After hitting a 9 year high of 1.3124 last week, the rally in AUD/NZD is losing steam. I should have posted about this earlier, but I think there is still room for the currency pair to fall.

Last week, the Reserve Bank of Australia raised interest rates by 25bp to 4 percent but hinted that from here on forward, they will begin to slow down their pace of tightening. Having already doled out 80 to 90 percent of their planned rate hikes, the focus will now turn to the RBNZ who has not even started to raise interest rates. Granted, the Australian economy is doing far better than the New Zealand economy, it is time for New Zealand to catch up. In January, New Zealand turned its first trade surplus after 7 months of consecutive deficits and in February, business confidence hit a 10 year high. Yes my friends, a TEN YEAR HIGH. With numbers as strong as these, the Reserve Bank of New Zealand will most likely grow more hawkish, paving the way for a rate hike later this year.

Furthermore, 25% of New Zealand’s exports go to China and 25% go to Australia. Therefore the combination of higher commodity prices and strong growth in NZ’s most important trade partners should encourage the RBNZ to adopt a more optimistic tone when they meet later this week.

Finally AUD/NZD presents a good risk reward opportunity from a technical basis. It is currently trading at 1.2975 and if it rallies back above 1.31, the uptrend has resumed. Otherwise, there is no major support in AUD/NZD until 1.2775

From Basic Chase Instinct in Dogs by Karen Peak.

As 21st century citizens of the world, plugged continuously into the electronic heartbeat of the global economy, we love to think of ourselves as highly evolved and civilized human beings. With our Ipods and Blackberries permanently at our side, instantly aware of a Chilean earthquake, civil unrest in Athens, or latest skirmish in the Niger delta, we see ourselves as masters of the universe, able to control the world with one flick of the finger.

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But strip away the Hugo Boss suit, remove the Ermenegildo Zegna tie and kick off the Salvatore Ferragamo shoes and underneath all of our civilized armor we are much more like the Bushmen of the Kalahari desert than we like to think. We hunt and chase our prey just as they do, but we simply do it in more abstract ways.

Have you ever been involved in a bidding war on Ebay and wound up paying twice the retail price for some piece of second hand garbage? You are not alone. When men are placed into a competitive arena such as an auction, all sense of reason often leaves us and we are focused only on one task – catch and kill the prey. That instinct is so fundamental to our nature that we are not even aware of its power and no amount of formal education helps. That’s why multiple trading experiments (which are simply another form of a competitive auction game) involving engineers, Phds and physicists have shown near universal results of failure. Education is no protection from our instinct to chase.

The florist’s son did show up to pick asparagus, a job that simply entails walking along a line of stalks and cutting them into a basket. After two hours in the sun, however, the dough shaped boy clearly lost his enthusiasm and simply began to wander off the line, forcing other immigrant workers to clean up after him.

I bring this up because in this week’s video of my adventures and misadventures in ScalpLand, the biggest losses occurred when I was chasing price. Chasing price when you are short term trading is the fastest way to blow up your account. I know it’s tempting. Price is moving and you feel those profits running away from you, the way the Bushman sees an antelope running away from him on the great plains of Africa. But trust me, chasing price is a much bigger risk than chasing prey.

Short term trading is nothing more than a game of hot potato and if you are the last one to hold it you inevitably get burned. That’s why you can’t enter a trade half an hour after the news is out and expect to scalp your way to profit. To succeed in scalping you need to override your instinct and remember that when it comes to short term trading the rule is - better never than late. ]]> http://www.bkforexadvisors.com/boris-schlossberg/forex-trading-tips-better-never-than-late/feed/ http://www.bkforexadvisors.com/kathy-lien/who-has-lost-more-jobs-men-or-women/ http://www.bkforexadvisors.com/kathy-lien/who-has-lost-more-jobs-men-or-women/#comments Fri, 05 Mar 2010 14:46:18 +0000 Kathy Lien http://www.kathylien.com/site/?p=2936 The U.S. labor market report was released this morning and the data was much better than everyone had anticipated. Following the warning from Larry Summers that the storms in the Northeast could have swelled unemployment rolls, investors were bracing for the worst. However disaster was averted and Larry Summers will probably not be forecasting payrolls again anytime soon having embarrassingly caused a stir in the financial markets (but then again Summers is never one to be embarrassed easily). As I wrote yesterday, Summers did not have the NFP report on hand when he gave the warning which was clearly the case as payrolls fell a mere 36k.

There has been alot of analysis published on the NFP number including including ours on FX360.com. One thing that I do want to point out is that the blizzards took away slightly more than a million jobs which means that next month’s report should reveal a big jump in job growth.

Instead I thought it would be interesting to look at where the levels of employment and unemployment are for men and women. This data, calculated from the Bureau of Labor Statistic’s information is based upon the seasonally adjustment numbers for men and women over the age of 20. There are more men than women in the labor force but we have two scales on our charts to make the comparison between the rate of change easier.

The U.S. recession began in December 2007 and the number of employed men have fallen by 6 percent while the number of employed women have fallen by 2 percent since then. The level of unemployment amongst men has risen by 123 percent while unemployment for women have risen by 85 percent.

Earlier this month, Summers came out of no where to warn that “The blizzards that affected much of the country during the last month are likely to distort the statistics.” This prompted economists to jump out and say that the snowstorms could inflate job losses by an extra 150,000 to 220,000.

Caroline Baum of Bloomberg did some fantastic investigative research on this and called the Bureau of Labor Statistics directly to find out what Summers really knew (or didn’t). According to her report:

The only people who know the numbers several days before the release work at the Bureau of Labor Statistics, according to Tom Nardone, assistant commissioner for current employment analysis at the BLS.

People in his office, which is responsible for the household survey from which the unemployment rate is derived, and in the office of Pat Getz, his counterpart on the payroll- survey side, compile the report and prepare the databases so everything is set to go at exactly 8:30 a.m. on the first Friday of the month (with an occasional exception).

Who Knows What

The report is provided to the White House Council of Economic Advisers on Thursday, according to Nardone. The Secretary of Labor is briefed at 8 a.m. Friday in a lock-down situation in an office with the BLS commissioner. The same goes for reporters in the press room, where contact with the outside world is suspended under BLS supervision.

“Larry Summers did not have the number when he made his comment,” Nardone said.

The entire process is laid out in the Office of Management and Budget’s Statistical Policy Directive No. 3: “Compilation, Release, and Evaluation of Principal Federal Economic Indicators,” revised on Sept. 25, 1985. The directive also specifies who has access to prerelease information (the president, through the CEA chairman) under strict security arrangements.

Here’s another really great point:

For the household survey, if you have a job and were absent in the reference week, you are counted as employed whether or not you were paid. The survey of establishments is a bit trickier. If you were paid for work you did in any part of the pay period that includes the 12th of the month, whether you worked or not, worked a full or reduced week, you are counted as employed, Nardone says. If you didn’t work that week but got paid, you’re still counted.

Only if you didn’t receive any pay for the entire pay period are you not counted as employed. (The federal government closed its Washington offices for four of five work days, and those folks got paid.)

What categories of workers would be affected? Primarily part-time workers and new hires as counted in the payroll survey.

What this means is that Summers did not have access to the NFP report before hand. His warning was based upon jobless claims and weather reports.

USD/JPY is trading off U.S. rates (yields) and not stocks. The following chart shows the strong relationship between USD/JPY and the 10 Year U.S. Treasury yield. This relationship holds for shorter term yields as well like the 2 year bond yield

If the video doesn’t load, watch it here Kathy’s Fox Business Interview

The political debate has also turned darker now that the quagmire that would be caused by a hung Parliament is considered a realistic possibility after the coming elections. In such a scenario, the winning party still doesn’t have sufficient Parliamentary support to carry out its legislative agenda without help from other parties.

Read entire WSJ Article - Sterling Falls on Election Worries

The postelection stakes are large. Credit-ratings agencies have warned the U.K. it could lose its top-notch triple-A rating if the winner of the next election fails to offer a credible plan for fixing the nation’s finances. Any new government plan must address what looks like a still-fragile national economy.