Currency Trading Update - 11/21/08

As of Thursday’s close, none of the top 5 contestants were even in the top 20 as of Wednesday, as choppy trading conditions changed the game. There is a clear difference between the top 5 on Wednesday and Thursday: the number of positions held. While both groups have shown a preference for EUR/JPY and GBP/JPY, Wednesday’s leaders traded far more frequently and flipped positions as many as 20 or 30 times during the course of 24 hours. On the other hand, many of Thursday’s leaders have only opened 3 or 4 individual positions since the start of the contest, suggesting that these traders are using longer time frames. This sort of strategy is beneficial during bouts of high volatility, since stops and target levels are likely to be further away from their initial entry points and thus allows individuals to avoid being hurt by wild intraday swings.

Interestingly enough, it seems that only the leaders are doing well trading the Japanese yen crosses, as our stats show contestants are making the most in USD/CAD and losing the most in EUR/USD, USD/JPY, EUR/JPY, and GBP/JPY. This may be due to the fact USD/CAD as done little but surge, making it easy to jump in on the trend. However, the other noted pairs continue to consolidate.

Here are the key indicators that will be worth watching at the start of trading next week:

Asian Trading Session
**No releases scheduled.

European Trading Session
11/24, 4:00 ET
German IFO Survey (NOV) – The IFO index of German business confidence is forecasted to show broad declines in sentiment on the business climate (from 90.2 to a 5-year low of 88.7), current economic conditions (from 99.9 to a 3-year low of 96.8), and the outlook for growth (from 81.4 to a record-low of 81.0). However, the November 11 release of the German ZEW survey shows that investor confidence on the economic outlook improved very slightly, while sentiment on current conditions fell further. Overall, businesses, investors, and consumers are likely to hold a cautious view of growth going forward, especially as the Euro-zone tips into recession and financial market instability shows no signs of easing.

US Trading Session
11/24, 10:00 ET
US Existing Home Sales (OCT) – The National Association of Realtors index of existing homes sales is forecasted to show that purchases fell 5 percent during October to an annual rate of 5 million from 5.18 million. Other factors to watch within this report including median home prices, which were down 9 percent in September from a year earlier, and supply levels, which had fallen to 9.9 months in September from 10.6 months. Overall, there are downside risks for both the sales and price components, as deteriorating labor markets along with tight credit conditions do not bode well for a recovery in the US housing sector in the near term.