eToro – Forex Trading Forum

[ashokfor]

Aug. 23 (Bloomberg) -- The dollar posted its first drop against the euro in six weeks as oil rose and traders speculated that the U.S. currency's 8 percent rally since mid-July will be too fast to be sustained.

``We are going to see more dollar weakness going into next week,'' said Mike Moran, a senior currency strategist at Standard Chartered in New York. ``The market is overly long on dollars.'' A long position is a bet a currency will advance.

[ashokfor]

Futures traders increased their wagers to the highest since May that the euro will decline, figures from the Washington- based Commodity Futures Trading Commission showed yesterday.

The dollar fell 0.7 percent this week to $1.4793 per euro, from $1.4687 on Aug. 15. It's the first decline since July 11. The U.S. currency dropped 0.4 percent to 110.05 yen, from 110.53, the first drop in three weeks. The yen fell 0.3 percent to 162.83 per euro, from 162.30, ending a four-week rally

[ashokfor]

The pound dropped for a fifth week against the dollar, its longest losing streak since February 2006, after a report showed British growth stagnated in the second quarter.

Sterling fell 0.7 percent against the dollar this week to $1.8527 and touched $1.8505 yesterday, the lowest level since July 2006. The U.K.'s second-quarter gross domestic product was unchanged from the first quarter, ending the country's longest stretch of economic expansion in more than a century. Against the euro, the pound fell 1.4 percent to 79.80 pence.

[ashokfor]

Dollar's Rally

The dollar has advanced versus the euro since touching the all-time low of $1.6038 on July 15 and appreciated 2 percent against the yen this month as the European and Japanese economies shrank in the second quarter and crude oil fell 22 percent from a July 11 record of $147.27 a barrel.

Crude oil for October delivery rose for the first time in three weeks, increasing 0.8 percent to $114.66 a barrel. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations based on value changes. A reading of 1 would mean they move in lockstep.

[ashokfor]

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, known as net shorts, was 20,364 on Aug. 19, compared with net shorts of 19,427 a week earlier.

Federal Reserve Chairman Ben S. Bernanke said yesterday that a drop in commodities, a stable dollar and slowing growth should stem inflation. He added in a speech in Jackson Hole, Wyoming, that the inflation outlook remains ``highly uncertain'' and the Fed ``is committed to achieving medium-term price stability and will act as necessary'' to achieve that goal

[ashokfor]

Fed Rate Decision

Policy makers kept its benchmark interest-rate at 2 percent on Aug. 5 and said they see both growth and inflation risk. The minutes of the meeting is scheduled for release Aug. 26.

The ICE futures exchange's Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners, fell 0.5 percent this week to 76.805. The index touched 77.413 on Aug. 19, the highest this year.

[ashokfor]

``The story of the week has been the consolidation in the dollar rally,'' said Boris Schlossberg, director of currency research in New York at online currency trader GFT Forex. ``Most of the dollar rally is behind us.''

Reports next week will show new home sales in the U.S. fell in July to near the lowest since 1991 and orders for durable goods stagnated, according to the median forecasts of economists surveyed by Bloomberg News. A third monthly drop in the Ifo institute's German business confidence index is forecast.

[ashokfor]

``The euro-dollar is evenly balanced,'' said Alan Ruskin, head of currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``The market is caught between the idea that euro-dollar at $1.60 cannot be justified with Europe in dire straits and that fundamentals in the U.S. haven't improved either.''

[jensen7]

A reading of one would mean they move in lockstep. Could anyone give a good example of how you would trade if someone if you found that a barrel of oil US had gone up in price. How much would a reading of one be in dollars and cents? When would it move the markets? Hopefully this makes sense to someone who can answer?

The dollar has advanced versus the euro since touching the all-time low of $1.6038 on July 15 and appreciated 2 percent against the yen this month as the European and Japanese economies shrank in the second quarter and crude oil fell 22 percent from a July 11 record of $147.27 a barrel.

Crude oil for October delivery rose for the first time in three weeks, increasing 0.8 percent to $114.66 a barrel. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations based on value changes. A reading of 1 would mean they move in lockstep.[/quote]

[BlueinGreen]

A reading of one would mean they move in lockstep. Could anyone give a good example of how you would trade if someone if you found that a barrel of oil US had gone up in price. How much would a reading of one be in dollars and cents? When would it move the markets? Hopefully this makes sense to someone who can answer?

The dollar has advanced versus the euro since touching the all-time low of $1.6038 on July 15 and appreciated 2 percent against the yen this month as the European and Japanese economies shrank in the second quarter and crude oil fell 22 percent from a July 11 record of $147.27 a barrel.

Crude oil for October delivery rose for the first time in three weeks, increasing 0.8 percent to $114.66 a barrel. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations based on value changes. A reading of 1 would mean they move in lockstep.

[/quote]



in the last year , the correlation between crude oil and the EURUSD is 0.9 strong ( 90% ) this was not the case before 2007.

“ a reading of 1 “ is not a logical scenario, it would mean that on every 1% move in every direction the EURUSD makes, crude oil will change exactly in 1% to the same direction - a perfect correlation
they talk about a reading of 1 to explain how strong a reading of 0.9 really is. it means that 90% of the time they move in the same direction.

you can trade EURUSD using crude oil chart, and you can trade crude oil using information on EURUSD ( a better idea ).

here you have a live price chart - crude oil -

http://www.livecharts.co.uk/MarketCharts/crude.php

i wouldn't try to trade the moves i see on crude oil on EURUSD, since it can get confusing – oil price can get very volatile even compared to EURUSD. instead try to notice when and if an important breach in oil price was made – while
a price under $115 is considered good for the dollar these days
a price under $110 and finally under $100 would be even better.

any price above $115 reduced the steam the dollar had the last few weeks,
and finally a price above $125, is where economies start to get very nervous again especially the biggest consumer of oil in the world – the U.S –in return hurts the dollar -