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Sunday, November 30, 2008

3:30PM Philippine time

The Markets are always forward looking.

What I mean by this is that the unrelenting bad news that has been pounding the markets for the past 2 months has already been fully priced in (discounted) by the markets. Even if the much awaited non-farm payrolls this coming Friday comes up negative again (which it will), I believe that this will not move the USD nor the other major currencies as much as before—but it will move the markets one way or the other.

The macro story now is that Investors are hoping for a bottom and are looking for a sign that it is in place. This past week, the Dow has rallied 5 out of 5 days, because of this, many are seeing this as a time to re-enter the markets as risk appetite returns. Is the bottom in place? I believe that the sentiment of hope is slowly edging out fear and the thought of an intermediary bottom is not far fetched at least for the equities markets. The Dow will continue to cautiously go up this week despite the projected job losses by Friday.

The problem is, the Dow and the major stock indices around the world are now at a disconnect with the currency market especially in Carry trades. With interest rates from major central banks around the world dropping fast, the demand for carry trade pairs will continue to decline in months to come as the rewards of the carry trades will no longer be worthwhile for the risks it presents. Therefore the Yen pairs will now search for a different dynamic to latch upon which is no longer the major US stock indices but rather the fundamentals of the USD, EUR, GBP, AUD, NZD. I continue my position that these pairs will continue to decline in the long term but a push up this week may happen due to the knee jerk reaction to the Dow – This will be temporary and shorting these carry trade pairs is still the main direction for my trades for the last month of the Year.

Now this week is going to be very active represented by first a move up by the Non-USD majors specifically EUR, GBP, JPY all heading higher at the start of the week before it drops to lower lows before this week ends. Having said that, here are the pairs I’ll be cooking this week:

Monday – Dec 1, 2008

Get ready to Sell USD/JPY on Monday Dec 1, 2008

The fundamental reason:

US ISM Manufacturing data comes out at 11PM Philippine Time and will show a decline in Purchasing for Manufacturing purposes.

Timing Window:

Get ready to Sell USD/JPY at these times should a Technical Set up or a Trading signal appear

Philippine Time: 8AM – 3PM (This is GMT+8)

London Time: 12MN – 8AM (This is GMT)

New York Time: 7PM – 2AM (This is GMT-5: Sunday 7PM to Monday 2AM)

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Get ready to Sell AUD/USD on Monday Dec 1, 2008

The fundamental reason:

On Tuesday Dec 2, 2008 Philippine Time, AUD retail sales trend data comes out at 8:30AM then the AUD cash rate (interest rate) announcement at 11AM which are both expected to drive the currency downwards.

Timing Window:

Get ready to Sell AUD/USD at these times should a Technical Set up or a Trading signal appear

Philippine Time: 10PM – 3AM (This is GMT+8)

London Time: 2PM – 7PM (This is GMT)

New York Time: 9AM – 2PM (This is GMT-5: Monday 9AM to 2 PM)

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Tuesday – Dec 2, 2008

Get ready to Sell EUR/USD on Tuesday Dec 2, 2008

The fundamental reason:

On Wednesday Dec 3, 2008 Philippine Time, EUR retail sales comes out at 6PM which is expected to drive the currency downwards. Technically, the pair should hit resistance at around 1.2950 by that time which if the pair cannot break it, will go down to the bottom of the range at 1.25

Timing Window:

Get ready to Sell EUR/USD at these times should a Technical Set up or a Trading signal appear

Philippine Time: 10PM – 11AM (This is GMT+8)

London Time: 2PM – 3AM (This is GMT: Tuesday 2PM – Wednesday 3AM)

New York Time: 9AM – 10PM (This is GMT-5: Tuesday 9AM to 10PM)

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Wednesday – Dec 3, 2008

Get ready to Sell NZD/USD on Wednesday Dec 3, 2008

The fundamental reason:

On Thursday Dec 4, 2008 New Zealand Cash rate comes out at 4 AM Early morning on Thursday and is expected to be cut by 1 full point.

Timing Window:

Get ready to Sell NZD/USD at these times should a Technical Set up or a Trading signal appear

Philippine Time: 10PM – 3AM (This is GMT+8)

London Time: 2PM – 7PM (This is GMT)

New York Time: 9AM – 2PM (This is GMT-5)

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Thursday – Dec 4, 2008

No viable opportunities on Thursday

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Friday – Dec 5, 2008

No viable opportunities on Friday

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Well that’s my forecasts and timing windows for this week, should anything change I will update this post!

Monsterpips to All!

-Mark

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