10 trades and $32,000 later … Crude Oil continues to deliver

May 21, 2008 · Filed Under CNBC, INO In The News, Technical Indicators, That Was The Week That Was, The Key to Trading Success, Trader Lessons, Trading Tips, Trading Videos · 9 Comments 

10 trades and $32,000 later … Crude Oil continues to deliver

The price of crude oil (NYMEX_CL) continues to move higher aided by speculative and hedge fund demand. However, this market has exhibited no signs of a blow-off which are typical of commodity market behavior when a top is reached.

We have continued to trade crude oil based on our “Trade Triangle” technology and have been extremely happy with the results. In this short video, I’m going to show all of the past and present signals and the success rate we achieved using MarketClub’s technology

Since the beginning of the year, we have traded crude oil ten times.Out of those ten trades we have seen eight winners, one loser and one scratch trade. A scratch trade is when you get in and out at the same price.

The trade signals are based on using our “Trade Triangle” technology for crude oil. The ten trades produced gains of $32,250 for each contract traded. This represents a return of 331% (so far this year) based on the latest margins of $9,788 supplied by NYMEX for a single contract.

How high can crude oil go?

Pick a number, any number and that’s how high crude oil can go. Right now world demand, and not just US demand, is driving crude oil prices. The U.S. represents only 5% of the world’s population, but the U.S. utilizes 25% of all crude oil supplies everyday. With India and China coming on strong with their own respective economies, there is going to be intense competition to acquire crude oil at any price. Demand coupled with a sharp decline in U.S.Dollar value (last 6 years) are all contributing to higher prices.

The greatest challenge to traders and investors is not the current price of crude, but it is emotion. Emotion will play a big part in the crude oil market in the coming months and years. To be successful trading in crude oil, traders need to eliminate all emotions. The only way I know how to do this successfully is by utilizing a simple market proven strategy like the “Trade Triangle” technology.

Enjoy the video, and if you have any questions please don’t hesitate to contact us. We have a willing support staff to help members, and if you have questions about joining MarketClub they can also help you with that as well.

Thanks for taking the time to watch the video,

Adam Hewison

Co-Founder, MarketClub.com

Be Our Guest
We welcome syndication of our content in your blog or on your trading website. Please feel free to use our content with attribution - more details here to syndicate our content

Tags: , ,

How high is high in crude oil??

May 12, 2008 · Filed Under General, INO In The News · 5 Comments 

We are very lucky to have our corporate offices located on the beautiful Chesapeake Bay, however sometimes we have to pay for that beauty as we are at the mercy of the elements. This weekend starting on Sunday night, we started paying the price as the elements hit us full force. When we woke up in the morning, we found that our offices along with over 37,000 other homes and offices were without power.

Now you may be wondering how could it be that you are reading this post if our we house our server farm far away in Virginia in a very secure site. Our servers are right alongside those of Google and Yahoo and our site’s uptime is 99.9%. The fact is, we never have to worry about power at our server facilities as they have generators the size of buses to run the whole facility including our servers. power is out? The good news is that

With crude oil prices hitting record highs, I think you’ll find this short 90 second video very informative. We have enjoyed a great deal of success trading crude oil using our Trade Triangle Technology.

Enjoy, we will have a more in-depth posting hopefully later today.

All the best,

Adam Hewison

Co-founder of MarketClub.com

Be Our Guest

We welcome syndication of our content in your blog or on your trading website. Please feel free to use our content with attribution - more details here to syndicate our content

Tags:

Looking for pockets of dollar strength - Greenback’s weakness is neither relentless nor without exceptions

April 1, 2008 · Filed Under INO In The News · 1 Comment 

By Lisa Twaronite, MarketWatch

Last update: 12:01 a.m. EDT April 1, 2008

SAN FRANCISCO (MarketWatch) — One hears so much about the battered dollar lately that it’s easy to forget the greenback is beating up a few of its major rivals, and will likely continue to do so this month — and might even take a swing at some of the big bullies that have been knocking it down the most.

Investors betting on a further dollar fall against the euro and the yen should prepare for the possibility that the dollar could make up a bit of lost ground against either one - or possibly both. Moreover, the dollar is likely to keep gaining on its Canadian counterpart, which has been hurt by lower U.S. growth prospects.
"In April we are expecting to see further stabilization and a modest recovery in the U.S. dollar. This will create a foundation for a more sustained recovery later in the year," said Adam Hewison, president of MarketClub.com, an Annapolis, Maryland-based a technical analysis site.

"It would appear that U.S. interest rates are at or close to their lows for the year. We had been looking for the Fed funds rate to trade down to the 2 to 2 .5%-level. We feel the market has achieved that downside target zone," said Hewison.

‘Poor ol’ loonie’

The dollar has gained more than 3% against the Canadian dollar this year.
The loonie, as it is commonly called, is a commodity-linked currency, meaning it usually rises and falls in line with crude oil futures, which are priced in dollars. But this time, its fall coincided with a record rise in crude futures, with the front-month contract up more than 5% so far in the first three months of 2008.
The Canadian dollar "slumped despite rising oil price because of the bigger picture fact that 80% of exports go to the U.S. and that geographically its, well, right there on the doorstep," said Andrew Wilkinson, senior market analyst at Interactive Brokers.

This point was not lost on Canada’s central bank, which cut its benchmark interest rate by a half-percentage point to 3.5% early last month and laid the blame south of the border.

"The deterioration in economic and financial conditions in the United States can be expected to have significant spillover effects on the global economy. These developments suggest that important downside risks to Canada’s economic outlook that were identified are materializing and, in some respects, intensifying," the Bank of Canada said the day it cut rates.
And higher oil prices would make it worse, not better.

Rather than lift the Canadian dollar, as they often did in the past, high oil prices "could worsen the outlook for U.S. consumer spending and therefore Canadian output, exerting more pressure on the poor ol’ loonie," said Wilkinson.

Euro, yen

Analysts are mixed when it comes to how the buck will fare in the coming weeks against the big two: the euro and the yen. So far, the euro has gained more than 8% this year against the dollar, while the latter shed about 11% against Japan’s currency.

While many see pressure on the dollar continuing, some say there’s a chance the dollar could regain lost ground by the end of April.
Last month, the Ides of March were literally a day late and a dollar short — a dollar short-sell opportunity, that is.

On Sunday, March 16, the Federal Reserve took the extraordinary step of cutting its discount rate by a quarter percentage point to 3.25% and offered to lend money to an unprecedented list of firms. This, combined with news of J.P. Morgan’s Fed-blessed firesale purchase of ailing brokerage Bear Stearns Cos., sent the greenback plunging in early trading Monday.
The euro topped at $1.5903, its highest level since it began trading in January 1999. Against Japan’s currency, the dollar slid to a new 12-year low of 95.75 yen.
But even some analysts who think the euro still has upside potential don’t expect April to end on a high note for the European unit.

"I think the market will take the euro through its record highs in the coming week and in April will probably come a bit lower," said Meg Browne, strategist at Brown Brothers Harriman. "April could see the euro come off its new high."

Part of this, she said, it due to low expectations for U.S. economic data, making market positions vulnerable to an upside surprise - or a downside surprise in the eurozone, where the effects of the strong currency could begin to show up.

"The market’s priced in a lot of negative U.S. news," she said.

"If there is any sign of improvement in the next month’s worth of housing or manufacturing data or some sign consumption’s not so bad, and if we see signs of weakness in Europe — maybe it becomes more apparent that non-German countries are deteriorating, or if German data somehow weakens — sentiment is likely to shift in favor of the buck," said Browne.

Against the yen, the dollar is still trading significantly above its post-World War II low of 79.85, set in April 1995, and some analysts don’t expect to see anything around that level anytime soon.

"The Japanese outlook is increasingly fraught with risk, and there is little to no expectation of confident leadership through any turmoil," wrote David Watt, senior currency strategist at RBC Capital Markets.

"Apart from carry trade unwinding and risk aversion, there is little to no reason to be bullish on Japanese yen. As a result, data releases will likely pose more upside risk to dollar/yen than downside risk, particularly those that suggest the Japanese economy is slowing," he said.


Lisa Twaronite reports for MarketWatch from San Francisco.
MarketWatch is a register trademark of Dow Jones News



Tags:

Trading/Investing Authors revealed: Tom Dorsey

March 5, 2008 · Filed Under General, INO In The News · Comment 

Today, we’re starting a series on some of the most well-known, and some
not-so-well-known, professional teachers in the trading and investing
world. We’ll provide you with each traders’ background, why you can learn from this author, and WHERE to find his/her best titles.

Our first subject is Tom Dorsey.

–Background–
Tom Dorsey is a popular figure in the financial community, representing the
major stock exchanges in the United States, conducting Risk Management
seminars across the country for industry professionals as well as
individual investors. Tom is the author of numerous articles on equity
market and options analysis for such publications as: The Wall Street
Journal, Barron’s, Technical Analysis of Stocks and Commodities
Magazine, and Futures Magazine.

–Why Tom?–

Tom’s expertise lies in chart analysis and risk management. He’s been
able to take his years of experience, contacts, and personal dedication
and parlay that knowledge into video and audio seminars for which traders the
world over are paying thousands of dollars. Tom’s ability to teach
has made him one of the most sought after speakers in the trading expo
circuit. His energy and passion for his work will make you a dedicated
follower!

–Where can I find Tom?–

INO TV polled Tom’s most dedicated members to find their favorite
presentations, and has complied them within INO TV for you to enjoy.
Today, you have the ability via INO TV to watch his best work right from
the comfort of your desk chair.

*A Game Plan for Investing in the 21st Century
*Point and Figure Charting
*Using Point and Figure Charts to Analyze Markets

Enjoy Tom’s Titles here:

INO TV

Next we will be going over another guru that has brought a new wave
to the trading world…Glenn Neely.

Best,

Brad Stafford

Tags:

Oil Prices Close at New High Above $100

February 26, 2008 · Filed Under INO In The News · 1 Comment 


By ADAM SCHRECK

———-

NEW YORK (AP) — Oil futures surged to close at a new record Tuesday as traders focused on supply concerns and a bullish stock market rather than renewed signs of a shaky U.S. economy.

Crossing the psychologically significant $100 mark once again — oil prices previously crossed that hurdle last week — in itself may have helped fuel the rally by triggering computer programs set to buy at certain levels and enticing new speculators into the market, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

"You see additional buying among people who think they’re missing something," he said. "Any time you move above ($100 a barrel), you’re going to ignite some fresh buying."

Light, sweet crude for April delivery jumped $1.65 to settle at $100.88 a barrel on the New York Mercantile Exchange. At one point in the session, prices surged as high as $101.15.

Investors who recently were selling on weak economic data seemed to take a spate of bad news in stride.

The Conference Board, a business-backed research group, reported its Consumer Confidence Index fell to the lowest since February 2003, far below what analysts had been expecting, indicating that consumers might continue to curb their spending in the coming months.

Meanwhile, the Labor Department reported that wholesale inflation jumped 1 percent in January, more than twice what analysts had been forecasting. That report, coupled with the consumer confidence index, pointed to an economy that is slowing even as prices are rising.

And Standard & Poor’s added to homeowners’ angst when it said its quarterly home price index tumbled 8.9 percent in the final quarter of 2007 — the indictator’s sharpest decline in its 20-year history.

But traders in both the energy market and the stock market, which also advanced, seemed largely unfazed.

"We’re seeing a solid tone to the stock market," Ritterbusch said. "I think the oil market is using the stock market as a proxy for future economic activity."

Last week, March oil rallied to a new settlement record of $100.74 and a new trading record of $101.32 before the contract expired.

Hedge funds looking to cover future positions and foreign buyers, who because of the weak dollar can still lock in oil prices at a relative bargain, may have helped accelerate the day’s buying, said Adam Hewison, president of INO.com, a financial Web site that specializes in futures trading.

"In euro terms, oil is not that expensive, and it’s likely to go even higher," Hewison said.

Also supporting prices were concerns about supply disruptions from unrest in Iraq, a major oil exporter, and warnings by Iran against further international sanctions. Turkish ground forces pushed their offensive against Kurdish rebels deeper into the north of Iraq, seizing seven guerrilla camps, officials said.

Oil has risen in recent days amid an increase in speculative buying, with some traders believing that global demand will be high enough to support higher crude prices even if the U.S. economy is slowing. That thesis will be put to the test Wednesday, when analysts expect the U.S. Energy Department’s Energy Information Administration to report that the nation’s crude stocks rose for the seventh week in a row.

The government inventories report also is expected to show supplies of distillates, which include heating oil and diesel, fell by 1.8 million barrels last week, according to a Dow Jones Newswires poll of analysts. Cold weather across the Midwest and Northeast has also helped push heating oil prices higher.

On Tuesday, heating oil futures gained 2.97 cents to settle at $2.8150 a gallon, after earlier setting a new trading record of $2.8188 a gallon.

Gasoline prices rose 0.8 cents to settle at $2.5505 a gallon. Gas prices at the pump rose to $3.142 from $3.137 Monday, according to AAA and the Oil Price Information Service.

The EIA report also is expected to show that crude oil stocks rose last week by 2.4 million barrels, which would be the seventh straight week of gains. Gasoline inventories are expected to rise by 400,000 barrels.

Natural gas futures rose 2 cents to settle at $9.206 per 1,000 cubic feet. Earlier, Gazprom, Russia’s natural gas monopoly, again threatened to cut supplies to neighboring Ukraine, according to Russian news agency reports.

In London, Brent crude futures rose $1.78 to settle at $99.47 a barrel on the ICE Futures exchange.

Tags:

Crude Oil Rises as U.S. Retail Sales, Gasoline Use, Increase

February 14, 2008 · Filed Under INO In The News · Comment 

By Mark Shenk

Feb. 13 (Bloomberg) — Crude oil rose after government reports showed that U.S. retail sales unexpectedly climbed and gasoline demand increased.

The 0.3 percent gain in retail sales for January reported by the Commerce Department is easing concern that the U.S. is in a recession. Gasoline demand advanced 1.2 percent to an average 9.02 million barrels a day last week, the Energy Department said. Crude-oil supplies rose 1.07 million barrels.

“The up-tick in retail sales and up-tick in gasoline demand are combining to further the recent rally,” said John Kilduff, vice president of risk management at MF Global Ltd. in New York. “The smallish crude build is also providing support.”

Crude oil for March delivery rose 49 cents, or 0.5 percent, to settle at $93.27 a barrel at 2:48 p.m. on the New York Mercantile Exchange. Prices are up 58 percent from a year ago. Futures have dropped 6.8 percent since reaching a record $100.09 a barrel on Jan. 3.

Analysts estimated the report would show that U.S. crude-oil inventories rose 2.38 million barrels last week, according to the median of 14 responses in a Bloomberg News survey.

Crude-oil stockpiles jumped 18.2 million barrels, or 6.4 percent, in the past five weeks. This week’s gain left stockpiles 1.2 percent above the five-year average for the period, the department said.

`$100 Range’

“We should move back into the $100 range in the next couple of weeks,” said Adam Hewison, trader and president of Annapolis, Maryland-based Ino.com Inc., which provides technical analysis of markets. “The market is trying to tell you something when there’s fundamentally bearish news and prices move higher.”

U.S. crude-oil imports fell 7.4 percent to 9.74 million barrels a day, the lowest since December, the report showed. Supplies of petroleum products dropped 20 percent to an average 3.36 million barrels a day, the report showed.

“The crude-oil number was a little less than expected because of the drop in imports,” said Antoine Halff, the head of energy research at Newedge USA LLC in New York. “There was a little fog that shut the Houston Ship Channel for a few days last week so we should see imports rebound next week.”

The Houston Ship Channel, which serves the largest U.S. petroleum port, was shut for most of Feb. 3 and Feb. 4 because of fog. The Houston area’s eight refineries represent 13 percent of U.S. oil-processing capacity, according to data from the plant owners and the National Petrochemical and Refiners Association.

Global Demand

The International Energy Agency reduced its 2008 forecast for global oil demand by 200,000 barrels a day to 87.6 million barrels a day because of the slowing U.S. economy, a monthly report showed. That cut the annual growth rate to 1.9 percent from 2.3 percent forecast last month.

“Global demand growth is still strong,” Hewison said. “Demand growth in the U.S. may slow but it will continue to grow in India and China.”

The Organization of Petroleum Exporting Countries, which produces more than 40 percent of the world’s crude oil, may cut production when it meets March 5 because demand for the fuel is falling, President Chakib Khelil said.

“One thing is for sure, we won’t increase production,” Khelil, who is also Algeria’s oil minister, told reporters at a press conference in the country’s capital of Algiers today.

OPEC rejected calls from U.S. President George W. Bush at its last meeting on Feb. 1 to boost production to help ease oil prices. The group instead maintained its output ceiling at 29.673 million barrels a day for 12 of its members. Iraq has no production quota.

OPEC Concern

“OPEC is worried that there will be more builds in the second quarter,” said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. “I doubt they will cut output because they would take a really bad public-relations hit. Also, the Saudis would like to see prices down somewhat to help avoid a recession.”

Brent crude for March settlement rose 46 cents, or 0.5 percent, to close at $93.32 a barrel on London’s ICE Futures Europe exchange. Brent touched a record $98.50 on Jan. 3.

Petroleos de Venezuela SA, the state oil company, cut off sales of crude, gasoline and diesel to Exxon Mobil Corp. in retaliation for the freezing of $12 billion in assets in a legal dispute. Venezuelan President Hugo Chavez threatened on Feb. 10 to cut off oil sales to the U.S., a warning that was widely discounted by industry analysts in both countries.

“We are due for a pullback from the recent rally as the news sinks in on the Venezuelan front,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The worst-case scenario is that Venezuela will sell the oil at a loss and Exxon will replace it with oil from somewhere else.”

Venezuela was the fourth-biggest source of U.S. oil imports in the first 11 months of 2007, according to the Energy Department.

*Bloomberg name belongs to Bloomberg


Tags:

Oil Futures Add Gains On Supply Anxiety & Warning Consumption Fears (Oil Prices)

February 8, 2008 · Filed Under INO In The News · 1 Comment 


February 8th, 2008 (10:52 AM - MST)


New York - Oil futures surged back above US $90 a barrel Friday, adding to the previous session’s gains on renewed concerns about soppy disruptions and waning fears that a U.S. economic recession would seriously curb demand.

Light sweet crude for March delivery jumped $3.03 to $91.14 a barrel late int he New York Mercantile Exchange session.

Crude gained on word that oil exports from Nigeria, Africa’s biggest oil produces and a major U.S. supplier, could fall by as much as a million barrels a day due to a deteriorating security situation and planned maintenance.

Prices also rose on news that North Sea oil production has been cut by 280,000 barrels a day due to technical problems at a Total SA field, and that Russian crude output could fall this year due to depletion, JBC Energy GmbH, an energy research firm in Vienna, said in a research report.

Concerns that Venezuela might retaliate after ExxonMobil Corp. won court orders freezing the assets of its state oil company also pushed prices higher. ExxonMobil is seeking compensation for assets appropriated last year as part of President Hugo Chavez’s nationalization of several large oil products.

Meanwhile, energy investors found reason to hope that the American economy will dodge a serious downturn.

"Crude traders also responded positively to the news that Congress has passed an economic stimulus package aimed a boosting consumption and staving off a recession," commented Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn.

There also were worries that the Organization of Petroleum Exporting Countries would cut production to support prices which have pulled back from a record $100.09 a barrel reached early last month.

Analysts said technical factors also lifted oil futures. Twice in recent weeks, oil prices have dipped to nearly $86, only to bounce back.

That price is seen as a psychologically important support level that may keep prices trading in a range around $90 for the foreseeable future.

"If we break below that, I think we’re going to see further weakness," said Adam Hewison, president of INO.com, a website that specializes in futures trading.

At the pump, meanwhile, U.S. gasoline prices fell 0.6 cents overnight to a national average of $2.966 a gallon, according to AAA and the Oil Price Information Service.

Retail gas prices have retreated from above $3 a gallon in recent weeks, but remained about 77 cents higher than a year ago, and the Energy Department predicts they will rise to new records near $3.50 a gallon this spring.

Tags:

Gold recoils from record highs; consolidation seen

January 18, 2008 · Filed Under General, INO In The News · 2 Comments 

(Recasts, updates with closing prices, market activity, changes dateline to NEW YORK, previous LONDON) By Frank Tang
 
NEW YORK, Jan 17 (Reuters) - Gold slipped further away from record highs after a choppy session on Thursday, extending the previous session’s steep losses and hit by chart-based weakness and falling energy prices. The yellow metal could decline further in the near term, largely due to a possible recovery of the dollar, but losses should be limited by flight-to-quality demand amid credit worries and inflation concerns, market watchers said.
"The failure of gold to take out Monday’s high at $914 was seen as a negative by a lot of traders. I just don’t see this market turning around unless there is a news item coming out that takes people by surprise" said Adam Hewison, president of INO.com.

Spot gold fell as low as $876.90 an ounce, and was last quoted at $876.70/877.40 by New York’s close at 2:15 p.m. EST (1915 GMT), against $885.60/886.30 late in New York on Wednesday, when it dropped 2 percent. It hit a record high of $914 on Monday. The most-active gold contract for February delivery at the COMEX division of the New York Mercantile Exchange settled down $1.50 at $880.50 an ounce. "$900 level is going to be a fairly important level for the market just to digest for the moment. I think we have to get more consolidation in the market to push it to the $950, $1,000 levels," Hewison said.

Weaker crude oil prices dented gold’s appeal as a hedge against inflation. U.S. crude futures ended 71 cents lower at $90.13 a barrel on Thursday. "Given the recent volatility, wide intra-day price swings seem set to continue," said James Moore, precious metals analyst at TheBullionDesk.com.

The dollar slipped versus the euro on Thursday after Fed Chairman Ben Bernanke repeated in a speech to the U.S. Congress’ House Budget Committee that more easing may be necessary. Bernanke also said he will support efforts to craft a fiscal stimulus package and repeated the U.S. central bank was ready to act aggressively to counter recession risks.
Investors have priced in at least a half-percentage-point cut in the benchmark U.S. rate this month, with some saying the Federal Reserve could cut rates by three-quarters of a point. The Fed is scheduled to render its interest rate decision at the end of a two-day meeting from Jan. 29 to 30.

Zachary Oxman, senior trader with Wisdom Financial in Newport, California, said gold should consolidate in the near term, moving in a trading range between $870 and $900. "Any big corrections here are going to be met with some long-side accumulation buying," Oxman said. In research news, consultancy firm GFMS said on Thursday that the price of gold is expected to correct lower in the near term, but then surge as high as $1,000 an ounce later this year, as a weak U.S. dollar and lingering credit turmoil burnish the metal’s investment appeal. Meanwhile, industry-sponsored World Gold Council (WGC) said on Thursday that higher gold prices and increased volatility hurt the consumption of gold jewelry in India, the world’s top gold buyer, in the fourth quarter of 2007. In 2006, India imported about 715 tonnes of gold.

London-based ETF securities expected to more than double the money managed in its listed exchange traded commodity funds, including precious metals, to about $7 billion by the end of 2008. In other bullion markets, the key gold futures contract for December 2008 delivery on the Tokyo Commodity Exchange (TOCOM) ended 26 yen per gram higher at 3,074 yen in a technical rebound after falling by the daily 120 yen limit on Wednesday. In industry news, Highland Gold Mining Ltd plans to raise gold output by at least 10 percent this year and is on track to hit 200,000 ounces of production by 2009, managing director Henry Horne said.

Silver rose to $15.86/15.91 an ounce, versus $15.84/15.89 late Wednesday, supported by news that BHP Billiton Ltd/Plc had stopped operations at its Cannington silver mine in Australia after a fatality earlier in the day. Platinum slipped to $1,555/1,560 from $1,559/1,564 an ounce late in New York on Wednesday, while palladium was down $5 to $366/371 an ounce. (Additional reporting by Atul Prakash, Daniel Magnowski in London)


*Reuters is a registered trademark and belongs to Reuters

Tags:

Dollar higher in thin trading on last day of 2007

January 2, 2008 · Filed Under INO In The News · 1 Comment 
Despite U.S. strong-dollar policy, greenback did not have winning year

SAN FRANCISCO (MarketWatch) — The dollar managed gains against most major counterparts Monday, in extremely thin trading conditions on the last day of what was not a winning year for the greenback.

The dollar was on track to lose more than 10% against the euro, more than 6% against Japan’s yen and about 2% on the British pound sterling. The dollar index, which tracks the U.S. unit against a basket of six major currencies, was down more than 8%. "2007 is likely to go down as a year that defenders of the dollar would like to forget," said Adam Hewison, president of INO.com, a technical-analysis site. "I would hate to think what would happen to the dollar if the current administration had a weak-dollar policy," Hewison added, referring to the strong-dollar policy that U.S. Treasury Secretary Henry Paulson consistently maintained was in place in his remarks throughout the year. Late Monday, the dollar index was at 76.675, up from 76.190 in late U.S. trading Friday.

The dollar was buying 111.65 yen, down from 112.55 yen late Friday. The euro was trading at $1.4587, down from $1.4715 Friday. In November, the euro rose as high as $1.4967, which was its highest level since Europe’s united currency began trading in January 1999. The pound was at $1.9865, down from $1.9932 Friday. The dollar gained against its Canadian counterpart Monday, but was still on track to lose more than 17% for the year. The greenback bought C$0.9981, up from C$0.9805 Friday. In September, the loonie reached parity with the U.S. dollar for the first time since 1976, and hit a modern-day high of C$1.1039 in November.
On Wall Street, stocks closed down Monday but still posted gains for the year. Lingering housing woes. Most analysts ascribed the bulk of the dollar’s 2007 woes to the subprime mortgage meltdown and subsequent credit crisis in August, which led the Federal Reserve to embark on monetary easing the following month. Lower rates pressure the dollar, because they reduce the returns on dollar-denominated assets. The Fed’s easing was eventually followed by interest rate cuts by the Bank of England and the Bank of Canada.
"At the end of a year which saw the worst credit crunch in over a decade, a deterioration in the outlook for the US economy and the start of a rate cutting cycle by the Fed, followed by the BOE and BOC, markets are closing the year still concerned about the financial markets and the U.S. economy and are pricing in further Fed easing," wrote currency analysts at Brown Brothers Harriman.

Some analysts don’t expect a repeat of 2007’s dismal dollar performance in the year to come. As the subprime fallout continues to spread to other parts of the globe, the dollar’s relative appeal will grow toward the latter half of the year, as U.S. investors bring assets home.
Earlier Monday, data from the National Association of Realtors offered a glimmer of stability in the beleaguered housing sector, showing that sales of existing homes rose 0.4% in November to a seasonally adjusted annualized rate of 5 million, in line with expectations.
But analysts cautioned that the modest uptick likely doesn’t herald a turnaround in the sector. "Despite the good news in this report, we could just be in the eye of the storm, as a significant number of mortgages reset early in 2008 will likely increase delinquencies and foreclosures driving prices lower and pushing buyers away," wrote Benjamin Reitzes of BMO Capital Markets Economics. "This could get even worse before it gets better," he added.

Upcoming data
After the holiday, investors will be watching key data releases this week for clues on how the U.S. economy is faring, and whether more interest rate cuts lie ahead. The Institute for Supply Management’s manufacturing and non-manufacturing surveys are scheduled for release at 10 a.m. Eastern on Wednesday. Analysts surveyed by MarketWatch are expecting the manufacturing index to be roughly flat in December.
Then on Friday, the nonfarm payrolls report is expected to show that payrolls increased by 70,000, according to economist surveyed by MarketWatch.


Lisa Twaronite reports for MarketWatch from San Francisco.

Tags:

FOREX-Dollar rises vs yen as trading volume thins

December 19, 2007 · Filed Under INO In The News · Comment 


By Steven C. Johnson

NEW YORK, Dec 18 (Reuters) - The dollar gained on the yen on Tuesday as traders covered their bets against the greenback and began taking profits ahead of year end.

Volumes were thin as investors began closing the books on 2007, leading to jittery trading influenced heavily by technical factors and flows, traders said.

The European Central Bank’s extension of $500 billion in two-week loans to euro-zone banks also helped ease anxiety about a year-end credit squeeze, traders said, prompting some investors to wade back into yen-funded carry trades.

"The ECB provided a bit of systematic relief, and that’s led to some renewal of risk-taking activity," said Robert Fullem, vice president of corporate foreign exchange sales at The Bank of Tokyo-Mitsubishi-UFJ in New York.

"But it is a very thin market out there, and the few orders that are out there are keeping currencies in ranges," he said.

Investors have long borrowed yen at low Japanese rates to fund purchases of higher-yielding currencies and assets. As a result, the yen’s fortunes wax and wane in inverse proportion to market risk appetite.

Late afternoon, the dollar was up half a percent at 113.38 yen

The euro traded at $1.4403

Analysts said the ECB’s massive injection bolstered the argument of dollar strength against the euro into year end.

"There is talk that some foreign banks (e.g. U.S. and UK) may have taken in funds as well and at lower rates than they can secure from their respective markets," wrote Win Thin, currency strategist at Brown Brothers Harriman in New York, in a note to clients.

"This may lead to some euro sales as the borrowings are converted and/or hedged. The foreign exchange implications of these money market operations are on the margin, but maybe part of the firmer dollar story that many will overlook," he said.

Investors are also awaiting Wednesday’s results of this week’s liquidity injection plans by top central banks.

The dollar has benefited over the past week from unexpectedly strong U.S. retail sales and inflation data, which fanned speculation that the Federal Reserve may be less aggressive in cutting interest rates next year.

However, the latest Reuters poll still shows a 40 percent chance of a U.S. recession next year.

The Fed is expected to cut its benchmark overnight lending rate twice by 25 basis points to 3.75 percent in the first half of 2008 and leave monetary policy unchanged for the rest of the year, the poll showed. For details, see .

Adam Hewison, president of INO.com, an information service for traders in Shady Side, Maryland, said the dollar looks poised to continue rallying in early 2008 after falling sharply against most major currencies this year.

"We have seen a fairly healthy correction here. I think we’re going to see much more two-way trading in the first and second quarters of 2008," he said.

If interest rates stabilize, he said traders will be pushed to cover dollar shorts, setting the euro up for a test of $1.40 and sending the dollar back into the 118-120 yen range in the first half of the year.

"Bears often make the best bulls and they will have to cover their short positions sometime," he said.


Steven C. Johnson reports for Reuters

(Additional reporting by Lucia Mutikani; Editing by Jonathan Oatis)

 

*Reuters is a registered trademark and belongs to Reuters

Tags: