EUR/USD

On the last trading session of the pair traded up to 1.2325 range in which the level is 38.2% Fib.Ret which are generally used for the retracement of the major trend. Bullish, but movements have a strong enough resistance where the range of 1.2345 is still strong to Resistance, Bias pair in the session this morning is a Bullish Bearish Momentum, be aware that an important level in the intraday session this time is the 1.24 range. If the range of 1.24 to Resistance confirmed the pair will return to weaken and potentially traded re-test range 1.2325 violated again and if successful will then go down then the Support is 1.2250, or 61.8% Wealth Fib.Ret. Instead watch out if the pair traded rose above the range of 1.24 and confirm it as well as managed to break 1.2445 support, then it will be situated next Resistance Wealth 1.2500/20.

EURUSD has traded with a 13 point range that is 11% of the Average Range 116 points and has diperdagangka gained +0.04% to +0.06% High and Low -0.05% from the close of trading yesterday.


Resistance Intraday 1.24 – 1.2445 – 1.25 – 1.2520
Support Intraday 1.2325 – 1.2250


GBP/USD

The pair traded rose and confirm the range of 1.5580 as Support after the BOE given inflation report in which the BOE Gov. Mervyn King believes that there needs to be easing and Cut Rate for the time being and he argues that economic growth will lag for 3 years. Bias and Momentum pair in the morning session today is Bullish, beware if the range of 1.5580 is violated and confirmed as the support it would be potentially traded pair rose to 1.5730 range. Conversely, if the range of 1.5680 is still acting as well as the Resistance the pair will potentially come back down to the range of 1.5580 again.

GBPUSD traded with a 27 point range is 24% of the Average Range 115 points and has been trading higher by +0.11% +0.16% High and Low -0.01% from the close of trading yesterday.


Resistance Intraday 1.5680 – 1.5730
Support Intraday 1.5650 – 1.5580


GOLD
Gold also rose after gold traded back to confirm the range of 1605 as a support in which gold is traded through the range of 1615 Resistance in the morning session today. Momentum Bias and Gold in the morning session today is Bullish, beware when gold traded higher and confirm the range of 1615 as a Support then be potentially traded gold rose back up to the 1625 range. Conversely, if the range of 1615 was confirmed as the Resistance would be potentially traded gold fell to a range of 1600 followed by 1585.


GOLD has been trading with a 4.60 point range is 29 points from Rang 16:03 Average point and has been trading higher by +0.22% +0.25% High and Low -0.04% from the close of trading yesterday.

Intraday Resistance 1625
Intraday Support 1615 - 1600 - 1585

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The Guidelines and Procedures for the Assessments and the Measurements of the Equilibrium Exchange Rates (disequilibrium) and Equilibrium Interest Rates (equilibrium) at Lower or Upper Currency Band

Questions have been raised by selected traders, economists and financial analysts on the guidelines and procedures for the assessments and measurements of the disequilibrium and equilibrium. There are several mathematical models have been introduced for the measurement of disequilibrium and equilibrium, however they are too complicated and CFA graduate from Chartered Financial Analyst Institute may not qualify to undertake the assessment and the measurement.

Equilibrium exchange rate (disequilibrium) and equilibrium interest rate (equilibrium) are different to effective exchange rate, nominal exchange rate, fundamental exchange rate and behavioural exchange rate that are generally used by the IMF, World Bank and other institutions in presenting the exchange rates.

The term of equilibrium exchange rate and equilibrium interest rate are illustrated in loanable fund theory introduced by Knuksell and equilibrium theory introduced by Cuikerman. However, those theories become more practicable after the introduction of the currency band theory introduced by Krugman, the later to be advanced by the theory of interest rate differential currency band introduced by Svennsons. Those are the foundation used by researchers and analysts to design equations that could be practiced by less educated analysts.

In practical, currency band theory is the indicator for the assessment and the measurement of the "actual" equilibrium exchange rate/disequilibrium and equilibrium interest rate/equilibrium. Therefore, unless currency band theory to be mastered and practiced, it is almost impossible to be able to measure the exchange rates at disequilibrium and at equilibrium. The actual exchange rates at disequilibrium and at equilibrium are assessable and measurable at the lower or at the upper currency bands. And, the most accurate currency band model is the interest rate differential currency band. The latest, they are advanced into time series interest rate differential based currency band.

The actual lower and upper currency band are validated by the performance of the currency pairs interior the band by using the theory of Brownian motion process. Therefore, the exchange rates at the lower or at the upper currency bands are different from time to time and dependance to the performance of the bands.

Accordingly, the exchange rates at lower currency band during the 1st quarter is different to the 2nd quarter, 3rd quarter and 4th quarter, and so on. Similarly, the exchange rates at upper currency band during the 1st quarter is different to the 2nd quarter, 3rd quarter and 4th quarter, and so on. Their difference is the result of different economic performance differential of currency pair from time to time. For example, one of more currencies' interest rates already increased or decreased, the GDP or CPI increased or decreased during the same or difference quarter to quarter. At such, the economic performance of a currency is accommodated by the performance of the currency band.

Thus, the currency band is dynamics, self-driven and self-adjustment and the actual exchange rates at disequilibrium and at equilibrium that measured at the lower or the upper currency bands are "dynamics" and "adjustable" from quarter to quarter or bi-quarter. The timing on the adjustment to be confirmed by the validation on the performance of the currency pairs interior the bands by using the Brownian motion process. It is "on-going performance mathematical computation" and may not presentable like advanced economic engineering and valuation or advanced corporate finance engineering and valuation. The theory however is accommodating the vested of interests of the global market participants (equal treatment and equal opportunity), a market-driven and motivated theory and practice.

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Lagarde Pays Tributes to Japan’s Leadership During Crisis July 6, 2012

Managing Director of the International Monetary Fund (IMF) Christine Lagarde today said that the continuing global economic crisis needs a cooperative policy response more than ever before. In this regard, Lagarde paid tribute to Japan’s global citizenship and its deep support for international cooperation.

“Over the past few months, the outlook has, regrettably, become more worrisome,” Ms. Lagarde said in a speech to a policy forum organized by Nikkei ahead of the October 2012 Annual Meetings in Tokyo. There are signs of slowing economic activity across both advanced and emerging economies.

While developments in Europe remain the most pressing risk for the global economy, Lagarde was encouraged by the outcome of the June 28 Summit, where “European leaders agreed to significant steps in the right direction to address the immediate crisis.” Yet, she stressed that “further progress will continue to be needed to overcome the crisis decisively and avoid the damaging effects on stability and growth.”

However, Lagarde was clear that the crisis is not just a European concern. “This is a global crisis. In today’s interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognize borders.”

Japan and the Asian region have coped with the crisis remarkably well so far, contributing more than half of total global growth since 2008. However, “this does not mean that Asia is immune. The spillovers from Europe are increasingly visible here,” Lagarde said.

Given these interconnections and the potential for spillovers, Lagarde stressed the need for effective solutions to be grounded in cooperation. She welcomed recent examples of countries taking account of those connections, including recent actions in Europe and the decision to strengthen the Chiang Mai Initiative Multilateralization.

Lagarde outlined the need for coordinated policy actions in three areas: dealing with high public debt across advanced economies; repairing and reforming the financial sector; and delivering strong, sustainable and inclusive growth.

As global policymakers work to tackle these challenges, Lagarde said Japan’s partnership and spirit of community was an invaluable guide for the international community. “When the global economy faced its darkest hours, you stood by your fellow global citizens,” Lagarde said, praising Japan being the “first to offer loans to boost the IMF’s resources and help stave off an even more dire global economic collapse.”

Lagarde was also impressed by the “heroic community response and the amazing adaptability of the Japanese people” following the Great East Japan earthquake and tsunami.

The IMF-World Bank Annual Meetings will take place in Tokyo this October, in a year that celebrates sixty years of membership at of both institutions. Looking ahead to the meetings, Lagarde said “the whole world will be looking to Japan’s leadership, spirit, and commitment to multilateralism—at a time when the world needs these qualities, and needs Japan, more than ever before.”

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IMF Concluding Statement of the 2012 Article IV Mission to The United States of America July 3, 2012

The U.S. recovery remains tepid and subject to elevated downside risks, in light of financial strains in the euro area and uncertainty over domestic fiscal plans. Against this background, policies need to decisively tackle medium-term challenges while using the available room to support the recovery. Specifically, it is critical to ensure a pace of fiscal adjustment in the short run that is supportive of the recovery, removing the threat of a very large fiscal adjustment in 2013, and to adopt a credible medium-term plan restoring fiscal sustainability.

Monetary policy conditions appropriately remain very accommodative, with some room for further easing should the outlook deteriorate. Aggressive implementation of the measures proposed by the Administration to speed up the housing recovery could yield sizable benefits to the broader economy. Good progress has been made in reforming the U.S. financial system, but vulnerabilities remain and appropriate resources should be devoted to complete and implement the new regulatory framework and monitor systemic risk.

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The Performance of EUR currency

The performance of EUR currency band is closely watched by global economists and analysts. As forecasted, the positive interest rate differential currency pairs (EUR/USD, EUR/CHF, EUR/JPY, EUR/GBP and EUR/CAD) are continuously stabilized at their lower currency bands. AND, as forecasted, the negative currency pairs (EUR/AUD and EUR/GBP) have reached their previous lower currency bands.

The global economists forecasted that ECB will cut the rate 0.25 % by July 5, 2012 to lower the rate from the current 1.00 % to 0.75 %. The rate cut was indicated by ECB on last June 2012 as quoted by Bloomberg. The performance of EUR currency band however does not indicate the possibility of ECB to cut the rate as the positive pairs are being continuously stabilized at their lower currency bands and the negative pairs underway to visit and near their lower currency bands. Should ECB cut the rate, ECB may undertake large market sterilization to defend those pairs at lower currency bands to establish new lower currency bands before they are established to move to upward direction. Nonetheless, the ECB rate cut forecast is scheduled within the time framework of the currency band stabilization.

At such, both the negative and positive interest rate differential currency pairs are now being stabilized at their lower currency bands. Depending to the ECB's monetary policy decision in July 5, 2012 (tomorrow), Should ECB not to cut the rate, then both positive and negative interest rate differential currency pairs will initiate to move to upward direction (up-trending) to visit their upper currency bands, BUT should ECB to cut the rate as forecasted by the global economists, then positive and negative interest rate differential currency pairs may be stabilized at longer time before they move to upward direction (up-trending) or they may be under pressured to establish their new lower currency bands before they move to upward direction (up-trending). LONG on EUR currency band's currency pairs will be analyzed (currency by currency), particularly for the positive interest rate differential currency pairs.

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EUR Currency Band Forecast

EUR currency band near the market entry timing. As forecasted above, the positive pairs (EUR/USD, EUR/CHF, EUR/JPY, EUR/CAD and EUR/GBP) continuously stabilized at lower currency band to wait until the negative currency pairs (EUR/AUD and EUR/NZD) to reach their lower currency band. Both EUR/AUD and EUR/NZD already moved to near their previous lower currency bands. Cross currency band performance analysis with AUD and NZD currency bands is indicating that both EUR/AUD and EUR/NZD will break their previous lower currency bands until they are stabilized.

During the stabilization of EUR/AUD and EUR/NZD at their lower currency bands, the positive currency pairs will be under pressure and re-stabilized at their lower currency bands. Both the positive and negative currency pairs are expected to reach their equalized lowest measured average traded weighted rates in order to enter the market in July 2012. At such, both positive and negative pairs become commendable to long from their lowest measured average traded weighted rates at their lower currency bands to target their upper currency bands. The performance of EUR currency band is an indicator "the end of the EUR weakening against major currencies by average" and European economic and financial crisis may already hit the rock. Accordingly, EUR currency band becomes commendable to target by this July 2012.

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Additional portfolio Trading Pairs NZD/JPY

The first trade has been commenced today to Long NZD/JPY (details of trade not disclosed) to target 650 PIPs profit expectation. The funds utilized for margin/equity utilization is 2.02 % from total funds to target 41.80 % profit in July 2012. Additional portfolio will be added with maximum funds utilized for trading (margin) about 5 % from total funds. At such, there are still 2.98 % funds available to be utilized to trade other currency pairs to increase the profit expectation in July 2012.

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