Monday, 11 August 2014

Canada and Italy - Two Contrasting Economies

Momentum players make their money buying new highs or selling new lows, hoping the markets are going to extend their recent moves.  For the pure technical analyst the price level is not relevant.  If there are enough players, price does not matter, only the momentum is relevant.

Over time, the cure for high prices is high prices, and for lows the opposite works.  High prices kill demand and low prices stimulate demand.  This theory works, the fundamental traders argue, but not very quickly.  Changes in supply and demand, because of price, may not occur for six months or possibly much longer.  For that reason it is important to have an understanding of the strength of the different market drivers.

In Canada, for example, there is a Bloomberg article touting the bearish side of the Canadian Dollar.  Because the C$ has weakened versus the USD, making a recent new low above 1.0960 to the USD, this is a good enough reason to forecast further weakness, according to the technicians.

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Tuesday, 5 August 2014

Will The EURUSD Be Influenced by Last Week's Numbers?

The US labor numbers released Friday showed the US economy is gradually creating more jobs.  The July number - 209K - did fall short of higher expectations from the bulls, but was still a respectable number.  The unemployment rate went up to 6.2%, a mere .01% higher, which reflected a small increase in those seeking a job.  Still, the U-6 number which measures those unemployed, and working part-time because full-time jobs are unavailable, is 12.1%.  This U-6 number equates to 23.8M, and perhaps illustrates the slack in the US labor markets, which hinders wage increases.

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