Monday, November 16, 2009

European markets advance on improved risk appetite; Euro and Pound recoveries stall


Mon, Nov 16 2009, 10:29 GMT

FXstreet.com (Barcelona) - European markets have opened the week on a bid tone, boosted by bright Japanese GDP data and Wall Street's advance on Friday. In FX Markets, Euro and Pound recoveries from last week's lows have stalled.

Eurostoxx 50 Index trades 0.9% up, while German DAX Index advances 1% up, and the French CAC Index adds 0.80%. In the uK, the FTSE Index trades 1.1% up in the first hours of trading.

On the macroeconomic domain, inflation on the Euro Area has been negative for the fifth consecutive month in year on year terms, CPI has risen 0.2% in October and edged down 0.1% since October last year..

Euro and Pound's recoveries stall

EUR/USD recovery from 1.4825 low on Friday extended during Asian session although the pair has has stalled after hitting 1.4995 on early European session, and trades around 1.4965 at the timer of writing.

GBP/USD recovery from 16515 low in November 12 has reached 1.6750 high on Monday´s European session and the Pound has pulled down, reaching levels below 1.6700 and testing 1.6685 support at the moment of writing.

USD/JPY is trading in a range roughly from 89.40 to 89.70, consolidating at levels below 90.00 psychological level since its decline from 90.60 high in November 12.

EUR/USD (Nov 16 at 11:37 GMT)

1.4960/62 (0.28%)

H 1.4994 L 1.4914

S3S2S1R1R2R3
1.48781.49151.49521.49641.50021.5039
[?]Trend Index[?]OB/OS Index
Slightly BearishNeutral
Data updated on Nov 16 at 11:35 (15-minute timeframe)


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GBP/USD: Pound retreats further, dips to 1.6670 intra-day low


Mon, Nov 16 2009, 10:58 GMT

FXstreet.com (Barcelona) - Pound's rally from 1.6515 low in November 12 has been capped on Early European ttrade at 1.6750, and the Pound has dropped about 80 pips to hot an intra.day lowa at 1.6670. At the moment, the Sterling trades at 1.6680.

According to Stoyan Mihaylov, technical analyst at Deltastock.com, the Pound could decline to 1.6612 support: "The uptrend from 1.6515 has peaked at 1.6753 and a larger slide is to be expected, towards 1.6612 support zone. The overall bias remains positive for 1.6840, en route to 1.6932, but keep in mind, that current uptrend is probably the last leg of the rise from 1.5706 short-term bottom."

On the downside, below 1.6685/00 support, the Pound could find support at 1.6630, 1.6570 and 1.6515 (Nov 12 low). On the upside, resistance levels lie at 1.6735/50 (intra-day highs), and above here, 1.6800 (Nov 11 high) and 1.6845 (Nov 9 high).

GBP/USD (Nov 16 at 11:36 GMT)

1.6697/99 (-0.01%)

H 1.67515 L 1.6667

S3S2S1R1R2R3
1.65821.66231.66651.66781.67201.6761
[?]Trend Index[?]OB/OS Index
Slightly BearishNeutral
Data updated on Nov 16 at 11:25 (15-minute timeframe)


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Forex: EUR/USD: Market will remain bid while below 1.5020 - Commerzbank


Mon, Nov 16 2009, 08:47 GMT

FXstreet.com (Barcelona) - Euro recovery from 1.4825, has extended to levels close to 1.5000 on early European morning, although, according to Karen Jones, technical analyst at Commerzbank, the pair short-term risk is a sell-off to 1.4718.

On the intra-day basis, Jones observes the pair offered while below 1.5020: "The short term risk is that the market will sell off to the 1.4718 region (55 day ma and uptrend). The market will remain offered intraday while capped by 1.5020."

On the upside, Jones points out to 1.5065 resistance area: "Above the October 1.5064 high targets 1.5245/87, the 78.6% Fibonacci retracement of the 2008 decline and May 2008 low."

EUR/USD (Nov 16 at 11:37 GMT)

1.4960/62 (0.28%)

H 1.4994 L 1.4914

S3S2S1R1R2R3
1.48781.49151.49521.49641.50021.5039
[?]Trend Index[?]OB/OS Index
Slightly BearishNeutral
Data updated on Nov 16 at 11:35 (15-minute timeframe)

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How to Calculate Rollover Interest?


How to Calculate Rollover Interest?

In the Foreign Exchange Market or Forex market, Rollover is a method of stretching the arranged clearing date or what is known as the settlement date of an open position. Mostly, in common currency trades, trades ought to be completed in two business days and traders who wish to stretch their positions with no intention of settlement must close their positions before 5:00 in the afternoon Eastern Standard Time on the date of settlement day, plus re-opening of them the next trading day. This means by rolling over the position, this at the same time closes the existing positions at the daily close rate and again coming into a new opening rate at the next trading day. This precisely means that the trader is indirectly extending the settlement day by one more day.

This is also known as tomorrow next strategy, it is functional in forex due to many traders have no purpose of getting delivery of the currency they buy but instead they have the intention of getting profit from fluctuating exchange rates. Since rollovers shove out the settlement by another two trading days, it may cause a gain or a cost to the trader depending on the existing rates.

Apparently, Rollover is when you reinvest funds from a mature security into a new issue of the similar security or same security. You are transferring the holdings of one retirement plan to another without the agony of tax effects. Plus a charge is incurred by Forex investors who extend their positions on the following delivery date.

Rollover interest is the net effect of the money borrowed by an investor to purchase another currency and such interest is paid on the borrowed currency and earned on the purchased currency. To calculate this interest, you should get the short-term interest rates on both currencies, the existing exchange rate of the currency pair and the number of the currency pair purchased. For instance, an investor possesses 15,000 CAD/USD. The present rate is 0.9155, the short term interest rate on the Canadian dollar (base currency) is 4.50% plus the short term interest on the US dollar (quoted currency) is 3.75%, so the interest would be $33.66 [{15,000 x (4.50% - 3.75%)} / (365 x 0.9155)].

If on the contrary, the short term interest rate on the base currency is lower than the short term interest rate of the borrowed currency, the interest rate would result into a negative number which may reduce the value of the investor’s account. Such interest can be avoided by taking a closed position on the currency pair. If an option is about to expire is quite favorable to grip, you can either buy or sell the later expiring option. Always note the interest rate that is paid by a currency trader or he may received in the course of these forex trades is considered by the IRS as ordinary interest income or expense. For taxation, the trader of the currency should always keep track the interest received or paid, separate from regular trading gains or losses.

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