Sunday August 12 2007
We opened at 7:45pm EST with a short (sell) on
the
USD/JPY@1.1824 stoploss at 25 pips
we closed @1.1774 +50 pips
We opened at 7:45pm EST with a long (buy) on
the
USD/JPY@1.1824 stoploss at 25 pips
we closed @1.1799 25 pips
Profit 25 pips
Monday August 13 2007
We opened at 8:25 am EST with a short (sell)
on the
EUR/USD@1.3655 stoploss at 25 pips
we closed @1.3605 +50 pips
We opened at 8:25 am EST with a short (sell)
on the USD/CHF @ 1.2011 stoploss at 25 pips
we closed @1.2036 25 pips
Profit 25 pips
Total Profit today + 50 pips
Trades for Tuesday August 14 2007
PPI
The Producer Price Index (PPI) measures the rate of
inflation (i.e., the rate of price changes) experienced
by manufacturers when purchasing goods and services.
A rising trend has a positive effect on the nation's
currency. When manufactures pay more for goods and
services, they are likely to pass the higher costs
to the consumer, so PPI is thought to be a leading
indicator of consumer inflation. PPI is highly regarded,
and at extremes will have a market impact equal to that
of its CPI counterpart.
Why Do Investors Care?
The PPI measures prices at the producer level before
they are passed along to consumers. Since the producer
price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer
level gets passed through to the consumer price index (CPI). By tracking price pressures in the pipeline, investors
can anticipate inflationary consequences in
coming months.
While the CPI is the price index with the most
impact in setting interest rates, the PPI provides
significant information earlier in the production
process. As a starting point, interest rates have
an "inflation premium" and components for risk
factors. A lender will want the money paid back
from a loan to at least have the same purchasing
power as when loaned. The interest rate at a
minimum equals the inflation rate to maintain
purchasing power and this generally is based on
the CPI. Changes in inflation lead to changes in
interest rates and, in turn, in equity prices.
The PPI comes in three versions: finished goods;
intermediate supplies, materials & components;
and crude materials that need further processing.
The finished goods PPI is most often cited in
the media. This index covers final products
bought from producers by businesses to sell
to consumers or to use for capital equipment.
The PPI is considered a precursor of both consumer
price inflation and profits. If the prices paid
to manufacturers increase, businesses are faced
with either charging higher prices or they taking
a cut in profits. The ability to pass along price
increases depends on the strength and
competitiveness of the marketplace.
Producer prices are more volatile than consumer
prices. The CPI includes services components - which
are more stable than goods - and the PPI does not.
Wages are a bigger share of the costs at the retail
level than at the producer level. Commodity prices
react more quickly to supply and demand. Volatility
is higher earlier in the production chain. Food and
energy prices are major sources of volatility, hence,
the greater focus on the "core PPI" which excludes
these two components.
The bond market rallies when the PPI decreases or
posts only small increases, but bond prices fall
when the PPI posts larger-than-expected gains.
The equity market rallies with the bond market
because low inflation promises low interest rates
and is good for profits.
We open at 8:25am EST with a short (sell) on the EUR/USD stoploss at 25 pips
We open at 8:25am EST with a short (sell) on the USD/CHF stoploss at 25 pips
Bernard
Licensed Brokers
Linear Mode
