Chandresh, thanks for your informed views on the FX market. We should have more of you on these matters.

Let me draw upon your long experience in FX market by asking your comments on the following two questions.

(1) In view of the fact that:

- the effective US Fed rate is now higher than the BoC overnight target rate
- the US economy growing much faster than the Canadian economy and
- worsening debt situation in the US

What direction our Looney is expected to take in the next few weeks?

(2) Is it not better to trade in Euro/US$ than in Cd$/US$ because of the fact that the European economy being much bigger and stabler and more diversified than the Cd$ economy?

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Man's Best Friend

Chandresh,
Thanks for the explanation, looks like you are following these matters quite closely.
Thaks again

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Deal With Reality or Reality Will Deal With You

Some forex news today:
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Mind you, I cannot explain the technicals, since I do not understand them myself. However, I can get a sentiment of the market for short term. Accordingly, C$ seems to be weakening, but in the interim period, ther might be a halt around these level.
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Minor and brief breakout above 1.2465-70 so far. A sustained breakout is a
buy, but overbought daily slow stochs and falling ADX readings suggest the
uptrend begun on Jan 12 at 1.1950 is nearing at least an interim top. The
uptrend line from 1.1950 is key support today at 1.2360. Hourlies are still
bullish but nearing overbought. Tricky technical set-up. (RD)

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15:08 USD/CAD: Another Run at the Highs as Ivey PMI Dips to 50] Boston,
February 4: USD/CAD is taking another run at the 1.2470/75 area after a softer
than expected Ivey PMI survey. The headline figure dipped to 50.0 in January
versus expectations for 53.0. Is stood at 54.6 in December. This more evidence
that the strong Loonie continues to weigh on the Canadian economy, helping
rapidly ease fears that a the output gap could close and start pushing up
inflation.
CTAs were big buyers of USD/CAD on the brief run to fresh highs but don\\\"t expect
them to hang on to positions for long if the rally does not accelerate soon.
-USD/CAD trades at 1.2460. --Jamie.Coleman@thomson.com
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Boston, February 4, 2005.
January December Avg prior 3 mos
Headline: 50 54.6 56.6
Employment: 49 53.9 54.4
Inventory: 48 45.8 52.6
Supplier Deliveries: 46 43.1 46.5
Prices: 69.8 61.5 65.7
The numbers speak for themselves. -David.Ebata@thomson.com


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[IFR Forex Watch]
[SQUAWK BOX]
Boston, Feb 4:
January saw slower payroll growth than expected. Payroll employment climbed by
146k in January following a downwardly revised reading of 133k in December (prev
157k). The rise was below expectations for a rise of 185k. Treasuries are
higher following the news.
The unemployment rate dropped to 5.2% from 5.4%, a level not seen since Q3-
01. Average hourly earnings were up 0.2%, in line with expectations. The work
week dropped to 33.7 hrs. The manufacturing workweek rose to 40.7 hrs from 40.6
hrs.
[HIGHLIGHTS:]
Nonfarm Payrolls 146k vs. 133k (prev 157k, est 185k)
Unemployment Rate 5.2% vs. 5.4%
Avg Hrly Earnings +0.2% vs. +0.2% (prev +0.1%)
Work Week 33.7h vs. 33.8h
Goods producing employment fell 31k versus expectations for a modest rise.
It rose by 10k in December. There was a 25k drop in manufacturing jobs. This
job loss came as purchasing managers surveys continued to point towards rising
employment levels. Construction employment fell by 9k vs. a 14k gain in
December.
On the service side, payrolls expanded by 177k following a 123k gain in
December. This was better than expected. Retail jobs rose by 19k while
professional and business service jobs were up 25k, following a 39k gain in
December. Government payrolls expanded by 12K following a 7k drop in December.
Average hourly earnings rose 3 cents to $15.88 in January. From a year ago
wages were up 2.5%, down from the 2.6% rise noted in December.
The unemployment rate posted at 5.2%, down from 5.4% in December. The last
time the unemployment rate was this low was back in September 2001 when it was
4.9%.
Also in the household survey there was a sharp drop in the number of
unemployed (+310K) but a rise in the number of employed (+85k). The labor force
contracted by 224k. The participation ticked down to 65.8% from 66.0%.
The report was actually a bit better than the headline suggested given the
better than expected rise in service sector employment. The January increase
was well above its recent trend at 177k. The fact that factory employment fell
is puzzling and one would think that a weaker dollar would have encouraged
activity and hence, job growth. That doesn't seem to be the case.
The rise in earnings suggest wage pressures are there, but still modest. The
drop in the workweek leaves it in its recent range of 33.6 to 33.8 hrs.
The bottom line is that the economy is adding jobs but payroll growth is
well short of what was seen during past recoveries. Factoring in the benchmark
revision employment is above its peak from March 2001 but with sub-150k growth,
it isn't really keeping up with the labor force. The rule of thumb is that 150k
jobs per month are necessary to keep the unemployment rate from rising.
Overall there is nothing in the data to cause the Fed to pause in its
tightening cycle. If anything it gives those who think the Fed could pause soon
a little more grist for their mill. The Fed will get the chance to see another
employment report before it meets on March 22. --
Jennifer.Rossum@thomson.com/cc



[IFR Forex Watch]
[SQUAWK BOX]


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Jobs -5.7k , Unemployment 7% (unchd)] Toronto, Feb 4.
Canadian employment fell by 5.7k in January, to 16,057.4k, virtually unchanged
from the previous month (16,063.1k) - indeed, virtually unchanged for the third
straight month. The unemployment rate also held steady at 7%. Hours worked fell
0.7% (still +1.4% y/y).
Part time youth employment fell by 21,000 in January, with the youth
unemployment rate edging up to 12.8%. Youth employment gained 1.2% over the past
year.
Retail and wholesale trade gained 18,000 jobs in January, 46,000 since August
(+1.8%). Manufacturing added 14,000 jobs, reversing declines of 29,000 over the
last 7 months of 2004. Construction rose slightly in January, with 84,000 new
jobs over the past 13 months. Health care and social assistance employment fell
by 14,000 in January. Public administration jobs also fell 14,000 in January,
and are little changed on the year. Information, culture and recreation dropped
12,000 jobs in January, and is now -36,000 jobs since August, offsetting most of
the gains through the earlier part of 2004.
Private sector employment rose 42,000 in January, including self-employment.
Private sector jobs are up 1.5% in the past 13 months, with self-employment up
1.5%.
Ontario saw employment drop by 28,000, with the loss of 51,000 full-time jobs
partly offset by increases in part-time work. Ontario\\\"s unemployment rate is
lower at 6.7%, due to fewer people in the labour force. Over the last year,
employment growth in Ontario was only 0.8%. Quebec gained 16,000 jobs in
January, 71,000 over the past year (+2.0%). Quebec\\\"s unemployment rate edged
down to 8.4%.
The numbers are weaker than expectations for 12k new jobs, but unemployment
is roughly unchanged. - harry.koza@thomson.com

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Chandresh

Advice is free – lessons I charge for!!

I think trading in forex and derivatives adds another layer to the core of conventional investing in stocks and bonds. Since trading in these products require specialized knowledge, there would be more opportunities for rewards.

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Man's Best Friend

Double post deleted.

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Man's Best Friend

However, one has to realise that one can trade forex on very very low margins - 1-2%, and the movements are extremely fast - in literal sense 'palak jhapakte hi' (like it moved half % in a blink yesterday at 8.30am when the employement figures for USA wer released), and so while it is easy to double your equity in a day, it is entirely possible to lose it in a day too.

Forex trading is good only for people who have:

1. a heart to be able to take huge losses in a flash

2. who have some money to spare and loss of that will not in anyway hinder their daily living.

3. who are very very disciplined in trading - they set their goals for profit and losses and take whichever comes first. (I used to trade with specific $amount as maximum loss that I will take in a year - twice it happened that I lost that money in January and in February - I disciplined myself and did not trade for the rest of the year both those years!)

4. Have the courage to come back after a while once they have saved/earened what they had lost and are ready to try out again. Because if you have lost once, it does not mean you will lose again.

Chandresh

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Chandresh

Advice is free – lessons I charge for!!

I quote below a message received from one of our members in my personal inbox:
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Hi Chandresh,

How are you doing?

I have seen sites like forex.com and refcofx and would like to know if there is any sort of training that is really helpful to deal in forex. I have seen some e-books and online training on sites starting from US$ 50-100 and upwards. Are these really helpful for someone novice or one learns from experience only?

I never traded in stock markets or forex markets.

Regards,


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I am taking the liberty of replying to this on the public forum. Hope the person will not mind.

Yes, these books are helpful.........infact I had bought some when I started trading long time back. But, for me I found it difficult personally since I am not good at math, and most of these books talk about technical analysis which involves lot of math (moving averages, RSI, regression analysis etc kind of a thing). Those who can understand it, it is very good.

However, another 'community service' that I can do (and infact I did two nights ago with another of CD friends) is to conduct say a 2 hr workshop on the basics of forex trading. Don't worry - I am not an agent of any broker or anything of that sort - I simply like teaching (and speaking ). If any of you guys are interested, let me know and we can organise that. And then you can buy books if you feel you want to learn more about it (and in turn teach me what you have learnt )

I would suggest learning the basics from someone into this trade rather than directly from a book.

Chandresh

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Chandresh

Advice is free – lessons I charge for!!