TRENDS

FOR 2011
CHINA’S
INFLATION
TRADER MAGAZINE I M PA C T S

GOLD
STRONGEST
CURRENCY

SHOULD
HEDGE

euro
FUNDS
TRADE
Forex?

life and death

between
A R E F I N A N C I A L B A I L O U T PA C K A G E S S U F F I C I E N T ?
IS THE P OLITICAL WILL THERE TO RESCUE T H E E U R O ?

JANUARY - MARCH 2011

 CONTENTs FX
EURO BETWEEN
LIFE AND DEATH:
TRADING
An analysis of the CURRENCIES:
macro-economic
parameters which The speculator’s dream or
affect the Euro zone an acceptable hedge fund
and could lead to strategy?

28
the Euro’s survival or
demise.

18
T EC H n I C A L
ANALYSIS:
Majors retrospect
and prospe ct
analysis

36
05 EDITOR’S NOTE TECHNICAL ANALYSIS: CURRENCY VIEW:
MACRO ECONOMICS: 09 Trends for 2011 and trading 62 Quarterly report
12 Will China’s battle with inflation opportunities: analyses potential
trend reversals offering good trading TECHNICAL OUTLOOK:
affect global recovery?
opportunities. 64 Trends & Targets for Major FX
STRATEGY:
Rates
42 “Society Says”: example of FX MANAGERS:
64 Trends & Targets for Emerging
momentum strategy, dictated by the 47 Interview with Michael Aronovitz,
market mood. Markets
Manager of Gables Capital Management.
65 EUR/USD, EUR/SEK, USD/ZAR
FUNDAMENTAL ANALYSIS:
50 FX roller coaster ride draws to a WOMEN IN FOREX:
55 Interview with Jody Samuels, trader, INTERNATIONAL DATA:
subdued close: a global analysis of key 68 FX Spot Monitor
economical and political events and their coach and founder of FX Trader’s Edge
program. 69 Central Bank Rates
forecasted effects on currencies for 2011. 70 Economica Data - FX Poll
34 Gold. Strongest Currency for 59 Interview with Karen Jones, 71 Markets View
2011: why gold can be considered as the head of FICC Technical Analysis at
strongest “money”. Commerzbank . 72 ECONOMIC CALENDAR

FX TRADER MAGAZINE January - March 2011 


Let me start by wishing all our loyal
readers, contributors, partners and
customers, a happy and prosperous
2011. When a year ends, we usually
like to analyze the lessons from the
past year and to make plenty of good
resolutions for the coming year.
For FX Trader Magazine, 2010 was a
great year, I would even say the year
of its consecration and acceptance by
the global market, after a good start in
2009. We’ve reached the remarkable
number of 30.000 subscribers and
a stable growth of 3.000 new online
subscribers per month, over the
last months. But what pleased us
the most during the past year is the
continuous positive feedback and
support from our readers, who have
perfectly understood and appreciated
the approach of the magazine.
In 2010 we also launched the paper
edition of the magazine, to which it
is now possible to subscribe online,
and again, after considerable interest
and feedback from our readers, we’ve
decided to adjust the cost of the
yearly subscription (down!) to meet
demands. The print edition is now
available at € 49 annually - under this
threshold it becomes uneconomic to
produce - and although the digital
version is still free (and will remain
as such), in our opinion, this quality
Belief creates the actual fact
publication has its place in any serious
library and will satisfy any paper-
addicted reader. We will extend the
subscription for all of you who have
already subscribed, hoping you will
appreciate the initiative.
In this edition, we analyze the
entropic development of the Euro
situation. Alessandro Balsotti gives
a very pertinent analysis of the
macro-economic parameters which
might influence the evolution of
the Eurozone and lead either to the
collapse or redefinition of the Euro.
We analyze the latest and future moves
EDITOR’s note FX
William James
of the Majors, both from a fundamental
and technical analysis point for view.
We look at how China’s battle with
inflation might affect the global
recovery. Or how gold could be
considered as the strongest “currency”
for 2011. And more…
In 2011 we will closely follow the
current evolution of the retail forex
industry, which was recently marked
by the launch of FXCM’s and Gain
Capital’s IPOs. (There are also rumors
on ForexMagnates.com that FxPro is
also on its way to an IPO). We believe
that 2011 will be marked by further
consolidation moves and that the
more brokers go public, the higher
the transparency between brokers
and retail customers will be, taking
advantage of the strict regulations and
control imposed on listed companies.
We will continue to provide quality
fundamental and technical analysis
articles.
We will also continue with the
interviews with money managers, top
traders, and the series of interviews
about Women in Forex in partnership
with Fxstreet. Finally, we will inform
you about the new trading platforms
and tools which you might find useful
to further improve your trading
results.
Emmanuelle Girodet
FX TRADER MAGAZINE January - March 2011 
 FX CONTRIBUTORS
Alessandro Balsotti, worked for
several years as market maker of
Italian Lira, Greek Dracma and
Czechoslovak Koruna in JP Morgan.
He was then in charge of the FX
trading desk in Abax Bank and
Caboto. He is currently responsible
in JW Partners for the FX Single
Manager strategies.
Dermot Butler is Chairman of
Custom House Global Fund
Services Ltd., (“Custom House”),
which offers a 24 hour, “round
the world” and “round the clock”
hedge fund administration service
through offices in Chicago, Dublin,
Guernsey, Luxembourg, Malta,
Singapore and The Netherlands.
Dermot, who has over 40 years
experience in the financial industry,
has worked variously as a Stock
Broker, Stock Jobber, Commodity
and Metal Broker and Option
Dealer on the London Markets,
before establishing Custom House
in Dublin in 1989. In September
2008, Equity Trust’s Fund Services
division merged with Custom
House and it became a US$50
billion hedge fund administrator.
As such, Custom House is one
of the largest independent hedge
fund administrators in the world.
Dermot is a regular speaker at
international conferences and has
authored numerous articles on
hedge funds, as well as appearing
as an expert witness and testifying
on regulatory matters. www.
customhousegroup.com, dermot.
butler@customhousegroup.com.
Dermot Butler’s article in this
 FX TRADER MAGAZINE January - March 2011
edition of the magazine was first
published by Barclay Hedge.
Maud Gilson, is communications
and education manager at FXStreet.
com. After working as a journalist
and communications consultant, she
joined the FXStreet.com team where
she now manages the live Webinars
and the education section as well
as media relations. Maud is also the
organizer of the International Traders
Conference, an educational event that
has been held in Barcelona on a yearly
basis since 2007.
Barclay Hedge, a leading source for
proprietary research in alternative
investments since 1985, has provided
services as a publisher, database
and software provider, and industry
consultant. Barclays 18 hedge fund
indices and 10 managed futures indices
are utilized worldwide as performance
benchmarks for hedge funds and
managed futures.
Steve Jarvis has well over 20 years’
experience of providing technical
analysis to FX professionals. Steve
is head of InterpreTA, Tradermade’s
technical analysis service. Fully
annotated Technical commentaries are
provided on Tradermade’s Maverick
charting system. Daily and intra-day
updates are applied to live charts for a
wide range of FX majors, FX emerging
markets and closely related markets.
InterpreTA is also available via the
Reuters platform. To arrange for a free
trial, please call 020-8313-0992 or e-
mail sales@tradermade.com
(continue on page 8)
Editor :
Emmanuelle Girodet
editor@fxtradermagazine.com
For advertising,
contact:
ad@fxtradermagazine.com
Webmaster:
Hristo Katzarski
webmaster@fxtradermagazine.com
Graphic design:
Preslav Dobrev
Editorial support:
Jacopo Visetti
Lorenzo Lorenzi
Simon Holmes
Trading carries a high level of risk, and may not be
suitable for all investors. The objective of FX Trader
Magazine is to give readers the tools, training and
information which will help them be better prepared
to trade on the foreign exchange. However, any analysis,
news, research, strategy, or other information contained
on this magazine is provided as general market
information and does not constitute investment advice.
FX Trader Magazine, will not accept liability for any
loss or damage, including without limitation to, any loss
of profit, which may arise directly or indirectly from use
of or reliance on such information.
Paper edition
Subscriptions:
www.fxtradermagazine.com
Tom Hougaard

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 FX CONTRIBUTORS
(continued from page 6)
JW Partners is an independent FX
solution provider, based in Milan,
with a strong FX specific know-
how. JW supports institutional
investors and HNWI in building
quality FX multimanager
portfolios, and FX underlying
structures.
Gabor Kovacs is a technical
analyst, his specialty is Ichimoku
Kinko Hyo. As a qualified
journalist with more than 8 years
experience, Gabor is the writer
and editor of the Ichimoku World
Book Series and the Ichimoku
World website, where he provides
articles and video presentations
about trading with the Ichimoku
Kinko Hyo charting system. His
regular analyses of the major
currency pairs, can be on view
here: www.ichimokuworld.com.
Andrew McKay began his career
as cash and securities dealer for
the Bank of New York in Sydney.
He moved to London to work
for a Shearson Lehman Hutton
subsidiary where he progressed
rapidly to the position of Senior
Dealer, Futures and Options, with
responsibility for implementing
the hedging strateg y of the
treasury department, and trading
futures, FX and options. On his
return to Australia, Mr. McKay
launched an asset management
company, Armytage AAM, to apply
his extensive knowledge of the
markets. Mr. McKay is responsible
 FX TRADER MAGAZINE January - March 2011
for the trading system design and which is an independent currency
management of the Company and multimanager advisory company.
its Segregated Portfolios. He holds
an Australian Financial Services Stephanie Radkay, is Vice
License with the Australian President of DTI www.dti-fx.com
S e curities & Investment She first joined the “rough” pits of
Commission. www.armytageaam. the Chicago Mercantile Exchange
com, www.asiancurrencyfund.com as a clerk for a major International
Options and Futures firm. In
Alex and Nicky Ong have been 1993 she began her broker career
involved in the Forex Markets as the only woman in the Major
since 2005. After successfully Market Index Futures pit. She also
managing their own account as joined her husband, Mike, after
retail traders they moved into the trading hours at the University
world of fund management and of Trading to teach eager learners
currently act as Consultants to to pit trade. By 1995 she was
a Private Investor Fund based in awarded the task to fill orders
Europe. They write extensively in the S&P500 Futures pit. In
for FXStreet.com, Forex Journal 1998, Stephanie left the S&P500
Magazine as well as various other Futures pit and followed the
publications in the UK. Alex and “Tech Boom” to fill orders in the
Nicky also run the trading website NASDAQ100 Futures pit. After a
www.TradersCorner-Online.com break from trading she is happily
where their Forex Analysis and trading and teaching again.
Commentary can be found daily h t t p : / / d t i - f x . c o m / d t i f x /
via their Blog. education.php
Javier Paz is the President of Kevin Sollitt is an FX Portfolio
Forex Datasource, a boutique Manager. Previously, he acquired an
market research firm that extensive FX trading background
continues to track and attract in Europe, Asia and North
broker evaluations from traders America, managing three bank
worldwide through its website trading teams. Kevin’s longevity
www.forexdatasource.com. in the FX world has been assisted
by a willingness to embrace a
Giovanni Pozzi, worked as key collaborative approach at all
professional or managing levels. Combining this with his
director of FX teams in clear grasp of market dynamics &
leader market making banks by using a wide range of disciplines
such as UBS, Swiss Bank Corp. has achieved positive results in
and American Express Bank, … and many different circumstances and
brokers. Today he runs JW Partners, market conditions over the years.

Since mid 2007 the theme in the
currency markets of Risk aversion
and the so-called “flight to safety”
has seen two currencies in particular
gain significant strength against a
basket of currencies including the US
Dollar. Throughout this period there
have been moments when the markets
have rallied against these safe haven
currencies, but for the most part, it has
been a bit of a one way train with the
US Dollar losing nearly 3000 pips from
a pre-crisis high of 1.24700 to a low of
0.9460 against the Swiss Franc and an
astonishing 4500 pips from a pre-crisis
high of 124.00 to an almost all time
low of 80.00 against the Japanese Yen.
Fortunately such moves tend to present
fantastic risk reward opportunities to
profit from the reversals and almost
inevitable recoveries.
Before we get into the details of the
opportunities mentioned above, let’s
explain the trading strategy behind our
analysis, and the tools used to identify
opportunities.
In a nutshell one could call us Trend
traders. We browse the charts looking
for opportunities to enter trades in the
Fundamental Analysis
TRENDS FOR 2011
and trading opportunities
direction of the already established
major trend, or at early signs of a
possible reversal. To identify these
opportunities we use nothing more
than price action in conjunction with
various forms of support and resistance
(horizontal lines, trend lines, fibonacci
retracements). When we talk about
price action we are referring to the
market form, therefore, in an uptrend,
we would be expecting a market to
consistently make higher highs and
higher lows, whereas in a downtrend
we would expect the market to make
lower highs and lower lows. As long as
the market respects this form we would
be looking to enter in the direction
of the trend, adding to positions and
Figure 1. USDCHF Daily Chart
FX
breaks to new levels, and scaling back
at the first signs of a trend reversal.
The opportunities that we present
below are based on this approach
and in fact are among the most
exciting of opportunities, as they
are potential trend reversals offering
trading opportunities with a risk
reward ratio far in excess of 1:1 or
even 1:2. Furthermore, these trades
are supported by fundamentals, which
adds further strength to trades.
The first interesting setup is that
of the USD/CHF. Having traded
downwards for much of the last half of
2010, the pair is finally showing some
FX TRADER MAGAZINE January - March 2011 
 FX Fundamental Analysis
signs of exhaustion with the price
failing to capitalize on the low, reached on
the 14th of October 2010, and it is now
in the process of posting higher highs
and higher lows indicating the potential
for a trend reversal to the upside. As
can be seen on the chart indicated by
the green line (Figure 1), the main
level is the 1.0066. Should we trade
above that level, we would be looking
to go long in anticipation of an initial
move up to 1.0660 and a sustained
move to 1.1730 before finding any sort
of significant resistance.
The second opportunity is in the USD/
JPY. After the brief rally during the
first few months of 2010, this pair has
more or less traded in one direction,
down! However after posting a 15 year
low of 80.22 and following the Fed’s
announcement of the second round of
Quantitative Easing, this pair has been
on its way back up, posting an almost
400 pip rise in little less than a month.
This rally also broke the significant
downwards trend line that can be
found on the daily chart (Figure 2).
What we need to see now is the market
move away again and fail to make a
new low before coming back strongly
breaking out to new highs. If this were
to happen we would look to get long
this pair targeting initially the 95.00
area, before looking to the 101.00 and
then the all important psychological
110.00 hurdle.
Of course when entertaining any sort
of trading idea one has to consider
the downside risks, so what would
our money management criteria be
for these two trades? We are great
10 FX TRADER MAGAZINE January - March 2011
Figure 2. USDJPY Daily Chart
believers in price action and the power
of swing highs and lows, so naturally
we will look to place our stop losses
somewhere behind the most recent
swing lows, remembering to adjust
our position sizes to ensure we do not
put at risk any more than 2% of our
account capital on any one trade.
Looking at these trades from a
fundamental perspective we can also
find strong arguments to remain
bullish. We believe that most of
the recent decline in both pairs has
not necessarily been due to strong
fundamentals in Japan or Switzerland,
but to a particularly negative sentiment
towards the US Dollar, as markets
began to accept the fact that the US
were not going to be amongst the
first of the G7 nations to embark
upon a rate hike cycle, and may in
fact embark upon a second round of
Quantitative Easing before anything
else. This negative sentiment towards
the Dollar seemed to evaporate as soon
as the Fed confirmed the market’s fears
and embarked upon QE2, promising
regular injections into the economy
through to the second quarter of 2011.
It was almost a buy-the-rumour sell-
the-fact type scenario where, as soon as
the news was announced, the markets
realized that the previous moves in
the currency were a little excessive
and liquidation of the short positions
started to occur. This is demonstrated
most clearly in the USD/JPY chart
where, following the announcement,
the Dollar went on a month long rally
as opposed to dropping through the
floor and posting all time lows.
Why do we believe these trades have
fundamental legs? The primary reason
is the turnaround in sentiment towards
the Dollar. We believe that now the
worst is behind us, the stimulus will
filter through to the real economy and
the US will start to print positive data.
When this occurs, markets will start to
speculate on when the Fed will begin
to raise rates. When this happens,
there really is only one way for the US
Dollar. This may not begin initially, but
assuming we get the breaks initially on a
technical basis, this could be the catalyst
to really push the Dollar higher, as we
are there to ride the trend and profit
from our long Dollar positioning.
Alex Ong & Nicky Ong
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 FX Macro economics
I
t i s n o s e cret that the
Chinese economy emerged
from the financial crisis
in the enviable position of
producing robust positive
12 FX TRADER MAGAZINE January - March 2011
Will China’s battle
with inflation affect
the global recovery?
g rowth b a se d on a foundation
of a current account surplus.
Th is p osition wa s derive d
from the c ontentious p e g g ing
o f th e Yua n at a n un d er
va l u e d pric e a g a inst the U.S
dollar, coupled with a carefully
ca lcu late d stimu lus p acka g e
wor th $586bn over a p erio d
of 2 years . The stimu lus,

a s i g n i f i c a nt p r o p o r ti o n
o f G D P, w a s f o c u s e d o n a
r e l e ntl e s s a n d d e t erm i n e d
effort to s up p o r t th e
development of infrastructure
p r o j e c t s tha t r e q u i r e d va s t
a m o unt s o f c o mm o d i ti e s . A s
a direct consequence, China’s
v o r a c i o u s a p p e ti t e s up p o r t e d
c o mm o d i t y r i c h c o untr i e s
s u c h a s Au s tr a l i a , h e lp i n g
th e m av o i d r e c e s s i o n a s th e y
exported iron ore and coal,
w h i l s t c r e a ti n g mu c h n e e d e d
d o m e s ti c j o b s , ena b l i n g th e
Chinese economy to grow at a
r a t e o f 8 . 7 % d ur i n g 2 0 0 9 a n d
annualised growth rate of 9.6%
Macro economics FX
for the first thre e quarters of
2010.
H
o w e v er, Ch i na’s
p r o sp er i t y ha s c o m e
a t a c o s t . No t o n l y
have they drawn criticism from
g l o b a l l e a d er s w i th r e g a r d t o
th e i r e xc ha n g e -r a t e p o l i c y, b ut
are now facing the prospects of
inflationary pressures that have
c o m e a s a r e s u l t o f e xc e s s i v e l y
l o o s e m o n e ta r y c o n d i ti o n s .
With consumer price inflation
at 4.4%, sig nificantly hig her
tha n th e 3 % ta r g e t , p u b l i c
d i s c o nt ent ha s escalated.
L o w er i n c o m e h o m e s a r e
suffering the rise in the cost of
necessities including fruits and
v e g e ta b l e s . Ch i n e s e o f f i c i a l s
hav e em b a r ke d o n num er o u s
counter inflation programs in
the form of raising the reser ve
requirements of banks on five
s e p a r a t e o c c a s i o n s th i s y e a r,
raising interest rates for the
f i r s t ti m e s i n c e 2 0 0 7 , a n d
e v en l i m i ti n g c a p i ta l i n f l o w s
from foreigners investing in
c o mm er c i a l a n d r e s i d enti a l
r e a l e s ta t e i n a b i d t o s l o w
th e economic j u g g erna ut .
However, what they have failed
to do is a llow a substantia l
a p p r e c i a ti o n o f Yua n . S i n c e
FX TRADER MAGAZINE January - March 2011 13
 FX Macro economics
Figure 1. USD/CNY Monthly Chart
June the Yuan has appreciated
2.4% against the U.S dollar.
C
h i na’s r e l u c ta n c e t o
a l l o w th e Yua n t o
appreciate ag ainst the
U.S dollar has drawn criticism
f r o m th e U. S a n d I M F, w h i l s t a t
the same time, being threatened
w i th th e p o t e nti a l l a b e l l i n g
a s a c urr e n c y ma n i p u l a t o r.
Te n s i o n s c o nti nu e t o g r o w
a s th e U. S s u f f e r s a n a na em i c
r e c o v e r y, in c o ntr a s t
Ch i na’s a l m o s t d o u b l e d i g i t
g row th rate . It ha s b e en arg ue d
tha t th e un d er va l ua ti o n
o f th e Yua n ha s o f f er e d a
c o m p e ti ti v e a d va nta g e
Ch i n e s e e x p o r t er s , and
resulted in g lobal imbalances.
As we mentioned above, since
China a g re e d to a llow g reater
flexibility in June the Yuan has
ma na g e d a 2 . 4 % r i s e a g a i n s t
the dollar on the backdrop of
un c e r t a i nt y o v er th e g l o b a l
r e c o v e r y. 2 . 4 % s i n c e Jun e
w o r k s o ut t o a n a nnua l i s e d
gain of close to 6%, which is
14 FX TRADER MAGAZINE January - March 2011
o f a s i m i l a r a n d a c c e p ta b l e
r a t e t o th e p r e v i o u s p er i o d
o f Yua n a p p r e c i a ti o n b a c k i n
2005-2008, but not substantial
en o u g h t o s a ti s f y th e U. S
g o v ernm ent i n th e c urr ent
financia l environment.
I
n t e r e s t i n g l y, C h i n a’s
e f f o r t t o s up p r e s s th e
va l u e o f th e Yua n ha s
be en counterproductive when
it comes to fighting inflation.
to Tr a d i t i o n a l l y, a s t r o n g e r
currency would slow economic
growth and subdue inflationary
to
Figure 2. 2010 Inflation Data for China
pressures. China is fully aware
of this as can be seen on figure1.
( U S D / C N Y ) . T h e Yua n ha s
h i s t o r i c a l l y b e en a l l o w e d th e
f l e x i b i l i t y to streng then during
times of hig her commodity
prices e.g . e a r l y 2 0 0 8 .
C
h i n e s e C P I y / y f i g ur e s
hav e b e en s t e a d i l y
c l i m b i n g thr o u g h o ut
2010. Back in Januar y, inflation
s u f f er e d b y c o n s um er s wa s a t
1 . 5 % , b y th e m i d-p o i nt o f th e
y e a r i t wa s up a t 3 . 1 % , a n d
No v em b er ’s C P I y / y wa s o ut
of the PB OC ’s comfort zone
at 4.4%. With this in mind and
w i th Ch i n e s e o f f i c i a l s l a y i n g
th e g r o un d w o r k f o r f ut ur e
interest rate hikes, we fe el the
theme g o ing in to 2011 may b e
o n e o f c a uti o n a s th e Ch i n e s e
economy is gradually broug ht
down to a more sustainable rate
of g rowth by a combination of
h i g h er i nt er e s t r a t e s , a n d a n
appreciating currenc y. There is
no disputing the fact that China
FX TRADER MAGAZINE January - March 2011 15
 FX Macro economics
has firmly established itself as
the engine for global growth,
w i th th e a b i l i t y t o d ema n d
levels of exports from trading
partners that essentia lly ke eps
at bay recessionary conditions.
Therefore, a slowdown in the
world’s 2nd larg est economy
ma y i n d u c e a p er i o d o f r i s k
av e r s i o n , and c o n s e q u ent
s e l l- o f f i n r i s k a s s o c i a t e d
c urr e n c i e s , w h i l s t r e wa r d i n g
those traditionally considered
s a f e hav e n s .
F
r o m Ch i na’s p er sp e c ti v e
th e U. S d o l l a r ha s
e x p e r i e n c e d p er i o d s o f
streng th as investors looked to
the world’s reser ve currency as a
safe haven play during periods
of un c e r t a i nt y, th er e f o r e
i n d i r e c tl y s tr e n g th en i n g th e
Yuan at the same time. Many
e xp er ts b e l i e ve the l ikel iho o d
o f the Yuan appreciating against
the do l lar during times of
dollar streng th to be remote,
and with the economic outlook
Figure 3. USD/CNY Monthly Chart with the USD/JPY Overlay
16 FX TRADER MAGAZINE January - March 2011
o f th e g l o b a l r e c o v er y s ti l l
frag ile, it appears the People’s
B a n k o f Ch i na d o n o t wa nt t o
b e v i c ti m o f a d o u b l e a c t o f
s tr en g th v i a a w i d er tr a d i n g
band against the dollar, as well
as enduring indirect streng th
thr o u g h d o l l a r p o p u l a r i t y.
N
ow that we have
hig hlig hte d what
we belie ve to be
the f undamenta l outlook
with reg ard to the Chinese
e conomy g oing into 2011, it is
important to understand the
potentia l impact this will have
on currenc y markets. Due to
Austra lia’s reliance on China’s
g rowth, as well as Aud/Usd
correlation to the market’s
risk- on/risk- off dynamic , we
fe el the Austra lian dollar will
be vulnerable to downside
pressure as a combination of a
de crease in exports to China ,
a long with hig her interest rates
set by the RBA ta ke their toll
on the Austra lian e conomy.
From a broader perspe ctive
safe haven flows to the U.S
dollar and Japanese Yen may
be a theme to watch out for
despite USD/JP Y trading at
extreme le vels. If the historica l
correlation bet we en the Yuan
and the Yen is any thing to g o
by then USD/JP Y looks sets for
f urther de clines, at least until
the U.S re cover y f ully g a ins
traction and turns the corner
towards susta inable positive
g rowth. Fig ure 3 demonstrates
the correlation bet we en the
Yuan and USD/JP Y.
I
t is our opinion that China’s
policy of pegging their
currency at an under valued
level against the dollar in order
to operate a trade surplus and
finance their fiscal stimulus
has brought to the forefront
inflationar y pressures. Although
many programs have been tried
and tested, inflation has a
stubborn grip that requires the
PB OC to loosen their ties on
the Yuan and allow a stronger
currency to prevent their
economy from overheating. Due
to the world’s dependence on
Chinese growth, the potential
slowing will likely have an impact
on risk sentiment in the financial
markets. As a consequence a
period of risk aversion will
reward certain currencies, whilst
punishing others.
Al e x Ong & Ni ck y O ng
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 FX Macro economics

“People only accept change when they are faced with necessity, and only recognize
necessity when a crises is upon them”
Jean Monnet, father of the European Union

EURO: Between Life and Death

18 FX TRADER MAGAZINE January - March 2011

 Macro economics FX

It was nine months ago, in these very

columns, that I focused on the strains
hitting the euro zone (“Weak dollar,
euro troubles”). At the time, Greece
was the culprit and the plot of the
drama had only started to unravel
under the eyes of investors a few
weeks before. I was quite sure that
a solution would have been found,
albeit a temporary one. Only time,
possibly a very long time, would have
told us if Europe would have been
able to reach safe ground from the
quicksand of being “a monetary but
not fiscal union”.

Where are we now? The Greek crisis

was in the end contained and the
‘shock and awe’ 750 billion Euro
EFSF was quite beyond the makeshift
solution I expected. Still here we
are, even less than a year later, with
the periphery under renewed attack,
even in a broader way than before.
The story is actually developing
pretty much as I expected, but more
quickly. We may not have to wait
few years to witness a life or death
experience for the Euro since the
market seems quite ready to find
out sooner, maybe in 2011. It is very
likely that the political will to keep
the project alive will be forced to
overcome structural and ideological
issues, or to abandon it completely,
sooner rather than later.
A new, broader crisis, generating
a more complex response
The first act of the current crisis
began in the chic French beach resort
10 year government bond yield (Source: Der Spiegel, Nov 22nd)
of Deauville in mid-October. To the
consternation of their allies, Merkel
and French President Nicolas Sarkozy
announced the end of their ambitious
goal to enforce a stricter stability pact
with automatic sanctions for nations
that break the deficit rules. In return,
Sarkozy supported the German idea
to assign some of the liability for
future financial crises to private-sector
creditors such as banks and to accept
the possibility of bankruptcy for an
insolvent country. The 27 heads of
state and government approved the
deal at the European summit in late
October.
The German plan to automatically
force bondholders to pay up when
financial aid packages are approved
“might seem attractive from a
theoretical point of view,” says ECB
executive board member Lorenzo
Bini Smaghi, but it would “in practice
destabilize markets and have severe
effects on economies in the euro
area.” It could ultimately achieve
the opposite of what was intended,
says the central banker, because
“speculators would take advantage
of the situation, while many small
investors would suffer losses.”
Such evolution and, later on, the horror
stories about Irish banks, caused a
stir in the financial markets, pushing
up risk premiums for the government
bonds of all the ailing countries.

FX TRADER MAGAZINE January - March 2011 19

 FX Macro economics
This second crisis (after the one
centered on Greece last Spring) is for
sure broader in its effects on markets,
with Ireland dragging along Portugal,
Spain and to some extent even Italy
and Belgium, but it is also stirring a
wider debate among policymakers.
On the negative side it has brought a
re-pricing of financial and sovereign
risk due largely to the realization that
the euro zone is opening the door
to the future restructuring of the
sovereign debt of its periphery. But,
at the same time Franco-German
forced co-ordination has given rise to
a significant recalibration of the euro
zone’s new financial architecture: we
have begun to receive clarification
about the future of the euro zone’s
financial rescue mechanism. In
20 FX TRADER MAGAZINE January - March 2011
the statement by finance ministers
of the Eurogroup on November
28, made aside from revealing the
Ireland package, referring to loans
that would be made, post-2013, in
the context of the permanent crisis
management mechanism (European
Stability Mechanism or ESM), the
Eurogroup indicated that:
“In all cases, in order to protect
taxpayers’ money, and to send a clear
signal to private creditors that their
claims are subordinated to those of the
official sector, an ESM loan will enjoy
preferred creditor status, junior only to
the IMF loan”.
The need of some kind of debt
restructuring, if and when
unavoidable, is slowly being
accepted. And such an awareness can
open the way to an increased degree
of acceptance of collective fiscal
responsibility from the stronger
nations.
Most commentators would argue
that the response from the European
authorities has, so far, been clumsy
at best. The financial markets do
not believe that the financial bailout
packages sponsored by the EU and the
IMF will be sufficient to address the
solvency risk plauging the peripheral
European nations. In particular the
Irish rescue package has not gone far
in assuaging panic. In fact, the debt
crisis has initially intensified and
been spreading since the package was

Chair of the Eurogroup - Jean-Claude Juncker
Financial markets do not believe that
the financial bailout packages will be
sufficient to address the solvency risk
plaguing the peripheral European nations
announced only to recede a
bit when the ECB, during
and after the recent monthly
Trichet press conference, showed
up as an aggressive buyer of
peripheral government paper.
Why are financial markets not
happy about the policy response
to the debt crisis? The EU and
IMF have insisted that draconian
austerity programs need to be
implemented for any debt stricken
economy to receive a financial
rescue. The donor countries also
Macro economics FX
want the troubled borrowers to
bear a big part of the bailout costs.
Ireland has to deplete almost its
entire pension reser ves in order
to receive the rescue package.
There is a huge problem with
this approach. Without a much-
devalued euro to stimulate growth
and reflate nominal income levels,
austerity programs can only serve
to crush growth, drive down prices
and worsen the debt arithmetic
in peripheral Europe. This is
why the €85 billion Irish rescue
package has actually triggered
an even bigger selloff in the
bonds of the troubled borrowers,
suggesting that financial markets
do not believe that most of the
debt-laden economies will be able
to ser vice their debt loads in the
future, even with the bailout fund.
The problem is that Spain and
Italy are steadily getting drawn
into the crisis. Their sovereign
spreads have widened significantly
and investors are openly talking
about the unthinkable: a possible
default by Spain. There is no
question that both Spain and
Italy are vulnerable and could be
under attack at any time. There is
no way that the EU or any other
multilateral institution can come
up with the money needed to
stem a Spanish and Italian crisis
— they are simply too big to fail.
So far no country has talked about
an “exit” yet, but if the authorities
cannot find new ways to stem
the crisis sooner rather than
later, the population of the EMU
members will force politicians to
recalculate the costs and benefits
of staying within the euro area.
At that point, a breakup of the
European common currency
would no longer be unthinkable.
The market is going to test the
resolve of policymakers earlier
than I expected a few months ago.
It is actually already doing it now.
In the following tables, showing
in millions of Euro the redemption
schedule (excluding new deficit)
of PIIGS (the famous acronym
FX TRADER MAGAZINE January - March 2011 21
 FX Macro economics
Ireland Greece
for Portugal, Ireland, Italy, Greece
and Spain), it is easy to understand
why: in 2011 a lot of government debt
will need to be rolled (redemption
schedule is heavy for the euro zone’s
banks as well).
To be more complete, including not
only redemption but also projected
Spain deficits and miscellaneous other cash
needs, I would utilize a very recent
analysis from Goldman Sachs (EFSF
is the European Financial Stability
Facility, the entity created in the
middle of the Greek crises with 440
billion Euro firepower; EFSM is the
European Financial Stabilization
Mechanism, a facility administered
from the EU, already in place and
used in the 2008-2009 crises to help
Portugal Eastern European countries, with a
60 billion Euro capacity):
“Between 2011-13, our European
team estimates the gross financing
need of Italy at €803 bn, with €374
bn coming due next year. Much
of this is driven by large principal
repayments coming due (€306 bn).
The next heaviest financing need is for
Spain, where we have a total of €425
Italy bn over the same period, with a gross
22 FX TRADER MAGAZINE January - March 2011
financing need of €210 bn in 2011, of
which €130 bn stems from principal
repayments. For Portugal we estimate
a gross financing need of €78 bn
between 2011-13, with €38 bn coming
due next year alone. For Ireland and
Greece we estimate the gross financing
needs over the next three years at €78
bn and €143 bn, respectively.
The EFSF and EFSM have combined
resources of €315 bn, with €60 bn
from the EFSM and usable resources
of around €255 bn in the EFSF
(where we count only contributions
from core countries, not the headline
€440 bn number). Of the available
€315 bn, about €50 bn have now been
committed for Ireland, which leaves
around €265 bn in free resources.
This free cash could be used as
follows. For example, the EFSF/M
could commit €50 bn for Portugal,
which – with 2:1 IMF co-financing
– would make a €75 bn program,
approximately enough to fully meet the
gross financing needs of the sovereign
over the next three years, as per our
calculations above. With Portugal out
of the way, this would leave about €215
bn in free cash in the EFSF/M, which
– again with 2:1 IMF co-financing
– would permit a program of just over
€320 bn for Spain, which – based on
our numbers above – would suffice to
take Spain fully off the market for two
years.
Would it be enough to take Spain out
of the market for around two years?
This question cannot be answered
with a definite yes or no.”
 Macro economics FX

It has to be acknowledged anyway

that with Spain carrying a public
debt that is roughly twice the sum of
those of Greece, Ireland and Portugal,
the game enters a completely different
level. Especially if we include a private
debt in the banking sector that, despite
not reaching the appalling (in terms of
banking assets/GDP) levels of Ireland
(it is about one third of it), is quite
sizable in absolute terms.

Economically and financially a

solution is possible

To be sure, the debt crisis in the euro

area peripherals is entirely solvable at
least from an economic and financial
point of view. The key reason that
the crisis has deteriorated so badly is
because of gross miscalculations on
the part of policymakers. It is true, a
combined United States of Europe
would be no paradise: the very
recent explosion of debt in Ireland,
Greece, Spain, Portugal and the other
peripherals has made sure of that. But
if you bundle Europe’s debts together
it is little worse than the US, a little
less healthy than the UK, and a lot
less weird than Japan. Europe’s annual
budget deficit would probably be
manageable – maybe 6 or 7 per cent
of GDP. The total stock of debt is big.
A debt-to-GDP ratio peaking at 90
per cent is dangerous territory, as tax
revenues might not meet the interest
bill. Overall, though, such an entity
might well be able to make its case to
the markets.
Besides, the peripheral debt debacle
is not a sovereign debt crisis in the
EU Finance Ministers discussing stabilization mechanism ((Georges Gobet/AFP/Getty Images)
T h e p er i p h er a l d e b t d e b a c l e
i s n o t a s o v er e i g n d e b t c r i s i s
i n th e tr a d i ti o na l s en s e
traditional sense. Strictly speaking, it Therefore, in a strict sense, there
is a local debt crisis within a currency should not be any “country solvency
union. The world has experienced risk.” The Irish solvency crisis is to
many episodes of sovereign debt the euro zone what the state solvency
crises in recent history, all of which crisis of California is to the U.S.
have shared a common attribute: a
large amount of foreign currency- The solution could actually be quite
denominated debt is the key culprit simple: all it would take is for the
of all previous fallouts and crises. European Central Bank (ECB) to buy
The debt crisis in peripheral Europe the paper of the troubled borrowers
is different— it involves no foreign- and finance the purchases by printing
currency debt and all liabilities of the money. The fact that there is no foreign-
troubled countries are expressed in currency debt in the peripherals has
the local currency: the Euro. The whole given the ECB an “unlimited” ability
area current account is pretty much in to make sure that the debt obligations
balance and the debt is owed to each of member countries are totally met.
other among the member countries. The only limit on the ECB is how

FX TRADER MAGAZINE January - March 2011 23

 FX Macro economics
Spanish Finance Minister Elena Salgado
Sp a i n a n d It a l y a r e s t e a d i l y
g e t ti n g d r awn i nt o th e c r i s i s
much inflation the central bank is
willing to create. ECB’s bond purchases
have been shrinking since it started
in May 2010, despite the fact that
the debt crisis has been raving. Only
recently president Jean-Claude Trichet
has indicated that the central bank
may recalibrate its bond purchase
program to drive down the spreads
of troubled borrowers. The ECB will
continue to buy debt, but will do so
on a sterilized basis. What the ECB is
doing is effectively redistributing bond
risks as well as money supply within the
euro zone. By buying the debt of the
troubled countries, the ECB is assuming
the solvency risk of the troubled debt
24 FX TRADER MAGAZINE January - March 2011
while funneling fresh money supply
into the troubled borrowing countries.
This effectively defuses default risk.
At the same time, the central bank is
mopping up liquidity in the stronger
economies such as Germany and France
via sterilization. By swapping the bond
risk through the redistribution of
money supply within the euro zone, the
ECB is hoping to bring down the risk
premium and address the debt crisis
without creating too much money.
Only time will tell whether the ECB’s
ultra-cautious attitude toward creating
money makes sense or not.
The message that the ECB is trying to
pass along is that the burden of renewed
fiscal discipline has to be felt completely
by each national government. They
can only buy bonds as an extraordinary
and temporary measure to keep the
transmission of monetary policy
functioning. Only credible fiscal
behavior will, in the end, bring the
cost of financing back under control.
They may not say it clearly but, they are
buying time for peripheral governments
to comply with fiscal discipline.
But in order to comply PIGS (PIIGS
without Italy) need more time... time
that markets are not willing to concede
any more. And, if Spain is dragged in,
very likely the EFSF is not going to be
enough. An enlargement of the EFSF
or, even better, a common EuroBond
issuing mechanism will be needed
(I suggest to read the Bruegel think
tank’s Blue Bond proposal - http://
www.bruegel.org/publications/show/
publication/the-blue-bond-proposal.
html - to get a feel of what a concrete
plan could be). Politicians from core
countries are not there yet. But, as we
are experiencing, this process will keep
being a reactive one, not a proactive
one. Renewed market turmoil will force
new progress.
Political will or no way out ?
At the moment a demise of the Euro
is not inevitable, economically and
financially at least. It will depend
on sacrifices member states will be
willing to sustain or on costs they
will be ready to stand to abandon the
project. In the end it will depend on
their political will.
 Macro economics FX

A break-up might happen in

one of two ways. One or more
weak members (Greece, Ireland,
Portugal, perhaps Spain) might
leave, presumably to devalue their
new currency. Or a fed-up Germany,
possibly joined by the Netherlands
and Austria, could decide to junk
the euro and restore the D-mark,
which would then appreciate.

In either case, the costs would be

enormous. For a start, the technical
difficulties of reintroducing a
national currency, reprogramming
computers and vending machines,
minting coins and printing notes
are huge (three years’ preparation
was needed for the euro). Any hint
that a weak country was about to
leave would lead to runs on deposits,
further weakening troubled banks.
That would result in capital
controls and perhaps limits on bank
withdrawals, which in turn would
strangle commerce. Leavers would
be cut off from foreign finance,
perhaps for years, further starving
their economies of funds.
The calculation would be only
slightly better if the euro escapee
were Germany. Again, there
would be bank runs in Europe as
depositors fled weaker countries,
leading to the reintroduction of
capital controls. A German banking
system collapse, or a very expensive
bail out, would most likely follow
any departure from the Euro.
Germany, remember, is the system’s
A collapse of the euro would
g enerate unpre c e dente d te chn ica l ,
economic and political costs
biggest creditor. German exporters,
having been big beneficiaries of
a more stable single currency,
would howl at being landed once
again with a sharply rising D-mark.
Finally a German departure from
the Euro, after reducing the landed
once again with a sharply rising D-
mark. Finally a German departure
from the Euro, after reducing the
price competiveness of its exporters,
undermining corporate balance
sheets and potentially devastate the
German financial system, will lead to
protectionist measures being applied
against German exports from the
single most important export market
that Germany has.
Pure economic arguments also fail
to take into account that the euro
is as much a political project as an
economic one. There is a massive
amount of political capital wrapped
up in the formation of the euro zone
because it was the culmination of
more than fifty years of compromises.
It would take a catastrophe rather
than a mere crisis to undermine their
efforts.
A collapse of the euro would bring
with it unprecedented technical,
economic and political costs. Breaking
up the euro is not unthinkable, just
very costly.
The Euro is a dysfunctional monetary
union, and should never have been
created with either the structure or

FX TRADER MAGAZINE January - March 2011 25

 FX Macro economics

the membership that it currently

has. Having created it, however,
those who rushed to sign up to
the union – including Germany
– will just have to make the
best of it. Exit is not a viable
economic option.

The longer term

Policymakers are still on time

to try and save the Euro and the
important message of integration
the common currency is bringing
along. Aggregate economics and
financials for the euro zone are
still under control and success is
in the end a question of political
will mixed with lack of a passable
alternative.
It will take compromises and
sacrifices by all players and
such complex management
cannot guarantee a merry end
game. Strong countries will
have to redistribute wealth.
Weaker countries will have to
go through painful austerity.
The ECB will have to soften
the ideological stance of being
the last defender of monetary
orthodoxy. The private sector
will have to accept some level
of haircuts and restructuring
in their supposed ‘risk-free’
holdings.
All these are necessary conditions.
Nobody knows if they are going
to be sufficient.
Irish citizens protesting against austerity measures
The difference in competitiveness
and productivity between core and
peripheral Europe is the mother of all
strains and the seed of any future crisis
Besides all this could prove
insufficient if the badly needed
new integration mechanism or
path will fail to generate a real
economy convergence in the very
long term. We have witnessed
a double-helix of causes for the
euro zone debt crisis. On one
chain (Greece and Portugal) it is a
problem of a bloated government
sector, chronic fiscal profligacy
and weak competitiveness.
On the other chain (Ireland and
Spain), it is a credit-fuelled asset
bubble that burst, leaving the
banking system in tatters. So the
real solutions are also different:
cleansing the banking sector for
Spain and Ireland; downsizing
the state sector and increasing
productivity for Greece and
Portugal. But it is especially the
difference in competitiveness and
productivity, so easy to observe
now between core and peripheral
Europe, that is the mother of all
strains we currently have in front

26 FX TRADER MAGAZINE January - March 2011

 Macro economics FX

of us and will likely be the seed
of any future crises, even after
controlling this one.
Successfully correcting these
imbalances is going to be a very
long journey. Along such a journey,
increased unemployment and
steep fall in wages, for those who
keep a job, are almost a certainty
for the weaker countries. For
now things like riots or national
strikes in places like Greece
and Portugal are not effective
forces for political change.
The electorate may vent their
anger in this way but unless
pro-EMU governments can be
overthrown in national elections
by anti-EMU parties little will
change. And right now, there
is no such force for political
change. Generally speaking ,
major opposition parties are
not seeking withdrawal, just an
alternative way of coping with
the pain of the bailouts. But
could this change in the future?
Say in five or ten years time? I
think this is possible because
with time declining average
wealth could be seized upon by
both the electorate and possibly
political parties as cause for an
alternative to EMU membership.
At the moment, politicians are
successfully arguing that the
economic consequences of being
outside the EMU are far worse
than those of staying inside. But,
if things don’t change in coming
years this argument may clearly
become harder to sell to the
electorate. If the Euro survives
it could eventually be a smaller
Euro.
Alessandro Balsotti

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 FX hedge funds

CURRENCY TRADING :
T H E S P E C U L AT O R’ S D R E A M
O R A N A C C E P TA B L E H E D G E
F U N D S T R AT E G Y ?

I was asked the other day whether
I thought that currencies were
an acceptable asset class for
hedge funds, the implication,
presumably, being that otherwise
they were just the speculator’s
dream. The following comments
reflect my own personal opinions.
To address the last point first, I would
suggest that any liquid market
with volatility is a speculator’s
dream and the currency markets
have, and always have had, those
two characteristics in abundance.
Of course, ignoring speculation
for speculation’s sake, currencies
play an important part in almost
any investment made by a global
investor. But I will come to that later.
In the context of hedge fund
managers, probably the best-
known name is George Soros
and he became the best-known

28 FX TRADER MAGAZINE January - March 2011


name b e cause he wa s cre dite d
with ta king down Sterling at
the time of the E MU crisis
when the U K were force d to
leave the Europ ean Monetar y
Union . S oros wa s repute d to
have ta ken $1 billion out of
the market on that par ticular
transaction, which wa s, at the
time, an enormous amount
of mone y - inde e d , it is not
to o shabby a sum to day. That
wa s, p erhaps, the epitome of
a ‘macro’ trade or investment,
but it wa s, ne ver theless,
sp e culation for sp e culation’s
sa ke and there’s nothing wrong
with that.
Of course, pe ople have be en
trading currencies for profit
for many years prior to Mr.
S oros hitting the headlines,
howe ver, the size and liquidit y
of the market in the primar y
currencies is larg ely the result
of he dg ing activities by both
financia l and non-financia l
users of the markets and not
spe culative activit y. For the
most part, currency trading has
a lways be en carrie d out on the
inter-bank market, a lthoug h
there has been a huge amount of
activit y on the exchang es since
the currenc y f utures contracts
were introduce d in the late
1970s.
I suppose it’s a matter of
semantics, but any time that
you don’t he dg e a currenc y
risk inherent in an investment
position, or any other
commercia l position for that
matter, you are spe culating
that the asset you have boug ht
will increase in va lue both
intrinsica lly and vis-à-vis the
desig nate d currenc y of that
asset.
If a copper producer wished to
he dg e its f uture production,
then it can sell copper for ward
by selling copper f utures, but
that transaction is, like most
commercial hedges, an arbitrage
between two similar assets - in
this case, raw copper still in the
g round or perhaps a yard f ull
of unprocesse d scrap, he dg e d
by a forward copper sale on the
L ME , or COME X . Howe ver,
if the obje ctive is to he dg e
the currenc y risk within an
investment – say a Euro investor
who has boug ht US stocks -
then that investor may de cide
to sell for ward Dollars and buy
for ward Euros to the va lue of
those US stocks. Presumably,
hedge funds FX
the Euro investor would
orig ina lly have sold spot/cash
Euros and boug ht Dollars to
pay for the US stocks. But my
point is that, unlike most other
he dg ing transactions, whate ver
happens, any transaction you
do to he dg e a currenc y results
in an offsetting transaction in
some other currenc y.
Excepting the most die hard
anti-capitalists, I think it is fair
to say that most pe ople accept
that, certa inly in the f utures
and commodit y markets,
‘spe culators’ provide liquidit y
in the market. It is of ten the
case that spe culators ta ke
the other side of the he dg ing
transactions and thus provide
the liquidit y to the markets.
Nobody belie ves or would
suggest that speculators do this
for any altruistic reason - they
do it be cause the y belie ve the y
will ma ke a profit. It is a fact
that, often hedgers lose money
on their he dg ing positions but
FX TRADER MAGAZINE January - March 2011 29
 FX hedge funds
not always and that, of course, is
compensated by a chang e in the
value of their physical positions.
Thus, a commodit y producer
may, in addition to he dg ing
his production on the London
or US commodit y markets,
a lso enter into a currenc y
he dg ing transaction in order
to eliminate or mitig ate the
inherent currency risk that exists
within those initial commodity
he dg ing transactions. For
example, a European chocolate
manufacturer may he dg e his
cocoa re quirements for the
next t welve months utilising
the commodit y markets, for
the most part, hedging through
a Dollar contract. When the
producer comes to buy the
physica l cocoa , he may well
be doing that in Euros and
therefore, will have to f urther
hedge the currency risk between
his Dollar denominated cocoa
30 FX TRADER MAGAZINE January - March 2011
throug hout the world in
Eastern Europe, Asia , Africa
and S outh America de velop,
we are seeing increased activity
and increase d liquidit y in
what use d to be ca lle d “minor ”
currencies. Thirt y years a g o,
few pe ople would spe culate in
the Australian or New Zealand
Dollar and the majorit y of
emerging market currencies were
subje ct to exchang e control.
This has changed - not entirely,
but to a ver y large extent - and
now there is a g rowing market
in trading in these “minor ”
currencies, because the markets
hedge and his Euro denominated are considerably more liquid
physical transaction. It is often than the y use d to be.
the currenc y spe culator that
will ta ke the other side of that To g et back to the orig ina l
Euro/Dollar he dg ing trade, question, I cannot se e why
but as I have a lready sa id, the spe culation or trading in
spe culator is not doing this for currencies is any less acceptable
a ltruistic reasons, but in order than spe culation or investing
to ma ke a profit. Af ter a ll that in any other asset or financia l
is why investors buy stocks and market. Furthermore, when a
he dg e f und mana g ers run long Central Bank decides to enter
short- e quit y, merg er arbitra g e the market in order to blatantly
or convertible bond portfolios. manipulate that market, either
by buying their own currenc y
In today ’s e conomic in order to bolster it, or selling
environment, where economic their own currency in order to
chaos abounds in most of the depress it, is that spe culation
world, sovereig n debt risk or investment ? If we accept
has be come a rea lit y, Asia is one definition of spe culation,
booming and the BRIC nations which is “an investment that
are becoming the new economic went wrong ” and if we accept
powerhouses, fluctuations in (my belief not base d on any
the currenc y markets across scientific fact or research) that
the world have become a daily most inter ventions by Centra l
occurrence. Furthermore, Banks end up losing mone y,
as various emerg ing markets then we can accept that most
 hedge funds FX

IMF has warned that continued

inter vention by Central Banks
( in this case, Japan) combine d
with the expectation that the
se cond wave of Quantitative
Easing is just around the
corner will ine vitably lead to
hig h volatilit y in the currenc y
markets, a view endorse d by
the Centra l Bank of Bra zil.
Althoug h that may provide
great trading opportunities and
be manna from He dg e Fund
Mana g ers’ heaven, it is not
their fault.

He d g e f unds ma ke pro f i ts
by identif ying an d ta king
inter ventions by Central Banks In my opinion, pension f unds advanta g e of ineffi c i en c i e s in
are indeed speculations in their speculate every day by investing the markets, wh ich are o f ten
own rig ht. I would g o f urther in stocks that the y hope will exac erb ate d by h ig h vo lati l i t y.
and sug g est that the y are a g enerate a profit. That is He d g e f und acti vi t y wi l l
blatant and obvious - inde e d, one of the definitions of both ultimately reduce or eliminate
of ten de clare d - attempt to “spe culation” and “investment” market inefficiencies - but, in
manipulate the market, which, in the Oxford Shorter th is ca se, market insta b i l i t y
if carrie d out by a he dg e f undDictionar y. The me dia and or vo latil it y resu lts f rom th e
mana g er, would result in certain political commentators Centra l Ban k’s inter venti on
se verely rappe d knuckles at would have us belie ve that for the (their) “ Nati ona l
best, and possibly a politica l speculation is outright gambling Interest” is l ikely to c ontinu e
me dia inspire d witch-hunt. and, as such, reprehensible. I to provide investment trading
Gordon Brown’s sale of all or find it ironic that, if you g o to and sp e cu lative opp or tun i ti e s
most of the UK g old reser ves a UK racecourse and have a bet wh ich he d g e f und mana g er s
at what is close to the lows of with the Tote, you are advise d can and shou ld ta ke a dvanta g e
the g old market in the last few that you have investe d £5 or of, in the interest o f th e ir
years is a perfe ct example of whate ver sum your capita list investors .
g overnment inter vention that pocket permits - presumably
went wrong . a bet to win is a spe culation My c onclusion, th ere f ore , i s
whereas an each way bet is a that currencies are not only an
When considering speculation he dg e d transaction. acceptable asset class for hedge
rationa lly, if that is possible, f unds, but to day, are rath er
it is difficult to come to any As a fina l word, the headlines more interesting .
other conclusion than a ll and in the Financia l Times today,
any investment is spe culation. as I write this, report that the De rmot S . L . B u tl e r

FX TRADER MAGAZINE January - March 2011 31

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 FX FUNDAMENTAL ANALYSIS

Which currency will be

the strongest in 2011?
GOLD

Throug hout the histor y of render them wor thless) over th e c entra l b an k mana g e s
pap er mone y (fiat mone y) and time. ( There have been 20 the population’s expectations
not lea st in the la st de cade, currencies b e come wor thless regarding the erosion of their
centra l banks print mone y in the 20th centur y a lone). saving by claiming 2-3% is
at will and acceptable
i m p o r t a n t l y, (excluding
in excess of o f c o ur s e th e
their nationa l key consumer
G D P g rowth . s p e n d i n g
This is i tems o f f o o d
i n f l a t i o n a r y. an d en er g y ! ) .
Under a paper
c u r r e n c y C e n t r a l
r e g i m e , banks are
monetar y inflationists
inflation at heart.
results in an That is never
erosion of clearer that
the currenc y ’s the Fed’s move
va lue. This to bail out
is esp e cia lly the economy
beneficial ag ain via
when a QE2. It is
countr y ha s cr ystal clear
debts it cannot repay. Through S im i larl y i t re du c e s th e now, if it was ever in doubt,
devaluing its currency the population’s savings by slowly that central bankers, the world
country can effectively reduce increasing the prices of ‘’real’’ over, fear deflation more than
its debts (or in the worst case assets and goods. Of course inflation.

34 FX TRADER MAGAZINE January - March 2011


Over history one of few tangible
assets that has remained
‘’money’’ is gold. Before America
dropped the gold standard the
world considered gold not as
a commodity, but as another
currency.
While the world’s major
economies print money at
will (money supply growth
of 10%+ pa) supplies of the
metal are growing at only 1.5%
a year. Which is more likely to
increase in value ? Gold, as a
finite currency, will increase in
value against not just the dollar,
but sterling and the euro too.
Over history one of few tangible assets
that has remained ‘’money’’ is gold
FUNDAMENTAL ANALYSIS FX
Similarly the case can be made
for other commodities that are
in finite supply.
Perhaps the ultimate folly is the
belief that a small piece of paper
and cotton, with numbers printed
on it, that has no fundamental
asset backing except “full faith
and credit” in the government,
is worth anything at all and yet
it is considered to be ‘’money’’.
Previous Fed Chairman
Greenspan Greenspan famously
argued the case for returning to
a gold standard in his 1966 paper
“Gold and Economic Freedom’’.
While this is probably not realistic
the reality through history is that
no paper currency maintains its
purchasing power over the long
term. In the face of globalisation,
no government wants a strong
currency. However some countries
are more desperate and need a
weak currency more than others.
Those that argue that gold is a
‘’bubble’’ miss the point. The
bubble is the printing of paper
money by Government’s globally.
Gold only reflects that.
Which currency will be the
strongest in 2011? The answer
is probably none of the paper
currencies compared to other hard
assets and other stores of wealth
but clearly the US is leading the
charge towards devaluing their
‘’money’’ faster than most.
Andrew McKay
FX TRADER MAGAZINE January - March 2011 35
 FX TECHNICAL ANALYSIS

MAJORS ANALYSIS
Retrospect and Prospect
On the grounds of the New Year, let’s look back at the majors’ charts of
2010, analyze them with the Ichimoku Kinko Hyo charting system, and
calculate possible directions of future movements..
For a better understanding of Ichimoku Kinko Hyo analysis, please refer to the author’s introductory
article in the October 2010 edition of FX Trader Magazine.

EUR/USD Retrospect trend. From that signal, the price it reached the K ijun-sen level.
fall down more than 1400 pips Then another Tenkan-sen/
On the EURUSD Weekly chart, through the next six weeks, and K ijun-sen cross happened, but
the year started with a weak beat the low record of the last in this case a bullish cross at the
Tenkan-sen/Kijun-sen down three years. During these weeks, ver y end of Aug ust. The price
cross, which was supported by the price marched down ver y fast crossed up the K ijun-sen, and by
the Monthly K ijun-sen. At this and left behind the K ijun-sen. the end of September the Chikou
time the price was clearly below This was the sign of a potentially Span also crossed up the price,
the Week ly K ijun-sen too, the beginning disequilibrium on the however the Kumo future still
Chikou Span crossed down the market. Finally K ijun-sen turned remained bearish. At this stage
price, and the future Kumo f lat and started to attract the the price reached the top of the
started to turn bearish. These price back to set the harmony thin Kumo cloud, and ranged in
facts indicated possible bearish of the market back. This led the the body of it through the whole
movements right in the beginning price to move up from June till October. The facts that the
of the new year. In Februar y,
when Chikou Span was still
moving in the body of the Kumo,
the price started to range, and
haven’t closed below the Kumo
through five weeks. Finally the
price could break out from the
Kumo on the down side, however
the Chikou Span only confirmed
the movement with a Chikou
Span breakout six weeks later,
at the end of April. This was a
perfect sign of the new bearish Figure 1: EURUSD Weekly

36 FX TRADER MAGAZINE January - March 2011


Figure 2: EURUSD Daily
Ch i ko u Sp an d idn’t supp or t
any kin d o f b u l l ish brea kouts
f rom th e Kum o, the f uture
Kum o wa s sti l l qu ite b earish,
an d th e pri c e l ef t b eh ind the
K ijun- s en s e c on d time th is year
l e a d to a d i s e qu il ibrium a g a in,
an d th e pri c e move d b ack to
K ijun- s en , b ut staye d in the
b o d y o f th e Kumo a l l a long
f rom O c to b er. That cause d
that th e EU RUS D currenc y
p a ir b e cam e untradeab le for
th e rema in d er of the year, a s
th e Kum o repre s ents an unsure,
unpre d i c ta b l e rang ing zone.
On th e Da i l y timeframe,
th e y e ar star te d with f u l ly
c onf irm e d an d supp or te d
b e aris h s i g na l s , a s b oth Ch ikou
Sp an an d th e pric e wa s b elow
all Ic h im o ku c omp onents,
th e Ten k an- s en crosse d down
K ijun- s en pre vi ously and the
Kum o f uture turne d b earish
to o. Th e Kum o supp or te d the
wh o l e d own m ovement from
Januar y ti l l th e m idd le of Ju ly,
th en , th e pri c e c ou ld brea k out
TECHNICAL ANALYSIS
on the upside of the Kumo, it
supp or te d the bu l l ish moves
til l at the end of Novemb er.
EUR/USD Prosp e ct
Currently the We ekly EU RUS D
char t is stil l ver y unde cide d .
Bu l l ish sig ns are the bu l l ish
Ten kan-sen/Kijun-sen cross
that happ ene d pre viously, the
bu l l ish Kumo f uture t wist, and
the f act that the Ch ikou Sp an
c ou ld brea k up the pric e, and
the pric e is ab ove the Kijun-
sen . Howe ver the pric e shou ld
brea k out from the Kumo on
Figure 3: GBPUSD Weekly
FX
the upside with the Ch ikou-
sp an to ma ke the bu l l ish sig n
c onfirme d . As long a s these
c omp onents are staying in
the b o dy of the Kumo, the
movements are unpre d ictab le.
It is a lso imp or tant, that the
Month ly char t is qu ite b earish
at th is time, howe ver the
Ch ikou Sp an is stil l ab ove the
Kumo. The ma in supp or t and
resistanc e le vels are the Kijun-
sen, the S en kou Sp an A and the
S en kou Sp an B l ine s .
G B P/USD R etrosp e ct
After spending the half 2009
year in the body of the Kumo
on the GBPUSD Weekly chart,
the price could finally broke out
from it on the downside at the
end of Januar y. Prior to that a
bearish Tenkan-sen/Kijun-sen
cross signaled the potential
down movement. However the
Chikou Span couldn’t confirm
it, as it was moving in the thick
body of the Kumo during the
whole move.
FX TRADER MAGAZINE January - March 2011 37
 FX TECHNICAL ANALYSIS
Figure 4: EURUSD Daily
It wa s a sp e c ta c u lar movement,
an d pri c e n e arl y touche d the
la st y e ar ’s l ow when it reache d
i ts l owe st l e ve l in May. In
May th e Ch i ko u Sp an bro ke
o ut f rom th e Kumo to o, but
at that p o int th e pric e move d
to o f ar f rom the Kijun-sen,
s o th e harm ony of the market
f e l l o ver an d th e Ch ikou Sp an
ha d to attra c t th e pric e b ack to
d i ss o lve th e d i s e qu il ibrium and
cre ate e qu i l i bri um . The pric e
re a c h e d th e K ijun-sen le vel in
Ju l y, marc h e d throug h it and
ha d n’t stopp ti l l it reache d the
top o f th e Kumo. The pric e
wa s rang ing in the Kumo til l
S ep tem b er, an d then it trie d to
bre a k o ut on the upside with
m o d erate su c c e ss, a s Ch ikou
Sp an wa s sti l l moving in the
b o d y o f th e ver y th ick Kumo.
On th e Da i l y c har t the b earish
tren d wa s a l re a d y c onfirme d on
th e b e g inn ing of 2010. Af ter
th e Ch i ko u Sp an c onfirme d
th e b e ari s h Kum o brea kout, the
pri c e f e l l d own in t wo maj or
38 FX TRADER MAGAZINE January - March 2011
waves more than 2000 p ips .
The waves were ar ticu late d
by t wo Ten kan-sen/Kijun-sen
crosses, and were supp or te d by
the b earish Kumo. Fina l ly at
the end of June the pric e bro ke
out from the Kumo on the
upside and it marche d up with
the supp or tanc e of the bu l l ish
Kumo cloud til l the end of
Novemb er.
G B P/USD Prosp e ct
The p icture is a b it m ixe d
on the We ekly char t, a s the
pric e is ab ove a l l Ich imo ku
Figure 5: USDJPY Weekly
Comp onents, the f uture Kumo
is bu l l ish and the Ten kan-sen
is ab ove Kijun-sen to o, but
the Ch ikou Sp an is stil l in the
Kumo and the Month ly char t
is stil l qu ite b earish . The most
imp or tant supp or t le vel is the
Kijun-sen at th is sta g e.
USD/J PY R etrosp e ct
The US D J P Y star te d the year
with a m inor c onso l idation,
a s in Febr uar y a wea k bu l l ish
Ten kan-sen/Kijun-sen cross
happ ene d and by March the
pric e reache d the ver y top of
the Kumo cloud . Af ter that
the pric e star te d to rang e
til l the end of June, when
a f u l ly c onfirme d b earish
Kumo brea kout star te d a hug e
down r un . The movement
wa s supp or te d by the b earish
Kumo, and a l l other Ich imo ku
c omp onents to o, f ur thermore
the extremely b eari sh Month ly
char t wa s ra ise d the imp or tanc e
of the b earish sig na l on the
We ekly char t, so it wa s an ea sily

Retrospect and prospect analysis of the
majors with Ichimoku Kinko Hyo
On the grounds of the New Year, let’s
look back to the major charts of 2010
and analyze them with the Ichimoku
Kinko Hyo charting system, and also
calculate the possible direction of
the future movements. For a better
understanding of Ichimoku Kinko
Hyo analysis, please refer to the
author’s introductory article in the
October 2010 edition of FX Trader
Magazine. EURUSD Retrospect
On the EURUSD Weekly chart, the
year started with a weak Tenkan-
sen/Kijun-sen down cross, which was
supported by the Monthly Kijun-sen.
At this time the price was clearly below
the Weekly Kijun-sen too, the Chikou
Span crossed down the price, and the
future Kumo started to turn bearish.
These facts indicated possible bearish
movements right in the beginning
of the new year. In February, when
Chikou Span was still moving in the
body of the Kumo, the price started
to range, and haven’t closed below the
Kumo through five weeks. Finally the
price could break out from the Kumo
on the down side, however the Chikou
Span only confirmed the movement
with a Chikou Span breakout six
weeks later, at the end of April. This
was a perfect sign of the new bearish
trend. From that signal, the price fall
down more than 1400 pips through
the next six weeks, and beat the low
39 FX TRADER MAGAZINE January - March 2011
TECHNICAL ANALYSIS
record of the last three years. During
these weeks, the price marched down
very fast and left behind the Kijun-
sen. This was the sign of a potentially
beginning disequilibrium on the
market. Finally Kijun-sen turned flat
and started to attract the price back to
set the harmony of the market back.
This led the price to move up from June
till it reached the Kijun-sen level. Then
another Tenkan-sen/Kijun-sen cross
happened, but in this case a bullish
cross at the very end of August. The
price crossed up the Kijun-sen, and by
the end of September the Chikou Span
also crossed up the price, however the
Kumo future still remained bearish. At
this stage the price reached the top of
the thin Kumo cloud, and ranged in the
body of it through the whole October.
The facts that the Chikou Span didn’t
support any kind of bullish breakouts
Figure 1: EURUSD Weekly
FX
from the Kumo, the future Kumo was
still quite bearish, and the price left
behind the Kijun-sen second time this
year lead to a disequilibrium again, and
the price moved back to Kijun-sen,
but stayed in the body of the Kumo
all along from October. That caused
that the EURUSD currency pair
became untradeable for the remainder
of the year, as the Kumo represents an
unsure, unpredictable ranging zone.
On the Daily timeframe, the year
started with fully confirmed and
supported bearish signals, as both
Chikou Span and the price was below
all Ichimoku components, the Tenkan-
sen crossed down Kijun-sen previously
and the Kumo future turned bearish
too. The Kumo supported the whole
down movement from January till
the middle of July, then, the price
 FX TECHNICAL ANALYSIS
Figure 6: USDJPY Daily
pre d i c ta b l e an d wel l supp or te d
m o vem ent . In O cto b er the pric e
b e at th e l ow re c ord of the la st
f o ur te en y e ar s ( !) and touche d
th e l owe st l ow o f 1995.
On th e Da i l y c har t the pric e
tri e d to bre a k out from the
Kum o on th e downside in
Marc h an d a l s o in May. The
f ir st attemp t wa s unsuc c essf u l
b e caus e th e Ch ikou Sp an
b o unc e d up f rom the top of
th e Kum o an d i t a slo b ounc e d
th e pri c e b a c k . The se c ond
attemp t wa s f ina l ly c onfirme d
by th e Ch i ko u Sp an, howe ver
a f ter th e bre a kout the pric e
re tra c e d a b i t b a ck to the Kumo
an d star te d to f a l l on ly af ter a
b e aris h Ten k an-sen/Kijun-sen
cro ss happ en e d in June.
US D / J P Y Pro sp e ct
On b o th We e kl y and Month ly
c har ts th e p i cture is ver y
b e aris h , a s a l l Ich imo ku
c omp on ents s h ows the same
b e aris h p i c ture , so these f acts
40 FX TRADER MAGAZINE January - March 2011
supp or ts down movements
on ly henc efor ward . The Kijun-
sen is currently the next most
imp or tant resistanc e le vel
on the h ig her timeframes of
US D J P Y.
USD/CHF R etrosp e ct
The ne w year wa s star te d with
a wea k bu l l ish Ten kan-sen/
Kijun-sen cross on the We ekly
US D C H F char t. In sp ite of the
b ottom of the Kumo b ehave d
as a ver y strong resistance level
and hadn’t a l low the pric e to
brea k it throug h for ten we ek s,
Figure 7: USDCHF Weekly
finally the price reached the top
of the Kumo by May and instantly
broke out on the upside with
hig h volume. In spite of being
a confirmed breakout, the price
couldn’t keep its hig h level and
started to fall back into the body
of the Kumo. It was staying in
the Kumo for five weeks, when
finally a bearish Tenkan-sen/
Kijun-sen cross happened and
the price also broke out from
the Kumo on the down side with
the confirmation of the Chikou
Span. From Aug ust till October
the price was continually
falling and it hit its record low
level at 0.9462, then a small
consolidation period started.
On the Daily chart January was
started with a strong bullish
Tenkan-sen/Kijun-sen crossover.
The bullish movement held
till March, then the price
consolidated in the Kumo cloud
till the end of April. A new
bullish wave was confirmed when
the price broke out from the Kumo
with the supportance of the Chikou

Figure 8: USDCHF Daily
Span, right after a bullish Tenkan-sen/
Kijun-sen cross happened. From this
level the price marched up nearly
1000 pips. Finally in the middle of
June a bearish Tenkan-sen/Kijun-
TECHNICAL ANALYSIS
sen cross happened and the price
fall down more than 1600 pips till
the middle of October. Currently
the price is consolidating on the
Daily charts too.
FX
USD/CHF Prospect
B oth Month ly and We ekly
char ts are b earish, so down
movements have more
possibility than up movements.
Howe ver on the We ekly
timeframe the picture shows a
possible disequilibrium, as the
pric e g ot f ar from the Kijun-
sen, and the Kijun-sen turne d
flat. This indicates a possible
consolidation period. The next
most important resistance line
here is a lso the le vel of Kijun-
sen .
Gabor Kovac s
 FX sTRATEGY

“S o ciet y Says”

As a young girl growing up in the
northern suburbs of Chicago, I found
competition and pressure regularly. At
first it was who had the cutest shoes (or
if you were a boy, who ran the fastest).
Then it was who had the biggest house
and the most expensive car. In high
school depending on who you were
friends with it was who had the best
GPA, class standing, or who could be
the craziest and have the most fun.
Throughout most of h i g h s c h o o l I
wa s a straight A student and it was
important to my family (and me, I
guess) to get the best grades.

42 FX TRADER MAGAZINE January - March 2011

 strategy FX

It w a s a l s o i m p o r ta nt t o b e “Society says” we are supposed esp e cia l ly a s more and more

involve d, so I was a che erleader to do this and supposed to do people depend on that person.
(my voice ser ved me well while that. We are supposed to go to
f i l l i n g o r d e r s o n th e C M E colleg e, graduate, g et a great Mostly I have followed along
tr a d i n g f l o o r i n th e S & P 5 0 0 j o b , ma rr y a g r e a t g uy / g a l , the “so ciet y says” p ath ;
Fut ur e s p i t ) a n d y e s , I wa s a have children, work really hard however, I have questioned it
synchronized a fe w times and
s w i mm e r ! O n c e chosen the ro ad
I applied to less travele d .
colleg es and g ot As on ly 1 of 7
accepted at all fema les in the
of the schools I S&P 500 Futures
applie d to, I let p it ( p opu lation
g o a l i t tl e . O r 600 men) I
ma y b e a l o t . A s chose to go
soon as I took against the norm
my e y e s o f f my and c omp ete d
schoolbooks suc c essf u l ly in a
I f o un d an ma le dom inate d
unbelievable so ciet y. One
a m o unt of “so ciet y says”
f un . And, r u le I won’t
p e e r p r e s s ur e . cha l leng e ha s
When I g ot to to do with
colleg e it was the markets
no d i f f e r e nt , themselves.
b ut th i s ti m e You can agree to disagree with When it
my
w e r e n’t
p a r e nt s
the masses, but you cannot deny
th e r e
c omes to the
markets, the y
t o l a y d o wn
th e l aw a n d
the influence on the markets are a l l A B O U T
so ciet y. As a
s tr a i g ht e n m e trader I am here
o ut i f I v e e r e d to cap ita l ize on
o f f c o ur s e . I a m s ur e y o u c a n t o p ut o ur c h i l d r en thr o u g h market movement and th is
r e l a t e t o my s t o r y i n o n e wa y c o l l e g e a n d th en o f f t o the is where I ac c ep t whate ver
o r a n o th e r. promised land. It rarely works “so ciet y says”. The markets
that linearly, and is not so easy are driven by emotions all over
After college, the peer pressure for most. The pressure can b e the g lo b e : Jap an’s, Ch ina’s,
d i d n o t e n d , a n d w h en I g o t unb earab le. B el ie ve me, I am Europe’s, Britain’s, Australia’s,
i nt o th e w o r ki n g w o r l d I a r u le fo l lower by nature, and New Zealand’s, Switzerland’s,
f e l t s o m e th i n g d i f f er ent . It these are the adu lt r u les, but Canada’s, Mexico’s and many
w a s g r o wn u p p e er p r e s s ur e the y can a lso cause some one others . We of ten refer to
a n d I c a l l e d i t “s o c i e t y s a y s”. to c o l lapse under pressure th i s a s th e “m i n d s e t o f th e

FX TRADER MAGAZINE January - March 2011 43


ma s s e s”. Yo u c a n a g r e e t o
d i s a g r e e w i th th e ma s s e s , b ut
you cannot deny the influence
o n th e ma r ke t s . W ha t e v er y o u
th i n k th e ma r ke t i s g o i n g t o
do may var y g reatly from what
i t a c t ua l l y d o e s . Pr i c e a c ti o n
te l l s us what i s rea l ly g o ing
on . S ome one (whether it is an
i n s ti t uti o n o r a r e ta i l tr a d er )
i s a c t ua l l y p ut ti n g r e a l m o n e y
o n th e l i n e . R e a l b uy i n g a n d
s e l l i n g c a u s i n g p r e s s ur e i n
o n e d i r e c ti o n o r a n o th er. I
monitor th i s
price action and
a s a d a y tr a d e r I hav e f o un d th e ma j o r i t y
I g e t i nv o l v e d
using a 15 u s e s a ny w h er e f r o m a ti c k
m i nut e c ha r t .
I u s e th i s c ha r t c ha r t t o a 3 0 m i nut e c ha r t
m o s tl y b e c a u s e
o v e r th e 2 0 + y e a r s I hav e b e en
a r o un d th e ma r ke t s , I hav e
f o un d th e ma j o r i t y ( m i n d s e t
o f th e ma s s e s ) u s e s a ny w h er e
from a tick chart to a 30 minute
chart. I take the middle of the
road, and this gives me a great
picture of the market- not too
close where I mig ht g et a lot
o f f a l s e entr y s ig na ls and not
too far away where I mig ht not
g e t a ny e ntr y s i g na l s . I u s e
the 15 minute chart for entr y
and exit and I do not use any
o th e r c ha r t s . I l i ke t o ke e p my
s y s t e m / s tr a t e g y a s s i mp l e a s
possible.
In o r d e r t o b u i l d my b u l l i s h o r
b e a r i s h b i a s o n th e d a y I l o o k
at what I call the market mood.
I a m a m o m ent um tr a d er, i n
other words, I go with the trend
of the market. If the market is
rallying I prefer to be long. If
the market is breaking I prefer
t o g e t s h o r t . I l e t “s o c i e t y
says” dictate my bias and I will
e x p l a i n f ur th er. In th e p a s t
I have tried unsuccessfully to
be a contrarian trader ( g oing
a g a i n s t th e tr en d ) . S o m e o f
o ur s t u d ent s u s e o ur s tr a t e g y
to identif y contrarian trades,
but picking the hig h or low is
not something I like to do and
I prefer to stay away from this
t y p e o f tr a d e . A g a i n , I l i ke t o
f o l l o w s o c i e t y h er e .
S o l e t m e e x p l a i n m o r e a b o ut
th e ma r ke t m o o d . It i s m o r e
tha n j u s t b uy i n g w h en th e
market is ra llying and selling
w h en i t i s f a l l i n g . I u s e a
s i mp l e c a l c u l a ti o n , which
g ives me the confidence to g o
l o n g o r s h o r t . I ta ke th e h i g h
o f th e d a y, a d d i t t o th e l o w
a n d th en d i v i d e b y t w o . T h i s
g i v e s m e th e m i dp o i nt o f th e
d a y a n d I u s e i t a s th e ma r ke t
m o o d i n d i c a t o r. I a m a l wa y s
i nt er e s t e d i n w h o i s w i nn i n g
– th e b u l l s o r th e b e a r s . I tr y
t o j ump o n b o a r d w i th th e
strategy FX
w i nn i n g t e a m b e c a u s e th e y
a r e th e o n e s w i th th e s tr en g th
a n d th e c a p i ta l t o p u s h th e
ma r ke t . W h en p r i c e a c ti o n
i s a b o v e th e m i dp o i nt I l o o k
f o r a n o p p o r t un i t y t o g o l o n g
( b u l l s a r e w i nn i n g , b u l l i s h
ma r ke t m o o d ) a n d w h en i t i s
below the midpoint I look to
g o s h o r t ( b e a r s a r e w i nn i n g ,
b e a r i s h ma r ke t m o o d ) . As
p r i c e a c ti o n d e v e l o p s o v er th e
c o ur s e o f th e d a y, I a d j u s t th e
m i dp o i nt a s n e w h i g h s a n d
l o w s a r e ma d e .
I a l s o c o n c ern
my s e l f w i th th e
market mood of
th e w e e k . By
th i s I m e a n I
l o o k a t th e h i g h
a n d l o w o f th e
la st 5 trad ing days, add them
tog ether and divide by two.
Now, if price action is above my
midpoint of the day AND the
we ek , I have more c onfidenc e
t o g o l o n g , a n d v i c e v er s a . But ,
you mig ht be wondering where
I actua lly consider g etting in.
If p r i c e a c ti o n i s a b o v e my
ma r ke t m o o d o n th e d a y a n d
a b o v e my ma r ke t m o o d o n th e
w e e k , I wa i t f o r th e ma r ke t
t o p u l l b a c k f r o m th e c urr ent
day session hig h, get as close
t o my a d j u s t e d m i dp o i nt a s
possible and enter with a long .
If p r i c e a c ti o n i s b e l o w my
ma r ke t m o o d o n th e d a y a n d
b e l o w my ma r ke t m o o d o n th e
w e e k , I wa i t f o r th e ma r ke t t o
pull back from the current day
FX TRADER MAGAZINE January - March 2011 45
 FX sTRATEGY

session low, g et as close to my
adjusted midpoint as possible
a n d e nt e r w i th a s h o r t . T h er e
a r e ti m e s w h e n p r i c e a c ti o n
i s a b o v e my m i dp o i nt o n th e
d a y, b ut i t i s n o t a b o v e th e
w e e kl y m i d p o i nt . I c o n s i d er
th i s a m i xe d i n d i c a ti o n a n d
t e n d t o s t a y awa y f r o m tha t
ma r ke t a n d m o v e
o n t o a n o th e r
one. This is
o n e r e a s o n w hy
I l o v e Forex. I
can move from
pair to pair with
such ease.
losing. I was familiar with the
newsletter and told my client
the newsletter author tended to
be a longer term trader and held
positions overnight, for weeks
and sometimes months. When I
started to work with this client
I realized he had no patience
tolerance and could not hold
recommended to be taken off. I
suggested he use an indicator
that adapted to the market as
the market unfolded within the
day. This finally put him on the
right side of the market and the
right side of his personal time
tolerance. I always stress to my
clients the importance of knowing
their own patience
tolerance when
they trade, and
to use indicators,
strategies and/or
recommendations
that suit their
personalities.

For my clients In the end, the

that are longer market mood has
term traders continued to help
(meaning they me stay on the
hold positions right side of the
overnight, for market and I will
several days, apply it for time
several weeks or to come. It gives
several months) me a great sense of
we look at daily market direction
charts and the
highs and lows
I use a simple calculation, which gives whether I decide
to put on short-
for the year. I me the confidence to go long or short. or long-term
recall teaching trades. In trading
one of my clients I will always look
about the market mood and the onto a trade for more than several to society as it gives us the real
different time frames. He thought minutes. He was using trade and true picture of the market
he was a long term trader, but recommendations to enter trades from price to price. “Society
after obser ving him, I pointed that were expected to develop over says” will dictate my trading ,
out he wasn’t. When he came the days and weeks ahead and he and as long as I follow the law
to me he had been following the did not have the patience to hold I will always question it for
advice of a well-known newsletter onto these positions. I told him personal use. I want to be true
and the trade recommendations. it did not make sense to follow to myself.
He was getting very discouraged a trade entry recommendation
with all of the money he was and then not hold it until it was Stephanie R adkay

46 FX TRADER MAGAZINE January - March 2011

 FX MANAGERS FX

Michael Aronovitz
Manager of Gables Capital Management, Inc.

Michael underlines the importance of understanding key

geopolitical events. He explains the company’s short term
investment strategy and risk management policy.

Interview by JW Partners for FX Trader Magazine INTERVIEW

Manager Gables Capital Management, Inc.

Strategy Gables Capital – GCM Global FX
Location Miami, FL.
Assets Under Management $32m FX, $420m Firm Assets
Type FX
Style Short Term Discretionary
Instruments FX

Currencies 100 %

JW: How long have you been
trading foreign exchange for? Tell
us about your career evolution.
MA: I have been trading in the
FX markets for nine years. I began
as a trader at Quest Partners,
LLC, a systematic hedge fund
firm in New York. For three years
I traded in the Asian, European
and US time zone trading in the
currency, equity, fixed income
and commodity markets. After
a great experience with Quest,
I decided to look for a position
with a discretionary firm. In
2005, I joined Ronin Capital
Management, a discretionary
global macro firm, as the head of
trading and currency portfolio
manager. After four profitable
years at Ronin, I joined Gables
Capital and in February 2009 we
launched GCM Global FX, which
is a short-term discretionary
trading currency managed account
program.
JW: What do you particularly
like about your job?
MA: I love how interconnected
the currency markets are to all
global events and news on a
daily basis. We literally watch
history unfold before our eyes and
weigh its potential effects on the
financial markets. Each day there
is something new to focus on. As
recently as this past November, we
were faced with renewed global
tensions between North and
South Korea, the European Union
teetering on the brink of disaster,
the impact of the US elections
and the Federal Reserve began a
new round of quantitative easing
in hopes to lower unemployment
and jumpstart the struggling
economy. Our job is to be aware

FX TRADER MAGAZINE January - March 2011 47

 FX FX MANAGERS

and have a good understanding of

all key geopolitical events in order
to manage risk and protect our
client’s capital.

JW: In what way is trading

currencies different from trading
other financial instruments?
MA: What I believe differentiates
the currency market from other
asset classes is its ability to
encompass all asset classes into
one. Fixed income views can be
expressed in the currency market
as often times the currency market
reacts to changes in interest rate
differentials between countries.
Commodity views can be
expressed in the currency markets
through buying and selling the
currency of countries which are
rich in natural resources such as
Australia, New Zealand, Canada,
and Norway. Over the past few
years, the broader equity markets
have been highly correlated to the
higher yielding currencies such as
the Australian and New Zealand
Dollar.
JW: When was the company
created?
MA: In 1997 Gables Capital
Management, Inc. was founded
as an SEC registered investment
advisory firm by Eric McKenna and
Judith Neiwirth. Prior to 2009,
Gables was primarily focused in the
fixed income and equity markets
but after the extreme market
volatility from 2005-2009, Gables
was looking to diversify into other
asset classes and trading strategies
to help balance their clients
portfolios. My integration into
the firm was a very natural fit for
all parties as Gables added access
to the currency markets along with
a shorter term, and more nimble
trading strateg y. While from my
perspective, I was joining a firm
that was well capitalized, has a
solid long-term reputation and a
strong proven track record, which
post 2008, was not easy to find.
JW: How is the company
structured?
MA: We currently have one
office in Miami, Florida on Brickell
Avenue, with a head count of six
employees. We service clients both
domestically and internationally.
JW: Which authorities regulate
Gables Capital Management, Inc?
MA: The company is registered
with the SEC and NFA. Judith
Neiwirth serves as our compliance
officer and she manages the firm’s
formal compliance program.
In staying abreast of the ever
changing regulatory environment,
Gables also employs the services of
National Regulatory Services, Inc.
We find it increasingly important
to be as transparent as possible for
our current clients and potential
investors.
JW: How would you describe
your investment strateg y?
MA: Our investment strategy is
short term opportunistic trading
with a high concentration on
managing downside risk at all
times.
Our objective is to achieve non-
correlated (to equity and trend
following strategies) returns
through short term discretionary

48 FX TRADER MAGAZINE January - March 2011


trading in the foreign exchange
markets. Our trading decisions are
driven by monitoring the global
macro environment, historical
asset class correlations, changes
in global interest rate spreads,
market sentiment and positioning,
central bank policy and economic
data. All trades should have a
minimum risk to reward ratio of
3:1 and there are internal controls
monitored by our risk managers
to oversee maximum monthly loss
and maximum gross exposure at
any time.
JW: How and when did
you develop your current FX
management strateg y?
MA: It began when I was a
trader at Quest Partners rotating
through all time zones getting
a feel for what news, data, and
events impacted the market at
different times of the day. Then
once given the opportunity as
a discretionary currency trader
at Ronin, I was able to form my
own short term trading strateg y
combining the skills I developed
from the systematic side at Quest
and the discretionary disciplines
at Ronin.
Being that the markets change
every day, it is a constant challenge
to get a feel for what is currently
moving markets and identifying if
that will be the case tomorrow.
JW: How do you manage risk?
MA: We have a very high focus
on risk at all times. In my strategy
we monitor risk on a per trade
basis and we know at all times
what our maximum loss is if the
market moves against each of our
positions. On each individual
trade we risk between .07 and .25%
of our NAV. We have firm stops in
the market with banks so even in
extreme market situations we know
within reasonable slippage (under
.1%) what our maximum loss is.
Additionally, Eric McKenna serves
as risk manager for additional
oversight.
JW: Under which market
conditions do you get the best
results?
MA: Typically we tend to do
well in times of elevated volatility
(Equity VIX in excess of 18 and
EUR 1m vol greater than 11).
Times of elevated volatility create
increased trading opportunities
and increased daily ranges, which
are typically beneficial for my
trading performance. We tend to
underperform in times of declining
volatility and a strong trend in the
market place.
JW: What should an
inexperienced trader watch when
choosing the time frame to trade
on?
MA: I think it is most important
to size trades appropriately. If
you enter a trade looking for a
multi month theme to develop in
a currency, you need to place your
stop loss a few percent away from
the market or else you risk being
stopped out with a loss while
ultimately your longer term theme
FX MANAGERS FX
might be correct. Conversely if
you are looking for a day trade to
make ½ of a percent, then don’t
enter your stop loss two percent
away as that does not make sense
for a risk reward ratio.
JW: What is your forecast for
the EurUsd, over the next 6/12
months?
MA: It is a very difficult time to
forecast. As we speak the EUR is
under pressure in the mid 1.30’s for
the second time this year on concern
about the viability of Greece,
Ireland, Portugal, Spain to survive
and finance its debts. At the same
time the Fed recently announced
its intent to engage in a further
round of quantitative easing which
is certainly dollar bearish. These
major market forces are the exact
reason I am a short term trader
and avoid focusing on the long
term. The one thing I have been
telling my clients is that the slump
in 2008 globally was synchronized.
The recovery is increasingly less
so. Currently the UK, US, EU
and Japan are still relying on
government support to aid their
recovery while countries such as
Australia, Canada, and Norway have
began raising interest rates. With
such differentiation between each
countries growth and future plan
for monetary and fiscal policy, we
anticipate that short-term volatility
will remain elevated resulting in
favorable trading opportunities in
the coming quarters for short-term
discretionary currency trading.
FX TRADER MAGAZINE January - March 2011 49
 FX Fundamental Analysis

FX roller coaster
ride draws to a
subdued close
Memories of high hopes for the States again bubbling to the In summar y it mig ht be fair
Euro at the outset of 2010 when surface. to say that current market
the Dollar traded at around Euro valuation is not as bad as
1.50 are now somewhat distant. As we go to print the EUR/USD it could have been when the
Despite flirting perilously close rate is heading towards the middle Greek situation took hold in
to its original launch level in the of its most recent range at around the springtime yet an ultimate
springtime amid waves of risk 1.30, the rejection of 1.42 only decline of around 13 percent
aversion and contag ion fears a month or so ago being caused when thing s were looking so
over the Greek debt crisis and by a robust employment number promising at the start of the
associated PIIGS ramifications, from the US and the reassessment year can hardly be welcome, at
1.19 ultimately provided a of sovereign risk in Europe, with least from a purchasing power
springboard sufficient to propel particular attention on Ireland. perspective.
the unit hig her to then retest
what has now become significant
resistance, at the 1.42 region.
This rebound was helped in part
by a market that was exposed
by record short positioning
and seemingly content with the
ironclad ‘sure thing ’ that the
Euro could easily test parity
ag ain. FX markets remain
consistent in maintaining their
peculiar habit of overshooting.
As we now know, these highly
speculative shorts were squeezed
out as confidence in EU austerity
measures reemerg ed, coupled
with perceptions of a ‘more than
likely’ double-dip in the United

50 FX TRADER MAGAZINE January - March 2011


Although 1.30 might be seen as fair
value given the uncertainty on both
sides of the pond, there is a distinct
possibility that the Euro’s fall from
grace may become deeper when the
holidays are over and the FX market
has had an opportunity to take that
all-important analytical review.
Especially troublesome is the effective
devaluation of Euro considering the
theoretical added weight behind
it provided by sovereign wealth
funds and central banks, which
seem committed to continuation of
reserve diversification, from USD into
EUR. That said, Chinese monetary
authorities reportedly switched into
Japanese Yen at the expense of the
Dollar and the Euro earlier in the year,
an act which is said by many observers
to have ignited the touch-paper on
accelerated appreciation in Yen and
subsequent numerical drop in JPY
currency crosses as the financial markets
underwent a period of risk aversion
via safe-haven seeking, prompted
mostly by the reality of the Greek
Fundamental Analysis
situation becoming the major issue of
focus for FX and associated markets.
Under the current spotlight is the €85
billion bail-out package approved for
Ireland, just over 40 percent of which
(€35bio) is allocated directly towards
a broad and sweeping restructuring
of the country’s banking system. Due
to the severity of this situation, which
is still compounded by latent issues
in Portugal, Italy, Greece and Spain,
EUR ministers that approved the Irish
aid package have also decided decisive
action is needed on a more permanent
solution to their temporary rescue
fund.
Reports imply that the creation of a
European Stabilisation Mechanism
is underway and will be completed
within the next 2 or 3 years, the
ultimate purpose being to resolve any
such sovereign debt issues in the future,
or in market parlance attempting to
get ahead of the curve. It seems that
this mechanism will be designed to
FX
make a successful distinction between
liquidity issues and solvency issues,
functioning to service those in need
of liquidity with ability to repay debt,
while at the same time differentiating
between member states that may not
be able to afford repayments. Those
members that are deemed able to repay
will receive appropriate assistance
and debt holders with exposure to
entities classified as unable to repay in
the future will themselves become the
financial casualties, rather than the
authorities or citizens.
That all sounds good in theory and
is both worrying and interesting at
the same time, especially considering
that American solvency issues may
also be at risk of coming to the
forefront as a currency issue in 2011
with a stubborn unemployment rate
of 9.8% and widespread projections
that many states in the union may face
trouble servicing existing debt and/
or raising capital via debt issuance
in the future due to shrinking credit
ratings, plunging tax revenues and
potential inability to restore already
damaged balance sheets that are
mostly drowned in what seems to be
perpetual red ink.
Misery loves company and in both
cases, time seems to be the main
common goal and denominator in
that governments in each region see
the obstacles as being temporary
problems rather than structural
impediments to long term prosperity.
Importantly, this time the authorities
have chosen to do something rather
than do nothing, itself perhaps the
FX TRADER MAGAZINE January - March 2011 51
 FX Fundamental Analysis
most important step on the road to
respective recoveries no matter how
long it may take. Given the collective
bounce in global stock markets, the
current mood very much reflects a
sense that participants seem to have
come to terms with the fact that
everything will be all right in the
end and if it’s not all right, it’s not
the end. We are hopeful that this
sentiment proves true although in
reality we are less optimistic on both
Europe and America due to the sheer
weight of debt burdens, potential
civil unrest caused by a social unease
about future taxation implications
and the likely impact on family living
standards. In addition to the 3.5
million French citizens protesting
Irish citizens protesting austerity measures
52 FX TRADER MAGAZINE January - March 2011
austerity measures over the summer
combined with Greek and Spanish
labour parades, just this week in the
UK demonstrations on the streets
of London got so out of hand that
the Prince of Wales’ official car was
attacked by a student mob furious
about the forthcoming hikes in
tuition fees. We suspect, sadly, that
further unrest may be in the pipeline
as the true monetary and social costs
of austerity, not seen for several
generations, come home to roost and
bring with them a sour mood that
inevitably spreads itself among those
affected.
Not to be entirely gloomy, as the
growth engines of the world have
always been cyclical and if official
comments ring true, the markets
should not underestimate the power
of monetary officials who can act at
any time should liquidity conditions
become strained for any reason. The
ECB wants to underline its devotion to
the Euro by encouraging the notion
that membership is irreversible once
a state has committed itself to the
union.
The Fed is apparently buying another
$600 bio of QE-related debt, on the
face of it maybe not the best news
for those fearing a double-dip, yet
perhaps tempered by the underlying
fact that the TARP program ‘only’
ended up costing a projected $25
billion, a far cry from initial estimates
of $700 billion which more than
covers the perceived ‘cost’ of QE2.
Although we think outright
collective abandonment of the Euro
is unlikely, we would not rule out the
prospect that markets attempt to
test the resolve and therefore the
economic defences of policy makers
in the new year, especially with
Chancellor Merkel as recently as early
December alluding to the idea that
German membership of the Euro is
not necessarily a done deal unless
appropriate fiscal discipline and
economic contributions are adopted
by all member states. The cost for any
state to abandon the Euro could be
high both socially and economically
as years unfold, especially with the
planned incorporation of eastern
European members over the next few
years. In the short term though, self-
 Fundamental Analysis FX

imposed membership suspension by

countries like Ireland and/or Greece
seems almost inevitable to many at
some future point, even with the aid
already provided. We underscore the
fact that the Euro was born of political
will and not economic necessity and
now some 10 years after the creation
of the single currency, the naysayers
have many opportunities to again
decry the practical implementation
of a ‘one-size-fits-all’ approach to
monetary policy and currency.

Who knows whether or not anyone

will leave but some proponents of
returning to individual domestic
currencies think such a move might
be just what is needed in order for
equilibrium to return and allow
those heavily indebted nations to
float their currencies freely with a
lower market-determined value. FX
markets have a successful history of
finding the limits at which central
banks will act and although such
tactics obviously invite the stark
reality of losing capital by betting
against a central bank, a challenge of
certain valuations seems likely to be
on the agenda.
We remain bullish on Latin America,
in particular Brazil and Mexico,
and Asia, with an emphasis on
India, South Korea and Singapore.
Although China grabs the headlines,
we think India may have more upside
surprise potential, especially now that
India has more ‘middle class’ people
(approximately 350 million) than
the United States has actual people
and, importantly, does not have the
Sixth ECB Central Banking Conference
complicated political structure of
China, already being more geared
towards western interaction given its
trading partnership history.
We are less bullish on Australia and
Canada; although it’s hard to be
short those currencies even with
their respective dollars both having
converged at around parity to the
USD. We’d argue that there may not
be such a great deal of upside from
here, especially when accounting
for the relatively small populations
of these nations when compared to
the powerhouses of USA and Europe
and how fickle investor sentiment, if
challenged by a negative event, could
easily reverse and undermine the
prevailing bullish mood.
We bear in mind that Australia
especially relies on its export markets
for growth and with the AUD having
risen from 60 cents a couple of years
ago in the 2008 crisis to parity at
the end of 2010, even the supposed
insatiable appetite of wealthy nations
with cash to pay for their gold and
minerals may not be omnipresent
as time unfolds, especially at parity.
Over the next year or so it could
even become apparent that market
valuations of these commodity
currencies caused by the boom in
underlying asset prices and assisted by
favourable interest rate differentials

FX TRADER MAGAZINE January - March 2011 53

 FX Fundamental Analysis
have reached saturation point,
causing a wave of profit-taking to
set in and sending the AUD back
to around 0.85 USD and the CAD
to around 1.10. That said everyone
needs some commodity exposure so
given the choice we would select the
Norwegian Krone to outperform
the Aussie next year, bolstered by its
stellar ratings
and steady
economy and
under va luation
by the market
given its perceived
peripheral status,
targeting 5.35
from the current
6.00 region.
As for 2011
possibilities, it
would not be
surprising to see
an initial perhaps
seasonal bout of
risk aversion which
may provide
more power to the Swiss Franc and
Japanese Yen although we think that
over time both the CHF and the JPY
could weaken. In the Yen’s case, the
view is bolstered by potential demand
for US Treasury’s and therefore US
Dollars, the demographic impact of
an aging Japanese population unable
to replace itself to maintain the
required pace and therefore reducing
competitiveness, a depleted savings
rate and the threat of a lurking BoJ
who have already had enough of the
rising Yen. Switzerland could be
viewed as pricing itself out of the
54 FX TRADER MAGAZINE January - March 2011
market as the influx of large financial coupled with inaction or indecision
institutions expected to take place by EU leaders and perhaps abetted by
did not quite materialise, in theory a reversal of fortune in the US like the
removing some of the anticipated housing market bottoming and the
demand for the currency. The American consumer returning, albeit
Swiss National Bank intervened perhaps not quite as robustly as before,
sporadically during 2010 to arrest with some of those Dollars stashed in
the Franc’s appreciation and with the bank for another rainy day. We
some slight detection of a generally think the Fed will raise interest rates
next year while the
ECB may not be
in such a position
or at least be able
to keep pace and
see potential for
a range like of
1.05-1.40 for
EUR/USD.
The UK has
been out of the
limelight lately
and although
the sense of
impending doom
seen just before
the general
election seems
less-bullish approach to the nation, to have dissipated somewhat, recent
perhaps aided by the change in reminders seen by the civil unrest
policy on certain confidentialities, perhaps reawaken the dormant threat
the market may by accident or design that the Pound is also overvalued
continue what the SNB had tried based on the UK’s mounting debt
to start, which would be an ideal and perceived risk that the coalition
time for further intervention to Government could become shaky,
weaken the Franc to more practical which might lead the Pound to retest its
and desirable levels and we target lows in the 1.35 area from the present
EURCHF back to 1.40 from 1.30. 1.60 region, against the Dollar.
The Euro could easily take a We wish the readers of FX Trader
look at parity against the USD if magazine a prosperous 2011.
events conspire, such as further
deterioration of EU finances Kevin Sollitt
 WOMEN IN FOREX FX

Jody Samuels
Interviewed by Maud Gilson

“ Th i nki n g ba c k i t sh o ul d
h a v e b e e n m o r e d a u n t i ng
th a n i t a c t u a l ly wa s”, s ay s
Jo dy S a m u el s , th e “ Q u e e n
o f th e q u i d”, a b o u t h e r f i r s t
y e a r s ba c k i n th e 8 0 ’s a t
J P Mo r g a n i n N Y C . Jo dy
S a m u el s ,c o a c h a n d fo u n d e r
of F X Tra d e r sE D GE .c o m ,
d i s c o v e r e d Fo r e x i n 1 9 7 9
i n th e Arb i t ra g e ( Fo r e i g n
exchange) department of
a ba nk i n No r way a n d
i mm e d i a t ely g o t fa s c i n a t e d .
O v e r th e y e a r s , Jo dy l e a r n e d
h o w to limit her emotions
and this bal ance “on the vast
emotional spectrum of trading”
is something she is now teaching
to her students. She doesn’t
think there are gender specific
characteristics that make you a
better trader and “if a person
has goals to become a successful
trader, then the y need to do
whatever it takes to learn a
methodolog y, practice it over
and over again until it becomes
second nature.”

In this “ Women in Forex”

e xclusive interview series from
Women have an intuition
F X street.com, Jody S amuels
shares with us her long
about the market, almost
e x perience as a professional
bank trader a n d t e a c h e r.
like a gut feeling

FX TRADER MAGAZINE January - March 2011 55

 FX WOMEN IN FOREX
MG: When did you first get
interested in Forex trading?
JS: During my studies at the
Wharton School of Business at the
University of Pennsylvania, I belonged
to this organization called AIESEC,
an international student business
association that organized internships
abroad. I was fortunate enough to
get placed in Bergen, Norway, where
I worked in the Arbitrage (Foreign
exchange) department of a bank as a
trainee. My function was to operate
the telex machine and quote prices
from the traders in Norwegian
Kroners in the interbank market. I
was so fascinated that I extended my
internship to 3 ½ months, after which
I moved to NY and applied
to work for JP Morgan. I had
previously accepted a position
in a can manufacturing plant
When I joined the bank to
doing cost accounting which trade currencies, I really
I resigned from before I even
started working there. didn’t think about my
MG: How was it to be a
gender. I just did my job.
woman in a man’s world at JP
Morgan when you started in
1979?
JS: I was the only female trading the
GBP/USD in the interbank market
among the major global banks at the
time and I was called the “Queen of
the quid”. Thinking back it should have
been more daunting than it actually
was. However, having just graduated
from the Wharton, I was fortunate
enough to meet other women who
would later become giants in their
own fields of expertise and we had a
56 FX TRADER MAGAZINE January - March 2011
lot in common. We were prepared for
male dominated industries by virtue
of the fact that we had just graduated
from one of the top business schools
in the world where women and men
were on the same playing field, taking
the same classes. So, when I joined
the bank to trade currencies, I really
didn’t think about my gender. I just
did my job.
MG: Can you describe your
experience on the GBP trading desk?
JS: As the GBP trader in NY, I was
among a group of about 20 traders/
assistant traders on the desk trading
various currencies. We had to work
together as a team, answering phones
and quoting prices both over the
phone and electronically through
stand-alone dealing systems. It was
really electrifying, fast moving and
exciting. As market makers we had
to think on our feet and quote two-
way prices all day, corporates and
institutional investors.
MG: Did you feel more a sense of
camaraderie or competition with
the other women in your work
environment?
JS: I didn’t compete with the other
women in my work environment.
The competition was with me, to
see how many winning days I could
have every single month. That was
one of the goals I strived for, to
have a complete month of winning
days.
MG: When moving on from the
trading desk at JPM to the role
of retail trader/instructor, did
you need to adopt any changes in
strateg y or perspective?
JS: The biggest challenge I had
when migrating from institutional
to retail trader was to accept that
I could be successful on my own
without the support of
other institutional traders.
While at the bank I had
so many resources around
me, including currency
strategists, options strategists
and fellow traders that I
developed my style based
on my environment. When
I left all that behind, I had
to first accept that I didn’t
need all of that support to succeed.
My belief system needed changing.
Then I found myself studying with
successful independent traders who
became my mentors. That is the
process I followed in the transition
from institutional to retail trader.

MG: Does the independent trader
face any advantages/disadvantages
compared to institutional traders?
JS: The biggest disadvantage

that independent retail traders face
today is not trading with enough capital.
Because of the high leverage allowed
Forex traders, it is too easy to open
up an account with a small amount of
capital, leverage it up, and lose it after
several trades. One advantage is that
information is highly transparent and
data is cheap. When I started trading
on my own in the mid 1990’s, I paid
$2,500 a month for nice clean futures
data for charting. Today, the fixed
costs are practically zero, which means
that anyone can set up an account and
start trading. All the education and
information is available to the retail
trader today, but the right
education is key. Trading as
a profession takes time to
master. It’s important to hire a The biggest disadvantage
mentor and a coach who have that independent retail
Forex trading experience and
can communicate well. traders face today is not
MG: What feeling do you trading with enough capital.
get when trading?
JS: In my earlier days I felt I was on
a roller coaster ride with my emotions
most days, as the markets were very
volatile. I’ve been trading for so long
that I have experienced many different
feelings and emotions along the way.
Today, I work on limiting my extreme
emotions, positioning myself mentally
on the fulcrum of a seesaw between the
emotions of fear and greed. I practice
being balanced on the vast emotional
spectrum of trading.
MG: And that’s something you are
teaching to your students I imagine;
how to control their emotions...
WOMEN IN FOREX
JS: Yes. I can say there isn’t one
emotion or situation that a trader
can describe to me that I haven’t
experienced myself.
MG: Is this why you decided to
dedicate yourself to educating other
traders?
JS: Quite frankly, I have a lot to
offer to other traders due to my long
experience. I am a mentor and a coach
but I love to work with traders one on
one which is why I developed the FX
Trader’s EDGE coaching program to
teach traders entrepreneurial skills and
habits. I find that by teaching them
the nuances of running a business
or how to view a market through its
cycles often makes a big difference
in a trader’s results. When one of my
students succeeds, it brings me great
joy. When I run seminars to teach
trading skills, it always makes me think
about how I am trading and reinforces
what I do myself.
MG: Elliott Waves is one of your
favorite technical indicators you
teach to your students. Can you
remember when you first realized
Elliot Wave was a particularly
FX
effective indicator?
JS: At the bank our technical
analyst on the desk introduced
Elliott Wave Analysis. He was
very good at telling us what the
bias should be for the day, given
the Elliott Wave count and other
techniques he looked at. When I
left the bank I studied and mastered
Elliott Wave analysis on my own and
continued to use it in my trading. I
really can’t remember a time when
I didn’t use it – it has always been a
part of my analysis toolbox. Today
I love teaching it to traders and
often times they feel it is
the “missing piece” of the
trading puzzle. Elliott Wave
analysis can be used as an
overlay to whatever strategy
the trader is using to define
entry and exit points. It
provides a road map, making
it easier to target moves, and
see the bigger picture.
MG: You are very involved in
networks, to the point that you
encourage your students to use
them...
JS: Yes. When people take my
seminars, I encourage them to keep
in touch and we actually set up a
Skype group. That way when like
minded traders see setups, they can
share them with the group. Everyone
benefits. The market is so big that
it really doesn’t matter how many
people are taking the same position
at the same time. This works really
well when students follow different
FX TRADER MAGAZINE January - March 2011 57
 FX WOMEN IN FOREX
currencies and can share their analysis
and setups with the group.
MG: After teaching so many
students, have you noticed differences
in how men and women trade and
analyze the Forex Market?
JS: The analysis is the same but
sometimes I think women have an
intuition about the market that it
will go up or down – almost like
a gut feeling. I’m not sure that
men experience that same level of
intuition. In terms of trading, I do
think that women are
more conservative and less
aggressive than men as a If women are in fact more
whole but there are always
exceptions. That might risk averse, then they will take
translate into smaller fewer and smaller positions,
profits but tighter losses as
well. and take smaller profits.
MG: The CEO of a retail
forex trading training course says
women have 3 qualities which make
them better traders than men... First
he says women have a stronger sense
of risk aversion. Do you agree?
JS: I disagree – I don’t believe one
can generalize that more women than
men have these three qualities. On the
risk front, it is important to be a risk
taker in any trading business, including
Forex. If women are in fact more risk
averse, then that implies they will take
fewer and smaller positions, have less
exposure, and take smaller profits.
Perhaps they will be better at running
the marathon of Forex trading and
being in the business for the long
58 FX TRADER MAGAZINE January - March 2011
haul. I don’t know. I think being too
conservative isn’t good either so a
happy medium needs to be found.
I recently read the article “What if
Women Ran Wall Street”, by Sheelah
Kolhatkar, published in New York
Magazine, March 21, 2010. The
article implies that many men are
aggressive, stubborn and ego driven
and therefore need to work on taming
those qualities if trading large sums of
money. No comment on whether or
not women traders are better for the
economy – I would say that a good
mix of both genders might create the
right recipe of risk taking and risk
aversion.
MG: Second quality is increased
patience, which lets them follow
through on trading plans better than
men.
JS: Patience is important but again,
I’m not sure if women are more patient
than men. I know many male traders
who are very patient traders.
MG: Third, he points out women’s
tendency to really learn thoroughly
before trading, while men tend
to learn something partially and
immediately.
JS: This describes a person’s instincts
that drive a person’s natural way of
taking action. Since every personality
is different, one cannot say that the way
someone learns best is gender specific.
I’ve taught many male traders who are
well organized and meticulous about
their studying. I’ve also met many
female traders who are also rigorous
in their approach to learn.
MG: So you would not say these are
gender specific differences...
JS: From my experience,
these qualities are
definitely not gender
specific – if a person
has goals to become a
successful trader, then
they need to do whatever
it takes to learn a
methodology, practice it
over and over again until it becomes
second nature, and work with a coach
to keep growing as a trader.
PROFILE: Jody Samuels
• Current Job: Trader and Coach,
Founder of FX Trader’s EDGE
coaching program, Elliott Wave
expert
• Career: Over 25 years in the FX
Market, as bank trader at JP Morgan
and retail trader and coach
• Age: 52
 WOMEN IN FOREX FX

Karen Jones
Interviewed by Maud Gilson

K aren Jones is a purely

technical analyst with more
than 20 years of experience
in the financial business and
has always monitored and
analyzed currencies. “Of
all the markets I analyze,
it is simply the harder to
do [… and] also the most
v o l a t i l e” s a y s K a r e n . S h e
joined Commerzbank in
Feb r u a r y 1 9 9 9 , ju st a fte r
t h e E u r o’ s i n c e p t i o n , “ I
was somewhat disappointed
to have missed the start of
tra di ng for EU R / U S D ! ”

In th i s “ Wo m e n i n Fo r e x”
exclusive interview series
f r o m F X s t r e e t .c o m , K a r e n
sh a r e s w i th u s th e m a i n s t e p s
o f h e r c a r e e r a s w el l a s h e r
v i s i o n a b o u t th e d i f fe r e n c e s
between men and women in
th e Fo r e x w o rl d . S h e a f f i r m s
th a t sh e c a n’ t p i np o i n t a ny
a n d n e v e r fel t a ny p r e s s u r e
from her colleagues : “I do
a t t e n d s o m e m e e t i ng s w h e r e
I a m th e o nly fe m a l e , a n d
th e o nly t e c h n i c a l a n a ly s t .
The discipline of Technical
[…] I am not paid to agree
w i th th e m , I a m p a i d t o g i v e
Analysis is ideally suited for
my v i e w s ba s e d o n t e c h n i c a l
analysis!”
the FX market

FX TRADER MAGAZINE January - March 2011 59

 FX WOMEN IN FOREX
MG: How did Forex enter your
life?
KJ: I have actually only worked
for 3 companies - the first was
a commodity brokers - Sucden
(UK). I had just finished college
in 1987 and was looking for a job
- I ended up with 3 job offers but
went to work for the commodity
brokers because it sounded the
most interesting. I started work
as a junior technical analyst and
by sheer luck ended up in a job
which has fascinated me ever since.
I joined just before the October
crash in 1987 and remember
drawing spectacular lines
on my charts as the stock
market slumped. Although
I covered commodities
I was required to also
monitor moves in FX and
it became clear quite early
on that this was a volatile
market. But it wasn’t until
I joined Credit Suisse that
my interest in FX grew.
MG: Why?
KJ: I have actually only worked
for 3 companies - the first was
a commodity brokers - Sucden
(UK). I had just finished college
in 1987 and was looking for a job
- I ended up with 3 job offers but
went to work for the commodity
brokers because it sounded the
most interesting. I started work
as a junior technical analyst and
by sheer luck ended up in a job
which has fascinated me ever since.
60 FX TRADER MAGAZINE January - March 2011
I joined just before the October
crash in 1987 and remember
drawing spectacular lines on my
charts as the stock market slumped.
Although I covered commodities I
was required to also monitor moves
in FX and it became clear quite
early on that this was a volatile
market. But it wasn’t until I joined
Credit Suisse that my interest in
FX grew.
MG: ‘Chart Tarts’? Where that
nickname comes from?
KJ: A lot of people in the dealing
room had nicknames and this was
Myself, a lady called Carol
Harmer and Fran were
affe ctionately known
a s ‘the Char t Tar ts’
just an affectionate moniker. The
team consisted of 3 ladies (which
was unusual back then), Tart
rhymed with Chart, that’s it. I think
we were christened the nickname
by the FX spot desk.
None of us were offended by
it. we all liked it! There was a lot
more banter back then, political
correctness has killed this, which in
some ways is a shame. I remember
it being more of a laugh.
If ever anybody said anything that
I felt was out of line, I used to wait
pull them to one side and quietly
explain they had upset me. They
were always truly horrified that
they had done so and apologized
profusely. Once you explained
where the line was - no-one ever
crossed it!
MG: You left Credit Suisse at
the end of 1998 and then arrive at
Commerzbank, right?
KJ: Yes, in February 1999,
having been out of the market for a
couple of months. I was somewhat
disappointed to have missed the
start of trading for EUR/USD!
MG: Tell us how you worked your
way up to become head of
FICC Technical analysis
Research...
KJ: I started working for
the Treasury department
initially covering primarily
FX and bullion, then after
a few years I was merged
into the investment bank.
At that time I was the FX technical
analyst and reported to the head
of FX strategy, but the whole team
worked with the FX division. While
there, the demand for technical
analysis grew and I was asked to
increase coverage to include interest
rate products and as consequence I
gained another colleague to assist
me. As I already covered bullion I
was asked to cover commodities as
well, hence I became head of FICC
Technical Analysis Research.
MG: What is the FICC Technical
Analysis Research’s job?

KJ: The group is responsible
for forecasting and formulating
technical trading strategy globally
and covers foreign exchange, fixed
Income, emerging markets and
commodities.
MG: What about Forex in
particular do you find interesting,
as opposed to commodities, FI
and other instruments under your
command?
KJ: Of all the markets I
analyze - it is FX I enjoy
the most. It is simply I am a technical analyst first and
much harder to do - there
is more data to analyze
foremost and am confident in
for starters as it trades my convictions to stand by my
24 hours a day, the way it
trades in the various time analysis. It’s as simple as that.
zones can give you early
clues of market direction.
It is also much more volatile - after
all FX participants hold their
positions for much shorter durations
compared to say stocks or bonds. It
is a market which the discipline of
technical analysis is ideally suited.
Technical analysts are able to use
some fairly short term time frames -
also most FX participants use charts
extensively, so it is in this area where
we have most interaction with sales
and trading.
MG: With more women entering
the ultra-competitive world of big
banking, how do you feel women
treat each other?
KJ: Having worked for 6 years in
a team containing 3 women, I did
WOMEN IN FOREX
not find that my female colleagues
treated me any differently to my
male colleagues.
MG: How do you think you
analyze differently from men?
KJ: Having worked with both
men and women in the field, I can’t
say that there is any difference to
the way men and women analyze.
Not any that I can pinpoint anyway.
However one observation I will
make (not sure if this a male/
female divide however). There
is a strong tendency to want to
‘belong’ to a group, psychologically
I mean. In the course of my work
I do attend some meetings where
I am the only female, and the only
technical analyst. However, I feel
no compulsion to ‘agree’ with the
group. That said I am not paid to
agree with them, I am paid to give my
views based on technical analysis! Is
this a male/female divide? I suspect
not. I am a technical analyst first
and foremost and am confident
in my convictions to stand by my
analysis. It’s as simple as that.
MG: How have you handled
balancing a private life while
FX
growing into positions of increasing
responsibility at the bank?
KJ: I think it is hard to work in
any demanding job and to balance
your personal life. There are times I
have struggled, but as I have grown
older the demands of both areas
have headed into a natural balance.
MG: Do you believe the
opportunity for stay-at-home
trading will bring a flood of women
traders into the retail
Forex market?
KJ: Stay at home trading
will appeal to women
as they try to juggle
childcare with working
It is the flexibility they
need, however think this
just generally increases
the numbers who are trading from
home. I do not foresee a ‘flood’ and
no I do not expect it to impact on
the market at all.
PROFILE: Karen Jones
• Current Job: Head of FICC
Technical Analysis at Commerzbank.
Karen is also on the board of the STA
(Society of Technical Analysts).
• Career: Over 20 years in the Forex
business. Worked for a Commodities
broker and two major investment
banks.
• Age: 45
FX TRADER MAGAZINE January - March 2011 61
 FX CURRENCY VIEW

QUARTERLY REPORT

Currency Macro Rates Technical View

Broke through parity but has reversed as Bullish: Correcting overbought
Current = 4.75, rates likely Bullish:
AUD risk aversion hits global markets again,
on hold until 2011 Above 200 day MA
condition in the short term but trend
will remain key global risk barometer upwards against a weak USD

Bullish/Neutral: Correcting over

Problems with Ireland raise default risks Current = 0.50, rates will Bullish:
bought position & sovereign risk to
EUR within the Euro zone, Greece’s situation remain low but may be 1st Back above 200
weigh on Euro in the short term, QEII
getting worse to move among majors day MA
is not positive for the USD
Growth exceeding expectations & Neutral/Bullish:
Current = 0.50, rates will Neutral: No trend evident & likely to
GBP further QE seems not to be required in
remain low
back above 200 day
remain below 1.70 for some time
the short term MA
MAS has increased the band for the Bullish: Became over bought in the
Current = 0.55, MAS Bullish:
SGD SGD in a further tightening measure to
tightening via currency Above 200 day MA
short term but trend is still up key
slow capital inflows & the economy buy
Growth in Japan picking up & BOJ printing Neutral:Trend still up but this is not
Current = 0.00 - 0.5, & will Bullish:
JPY more money, a much weaker JPY would
remain low Above 200 day MA
sustainable, still looking for major
help the economy trend reversal in medium term
Bullish: MYR hit new highs but
Record flows into EM driving currency Current = 2.75, some
Bullish: correcting overbought position in
MYR higher, economy looks ok & no real modest increases due in
Above 200 day MA the short term, trend clearly up &
inflation evident in the short term next 6 months
USD has further to fall - key buy
Main Asian carry trade & some
measures introduced to slow flow of Current = 6.5, we expect Bullish : Momentum continues to
Bullish:
IDR hot money into IDR, inflation pressures rates to rise fanother 50bp slow but trend still up, gains will be
Above 200 day MA
may increase over the coming months in 2011 moderate
meaning higher interest rates &/or IDR
Some rules being introduced to slow
Neutral : Testing 1100 highs for the
flow of funds into KRW, inflation spike Current = 2.25, rates B u l l i s h / N e u t r a l :
KRW up to 4.1% forcing move on interest increased 25bp above 200 day MA
year, expect further gains as USD
falls
rates
Highest yielding Asian ccy has resulted
Current = 5.75, another Bullish : A short term correction but
in large inflows, inflation may be Bullish/Neutral:
INR beginning to moderate so interest rate
100bp of increases
above 200 day MA
expect it to break to new highs for
expected the year - key buy
rises may be slower
Inflation picking up & food inflation to Neutral/Bullish : Higher CNY makes
Current = 2.25, rates
continue to increase, measures still Neutral: sense as inflation picks up, USD
CNY ongoing to slow property & interest
increased & this will
200 day MA flat is being de-based so CNY will be
continue
rates will rise further strong in the medium term
Current = 4.00, no pressure Bullish: Correcting overbought
Remittances remain strong & that
on rates for now but expect Bullish: position but PHP trending higher &
PHP should support domestic economy,
increases in next 12 Above 200 day MA with a weak USD likely can test the
inflation has fallen to an 11 mth low
months ‘08 highs
NZD growth is now likely to be lower
Neutral/Bullish:
than forecast in the current year but PPI Neutral/Bullish: Testing 2008 highs
Recovered from
NZD was higher than expected, no pressure Current = 3.00, on hold
plunge & now above
above 0.8000, after short term
on interest rates until the economy correction will push higher
200 day MA
improves
Bullish : Probably the most
Stock market very overbought due to Current = 1.75, some small Bullish: above
overbought currency, correction
THB massive inflows & this has flowed into increases likely in next 6-12 200 day MA but
highly likely & gains may be more
the THB, controls on inflows likely months overbought
limited
Date: November 2010 Source: Armytage AAM

62 FX TRADER MAGAZINE January - March 2011

 CURRENCY VIEW FX

QUARTERLY REPORT

Base Currency AUD GBP EUR JPY SGD NZD

Bullish: Neutral:
Bullish: Neutral/Bullish:
Trend still up AUD briefly reached
Trend still up, a fall Neutral: Tested highs &
but upside may new highs for the
AUD back below 0.60
be more limited,
Still no trend
year, while USD is
AUD likely to rise
would suggest a evident yet more but gains will
below 0.70 would weak the AUD will
peak not be large
look like a peak edge igher
Bearish:
Bearish: Neutral/Bearish: Neutral:
Has stabilised but Bearish:
Trend still down No trend evident GBP testing ‘09
trend is still down New lows for the
GBP & AUD remains more trading lows but a break
& inflows will year & trend is still
key global risk between 1.2- 1.1 below those levels
see SGD remain down
barometer likely unlikely
strong
Neutral:
Neutral: Bearish/Neutral:
Bearish: Rebounded Neutral:
No real trend Testing lows
Trend is still down from new lows Euro recovery is
EUR but downside may
evident - further
could signal the over & a test of the
& trend is still
sideways trading down but major
be more limited beginning of a lows likely
within the range downside unlikely
bottom in EUR
Neutral:
Neutral: Bullish: Bullish:
Still no trend Neutral:
Both are likely to Testing highs & SGD likely to test
evident yet but No trend but SGD
SGD benefit from weak trend is still up - highs at least now
we expect SGD to has scope to test
USD but A$ will Asian ccy will be Euro recovery
rise significantly in ‘09 highs
rise faster strongest looks to be over
the medium term

AUD PPP
Over/Under
Valued

GBP PPP
Over/Under
Valued

JPY PPP
Over/Under
Valued

EUR PPP
Over/Under
Valued

Date: November 2010 Source: Armytage AAM

FX TRADER MAGAZINE January - March 2011 63

 FX TECHNICAL ANALYSIS

Technical outlook

MAJOR TRENDS AND TARGETS FOR THE MAJOR FX RATES

Current level Major trend Major target Trend change level
EUR/USD 1.3315 Sideways 1.2590 / 1.4154
USD/JPY 83.80 Down 74.69 & 70.00 85.91
USD/CHF .9740 Down .9349 & .9000 1.0628
GBP/USD 1.5750 Sideways 1.5299 / 1.6297
USD/CAD 1.0050 Down .9713 & .9061 1.0854
AUD/USD .9925 Up 1.0740 & 1.1449 .8771
NZD/USD .7530 Up .8212 & .8701 .6951
EUR/JPY 111.60 Down 100.00 & 88.97 115.65
EUR/CHF 1.2970 Down 1.2407 & 1.0400 1.3834
EUR/GBP .8450 Sideways .8143 / .8940
EUR/NOK 7.9400 Sideways 7.8125 / 8.2551
EUR/SEK 9.1540 Down 8.9600 & 8.8510 9.4253

MAJOR TRENDS AND TARGETS FOR FX EMERGING MARKETS

Current level Major trend Major target Trend change level
EUR/CZK 25.180 Down 23.711 & 22.925 26.614
EUR/HUF 277.85 Up 301.87 & 317.08 262.89
EUR/PLN 4.0130 Sideways 3.8238 / 4.2454
EUR/RON 4.2900 Up 4.6455 & 4.9363 4.1165
USD/ILS 3.6040 Down 3.3729 & 3.2043 3.8404
USD/RUR 30.770 Sideways 28.603 / 31.946
USD/TRL 1.5000 Down 1.3468 & 1.1485 1.6293
USD/ZAR 6.8300 Down 6.4318 & 5.9563 7.8901
Date: 13th December 2010

64 FX TRADER MAGAZINE January - March 2011


EUR/USD
EUR/USD reached an all-time high of 1.6039
in July 2008, with losses from there having left
a double bottom at 1.2329 / 1.2459 in October
2008 / March 2009, from where a prolonged
recovery phase was enjoyed. Although the break
above 1.4721 in September 2009 appeared to
complete a significant double bottom, a double
top was left at 1.5062 / 1.5144 in October /
November 2009, just shy of the 76.4% Fibonacci
retracement of the previous 1.6039-1.2329
decline. The subsequent failure to leave a higher
low above former resistance-turned-support at
1.3739 / 1.3751 confirmed a reversal and a steady
retreat ensued. A dead-cross of the (red & green)
13 & 52 week moving averages was accompanied
by a breakdown through the (blue) ultra long-
term 260 week (5 year) moving average and
MACD moved back under the pivotal zero line
to confirm a trend change. Losses accelerated
through the previous floor at 1.2329 / 1.2459
TECHNICAL ANALYSIS FX
to eventually reach 1.1881 in June 2010, from
where a two -legged recover y to 1.3333 & 1.4280
occurred. The speed / extent of the latest retreat
from 1.4280, which was just under the 1.6039-
1.5144 downtrend line, warns of the possibility
of a resumption of the major underlying
downtrend. Already the mid-point of the
previous 1.3333-1.2590 dip is being tested and a
lower top now below the 1.3786-1.3816 area may
trigger a move towards the 1.2329-1.2590 area
over coming weeks. That area may initially hold
firm for quite some time, but a clean breakdown
will raise fears of an eventual extension beyond
1.1881 towards a minimum of 1.1434 (100% of
1.6039-1.2329 decline measured from 1.5144)
and possibly 1.1017 (100% of 1.5144-1.1881
decline measured from 1.4280). Between those
targets, the 61.8% Fibonacci retracement of the
entire October 2000-July 2008 .8232-1.6039
rise comes in at 1.1214.
FX TRADER MAGAZINE January - March 2011 65
 FX TECHNICAL ANALYSIS
EUR/SEK
EU R / S E K r e c o r d e d a n a l l- ti m e tr a d e d h i g h
at 11.7840 in March 2009 and then trace d
out a major head and shoulders top pattern
a b o v e a n e c k- l i n e c o n n e c t i n g 1 0 . 4 2 4 0 a n d
10.3840 lows. This was completed in
Ju l y 2 0 0 9 b u t l o s s e s w e r e i n i t i a l l y l i m i t e d
to 10.0370 before undergoing a modest
correction higher to 10.5370. Fr o m
there a relentless retreat has occurred,
with the long -term uptrend connecting
the December 2006 and October 2007
bottoms at 8.9600 and 9.0920 having been
b re a c h e d in Ju l y 2 0 1 0 . Th i s tren d-l in e
took a similar traje ctor y to the ultra long -
term 260 week (5 year) moving average
(shown in blue) which had been lost a
f e w m o n t h s e a r l i e r. A n 1 8 m o n t h s u p p o r t
line with multiple points of contact was
exceeded en-route to 9.0932 in September
66 FX TRADER MAGAZINE January - March 2011
but recover y attempts from there have
already left a lower double top at 9.4232 /
9.4253 and a renewed decline is now under
w a y. T h e 2 0 0 2 / 2 0 0 6 l o w s a t 8 . 9 6 0 0 a r e
the next downside target and although a
recover y may initially be mounted from
around there, losing this former floor and
next support at 8.9285 (76.4% Fibonacci
retracement of the entire 8.0460-11.7840
May 2000-March 2009 rise) may trig g er an
acceleration lower over coming weeks and
months beyond the 2004 and 2003 lows
at 8.8800 and 8.8510 towards the next
ma j o r h i s t o r i c a l f l o o r a t 8 . 4 4 3 0 / 8 . 4 8 7 0 ,
the October / December 2000 base. With
MACD remaining entrenche d in bearish
territor y below the pivotal zero line, as
yet there are no signs that a major low is
due anytime soon.

usd/ZAR
US D / Z A R a c c elerate d the re c over y from
5 . 6 0 5 0 in D e c emb er 2004 (a 6 year low)
to a p e a k o f 11.8695 in O cto b er 2008
( a 6 y e ar h i g h), b efore tracing out a top
p attern . A steady retreat fo l lowe d and
l o s s e s a l m o s t r e a c h e d th e 5 y e a r + u p tr en d
l i n e i n Ap r i l 2 0 1 0 , b o u n c i n g f r o m a l o w
o f 7 . 1 9 7 2 . Ho w e v e r, t h e f a i l u r e t o t h e n
t a ke o u t t h e No v e m b e r 2 0 0 9 l o w e r t o p a t
8.2653, reversing from a hig h of 8.0628 in
Ma y 2 0 1 0 , m e a n t t h a t a s i g n i f i c a n t b a s e
w a s n e v e r c o mp l e t e d a n d th e s u b s e q u ent
r e tr e a t e v e nt ua l l y b r o ke d o wn thr o u g h th e
a f o r e m e nti o n e d 5 - y e a r + up tr en d l i n e . T h i s
wa s a c c omp an i e d by a dead- cross of the (re d
and green) 13 week and 52 week (3 month
a n d 1 y e a r ) m o v i n g av er a g e s a n d a l s o b y
M AC D d ipp ing b ack under the p ivota l zero
TECHNICAL ANALYSIS FX
l i n e . T h i s a b a n d o n e d e a r l y b u l l i s h s i g na l s
b y b o th i n d i c a t o r s t o wa rn o f a r e s ump ti o n
of the underlying bearish trend. With
the 13 & 52 week moving averag es now
bearishly alig ne d with the ultra long -term
260 week (5 year) one, we see the risk of
a continue d steady retreat over coming
months. T h e ( No v e m b e r ) 2 0 0 7 l o w o f
6.4318 is the next major downside targ et,
where the next corrective recover y phase
may be mounte d, with the (April ) 2006 low
a t 5 . 9 5 6 3 b e l o w th er e . L o o k f o r a r e c o v er y
a t t emp t t o n o w t o p o ut w e l l b e l o w th e Ma y
2010 lower top at 8.0628, and ideally no
hig her than 7.6300, the mid-point of the
pre vious 7.1972-8.0628 bounce.
S t e v e Ja r v i s
FX TRADER MAGAZINE January - March 2011 67
 FX INTERNATIONAL DATA

FX SPOT MONITOR
Country Flag USD Spot Last vs USD % Ch 3M % Ch 12M 12mth High 12mth Low

Eurozone EUR= 1.3176 -1.7% -7.8 % 1.4582 1.1878

UK GBP= 1.5509 -1.0% -3.3 % 1.6299 1.4232

Japan JPY= 83.59 -1.1% -8.3% 93.64 80.2500

Switzerland CHF= 0.9574 -3.0% -8.5% 1.173 0.9399

Australia AUD= 0.9985 4.4% 13.3% 1.0182 0.8068

Canada CAD= 1.0182 -1.2% -4.2% 1.0851 0.9976

New Zealand NZD= 0.7457 0.9% 5.7% 0.7976 0.6563

Sweden SEK= 6.81.46 -0.7% -6.6% 8.1362 6.4845

Norway NOK= 5.9704 1.4% 1.6% 6.7269 5.7041

Iceland ISK= 116.93 1.1% -9.2% 133.53 108.64

Israel ILS= 3.6 -2.6% -5.3% 3.9195 3.5607

South Africa ZAR= 6.8126 -3.3% -12.2% 8.084 6.7625

Egypt EGP= 5.808 1.8% 5.5% 5.813 5.5900

Saudi Arabia SAR= 3.7503 0.0% 0.0% 3.765 3.7374

Czech Rep. CZK= 19.18 4.5% 4.3% 24.532 17.065

Poland PLN= 3.0281 2.5% 3.0% 3.5283 2.7276

Hungary HUF= 209.32 0.2% 8.7% 242.9 190.71

Russia RUB= 30.752 -0.8% 0.7% 31.9445 29.568

Turkey TRY= 1.554 4.5% 1.7% 1.6175 1.1938

China CNY= 6.6589 -0.7% -2.5% 6.8329 6.6070

Hong Kong HKD= 7.7744 0.2% 0.3% 7.825 7.7505

Singapore SGD= 1.3129 -1.0% -6.7% 1.4208 1.2818

Taiwan TWD= 29.855 -5.3% -7.9% 32.52 29.766

India INR= 45.18 -0.9% -3.5% 47.74 43.84

South Korea KRW= 1152.15 0.1% -2.9% 1276.9 1104.1

Thailand THB= 30.18 -1.8% -9.2% 32.75 29.46

Malaysia MYR= 3.173 1.5% -8.7% 3.365 3.081

Indonesia IDR= 9047 1.0% -4.8% 9380 8887

Philippines PHP= 44.4 1.1% -4.9% 47.99 42.29

Mexico MXN= 12.3709 -2.2% -4.6% 13.3802 12.1743

Brazil BRL= 1.6968 -1.3% -4.9% 1.9157 1.6437

Chile CLP= 468.8 -5.0% -7.2% 553.3 468.4

Venezuela VEB= 2150 0.0% 0.0% 0 0

Colombia COP= 1932.3 6.9% -5.1% 2026.1 1784.1

Levels Date:21-Dec-10 Source: Thomson Reuters

68 FX TRADER MAGAZINE January - March 2011

 INTERNATIONAL DATA FX

CENTRAL BANKS
Country Flag Central Bank Rate Name Actual Previous

USA FED Fed funds 0.25 0.25

Eurozone ECB Refi 1.00 1.00

UK BOE Bank Repo 0.50 0.50

Japan BOJ O/N Call 0.10 0.10

Switzerland SNB 3 mth Libor 0.25 0.25

Australia RBA Cash 4.75 4.75

Canada BOC O/N Funding 1.00 1.00

New Zealand RBNZ Cash 3.00 3.00

Sweden Riksbank Repo 1.25 1.25

Norway Norges Bank Depo 2.00 2.00

Iceland CBI Policy 4.50 5.50

Israel BOI Short Term Lending 2.00 2.00

South Africa Reserve Bank Repurchase 5.50 6.00

Egypt CBE O/N Depo 9.75 9.75

Czech Rep. CNB 2 Week Repo 0.75 0.75

Poland NBP 28 Day Intervention 3.50 3.50

Hungary MNB 2 Week Depo 5.75 5.50

Russia CBR Refinancing 7.75 7.75

Turkey TCMB O/N Borrowing 6.50 7.00

China PBC 1 Year Lending 5.56 5.31

Taiwan CBC Discount 2.000 1.750

India RBI Repo 6.30 6.30

South Korea BOK O/N Call 2.49 2.50

Thailand BOT Repo 6.25 6.25

Indonesia BI BI 6.50 6.50

Philippines BSP Repo 4.00 4.00

Mexico BDM Target 4.50 4.50

Brazil BCB Selic 10.75 10.75

Chile CBC MPR 3.00 3.00

Levels Date: 21-Dec-10 Source: Thomson Reuters

FX TRADER MAGAZINE January - March 2011 69

 FX INTERNATIONAL DATA

ECONOMIC DATA
GDP CPI Industrial Production Unemployment
y-o-y y-o-y y-o-y level
USA 2.20 1.10 0.40 9.80
Eurozone 1.90 1.90 0.70 10.10
UK 2.80 3.30 -0.20 7.90
Japan 0.90 -0.60 -2.00 5.10
Switzerland 3.00 0.20 3.60
Australia 2.70 2.80 5.20
Canada 1.00 2.00 7.60
New Zealand (partecipation) 1.90 1.50 68.3 (partecipation)
Sweden 6.90 1.80 0.20 7.10
Norway -1.60 1.90 -0.30 2.70
South Africa 2.60 3.60 2.50 25.30
Czech Rep. 2.80 2.00 6.90 8.60
Poland 4.20 2.70 10.10 11.50
Hungary 1.70 4.20 8.30 0.00
Russia 3.90 0.80 6.70 6.70
China 9.60 5.10 13.30
India 7.40 10.80
Mexico 5.30 0.25 3.70 5.70
Brazil 6.70 0.83 2.10 5.70
Levels Date: 21-Dec-10 Source: Thomson Reuters

FX POLL
3 Month Days since Poll Poll Median Poll Min Poll Max Poll Mean Std Deviation Spot@Poll Date
EurUsd 19 1.345 1.17 1.5 1.34 0.061 1.3134
GbpUsd 19 1.58 1.42 1.69 1.575 0.057 1.5622
AudUsd 19 0.98 0.8 1.05 0.973 0.045 0.9682
UsdJpy 19 84 75 90.5 83.6 3.3 84.2
UsdChf 19 0.985 0.9 1.16 0.99 0.045 1.0024
UsdCad 19 1.005 0.95 1.14 1.013 0.035 1.0172
EurJpy 19 111.8 103.7 121.8 111.9 4.2 110.61
EurChf 19 1.32 1.235 1.516 1.327 0.051 1.3169
EurGbp 19 0.846 0.791 0.938 0.851 0.028 0.8405
GbpJpy 19 131.1 118.5 145.3 131.6 5.1 131.51
1 Year Days since Poll Poll Median Poll Min Poll Max Poll Mean Std Deviation Spot@Poll Date
EurUsd 19 1.305 1.1 3 1.343 1.243 1.3134
GbpUsd 19 1.589 1.335 1.9 1.588 0.112 1.5622
AudUsd 19 0.95 0.7 1.07 0.949 0.081 0.9682
UsdJpy 19 89.9 50 105 88.6 7.9 84.2
UsdChf 19 1.02 0.84 1.25 1.019 0.083 1.0024
UsdCad 19 1.024 0.9 1.2 1.023 0.057 1.0172
EurJpy 19 117.6 97.8 150 117.5 8.9 110.61
EurChf 19 1.34 1.197 2.82 1.37 0.228 1.3169
EurGbp 19 0.83 0.705 1.967 0.848 0.155 0.8405
GbpJpy 19 140.6 76.3 167.2 140.4 12.7 131.51
Levels Date: 21-Dec-10 Source: Thomson Reuters

70 FX TRADER MAGAZINE January - March 2011

 INTERNATIONAL DATA FX

MARKETS VIEW
Stock Indices Last % Ch 6M % Ch 12M Commodities Last % Ch 6M % Ch 12M
Gold 1384.3 11.27% 26.80%
MSCI World 1266.87 13.0 10.1 Silver 29.16 56.35% 71.63%
Dow Jones Ind. 11478.13 9.8 11.1 Brent DTD 93.32 23.41% 27.68%
S&P 500 1247.08 11.6 13.1 WTI 88.82 16.93% 22.16%
Nasdaq 100 2223.04 16.2 23.0
Eurostoxx 50 2872.08 3.7 -1.1 Bonds Last % Ch 6M % Ch 12M
UK FTSE 100 5945 12.2 13.4 5Y Euro 1.982 32.8 10.3
Dax 7076.96 12.9 20.4 10Y Euro 2.988 15.1 -6.5
Cac 40 3922.66 5.4 2.4 10Y US Treasury 3.34 6.3 -9.2
FT MIB 20657.55 -1.8 -9.3 30Y US Treasury 4.444 8.4 -2.6
Swiss SMI 6555.6 1.2 0.9 10Y UK Gilt 3.477 2.6 -10.1
Nikkei 225 10370.53 2.2 0.7 10Y CH Govt Bond 1.835 17.6 -5.5
Australia AORD 4862.469 5.6 3.4
HK Hang Seng 22993.86 11.6 6.9 Money Markets Last % Ch 6M % Ch 12M
Shanghai Comp. 2904.115 13.5 -8.4 US 6M Depo 0.4572 -39.2 6.2
Singapore StraitT. 3139.85 10.6 11.8 EUR 6M Depo 1.2530 22 25.9
India BSE30 20060.32 13.2 19.0 GBP 6M Depo 1.0469 2.9 25.5
Brazil Bovespa 67915.68 4.4 0.7 CHF 6M Depo 0.2383 14.4 -30.2
Russia RTSI 1750.46 23.4 23.4 JPY 6M Depo 0.3475 -21.9 -27.7
Levels Date: 21-Dec-10 Source: Thomson Reuters

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FX TRADER MAGAZINE January - March 2011 71

 FX Economic Calendar
JANUARY, FEBRUARY, MARCH 2011
GMT London Time

January 8:30am USD Retail Sales m/m

14 Fri
2 Sun 8:00pm CNY Manufacturing PMI 9:55am USD Prelim UoM Consumer Sentiment
3 Mon 10:00am USD ISM Manufacturing PMI 4:30am GBP CPI y/y
4 Tue 4:30am GBP Manufacturing PMI 5:00am EUR German ZEW Economic Sentiment
- GBP Halifax HPI m/m 18 Tue 9:00am CAD BOC Rate Statement
8:15am USD ADP Non-Farm Employment Change 9:00am CAD Overnight Rate
5 Wed
10:00am USD ISM Non-Manufacturing PMI 9:00am CAD TIC Long-Term Purchases
7:30pm AUD Building Approvals m/m 4:30am GBP Claimant Count Change
4:30am GBP Services PMI 8:30am USD Building Permits
19 Wed
8:15am CAD Housing Starts 4:45pm NZD CPI q/q
6 Thu
8:30am USD Unemployment Claims 9:00pm CNY GDP q/y
10:00am CAD Ivey PMI 8:30am USD Unemployment Claims
7:00am CAD Employment Change 9:30am CAD BOC Monetary Policy Report
7:00am CAD Unemployment Rate 20 Thu 10:00am USD Existing Home Sales
7 Fri
8:30am USD Non-Farm Employment Change 10:15am CAD BOC Press Conference
8:30am USD Unemployment Rate 4:45pm NZD Retail Sales m/m
9 Sun 7:30pm AUD Retail Sales m/m 4:00am EUR German Ifo Business Climate
8:30am CAD Building Permits m/m 21 Fri 4:30am GBP Retail Sales m/m
10:00am CAD BOC Business Outlook Survey 8:30am CAD Core Retail Sales m/m
4:00pm NZD NZIER Business Confidence 23 Sun 7:30pm AUD PPI q/q
10 Mon
7:30pm AUD Trade Balance 7:30pm AUD CPI q/q
9:00pm CNY Industrial Production y/y 24 Mon - JPY Monetary Policy Statement
11:00pm CNY Trade Balance - JPY Overnight Call Rate
11 Tue 7:30pm AUD Home Loans m/m - JPY BOJ Press Conference
7:30pm AUD Employment Change 4:30am GBP 4:30am
12 Wed 25 Tue
7:30pm AUD Unemployment Rate 7:00am CAD Core CPI m/m
3:15am CHF Retail Sales y/y 9:00am USD CB Consumer Confidence
4:30am GBP Manufacturing Production m/m 4:30am GBP MPC Meeting Minutes
7:00am GBP Asset Purchase Facility 10:00am USD New Home Sales
- GBP MPC Rate Statement 2:15pm USD FOMC Statement
26 Wed
7:00am GBP Official Bank Rate 2:15pm USD Federal Funds Rate
13 Thu 7:45am EUR Minimum Bid Rate 3:00pm NZD Official Cash Rate
8:30am CAD Trade Balance 3:00pm NZD RBNZ Rate Statement
8:30am EUR ECB Press Conference - GBP Nationwide HPI m/m
8:30am USD PPI m/m 5:30am CHF 5:30am
8:30am USD Trade Balance 27 Thu 8:30am USD Core Durable Goods Orders m/m
8:30am USD Unemployment Claims 8:30am USD Unemployment Claims
4:30am GBP PPI Input m/m 10:00am USD Pending Home Sales m/m
14 Fri 8:30am USD Core CPI m/m 28 Fri 8:30am USD Advance GDP q/q
8:30am USD Core Retail Sales m/m 31 Mon 8:30am CAD GDP m/m

72 FX TRADER MAGAZINE January - March 2011

 Economic Calendar FX
4:45pm NZD Labor Cost Index q/q 13 Sun 7:30pm AUD Home Loans m/m
8:00pm CNY Manufacturing PMI 14 Mon 7:30pm AUD Monetary Policy Meeting Minutes
31 Mon
10:30pm AUD Cash Rate 2:00am EUR German Prelim GDP q/q
10:30pm AUD 10:30pm 4:30am GBP CPI y/y
February 5:00am EUR German ZEW Economic Sentiment
15 Tue
4:30am GBP Manufacturing PMI 8:30am USD Core Retail Sales m/m
1 Tue
10:00am USD ISM Manufacturing PMI 8:30am USD PPI m/m
- GBP Halifax HPI m/m 9:00am USD TIC Long-Term Purchases
8:15am USD ADP Non-Farm Employment Change 4:30am GBP Claimant Count Change
4:45pm NZD Employment Change q/q 5:30am GBP BOE Gov King Speaks
2 Wed
4:45pm NZD Unemployment Rate 5:30am GBP BOE Inflation Report
7:30pm AUD Building Approvals m/m 8:30am USD Building Permits
16 Wed
7:30pm AUD Trade Balance 8:30am USD Retail Sales m/m
4:30am GBP Services PMI 4:45pm NZD PPI Input q/q
7:45am EUR Minimum Bid Rate - JPY Monetary Policy Statement
8:30am EUR ECB Press Conference - JPY Overnight Call Rate
3 Thu
8:30am USD Unemployment Claims - JPY BOJ Press Conference
10:00am USD ISM Non-Manufacturing PMI 17 Thu 8:30am USD Core CPI m/m
7:30pm AUD RBA Monetary Policy Statement 8:30am USD Unemployment Claims
4:30am GBP PPI Input m/m 4:00am EUR German Ifo Business Climate
8:30am USD Non-Farm Employment Change 18 Fri 4:30am GBP Retail Sales m/m
4 Fri
8:30am USD Unemployment Rate 8:30am CAD Core Retail Sales m/m
10:00am CAD Ivey PMI 21 Mon 9:00pm NZD Inflation Expectations q/q
6 Sun 7:30pm AUD Retail Sales m/m - GBP Nationwide HPI m/m
22 Tue
8:15am CAD Housing Starts 9:00am USD CB Consumer Confidence
7 Mon
8:30am CAD Building Permits m/m 4:30am GBP MPC Meeting Minutes
7:30pm AUD Employment Change 7:00am CAD Core CPI m/m
9 Wed 23 Wed
7:30pm AUD Unemployment Rate 10:00am USD Existing Home Sales
4:30am GBP Manufacturing Production m/m 7:30pm AUD Private Capital Expenditure q/q
- GBP Asset Purchase Facility 5:00am GBP Inflation Report Hearings
- GBP MPC Rate Statement 5:30am CHF KOF Economic Barometer
10 Thu 7:00am GBP Official Bank Rate 6:30am CHF KOF Economic Barometer
8:30am USD Unemployment Claims 24 Thu 8:30am USD Core Durable Goods Orders m/m
6:50pm JPY Prelim GDP q/q 8:30am USD Unemployment Claims
11:00pm CNY Trade Balance 10:00am USD New Home Sales
3:15am CHF Retail Sales y/y 9:00pm NZD NBNZ Business Confidence
7:00am CAD Employment Change 4:30am GBP Revised GDP q/q
25 Fri
11 Fri 7:00am CAD Unemployment Rate 8:30am USD Prelim GDP q/q
8:30am CAD Trade Balance 8:30am CAD GDP m/m
8:30am USD Trade Balance 10:00am USD Pending Home Sales m/m
28 Mon
11 Fri 9:55am USD Prelim UoM Consumer Sentiment 7:30pm AUD Retail Sales m/m
13 Sun 4:45pm NZD Retail Sales m/m 8:00pm CNY Manufacturing PMI

FX TRADER MAGAZINE January - March 2011 73

 FX Economic Calendar
10:30pm AUD Cash Rate 8:30am USD Retail Sales m/m
28 Mon 11 Fri
10:30pm AUD RBA Rate Statement 9:55am USD Prelim UoM Consumer Sentiment
March 13 Sun 4:45pm NZD Retail Sales m/m
- GBP Halifax HPI m/m 7:30pm AUD Monetary Policy Meeting Minutes
4:30am GBP Manufacturing PMI 14 Mon - JPY Monetary Policy Statement
9:00am CAD BOC Rate Statement - JPY Overnight Call Rate
1 Tue
9:00am CAD Overnight Rate 5:00am EUR German ZEW Economic Sentiment
10:00am USD ISM Manufacturing PMI 9:00am USD TIC Long-Term Purchases
15 Tue
7:30pm AUD GDP q/q 2:15pm USD FOMC Statement
8:15am USD ADP Non-Farm Employment 2:15pm USD Federal Funds Rate
2 Wed 7:30pm AUD Building Approvals m/m 4:30am GBP Claimant Count Change
7:30pm AUD Trade Balance 16 Wed 8:30am USD Building Permits
4:30am GBP Services PMI 8:30am USD PPI m/m
7:45am EUR Minimum Bid Rate 8:00am CHF Libor Rate
3 Thu 8:30am EUR ECB Press Conference 8:00am CHF SNB Monetary Policy Assessment
17 Thu
8:30am USD Unemployment Claims 8:30am USD Core CPI m/m
10:00am USD ISM Non-Manufacturing PMI 8:30am USD Unemployment Claims
4:30am GBP PPI Input m/m 18 Fri 7:30am CAD Core Retail Sales m/m
8:30am USD Non-Farm Employment Change 4:00am EUR German Ifo Business Climate
4 Fri 21 Mon
8:30am USD Unemployment Rate 9:00am USD 9:00am
10:00am CAD Ivey PMI 4:30am GBP CPI y/y
22 Tue
7 Mon 8:30am CAD Building Permits m/m 4:45pm NZD Current Account
8 Tue 8:15am CAD Housing Starts 4:30am GBP MPC Meeting Minutes
3:00pm NZD Official Cash Rate 5:30am CHF KOF Economic Barometer
3:00pm NZD RBNZ Press Conference 23 Wed 6:00am CAD Core CPI m/m
3:00pm NZD RBNZ Rate Statement 10:00am USD New Home Sales
9 Wed
7:30pm AUD Employment Change 4:45pm NZD GDP q/q
7:30pm AUD Home Loans m/m 4:30am GBP Retail Sales m/m
7:30pm AUD Unemployment Rate 24 Thu 8:30am USD Core Durable Goods Orders m/m
4:30am GBP Manufacturing Production m/m 8:30am USD Unemployment Claims
- GBP Asset Purchase Facility - GBP Nationwide HPI m/m
- GBP MPC Rate Statement 28 Mon 9:00am USD Pending Home Sales m/m
7:00am GBP Official Bank Rate 9:00am NZD NBNZ Business Confidence
10 Thu 8:30am CAD Trade Balance 3:30am GBP Current Account
29 Tue
8:30am USD Trade Balance 9:00am USD CB Consumer Confidence
8:30am USD Unemployment Claims 7:15am USD ADP Non-Farm Employment Change
9:00pm CNY Industrial Production y/y 30 Wed 7:30pm AUD Building Approvals m/m
- CNY Trade Balance 7:30pm AUD Retail Sales m/m
3:15am CHF Retail Sales y/y 7:30am CAD GDP m/m
6:00am CAD Employment Change 8:30am USD Unemployment Claims
11 Fri 31 Thu
6:00am CAD Unemployment Rate 6:50pm JPY Tankan Manufacturing Index
8:30am USD Core Retail Sales m/m 8:00pm CNY 8:00pm

74 FX TRADER MAGAZINE January - March 2011

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