Wish you a Great, Prosperous Blissfull, Healthy, Bright, Delightful Mind Blowing, Energetic, Terrific and Extremely Happy New Year of 2013

Stoltenberg Fears a New Euro Crisis in 2013

The Norwegian Prime Minister believes that Norway must prepare for difficult times of Euro area in 2013 .
Norwegian Prime Minister Jens Stoltenberg talked to television channel TV2 about the European financial crisis and its possible impacts on Norway for 2013. 

- We are not invulnerable and immune, it is easy to make mistakes that may also create problems in our own country, said Prime Minister Jens Stoltenberg to TV2.

Reminding Sweden and Denmark have already begun to feel the crisis with rising unemployment, Stoltenberg believes that Norway must prepare for difficult times even if the country has a better position than other European countries.

- Millions of people in Europe are losing their jobs and experiencing the insecurity of housing and income. There’s still a pretty dramatic economic situation in the world, said Jens Stoltenberg.

The Prime Minister also said the very uncertain economic situation will affect Europe in 2013 worse by pointing out the figures from Eurostat that shows nearly 19 million people in the Euro zone are unemployed.

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Special holiday hours for Forex markets

DATE TRADING HOURS 24 DECEMBER 2012 CLOSE AT 5 PM GMT 25 DECEMBER 2012 CLOSED 26 DECEMBER 2012 OPEN AT 6 AM GMT 31 DECEMBER 2012 CLOSE AT 5 PM GMT 1 JANUARY 2013 CLOSED 2 JANUARY 2013 OPEN AT 6 AM GMT

USD/JPY forecast to 85.00 in 1 month and 88.00 in 3 months

The UBS' team expects the USD/JPY extending its advance to early May highs in 1 month and they are comfortable with their 88.00 target in 3-month forecast. UBS expects the return of Abe as "substantial pressure on the Bank of Japan to ease policy further in the near term." 

The UBS Economics expects "the central bank to raise its quantitative easing Asset Purchase Programme again at this week's upcoming board meeting." The new governor, that is expected to take the power in April, "are likely to significantly increase domestic JGB purchases, and may eventually consider formally targeting the yen or buying foreign bonds if the new government changes the BoJ law." 

In this line, UBS raise its "one and three month USDJPY forecasts from 80 and 85 respectively to 85 and 88 with a risk that the pair trades as high as 90 over the next few months."

IMF: French Growth Outlook Fragile

• Growth relects weak European conditions
• French budget deficit seen at 3.5% of GDP in 2013.
• Bad news for France !!!!

Here Is Why The Euro Will Hit $1.40 End-2013 - Goldman Sachs

Goldman Sachs' base case forecasts for the EUR/USD next year is that it will be pushed back towards the upper half of the post-Global Financial Crisis (GFC) trading range, at about 1.40. That, according to GS, puts the EUR/USD at 1.25, 1.33 and 1.40 in 3-, 6- and 12-month respectively.

GS outlines 4 main reasons for this bullish EUR call next year:

1. GS' EUR profile is based largely on the view that USD undervaluation is unlikely without the second most liquid currency in the world, i.e., the EUR also trading overvalued to the USD.

2. GS has taken the view that the trough of the Euro area crisis may have been reached with the announcement of the ECB OMT program, and that over the next year or two the EUR will benefit from a gradual reduction in fiscal risk premia.

3. Short positioning in the EUR, according to GS, remains significant and a further unwind could push EUR/USD higher.

4. GS sees the persistent current account deficit in the US making a stronger USD performance unlikely.

EUR/USD Reversals History

Fitch affirms italy at A-; outlook negative

Fitch Ratings has affirmed Italy’s Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘A-’ with a Negative Outlook. The short-term foreign currency IDR is affirmed at ‘F2′ and the Country Ceiling at ‘AAA’.

RATING RATIONALE

The affirmation of Italy’s sovereign ratings follows the conclusion of a formal review in line with the forward guidance provided by Fitch when it last reviewed Italy’s sovereign ratings on 19 July 2012. The affirmation of Italy’s sovereign ratings reflects the following key rating factors:

- Progress with fiscal consolidation and structural reform in 2012 broadly in line with Fitch’s expectation. The budget deficit this year will be below 3% of GDP, implying a primary surplus close to 3%. The budget deficit has gradually declined from a peak of 5.4% in 2009.

- Low contingent fiscal risks from the banking sector, an underlying budgetary position close to that necessary to stabilise the government debt to GDP ratio and a sustainable pension system which underpins confidence in the long-run solvency of the Italian state.

- The Italian sovereign has demonstrated its financing flexibility and resilience during the crisis reflecting a strong domestic investor base and average duration of 4.7 years. Moreover, the announcement of the ECB’s Outright Monetary Transaction (OMT) programme has materially eased stresses in European sovereign bonds, including for Italian debt.

- The rating remains supported by the relatively wealthy, high value-added and diverse economy with moderate levels of private sector indebtedness.

RATING OUTLOOK -NEGATIVE

Top 10 Forex trading strategies for profit

Those who come to financial markets are blinded by seemingly easy profits. Lots of brokers scream about thousands of dollars that are to be made by you trading this or that market. Reality is different and you will find it for yourself in no time. One of the keys to trading successfully is to trade with a reliable system and this post is about some of the best Forex trading strategies that can also be applied in other markets. Firstly, I will deal with major systems which have given rise to alternative ones. Some of them will be quite simple, others more advanced. However, you should always remember that a trading method is only one of the keys to success. You need to know much more how to trade currencies profitably. You should also try to remember that there are so many scams online on the topic. To protect yourself from losses you should always be cautious and check everything you read and hear to see if that really works. I will try to explain as clearly as I can so that all beginners understand what I mean. I believe that intermediate traders will benefit from the post too. So let me reveal some of the systems for you.

1. Trend trading is the mother of all strategies both in stock and Forex markets

It took me more than one year to find out that I must follow a tendency in order to make money trading currencies. If you study lives and ways famous traders and speculators of the past made money you will find out that trend trading was most often used way to have profit. But how does that work? Most of the time securities stay in their ranges. In 2004 when I started trading Foreign Exchange market eur/usd was fluctuating in a pretty narrow range 1.1950-1.2460 from June to October when it exploded upwards. One should know that when a security stays for a long time in a narrow range it then forms a very powerful and often long term move. And that is when most Forex hedge and investing funds make money. You trade this kind of move by placing buy orders above the top of the range and sell orders below the bottom of the range. When price goes beyond one of the levels one of your orders is opened and you go with the market wherever it takes you. 

It is important to get out of your trades when signs of a reversal start appearing. Two major problems appear for traders who use this kind of strategy. One is that they run away from the market too early with very little profit, because they are afraid to lose it. Another is that they keep two positions too long and when a sharp reversal comes their profits are sharply reduced or they still sit hoping that trend will resume itself. They consequently lose all of their profit. So, watch for signs to determine your entry and exit levels. 

2. Forex range trading system for those who like playing with support and resistance

As has already been said most securities stay in tight ranges most time of the year. At this time prices tend to go to the top and bottom of the range a few times or even more till the extreme points are broken. What you want to do while trading this strategy is to trade a reversal at the top by selling a given security and buying a security around bottom. This is how you can make profits trading ranges. A few technical indicators can help you to filter your trades. 

Using this trading system one should remember that the longer the range continues the great odds are that a breakout is coming and one should be very careful when next time he sees price approaching key support or resistance levels as those can be taking in no time and one can experience severe losses. 

3. Breakout trading strategy for breakout traders

Breakouts of various levels happen on daily, weekly and monthly basis. Some even watch for hourly and minute basis to see a decent break and make fast money. One should find a period of time where a Forex pair is contained within small channel or a range and wait for it to be broken. It can be Asian session low and high or weekly top or bottom of any security depending on what Forex market hours you like trading most. 

There are too many false breakouts nowadays and if you really want to trade well the currency trading system you should have a number of filters to determine when to stay and when to get into the market. It is good when some fundamental news event makes the price go out of its’ range and the breakout is not only a technical one. I tend not to trade breaks that are not backed up by some fundamental news.

4. Swing trading as an alternative of trend following

The difference between swing and range trading is very narrow. Some would even say that it can be the same. It is also following a move that is usually shorter than a trend. Some say it could be from a few days to a few weeks. Trend on the other hand usually lasts from a few months to a few years (some Forex brokers can provide you with Forex trading software with a big choice of swing trading techniques by various providers). Traders who want to catch this kind of move tend to wait for some kind of news event which will give stimulus for a pair to move forward without stopping at least for a few days. This brings us to another strategy.

5. Forex news trading system for admirers of volatility

Economic news releases tend to catch markets by surprise and we usually see huge volatility in the markets when NFP or interest rate decision is announced. You should not be shocked to see 200 or even 400 pip moves in one minute during these events. It is intelligent to be out of the market if you are not sure what you are doing though. Some, however, love it and take advantages of the events by placing buy stop or sell stop orders minutes before the event happens. 

Beginners should avoid this trading method as it takes great skill to manage problematic situations that occur when news comes out. Your stop order might not be filled (it happened to me once when I was trading on Refco company platform) and you might be looking at the market going against you without being able to change anything. That’s when Forex trading online becomes dangerous. However, it is good to see what happens during these volatile sessions in the market and just analyze without any financial commitment. You will see the currency market in various aspects of it.  Lots of my posts on the blog contain my comments on how you could have traded this or that Forex news event. (Free Forex charts with live Forex quotes are available at dailyfx.com or metaquotes.net (metatrader platform, one of the best Forex platforms that I often use in my examples).

6. Forex scalping strategy

As Forex is a very liquid market and traders can open and close huge positions within minutes or even seconds making hundreds of trades per day has become popular among lots of day traders. When one is scalping he/she is making hundreds of trades per day and the average length of them is only a few minutes. As soon as the trader gets minimum profit (a few pips) he runs out of the position. It is a dangerous way to trade if one does not know how to control risk. Depending on your trading style: more aggressive or more conservative, you might be willing to choose one or another pair. For more aggressive traders gbp/jpy pair might be good way to scalp fx. If you are a more conservative trader you might be willing to find how to trade eur/gbp pair (the most orderly Forex pair in the market). 

When scalping you would want to have as low spread as possible (that’s why eur/gbp is good). You want to grab your few pips as fast as possible without having to wait too long till you break even due to unfavorable spread (15 pips or more). 

Problems with this kind of trading systems arise because stops are usually larger than take profits targets and one has to win many more trades just to break even. You should be careful and not go against theory of probability in terms of making profitable trades by scalping. Too many Forex scams turn around this way to trade the market and one must be aware of that in order not to be deceived. 

7. Overbought and oversold levels trading strategy

This is indicator based Forex trading system that a trader may use to make reversal trades when indicators give signals about a security being overbought or oversold. This works on various time frames and the most popular indicators for trading the method is RSI and MACD. I do not trade that way, but I often put RSI on my charts to see whether it is above 70 level (overbought) or below 30 (oversold) to know what I can anticipate in the coming days or even hours.

You should also have in mind that when Forex pairs are in a trend state all technical indicators will be at extreme levels and stay there for quite some time. This strategy is good in range bound markets and is not good at all when you a tendency is in place. 

If you look at various Forex signals providers you will notice that most of them widely implement these support and resistance levels in making predictions about move of securities they trade.

8. Bollinger bands trading system

Bollinger bands is a pretty powerful indicator and can be used in various types of strategies both long and short term. I like using the indicator on weekly charts to identify possible resistance and support levels and trade a reversal. You most probably know that John Bollinger does not consider bands to be working as support and resistance, but they fulfill this function when trends exhaust themselves and ranges start. That’s what I am waiting for in order to trade BB. When there is a prevailing tendency in a market, price slides through BB and one should not expect the indicator to act as support or resistance, but when price finally finds a top and starts going down, or a bottom and start going up, BB start flattening and form a nice channel to trade support and resistance. So, you need for price to hit the same are for the second time to be able to trade a reversal in a BB channel. (See the weekly chart in gbp/usd below). I heard that some guys include this trading pattern in their automatic Forex robots to identify tradable situations. 

9. Forex trading strategies with daily RSI indicator

There are a lot of techniques that one can apply for making trading decisions with any technical indicator, but I consider RSI to be the best for both long and short term trading systems. For catching bigger moves it is good to use 14 day RSI. One would wait for daily RSI to go above 50 to go long and below 50 to go short. It works pretty well when markets develop big ranges and swings and not so good when it goes sideways. The most recent example with gbp/aud is quite good for that. Check the chart below to see how this type of strategy could have been traded. You may also do your own analysis of gbp/usd (of April and May (daily chart)). 

10. 123 Forex trading strategy

123 trading pattern has been known for decades and successfully used in futures and stock markets by many traders. This is a reversal pattern that indicates that a major change of trend is coming. This pattern maybe found on various time frames but works best on long term charts, especially monthly. When you see it forming on a monthly chart you can be pretty sure that a major tendency shift is at hand and you can prepare for a few years of a different type of trend a trade accordingly. You will see this structure on small time frames too (all over the place), but they are not very reliable. I fully described this trading system here.

I am convinced that you have to use this method together with a few technical indicators such as RSI or MACD and it is recommended to draw trend lines on important support and resistance areas to see if the pattern forms at those levels. By no means make it an automated Forex trading system based just on one Forex technical indicator.

Yen set for further weakness, says Bank of Montreal

The Canadian bank accurately forecast in December 2011 that the yen would begin to weaken during 2012, landing it at the top of the 12-month rankings.

The perfect Global Financial Storm

Europe is in recession once again, having briefly recovered from the 2007-09 recession. Unemployment rates in Greece and Spain have reached 25%, with youth unemployment reaching 50%. The U.S. GDP is growing, but at a very low annual rate of 2% or less, with the unemployment rate still as high as 8%. China, India and Brazil are experiencing substantial reductions in their growth rates. Japan seems stuck in a long period of low growth and huge fiscal debts.

Several years of very large fiscal deficits and substantial money supply expansion have not managed to pull the world out of the great recession that began in 2007. Many nations now have fiscal debts so large that they are unsustainable. A rise in interest rates could make debt repayments impossible. Repeated financial crises in the Eurozone have been met with short-term stop-gap measures, while the EU has been reluctant to make the major institutional changes that many see as necessary for recovery. The U.S. "fiscal cliff" of the summer of 2011 is reappearing, as the U.S. once again approaches its legal "debt ceiling" and the President and Congress cannot agree on how to cut expenditures or raise taxes as part of a new fiscal "deal". 

In many nations, the fall in house prices cut consumer wealth, and hence led to reductions in consumer demand. The commodity boom with its increases in output and prices seems to have burst its bubble. Developing nations, dependent on commodity exports face decreasing global demand. The world is stumbling as Europe and the U.S., with their 50% of global GDP have failed to revive, and thus have failed to stimulate global growth.

The risks of global contagion extend to all financial markets. The financial crises of banks and governments will cause stock markets to fall precipitously, and then to recover gradually when stop-gap measures temporarily restore some degree of stability. Consequent volatility in international capital flows will cause foreign exchange rates to be volatile as well. Some feel that the new global Basel 3 banking rules and new national regulations such as the Dodd-Frank Act in the US will also put a damper on the recovery.

The Euro Crises

For the euro zone, two very different paths lie ahead. 

First, a continuation of financial crises will require spasmodic rescues by the economically successful EU governments, the European Central Bank and the IMF. Ireland and Greece will be followed by Cyprus, Spain, Italy, and Portugal. Banks will need injections of capital to prevent runs and collapses. Some governments will require loans, the purchase of their bonds, and organized debt defaults. 

However, Germany seems wary of continuing this shift of funds to nations that it sees as having been too profligate in their expenditures. Some analysts feel that the rich nations may not have adequate funds to bail out the economically troubled nations even if they wanted to, and so some unfortunate members may have to default and perhaps leave the Euro. Banks and investors in many nations now hold the debt of banks and governments of the troubled nations. Exits from the euro may become inevitable and even foreign banks and investors, such as those in the U.S., would be hurt. 

The second path lies in the transformation of the Eurozone into a single political entity, with new institutions such as:

A single Euro-wide banking system with a single regulator, with a single set of rules for banks in all euro nations, and with deposit insurance for all banks; nations would lose their rights to regulate or even supervise the financial sector.

A single decision-maker for fiscal policy; nations would lose their rights to determine their tax rates and expenditures. This would put clear limits on the ability of any nation to run fiscal deficits and build up its debt. This authority could issue Euro bonds for which all members would be liable. This sharing of debt would use the good ratings of nations like Germany to support the financial needs of the troubled economies. 

A much more powerful ECB that could use the "quantitative easing" practices of the U.S. FED to greatly expand the Euro money supply. In the summer of 2012, the ECB did begin this practice. 

Bailout funds to rescue banks in distress. While a fund has been established, some insist that funds go only to banks that encounter difficulties in the future; banks currently in trouble may have to rely on their nation's governments for bailouts. Thus, the current problems of banks will remain.

Perhaps, a new system for transferring funds regularly from rich nations to poor nations. However, such equalization funds seem unlikely. Hence, nations that have uncompetitive firms will experience ongoing unemployment and recession.

Many nations seem unwilling to give up their sovereignty in the ways required by this transformation. A concern of German leaders is the fear that a more powerful ECB could cause rapid inflation as a result of money supply expansion. However, others feel that rapid inflation is necessary to reduce debt as a percentage of GDP. A major degree of uncertainty continues.

The US Fiscal Cliff

In the summer of 2011, the nation faced a crisis when the fiscal debt approached the legal debt ceiling, and "Washington" had great difficulty in agreeing on a fiscal plan to raise taxes or cut expenditures. A compromise was that if no agreement could be reached by early 2013, then certain expenditures would be reduced automatically and the Bush tax cuts would be eliminated. The U.S. debt was downgraded. Without further agreement, the automatic expenditure reductions and tax increases could plunge the U.S. back into recession.

The Republican Party wanted to achieve budget balance by cutting government expenditures and reducing the size of government. The "tea party" movement was strong enough to block the attempts of Democrats to raise taxes on the rich and to raise the debt ceiling. In fact, a small group of Republican members of the House seemed prepared to block all compromises. The President seemed powerless to prevent the stalemate.

With the election of a divided Congress and Presidency, ongoing fiscal disputes and crises will be inevitable, with ongoing uncertainty for bond holders and tax-payers as the U.S. continues to run along the fiscal cliff. Inevitably, some crises will result in panics in all financial markets. Even a victory of the Democrats in the Senate and the Presidency may not be able to prevent the "tea party" Republican members from blocking a Democratic agenda, and hence sustaining the uncertainty.

EUR/USD: perspectives in December

So little time left to New Year, and on the threshold of holiday calm period on Forex market I will present a series of paragraphs, devoted to the forecast for the main currency pairs in the medium term perspectives. Let’s start from the EUR/USD as usual.

In the third quarter of 2012 the EUR/USD currency pair has turned bullish from the low 1.2041 (July, 24) to record high 1.3171 (September, 17). After this it rolled back to 1.2661 (November, 13). Fibonacci levels which correspond to this bullish trend are marked with orange color on my chart. So, it rolled back to the Fibonacci level 38.2% before upward movement. On the 5^th of December the EUR/USD currency pair reached its record high 1.3126, and almost fully compensated for drop in autumn.

But this time the currency pair also didn’t manage to break autumn high 1.3171 and continue to rise. It started falling again. The point is that almost during all autumn the EUR/USD currency pair was trading from 23.6% to 38.2% Fibonacci levels, that is to say it rolled back from 1.4939 (2011 high) to 1.2041 (2012 low). These levels are marked with blue color on my chart: 23.6% corresponds to 1.2725, а 38.2% – 1.3148. Thus, the euro needs to break strong resistance above 1,3148 in order to rise above autumn high. But it didn’t manage to do it three successive times.

This time news about the ECB meeting on the 6^th of December interfered with it. In the end of press conference Governor of the Central Bank Mario Dragi announced that there was a discussion on probable interest rate cut during the meeting. And though, I forecasted that the ECB would keep rates unchanged this time, Dragi worsened the outlook for GDP dynamics in 2013. New range of the forecast (from -0.9% to +0.3%) shows that according to the expectations of the ECB, E-17 GDP hardly go beyond zero level the next year even under the most optimistic conditions. And it is most likely that it will show bad result. Such forecast gave rise to expectations that the ECB will cut the interest rates in the nearest future. And, as usual, it has already influenced the prices on Forex market, and it caused selling the euro.

As a result, we see that the EUR/USD returned to the middle of its autumn trading range. If it breaks the resistance at 1.2905, the euro may reach 1.2725 – 1.2740 very fast. Only a serious injection of optimism may rescue European single currency.

Soon it may get such injection. Even two injections. The first one is FRS decision to implement QE3, which may be reached at the meeting on the 12^th of December. The second one is a solution of the fiscal cliff problem in the US Congress (it more likely happens not before the 20^th of December, taking into account the US congressmen habit to take a long time).

If both these events take place, it will cause risk-seeking on the Forex market. It will help the euro hit a high of its autumn range and even break higher above it. However, this scenario is not guaranteed. After all, lately markets interpret good news from the USA in favor of the dollar, but not in favor of the market assets.

AUTHOR: SERGEI GLUSHKOV

Trading the Forex weekend gap

Have you ever opened your trading platform at the beginning of the week only to see that the market has moved a lot since the last trading day with no intervening candles? This is what is known as the forex weekend gap.

The forex weekend gap occurs when there has been a major market moving event during the weekend when retail brokers are closed. However, currency exchange still goes on in the outside world, and if the weekend events cause a significant movement of one currency against another, this will produce a “gap” as retail brokerages update their trading platforms to reflect the new realities.

Certain clues can lead a trader to know when a weekend gap will occur. When there is a major political or economic event that will affect the demand on a currency or an asset, this will likely produce a weekend gap. One such gap occurred in crude oil prices at the outbreak of the Libyan Civil War in February 2011. The war broke out on a weekend, and led to immediate concerns about global crude oil prices. This led to a 400 pip weekend upward gap. Another instance occurred on the weekend when France voted out the pro-austerity Sarkozy government and voted in the Francois Hollande-led government which was largely in favour of an easing of the austerity measures. The impact on the Euro was felt with a weekend gap to the downside as concerns about the exit of Greece from the Eurozone and a collapse of the European monetary union mounted.

As a trader, the weekend gap can make you some good money if you know how to play it. How do you trade a gap? It is virtually impossible to predict the direction the weekend gap will take. Obviously if you are in a currency position at the close of the market on Friday and the market gaps in your favour, you are in for some good money. But if the market gaps against you, you stand a chance of not just losing the trade, but losing more than your stop loss target as a slippage could occur, pushing you deep into red territory.

A strategy that actually works is not about trading the gap itself, but trading the gap closure. The gap closure is a phenomenon that occurs when the market realises that the reason for the gap was actually not so wonderful as to sustain the trade in the direction of the gap. As such, we will see traders unwinding gap positions and trading against the gap. Our experience has shown that in 70% of cases, the gap actually closes. So the advice on trading the gap here is to wait for the market to open, and immediately trade against the gap using sound money management.

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More detail from IMF on $A status

 Economists at the International Monetary Fund have compiled figures backing the view that the Australian dollar is becoming a more important reserve asset for central banks.

"The IMF's new data-set provides fresh insights into central banks' debt holdings," Commonwealth Bank currency strategist Joseph Capurso said in a report on Friday.

"It also reveals central banks' preferences for reserve currencies because advanced economy sovereigns issue debt in their local currency.

"Central banks asset allocation decisions are important influences on financial markets because they are amongst the world's largest investors," Mr Capurso said.

"We still expect AUD and CAD to fall, at the very least in a knee jerk reaction, whenever global economic growth or global financial stability is questioned," he said.

"But the IMF data-set confirms what we have known for several years that both AUD and CAD are reserve currencies."

NZD/USD forecast to depreciate in 2013, though questionable - BNZ

As BNZ notes, what’s most are keeping an eye on is the NZD outlook for next year, which is tied to the outlook for NZ’s weighted trading partner growth, which is at 3.8% for calendar year 2013.

From Mike Jones, Currency Strategist at BNZ: “All things considered, the 3.8% growth forecast for NZ’s trading partners next year looks a touch strong. But not overly so. Plugging in our own (lower) numbers for Australia and the Eurozone still produces a healthy 3.5%. The important point is that, whether it’s 3.8% or 3%, the expected pick-up in global growth next year seriously calls into question our view the NZD will head lower from H2 2013.”

EUR/USD Monthly Fundamental Forecast December 2012

The EUR/USD closed the month at 1.2987. A slightly better-than-anticipated third-quarter performance in the euro area core (+0.2% q/q in both Germany and France) has led to adjusted 2012 GDP growth forecast from -0.6% to -0.5% for the region as a whole. Nevertheless, even with a slight uptick in certain surveys in November (PMIs, “Ifo”), leading indicators have failed to signal a material improvement in the forthcoming period. Elevated financial volatility caused unemployment, political risk, credit differentiation, fiscal tightening, and, eventually, a timid recovery to a trend growth rate of around 1-1.5% annually.

Highest: 1.3028	Lowest: 1.2881	Difference: 0.0147	Average: 1.2967	Change %: -0.01

With Greece behind markets are more positive. The focus is now the US Fiscal Cliff. Democrats and Republicans will reach a compromise but not until after weeks of political showmanship and stress. Markets are sure that the US will avoid a disaster. Other events include the FOMC meeting as traders are not exactly sure if Bernanke will offer up additional stimulus.

Disclosure/disclaimer: No positions. The above is for informational purposes only. All trade decisions are solely the responsibility of the reader.

FXall named “Best Online Foreign Exchange Trading System”

FX Alliance Inc. (“FXall”), a Thomson Reuters company and the leading independent global provider of electronic foreign exchange trading solutions, announced today that it has been named “Best Online Foreign Exchange Trading System” in the Global Finance Best Foreign Exchange Providers 2013 annual ranking.  It received this recognition for the ninth consecutive year since 2005.

The awards are judged and voted for by Global Finance editors, with input from industry analysts, corporate executives and technology experts. The criteria used for selecting the winners include transaction volumes, market share, scope of global coverage, customer service, competitive pricing and innovative technologies.

Phil Weisberg, CEO, FXall commented: “We are delighted to have won the award for Best Foreign Exchange Provider in the independent platform category. Our neutrality and independence is important to and valued by our clients, particularly at a time when market participants want to know what type of order flow they are interacting with. Over the past year, our clients have continued to operate in a challenging economic and political environment. At the same time, we have delivered on our commitments to extend our offering and help our clients navigate the new regulatory environment. We have continued to develop solutions for clients that meet the demands of today’s market, while preparing them for the future – now with the added benefit of being part of Thomson Reuters.”

EUR/USD - BANK TALKS !!!

Challenging the resistance at 1.3023.

• EUR/USD is challenging its strong resistance at 1.3023 (25/10/2012 high, see also declining trendline). An hourly support is at 1.2968 (30/11/2012 low). A key support is at 1.2875 (intraday low).The underlying trend is negative (see declining trendline linking the May 2011 high with the August 2011 high on a daily chart). Therefore we expect limited upside potential from current prices. MIG BANK comment of the day
  

  
  

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   NAB strategists take a look at the relationship between EUR/USD and the Spanish-German/German-US yield spread, saying the correlation remains strong. "If these trends are maintained, it is realistic to think about EUR/USD re-testing the 1.3172 mid-September high in the coming week or so" the bank notes.
  
  NAB strategists take a look at the relationship between EUR/USD and the Spanish-German/German-US yield spread, saying the correlation remains strong. "If these trends are maintained, it is realistic to think about EUR/USD re-testing the 1.3172 mid-September high in the coming week or so" the bank notes.  NAB BANK comment of the day.
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COUNTDOWN TO FISCAL CLIFF

Investors got their first taste this past week of how press events from the Obama administration and members of Congress over negotiations shifted markets. Expect those markets to get even more sensitive to the political drama in the coming week as the Dec. 31 deadline approaches.“You’d quickly have a crisis panic situation affecting the market, and that’s the only thing that moves politicians,” said Scott Wren, senior equity strategist at Wells Fargo Advisors. Under those circumstances, Wren wouldn’t expect a stock market drop of more than 10% as politicians scrambled to slap a Band-Aid on the situation. Morgan Stanley’s Slimmon sees the negotiations through the lens of the summer of 2011, when debt-ceiling squabbles forced a 16% pullback in stocks. While a 5% pullback is possible in December over further squabbles, he doesn’t see much more than that because too many investors got burned by selling into the political infighting back in 2011. Wren expects some sort of compromise mix of tax hikes and spending cuts using the Simpson-Bowles commission plan as a template but not before the end of the year. As for the coming week, he anticipates the market will react to the politicians stepping up to the microphone, and a very quiet volume week if nothing happens. “It’s only inevitable that anxiety will build over the next few weeks,” said Andrew Slimmon, managing director of global investment solutions at Morgan Stanley Wealth Management.