Wealth Builder FX Blog

Europe - What we NEED is GROWTH

Thu, 22 Mar 2012 09:43:00 GMT

Austerity isn’t working in Europe.

Greece is collapsing, Italy and Spain’s output is declining, and even Germany and the U.K. are slowing down. In addition to their direct economic costs, these “austerity”measures aren’t even swiftly closing budget gaps. As incomes decline, tax revenue drops, and it becomes harder to cut spending. A downward spiral looms.

These events have important lessons for the U.S. government who cannot forever borrow and spend 10 percent of gross domestic product each year, with an impending entitlements fiasco, to boot. Europe’s experience is a warning that austerity - - a program of sharp budget cuts and (even) higher tax rates, but largely putting off “structural reforms” for a sunnier day - - is a dangerous path.

Why is austerity causing such economic difficulty? What else should we do?

Lack of “stimulus” is the problem, say the Keynesians, epitomized by the New York Times and its columnist Paul Krugman, who has been crusading on this point. They claim that falling output in Europe is a direct consequence of declining government spending. Yes, 50 percent of GDP spent by the government is simply not enough to keep their economies going. They -- and the U.S. -- just need to spend more. A lot more.

Germany’s Limits

Where will the money come from? Greece, Spain and Italy simply cannot borrow any more. So, say the Keynesians, Germany should pay. But even Germany has limits. The U.S. can still borrow at remarkably low rates. But remember that Greece was able to borrow at low rates right up to the moment that it couldn’t borrow at all. There is nobody to bail out the U.S. when our time comes. What should we do then?

The traditional Keynesian answer was: Move on to monetary stimulus. Deliberately inflate and devalue. Break up the euro so the southern European countries can inflate and devalue even more.

Lately, Keynesians have been pushing an even more audacious idea: Deficits pay for themselves. In a March 17 column, Krugman wrote: “there’s a plausible case that spending more now actually improves the long-run fiscal picture.”

U.S. federal revenue is less than 20 percent of GDP. For deficit spending to pay for itself, then, $1 of spending must create more than $5 of output. Economists have been arguing about whether this “multiplier” is more or less than one; five is beyond any reported estimate. Keynesians made fun of “supply siders” in the 1980s, who made similar claims for tax cuts. At least those cuts had incentives on their side, which stimulus doesn’t.

Is there another explanation, and a more plausible way forward?

The stimulus explanation is curious for what it omits. Think of Greece.

Is it irrelevant that Greece is 100th on the World Bank’s“ease of doing business” list, behind Yemen; 135th on “starting a business” and 155th on “protecting investors?” Is it irrelevant that professions from truck driving to pharmacies are still rigorously protected, that businesses can’t fire people, that (according to a Greek colleague) you can’t even get a driver’s license without paying a bribe? Does it not matter at all that, as the International Monetary Fund delicately put it in its latest report on Greece, the “structural reform program” aimed at “deeply ingrained structural rigidities in labor, product, and service markets” got nowhere?

Greek Taxes

Doesn’t it matter that Greece has a high combination of individual, corporate, wealth and social taxes? True, Greeks famously don’t pay taxes, but businesses that must operate illegally to avoid taxes are much less efficient.

Money is fleeing Greece, Italy and Spain. Does talk of exiting the euro, followed quickly by devaluation, inflation (the IMF predicts 35 percent in Greece, should it leave) and capital controls, have nothing to do with lack of investment?

Keynesians urge devaluation to gain competitiveness. Greek wages have in fact declined about 10 percent to 12 percent, according to the IMF. Yet investment and production aren’t turning around. Greek “demand” needn’t matter -- the whole point of the euro area is that Greece can sell to Germany, so long as Greece stays in the euro area. But it isn’t happening. Is that a mystery? Would lower wages compel you to invest money in Greece; surmount a thicket of regulation; and expose yourself to the threats of wealth, property and business taxation, currency expropriation and capital controls, or even nationalization?

In sum, isn’t it plausible that a good part of Europe’s austerity doldrums are linked to “supply,” not “demand;” “microeconomics,” not “macroeconomics;” weeds in the economic garden, not a want of fertilizer? Isn’t it plausible that factors beyond simple declines in government spending matter in a debt crisis?

That insight suggests a different strategy: Let’s call it“Growth Now.” Forget about “stimulating.” Spend only on what is really needed. We could easily stop subsidies for agriculture, electric cars or building roads and bridges to nowhere right now, without fearing a recession.

Rather than raise taxes further on the “rich,” driving them underground, abroad, or away from business formation, fix thetax code, as every commission has recommended. Lower marginal rates but eliminate the maze of deductions. In Europe, eliminate the fears of wealth confiscation, euro breakup and currency devaluation that are driving savings and investment out of the south. Most of all, remove the profusion of regulation and (increasingly) direct government management of the economy.

Italy’s Deregulation

Europe is beginning to figure this out. Italy’s prime minister, Mario Monti, is addressing his country’s debt crisis by proposing far-reaching deregulation, now. While his proposals aren’t complete or close to radical enough, and they are combined with some unfortunate business-stifling tax increases, it’s remarkable that anyone in Europe is beginning to talk about this.

“Structural reform” is vital to restore growth now, not a vague idea for many years in the future when the stimulus has worked its magic. It’s also a lot harder politically than the breezy language suggests. “Reform” isn’t just “policy” handed down by technocrats like rules on the provenance of prosciutto; it involves taking away subsidies and interventions that entrenched interests have grown to love, and have supported politicians to protect. They will fight it tooth and nail.

That is even more reason to address this now, while there is a crisis. The will to do so may evaporate if better times return, and the ability to do so might disappear if the economies plunge.

(John H. Cochrane, a professor of finance at the University of Chicago Booth School of Business and an adjunct scholar of the Cato Institute, is a contributor to Business Class. The opinions expressed are his own.)

Read more opinion online from Bloomberg View.

To contact the writer of this article: John H. Cochrane at john.cochrane@chicagobooth.edu.

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net.

see this article at http://www.bloomberg.com/news/2012-03-21/austerity-or-stimulus-what-we-need-is-growth.html

The never ending European problem.

Wed, 21 Mar 2012 08:30:00 GMT

an interesting article on Europes problems and why the "crisis" might be with us for a long time to come....

<http://www.economist.com/blogs/charlemagne/2012/01/europes-debt-crisis>

"The World Bank report shows that Europe has deep structural flaws to contend with. Perhaps most worrying is the slowdown in labour productivity, the underlying driver of economic growth over the long term. Western Europe had almost closed the productivity gap with America by 1995. But thereafter it started to lag ever farther behind the United States (and kept losing its lead over Japan)."

This article looks at individual productivity amongst other things and why most European nations will find it difficult to work their way out of the debt they have found themselves in.

What's in store for 2012 ?

Sun, 15 Jan 2012 01:12:00 GMT

The currency markets are getting alot of attention lately from investors with good cause as this is one sector that - if managed properly- can provide good levels of growth & profit for those who participate.

Those who fail to learn from the past are doomed to relive it. One thing is certain... There's no way back to 2007 !

The world has come to the realization that the USA and European countries have been living beyond their means for many years. The crisis we are living with now is the culmination of bad governement policy and overspending together with the unwillingness from the private sector to increase spending or economic activity in the wake of subsequent reductions in government spend. Of course any first year undergraduate economics student could tell you that if you spend more than you earn... sooner or later it will catch up with you.

We are desperate for global growth to help us through and many believed that China might be the saviour to pull everyone though the tough times. But as concerns deepen over the slowing growth rates in China in the face of what seems like a never ending story of economic barrenness and uncertainty, the question is raised - Who will save the global economy?

EuroZone

As the European crisis continues now into 2012 , the focus has been on Italy and its problems, because Italy has the ability to cause greater damage to the eurozone and its single currency than Greece ever had. However, the latest event in the Euro crisis is the credit ratings cuts of several countires on Friday 13th by Standard & Poor.

The agency cut the credit ratings of Cyprus, Italy, Portugal and Spain by two notches and France, Austria, Malta, Slovakia and Slovenia by one notch.

But the significant cut was to the rating of France, which dropped from AAA to AA+, leaving Germany as the only major economy in the eurozone with a AAA credit rating. Italy went from A to BBB+, Spain from AA- to A, Austria from AAA to AA+, Portugal BBB- to BB, Malta from A to A-, Cyprus from BBB to BB+, Slovakia from A+ to A and Slovenia from AA- to A+.

S&P said it was "primarily driven by insufficient policy measures by EU leaders to address systemic stresses".

France still has a top AAA rating from the other two main agencies, Moody's and Fitch.

It's likely that the Eurozone may not exist in its current form by the end of 2012. There could be a scenario that would see the stronger countries like Germany & France being part of a smaller version. Some kind of fiscal and even political union would be one way of solving somes of the issues. So could we see a United States of Europe perhaps?, with member countries becoming more like states ?? I hope I'm wrong. It would be nice to see the Euro and it's Zone survive.

The uncertainty over this is likely to mean more weakness and volatility for the Euro dollar in 2012. We've already seen some volaitility in the EUR/USD and GBP/USD pairs so far this month.

CHINA

China is starting to make its move with the internationalisation of the renmimbi - and that process is happening faster than most expected. We could expect to see the ability to trade the yuan renmimbi on the international stage outside of Hong Kong perhaps as soon as later this year. While its a long way from the potential to replace the greenback as the worlds reserve currency, the writing is starting to appear on the proverbial wall. Although alot of things would need to happen in China for this to become reality. Some kind of move closer to a democracy would have to be part of that I would have thought.

However, for now, The USD remains King and that's not likely to change anytime soon.

Austerity measures in both USA and Europe will mean slower growth or even recession, so more turmoil and economic challenges look to continue into 2012 and beyond as it will take many years for these economies to recover from their debt levels.

Emerging Economies

In 2012 an important milestone will be reached when the developing economies will import more goods than the developed or so called rich economies. The GFC has hastened the shift in economic power towards the newcomers. Real GDP in the developed world is no higher now than it was in 2007. In constrast, the output of the developing or emerging economies grew by some 25%.

In 2012 emerging economies will account for nearly 50% of global retail sales. China looks likely to overtake the USA as the worlds biggest importer by 2014.

Aussie Dollar

The big four banks in Australia (which are among the strongest banks gloabally) have recently been quoted that they expect to cut staff and overhead in the expectation of further funding cost increases from the continued Eurozone problems. Major Australian bank exposure to offshore funding markets means the Aussie will remain at the whim of investor risk apetite. The AUD gains on positive developments and then sells off aggressively on negative ones, as the HSBC strategy team recently put it.

Countires that have the flexibility to ease policy will do so this year, which will lead to lower interest rates in Australia. Caution is recommended for long term positions on commodity based currencies like the AUD, CAD and NZD because an improving US economy will cause investors to start pricing in an end to quantative easing.

Most strategists think that the AUD will slip lower against the Greenback during 2012.

As the Eurozone crisis continues and the USA finds its way politically and economically, we think that 2012 will be another year of currency volatiltiy and economic uncertainty. This will translate into good opportunites again on the spot FX markets.

So... brace yourselves, 2012 will be interesting.. but it's not going to be the end of the world !

Merry Christmas Everyone

Sun, 25 Dec 2011 02:09:00 GMT

All of us here at Wealth Builder FX Group would like to wish you all a happy and safe Christmas and New Year and look forward to a prosperous 2012.

Is the Euro coming to an End?

Thu, 01 Dec 2011 06:47:00 GMT

It doesn't take rocket science to know that things are not well in Europe. But just how bad are they? and how much worse can it get? It's highly likely that recession or even depression is on the way.

We believe it can get a lot worse if things continue as they are. According to some it is quite possible the currency will not survive the next 12 months. But its not too late ! Below is a number of articles on the subject.

Obviously this all means more opportunity for us as traders... enjoy the read...

Investors sent Europe’s politicians a painful message last week when Germany had a seriously disappointing government bond auction. It was unable to sell more than a third of the benchmark 10-year bonds it had sought to auction off on Nov. 23, and interest rates on 30-year German debt rose from 2.61 percent to 2.83 percent. The message? Germany is no longer a safe haven.

Since the global financial crisis of 2008, investors have focused on credit risk and rewarded Germany with low interest rates for its perceived frugality. But now markets will focus on currency risk. Inflation will accelerate and the euro may break up in a way that calls into question all euro-denominated obligations. This is the beginning of the end for the euro zone.

Here’s why. Until 2008, investors assumed that all euro- zone sovereign bonds, as well as bank debt, were risk-free and would never default. This made for a wonderfully profitable trade: European banks could buy government debt, finance it at less expensive rates through funding provided by the European Central Bank, and pocket the spread.

Then credit conditions tightened around the world and some flaws became evident. Greece had too much government borrowing; Ireland had experienced a debt fueled real-estate bubble; and even German banks had become highly leveraged. Investors naturally decided some credit-risk premium was needed, so yields started to rise.

Greece, Ireland, Portugal, Spain and now Italy have large amounts of short term debt that they can’t roll over at low cost. Leading European banks are in the same situation. None of these countries or banks can long bear the burden of their current debt levels at reasonable risk premiums.

Last Resort Technocrats

Many of Europe’s leading politicians, some International Monetary Fund officials, and the technocrats-of-last-resort -- Mario Monti in Italy and Lucas Papademos in Greece -- mistakenly believe that these risk premiums can be quickly reduced. They argue that if they cut budget deficits, carry out structural reforms and modestly recapitalize banks, their countries will soon grow and regain access to markets.

More realistically, none of these countries will be borrowing again soon in the capital markets. Ireland’s finance minister, Michael Noonan, is at odds with reality when he claims that Ireland should return to the markets in 2013. This is a country with 133 percent of gross national product in public debt and about 100 percent GNP in additional contingent liabilities to the banking system. (We use gross national product because gross domestic product is artificially raised by the offshore profits of non-Irish multinational corporations, most of which Ireland doesn’t tax.)

With such enormous debt burdens, even if the Irish or other troubled countries manage to convince the market that there is only a 5 percent to 10 percent annual risk of default, these countries will experience high real interest rates -- plus ensuing low investment and fragile banks -- for decades.

The French, along with U.S. and U.K. officials, are pleading with the European Central Bank to come to the rescue. Their hope is that the ECB can remove credit risk by promising to back all sovereign and bank credits in the euro zone. This is what politicians mean when they say “bring out the bazooka.”

When large amounts of any currency are printed in response to deep structural flaws, it’s hard to trust that money. A massive bond-purchase program by the ECB would reduce credit risk but increase the danger that the euro will decline in value against the dollar and other currencies. And if the ECB needs to continue buying more debt to finance deficits and prevent defaults -- because peripheral countries could stop making painful fiscal adjustments once the ECB starts buying bonds -- wages and prices would increase, as we saw in the U.S. in the 1970s. This is anathema to the Germans.

Inflation Risk

We would soon see German bonds sold off as investors protect themselves from long-term inflation, which erodes the value of such debt. People holding bonds with a high credit risk (such as Italy and Spain) would surely sell many of those to the ECB, or simply cash out when those bonds mature in case the central bank, at some point, stops buying.

An ECB “bazooka” wouldn’t restore competitiveness to Europe’s periphery, so even with this, Europe’s troubled nations would require many more years of tough austerity and budget reform to stabilize debt.

This would all just look like another unsustainable debt profile. Germany would be paying higher interest rates on its debt, while most banks and the periphery would be heavily financed by the ECB -- and both credit and currency risk premiums would remain. Markets would eventually turn against Europe with a vengeance, and with no more plausible solutions, the whole system would come tumbling down amid both inflation and debt restructuring.

Germany’s credit is impeccable, but the country is issuing debt in a currency that is flawed and could soon be worth much less than it is today. If Germany does block the “bazooka” and instead takes on more of the fiscal burden in Europe -- for example, through the obligations inherent in any kind of euro- bond issue -- this would reduce currency risk but undermine the country’s credit rating.

The path of the euro zone is becoming clear. As conditions in Europe worsen, there will be fewer euro-denominated assets that investors can safely buy. Bank runs and large-scale capital flight out of Europe are likely.

Devaluation can help growth but the associated inflation hurts many people and the debt restructurings, if not handled properly, could be immensely disruptive. Some nations will need to leave the euro zone. There is no painless solution.

Ultimately, an integrated currency area may remain in Europe, albeit with fewer countries and more fiscal centralization. The Germans will force the weaker countries out of the euro area or, more likely, Germany and some others will leave the euro to form their own currency. The euro zone could be expanded again later, but only after much deeper political, economic and fiscal integration.

Tragedy awaits. European politicians are likely to stall until markets force a chaotic end upon them. Let’s hope they are planning quietly to keep disorder from turning into chaos.

(Peter Boone is a principal at Salute Capital Management, a non-resident senior fellow at the Peterson Institute for International Economics and a visiting senior fellow at the London School of Economics. Simon Johnson, who served as chief economist at the International Monetary Fund in 2007 and 2008, and is now a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics, is a Bloomberg View columnist. The opinions expressed are their own.)

To contact the authors of this article: Peter Boone at pb@effint.org and Simon Johnson at sjohnson@mit.edu

Article here: http://www.bloomberg.com/news/2011-11-28/the-euro-area-is-coming-to-an-end-peter-boone-and-simon-johnson.html

Unless Germany and the ECB move quickly, the single currency’s collapse is looming

http://www.economist.com/node/21540255

The sinking euro

Denial and delusion in Brussels, as the single currency founders

THE designers of the good ship euro wanted to create the greatest liner of the age. But as everybody now knows, it was fit only for fair-weather sailing, with an anarchic crew and no lifeboat.

http://www.economist.com/node/21540244

Beware of falling masonry

The crisis in the euro area is turning into a panic and dragging the zone into recession. The risk that the currency disintegrates within weeks is alarmingly high

http://www.economist.com/node/21540259

Other articles worth reading

A very short history of the crisis

To understand the politics of the euro, it is necessary to look at its causes

http://www.economist.com/node/21536871

http://www.economist.com/search/apachesolr_search/briefing%20the%20euro

Business is Great

Tue, 08 Nov 2011 14:19:00 GMT

At Wealth Builder FX, business is great !

For us the "economy' is speeding up, not slowing down. Our business is booming.

Outside, some of the herd are talking themselves into a 'recession' . Many actually enjoy it.

They are slowing down and complaining. They are wallowing in the mud of financial self-pity. For them the 'economy' provides a convenient and comfortable excuse for failure.

But we are not part of the herd !

Every day we discover new ways to provide better service and even greater value for our customers. And every day new customers are attracted to us.

They thrive on our positive attitudes, our ideas and our customer focus. They want to share our enthusiam !

Of course it's not always easy, but we are creative, clever and hard working. We know our goals and we enjoy the vision of what our future success will bring.

We are always actively looking for new opportunities and every day we find exciting and profitable ways to to help us achieve our goals. We are not part of the herd!

For us, buisness is great.

This was part of an answer someone wrote in the 1990's to the question "How's business" In the recesion "we had to have" . it still applies today, and it definately applies to us at Wealth Builder FX.

This statement reflects our attitudes and the fact that we choose to be successful, despite what the rest of the 'economy' is doing we will continue to find good opportunities to make profitable trades. Simply because the FOREX market doesnt care what state the economy is in. Markets still move and currency range movements still provide great opportunities for us as Traders.

Details of a High Yielding Trade

Sun, 15 Jan 2012 01:42:00 GMT

Below are the details of a trade we took a on the AUD/JPY spot pair during last month which yielded a very nice 17%+ profit.

A brief description of that trade appears below along with some screen shots of the chart set up.

The AUD/JPY resumed its downtrend in April and continued with a very impressive sell off during July and the begining of August, after which a correction began that was forming a nice bearish flag that retraced back to the 8250 - 8300 resistance where price formed a bearish divergence followed by a 4 hour trend line break. It was at this point we looked for a retracement to take advantage of what we considered to be a short opportunity.

Target was the 1.618 Fibonacci projection as shown in the charts below. We added to the trade as price moved lower adjusting our stops along the way.

Profit on this trade was a little over 17% with an initial risk of less than 1%.

Wealth Builder FX has moved its registered office

Tue, 18 Oct 2011 15:49:00 GMT

Wealth Builder FX Group has moved its registered office.

The registered office of Wealth Builder FX Group Limited has changed to:

11/F Yue Hing Building, 103 Hennessy Road, Wanchai, Hong Kong

with effect from 15 October 2011.

So Where do I Park my Cash ?

Sun, 25 Sep 2011 04:24:00 GMT

Well after breathing a sigh of relief that the United States was able to get over their political speed bumps and approve a higher borrowing ceiling to allow them to keep paying their interest bills, the attention is once again focused on the sovereign debt issues in Europe and in particular, Greece.

Something about this scenario should concern everyone, as these issues are not going away. It appears we are all on the merry-go-round of mismanagement.

Here are some web sites that have some good articles and updates on the latest issues. It makes good and interesting reading…

http://business.financialpost.com/tag/eu-debt-crisis/

“China to the rescue? Mission impossible,” said Jun Ma, Deutsche Bank’s chief economist for China, based in Hong Kong.

http://www.guardian.co.uk/business/2011/sep/15/imf-chief-warns-political-dysfunction

International Monetary Fund chief Christine Lagarde has warned that a "vicious circle is gaining momentum" in Europe and the US that could wreck attempts at a recovery and undermine rescue operations for Greece and other indebted EU countries. She said "political dysfunction" was feeding policy indecision in a "dangerous new phase of the crisis" that could make a delicate situation harder to resolve.

As I have said before when everyone was expecting the USA to move nicely into a recovery, the underlying problems and issues are not being addressed properly.

When a country borrows more than they can produce there will always be a shortfall, its simple math really.

So as the world gets used to the idea that Europe and the USA will have these problems for quite some time to come, I’d expect the slow recovery or even recessionary times will be the norm for the next few years.

China has reported a slow down in manufacturing recently and as we oscillate our attention back and forth between the States and the Euro Zone, politicians play their games to retain power while their respective economies pay the price.

As we have seen again this year, equities and property continue to underperform, Investors are now asking themselves, “where do I put my money” or ‘where can I park my cash”

If you are looking for a relatively safe place to park your money and you’d also like to see a return on it of some kind, My answer to that question is to find a good FX trading firm who has low volatility in its returns and uses best practice risk management enabling a conservative but reliable monthly return.

The reason to consider FX trading as an alternative is that FX traders don’t care what is happening in the economy.

We don’t need to rely on growth. We just need to see a movement in a currency pair….. any currency pair. As long as currencies move around, either up or down, FX traders can make profits from these moves. So as long as there is a reasonable amount of liquidity in the market and currencies pairs show good range movement, we can make good tradable profit.

Wealth Builder FX Group is one such firm !

We have a professional team of traders whose approach to the markets is consistent, providing moderate to good returns while adhering to conservation risk and money management practices that ensure safety of capital while seeking out profitable trading opportunities.

Our results for 2011 are very nice, and as I write this article, we are up by around +17% for the month of September 2011. bringing us to a return so far this year of around 40%.

On the Brink of the Unknown .... Again

Sun, 31 Jul 2011 22:33:00 GMT

So… here we are again… facing another scenario in the financial markets where no one has a clue at what will really transpire if the United States defaults on its debt.

I did say in an earlier article in this very blog that the fundamental problems of the last GFC were not properly addressed and now things look like they have resurfaced in the form of an almost defaulting reserve economy. GREAT !!

The last GFC which pretty much started with the Lehman Bros collapse will seem like a joy ride compared to whats around the corner if the US actually defaults on its debt.

At the moment the US debt due for August is around $USD306billion and revenue is about $USD172billion, so they have to borrow more to keep things going.

So the world faces a unique moment in time as the Unite States contemplates its options.

What happens if they do default?
The possibilities include a complete collapse of the USD as a currency; the banking system will cease to function as treasury bonds become toilet paper, what follows from that is up to your own imagination as I doubt you’ll find an economist who is in any mood to guess at what might follow.

One thing is for sure, it will get extremely interesting. I am sure everyone who matters in US politics will be doing everything they can to make sure they keep paying their commitments.

The problem we have now is that bankers and traders are realizing that the US is actually contemplating defaulting, we are truly in new territory and the answer is not in any text book. To realize we have got to this point is a mind shifter in itself.

The best scenario we can hope for is that the elected realize they have to act and NOT DEFAULT . This will further prolong a US recovery. But that’s a whole lot better than any alternative I can think of..

Russia finds new love in Aussie Dollar !

Sun, 31 Jul 2011 22:31:00 GMT

THE Russian Central Bank will pour up nearly five billion dollars into the Australian currency in a fresh wave of support, as Russia moves to diversify its reserves and shift away from the US dollar.

The first deputy chairman of the Russian central bank, Alexei Ulyukayev, said that starting from September, the bank would hold Australian dollars for up to 1 per cent of its $498 billion in reserves, The Australian reports.

He said at a conference at the St Petersburg International Economic Forum that the last meeting of the central bank's monetary policy committee had approved a list of banks that would buy Australian dollars.

"They will place funds on deposit and buy securities (in Australian dollars)," he said.

The comments by Russian officials come as Australian economists report increasing interest in the Australian currency by other central banks and sovereign wealth funds, amid uncertainty about the economic outlook in the US and Europe.

Read more: http://www.news.com.au/business/russians-chase-the-aussie-dollar-as-its-central-bank-secures-1pc-of-reserves/story-e6frfm1i-1226078240652#ixzz1QinzWc00

Read more: http://www.news.com.au/business/russians-c hase-the-aussie-dollar-as-its-central-bank-secures-1pc-of-reserves/story-e6frfm1i-1226078240652#ixzz1QinrBTAQ

US Economy Slower than expected… A good time to use Technical Analysis

Sun, 31 Jul 2011 22:38:00 GMT

Federal Reserve Chairman, Ben Bernanke acknowledged in a recent speech that the US economy is recovering more slowly than expected.

As the US economy recovers from the worst financial crisis and the most severe housing downturn since the Great depression of the 1930’s, it also now faces future challenges from the fallout of the Japanese Disasters and global pressures on commodity prices which also includes uncertainty over China’s demand.

Bernanke added that the US economy looks to be continuing its recovery at a moderate pace, but also said that “Until we see a sustained period of stronger job creation, we can not consider the recovery to be truly established.”

So just when will we see a sustained period of growth in the US ? at the moment there are approximately 5 unemployed for every 1 job opening. Sustained, stronger growth looks to be a while away yet !

Added to all of this is the continuing saga of the ever growing sovereign debt problems in Europe and the prediction that Japanese economic growth will be non existent in the immediate future as it recovers from the March tsunami and earthquakes.

But before you get too depressed over the above scenarios… there is good news !!

As technical traders, we rely quite heavily on what we see in the price chart patterns.

Chart patterns are extremely reliable in showing human behaviour (in our case, currency pair behaviour) as all this behaviour is built into the patterns we see in the charts.

By way of illustration… if we were to make a chart of someone’s everyday habits, we would see certain patterns and we would have a good idea of where that person was going at any given time by looking at those habit patterns...of course there are things that can occur to make you break pattern (data events, speeches, in our case) but otherwise it can be a fairly accurate predictor.

Socionomics - The Wave Principle of Human Social Behavior is a very interesting study ...these patterns can be applied to just about everything humans are involved in especially the buying and selling of foreign currency. Since there is so much data in each chart purely because of the size of the market, these charts tend to be more reliable than in analysis charts of other asset classes.

The title says... “US Economy Slower than expected… A good time to use Technical Analysis” but in reality, it’s always a good time to use technical analysis when one is trading Foreign Currency pairs.

For more info on Socionomics, see http://en.wikipedia.org/wiki/Robert_Prechter

USD$1.50+ for the Aussie Dollar

Sun, 31 Jul 2011 22:43:00 GMT

In a previous post (October 9, 2010) I said the AUD would probably reach parity or higher with the USD and stay there.

We are now seeing that as our reality ! There has been some discussion recently that the AUD could now get to USD$1.50 or higher over he next 1 - 2 years and we at Wealth Builder FX Group believe this is certainly a good possibility. Especially if interest rates in Australia continue to rise and at the same time the USA continues to experience economic challenges.

ANZ chief Mike Smith said recently that the currency was likely to resume its climb above $US1.10, and one of the world's leading foreign exchange experts predicted the dollar would continue to rise and could hit $US1.30 in 2013 and $US1.70 by 2014.

For those who can remember the AUD being at around 49 cents in 2001, the rise of the Aussie continues to be spectacular!!

http://www.theaustralian.com.au/business/rampaging-dollar-could-hit-us170-as-budget-and-industries-threatened/story-e6frg8zx-1226052152303

More articles here ... http://www.news.com.au/business/australian-dollar

Commodities and FOREX

Sun, 31 Jul 2011 22:45:00 GMT

Commodity prices affect currencies differently depending on the use of those commodities in each country. A lot of that depends on whether a country is an importer or exporter of a particular commodity.

Crude oil prices typically are a good example of this. Canada is generally thought of as the currency to benefit most from rising oil prices because it exports so much oil. Alternatively, the United States often is hindered from rising oil prices as consumers cut spending on other discretionary items to make up the difference.

The Aussie and Canadian dollars react most quickly to commodity changes. If demand is up, the Aussie and Canadian tend to see the benefit of the rise.

As you can see in the diagram below, the Aussie has an interesting correlation to the gold price. (more on this subject can be found in futuresmag.com)

Trades Up Close & Personal... see one of our traders post trades in real time.

Sun, 31 Jul 2011 22:48:00 GMT

During the month of April, One of our Traders (Chris) is sharing his trades in a trading training room called Live Connect which is run by Forex Mentor in Canada. While Forex Mentor and WBFX are not formally associated, we do have a shared history with some of the traders. Chris will be showing his trades in LiveConnect and they will also be posted via Twitter. So far this month, Chris is up 4.2% using a conservative risk approach.

Heres the link to find out more... http://www.youtube.com/user/ForexmentorLC#p/u/0/MEPJNZR9H0Q