ForexGen | Margin Call

Margin call is something that you will have to be aware of.
If for any reason the broker thinks that your position is in danger e.g. you have a position of $100,000 with a margin of one percent ($1,000) and your losses are approaching your margin ($1,000). He will call you and either ask you to deposit more money, or close your position to limit your risk and his risk.
Margin call is actually a good thing. It safeguards you and your broker.
Some traders become so emotionally involved with their position that they are in cable of making a rational decision.
If a margin call is exercised it will safeguard the trader from further losses.

Euro-area Manufacturing PMI | ForexGen

Release Explanation: As an indicator of economic performance the PMI has the ability to easily affect currency valuations as Institutions re-align existing positions, or build new, on the strength of these reports. It measures the activity level of Purchase Managers, they are surveyed on production, employment, inventories, orders, delivery data. The PMI is split into reads on Manufacturing, Service, and Construction industries. A read over 50 denotes growth.
Trade Desk Thoughts: The PMI release shows the Euro-area manufacturing side of the economy contracted for the third consecutive month. The release number of 47.6 is in-line with analyst expectations of 47.5. It is thought that the strong euro recently together with the tightening cycle of the ECB contributed to the poor reads from the last few periods.

Forex Technical Reaction: The euro was unmoved by the release. Since the Asian session started, the pair has declined 50 pips and is trading just above TheLFB S1

Crude Eases But Braces for Gustav | ForexGen

The Usd traded slightly higher in European Session on very light volume. Eurusd dropped sharply in Asian trading falling from 1.4722 to 1.4640 while UsdJpy slipped from 108.57 to 107.57. Crude prices has continued to slide as the risk that Hurricane Gustav would disrupted oil & gas supplies have subsided. WTI crude dropped sharply from $117.19bbl to $114.34bbl. However with Gustav expected to hit land shortly anything can happen and markets are clearly on edge. Asian stock markets traded lower and European equity indexes are not fairing much better. US markets are closed for Holiday.

Over the weekend Chancellor stated that the UK economy faced the worst downturn for 60 years, further weighing on the in the UK and GBP. In addition, this week will see the BoE MPC rate decision and a number of critical data releases. We expect that BoE to hold rates steady and expect the next move will be down.

In Europe, another fall in German retail sales adds to the evidence that regional economy activity is clearly deteriorating. However, the engine of Euro Zone growth continues to perform better than Spain & Italy, where the industrial surveys indicate sharp drop in production.

BoE and ECB to Keep Interest Rates on Hold | ForexGen

The Bank of England and European Central Bank are likely to keep their key interest rates on hold on Thursday at 5.0% and 4.25%, respectively, as inflation rates in both regions continue to greatly exceed the official 2% target. The worsening backdrop for economic growth in both regions has not gone unnoticed but stable interest rates are vital if the two central banks are to succeed in bringing inflation back under control. The monthly US employment report will be under scrutiny on Friday as participants evaluate whether the rebound in Q2 gdp growth to 3.3% annualised can be sustained in Q3 and Q4. We forecast a rise in the unemployment rate in August to 5.8%. Interest rates in Australia could be cut on Wednesday for the first time since 2001.

Aside from MPC member Blanchflower's comment last week that 'interest rates should be cut' and the downward revision to Q2 gdp growth to flat from +0.2%, we don't think UK economic trends have shifted enough since the Inflation Report in August to believe that a move in the BoE base rate is imminent. If anything, the fact that Mr. Besley stuck by his view last month of a need for higher interest rates testifies to the different views on the MPC as it worries about the course of inflation. A stronger than forecast gain in retail sales in July, +0.8%, and a 2-month high for the FTSE-100 last week are likely to convince the Bank that leaving interest rates at 5.0% is the best contribution it can make to ensure that inflation falls back to target. Whilst economic conditions in general remain tough and below trend gdp growth means that spare capacity in the economy should rise, the uncertainty of where CPI inflation will eventually peak against a backdrop of still very vigorous M4 money supply growth and a 12-year low for sterling (trade weighted) leaves no room for complacency.

The MPC decision will be preceded by the key PMI surveys of manufacturing on Monday and services on Wednesday. The decline in both indices below 50 in Q2 was quite accurate in forecasting stagnation in economic growth. Given the ongoing concerns that tight credit and high inflation could tip the economy into recession - not our forecast - this week's data should offer some indication whether conditions are stabilising or deteriorating further at the end of Q3. More pivotal with regard to the near-term inflation outlook is the direction of prices. Last month, PMI surveys for the first time in three months signalled that output price pressures could soon stabilise.

A Flat European Session | ForexGen

Overall, the currency pairs were flat during the European session, with only the yen (Usd/Jpy) able to break lower. The U.S. session will be closed today, as is Canada, so it's very likely the market will continue to move flat.

The Euro (Eur/Usd) tested TheLFB S1 during the overnight session but was unable to break lower. An economic release showed the manufacturing side of the economy contracted in the Euro-area for a third month in a row, reflecting the weak state the economy. Later this week, the ECB will announce its interest rate decision.

The Pound (Gbp/Usd) declined 150 pips during the overnight sessions as the U.K. economy may be facing the biggest downturn seen in decades. The pair is trading just under TheLFB S2, and expecting the Manufacturing PMI release which is very likely to show the sector contracted for a fourth month in a row.

The Aussie (Aud/Usd) fell 50 pips soon after the new trading week had started, however, did manage to stabilize. During the European session, the pair hovered around the neutral pivot point after a release showed the Australian current account was worse than expected.

The Cad (Usd/Cad) advanced during the Asian session, but just before the European session started, liquidity dried up and the pair flat lined. In the last 3 days, the cad has advanced more than 200 pips due to a release that pointed out the Canadian economy expanded less than forecast.

The Swissy (Usd/Chf) gained 80 pips during the Asian session, testing the high of the previous day. However, the pair reversed and now the swissy is trading virtually unchanged. During the European session, a release showed Swiss industry is still expanding despite the global slowdown, although less than analysts had predicted

The Yen (Usd/Yen) continued to weaken during the European session, falling almost 80 pips, of which 45 pips came from the gap at the Asian session open. during the Asian session, the pair was unable to break TheLFB S1, but managed to do so during the European session. currently, the pair is trading just above TheLFB S2.