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Thursday, 31 August 2017

Dollar, commodities cheered by China, U.S. economic news


SYDNEY (Reuters) - Investors discovered a taste for the dollar and commodities on Thursday as upbeat Chinese and U.S. economic news whetted appetite for riskier assets globally, even as tensions over North Korea simmered in the background.

One big gainer was U.S. gasoline which surged 6 percent to two-year peaks as flooding and damage from Tropical Storm Harvey shut nearly a quarter of U.S. refinery capacity. Prices are now up more than 20 percent in the past week.

Adding to the bullish mood, a survey showed Chinese factory growth unexpectedly accelerated in August, confounding forecasts for a slight slowdown. The official PMI firmed to 51.7, from 51.4 in July.

That gave a fresh boost to industrial metals, with copper CMCU3 nearing its highest since late 2014 and on track for gains of 7 percent for August.

European share markets looked set to open firmer, with Eurostoxx 50 futures up 0.4 percent and Germany’s DAX  ahead by 0.4 percent.

In Asia, Japan's Nikkei .N225 rose 0.7 percent to its best level in two weeks, helped by a pullback in the yen. The index was still down 1.4 percent on the month, however.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged down 0.1 percent, leaving it a modest 0.3 percent firmer for the month so far.

Wall Street had got a boost on Wednesday when data showed the U.S. economy grew at an upwardly revised 3 percent annualised pace in the second quarter, courtesy of robust consumer spending and strong business investment.

Other figures showed U.S. private-sector employers hired 237,000 workers in August, the biggest monthly increase in five months and an upbeat omen for payrolls on Friday.

The Dow .DJI rose 0.12 percent, while the S&P 500 .SPX gained 0.46 percent and the Nasdaq  1.05 percent.

SEEKING AN ANSWER

The better economic news helped distract from rumblings in the Korean peninsula and lifted the U.S. dollar.

President Donald Trump on Wednesday declared “talking is not the answer” to the tense standoff with North Korea over its nuclear missile development, but his defence chief swiftly asserted that diplomatic options remain.

Against a basket of major currencies, the U.S. dollar crept ahead to 93.015 .DXY and away from a 2-1/2-year low of 91.621 touched on Tuesday.

The dollar also bounced to 110.57 yen and off Tuesday's 4-1/2-month low of 108.25.

The euro recoiled to $1.1873 EUR= from its top of $1.2069, weighed in part by speculation the European Central Bank might start to protest at the currency's strength.

“The ECB meeting is coming up next week and there are rising risks of verbal intervention from Mario Draghi,” said Deutsche Bank strategist George Saravelos.

“Despite this the euro level does not appear particularly extreme and most importantly the ECB has not been driving recent appreciation anyway,” he added. “Verbal rhetoric may cause a correction but is unlikely to be enough to derail euro strength.”

The bounce in the dollar shaved 0.5 percent off the price of gold to $1,302.50 an ounce , short of Tuesday’s 9-1/2-month high of $1,325.94.

With so much U.S. refinery capacity shut in the wake of Tropical Storm Harvey, oil prices were hit by demand concerns. Brent  eased 9 cents to $50.77 a barrel, while U.S. crude fell 5 cents to $45.91.

Reference: Wayne Cole

Dollar buoyant after upbeat U.S. data, hits two-week high vs. yen


SINGAPORE (Reuters) - The dollar hit a two-week high versus the yen on Thursday, extending its gains after strong U.S. economic data bolstered expectations for a solid U.S. jobs report later this week.

The dollar rose to 110.615 yen at one point, its strongest level since Aug. 16. It last changed hands at 110.52 yen, up 0.3 percent from late U.S. trade on Wednesday.

The greenback gained a lift after the U.S. Commerce Department on Wednesday revised up gross domestic product to a 3.0 percent annual rate in the second quarter, the quickest in more than two years. In addition, the ADP National Employment Report showed U.S. private-sector employers hired 237,000 workers in August for the biggest monthly increase in five months, driving expectations for a solid U.S. August non-farm payrolls figure.

In the wake of such solid economic indicators, market expectations for the chances of a rate hike by the Federal Reserve in December may start to increase and support the dollar, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

“I think the market is starting to think that eventually the wage growth component is going to start to kick in,” Innes said, adding that the dollar may attract demand ahead of the U.S. nonfarm payrolls data due on Friday.

Recent readings on U.S. inflation have been subdued, however, and U.S. short-term interest rate futures are currently implying a roughly 40 percent chance of the Fed raising interest rates in December.

Later on Thursday, the dollar could take its cues from the U.S. core personal consumption expenditures price (PCE) index, the Fed’s preferred inflation measure.

Core inflation data for the euro zone is also coming up later on Thursday.

The euro slipped 0.1 percent to $1.1878, having retreated from a 2-1/2-year high of $1.2070 set on Tuesday.

The common currency had risen past the $1.20 threshold after European Central Bank President Mario Draghi made no mention of the euro’s strength at the Jackson Hole conference in Wyoming last week.

Analysts, however, say market participants remain wary of the risk that ECB policymakers may start expressing concerns about the euro’s rise, which can exert disinflationary pressures on the euro zone’s economy.

“We’ve got the ECB meeting next week and there’s a lot of focus in the market of what the ECB could or could not say about the currency strength,” said Peter Dragicevich, G10 FX strategist at Nomura in Singapore.

“So that’s probably going to keep a lid on how far the euro can bounce,” he said, referring to the euro’s outlook ahead of the ECB policy meeting next week.

Reference: Masayuki Kitano

Sterling licks wounds vs resurgent euro; outlook weak


LONDON (Reuters) - Sterling nursed losses on Wednesday after falling to an 11-month low against the euro in the previous session as investors remained sidelined with little interest in trading the currency amid ongoing Brexit negotiations.

Against the euro, the British pound recovered some ground to trade at 92.47 pence after falling on Tuesday to its weakest level since early October at 93.07 pence per euro.

The British pound has fallen more than 3 percent so far this month against the euro and is set for its fourth consecutive month of losses.

Sterling was broadly flat against the dollar at $1.2906.

“We are staying away from the sterling for now as it remains a headline driven currency even though on a valuation basis it looks attractive,” said Thomas Flury, global head of currency strategy at UBS Group AG.

Investors focussed on the third round of Brexit negotiations which started on Monday, with the European Union’s chief negotiator saying he was concerned at the slow progress of the talks.

The British government has laid out a series of position papers that have outlined compromises over some of the issues likely to block progress in talks this year, but EU officials say Britain needs to settle its divorce bill with the bloc before a trade agreement can be discussed.

Morgan Stanley strategists said the sterling will likely weaken further against the euro until October’s British party conference season when investors will be watching for any disagreements internally within the ruling Conservative party.

On a trade-weighted basis, sterling was trading at 75, its lowest level since November 2016.

While market analysts say sterling remains among the most undervalued currencies on a trade-weighted basis among its major rivals, the uncertainty around Brexit negotiations and the toll it is taking on the broader economy has discouraged investors from buying sterling-denominated assets.

U.S. stocks rebounded from a sharply lower open on Tuesday and helped an index of global equity markets pare losses as investors shrugged off concerns over North Korea’s latest missile test.

Treasury yields were off early lows and the dollar index , which measures the greenback against a basket of six major currencies, traded little changed on the day.

The dip in risk appetite that dominated most of the trading session and sent benchmark 10-year U.S. Treasury yields lower and gold to a more-than-nine-month peak gave way as the U.S. trading session progressed.

MSCI’s world index , which tracks shares in 46 countries, was down 0.29 percent, after earlier falling as much as 0.57 percent to a one-week low on heightened worries about North Korea.

North Korea fired a ballistic missile over Japan’s northern Hokkaido island into the sea on Tuesday, prompting a warning from U.S. President Donald Trump that “all options are on the table” as the United States considers its response.

“When the President says ’All options are on the table,’ the best strategy for investors is sometimes to do nothing,” said Brian Jacobsen, senior investment strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

Market analysts were relieved that the rift did not escalate further, with Trump’s focus on the devastation caused by Tropical Storm Harvey, the most powerful hurricane to strike Texas in 50 years when it made landfall last week.

“While it’s possible all these unfortunate events can add up to something more consequential, the economy is pretty darn big and resilient,” Jacobsen said.

The Dow Jones Industrial Average .DJI rose 56.97 points, or 0.26 percent, to finish at 21,865.37, the S&P 500, gained 2.06 points, or 0.08 percent, to close at 2,446.3 and the Nasdaq Composite added 18.87 points, or 0.3 percent, to end at 6,301.89.

Reference: Saikat Chatterjee

Wednesday, 30 August 2017

The History of Forex Trading


Trading Education


The origin of Forex trading traces its history to centuries ago. Different currencies and the need to exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. Speculation hardly ever happened, and certainly the enormous speculative activity in the market today would have been frowned upon.

In those days, the values of goods were expressed in terms of other goods (also called as the Barter System). The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.

Trade was carried among people of Africa, Asia etc through this system.
Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the Middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of today's modern currencies.

Before the First World War, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money; as a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom, appearing attractive to other nations, who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy. For this type of gold exchange, there was not necessarily a Central Bank need for full coverage of the government's currency reserves.

This did not occur very often, however when a group mind-set fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called "Run on banks " The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in Forex market activity. From 1931 until 1973, the Forex market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the Forex markets during these times was little.

In order to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility.

Near the end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis.

The Bretton Woods system came under increasing pressure as national economies moved in different directions during the 1960's. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970's following President Nixon's suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The last few decades have seen foreign exchange trading develop into the world's largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.

The European Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key centre in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance.
In Asia, the lack of sustainability of fixed foreign exchange rates has gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable.

While commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The Forex exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions, at present it also includes the dot com booms and the World Wide Web. The size of the Forex market now dwarfs any other investment market. The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that Forex market is a lucrative opportunity for the modern day savvy investor.

Reference: Divyansh Sharma

For more information on and learn how to trade:  http://www.tradingprofits4u.com/


Dollar recovers from lows vs major rivals as North Korea fears recede


SINGAPORE (Reuters) - The dollar pulled away from the previous session’s 4-1/2 month lows against the yen on Wednesday as investors’ concerns over North Korea’s latest missile test eased for now, while the Australian dollar surged on upbeat construction data.

The dollar index, which tracks the greenback’s value against a basket of six major currencies, added 0.1 percent to 92.292, having recovered from Tuesday’s low of 91.621, its lowest level since January 2015.

The dollar last traded at 109.77 yen JPY=, up from Tuesday's low of 108.265 yen, its lowest level since mid-April.

“The dollar/yen reacted yesterday, moving lower, and that seems to be reversing today,” said Mitul Kotecha, head of Asia macro strategy for Barclays in Singapore.

“Its become a typical reaction to what’s been happening in North Korea, where you initially see some risk aversion in markets and then reverse that move relatively quickly,” Kotecha said.

North Korea’s launch on Tuesday of a ballistic missile over Japan’s northern island of Hokkaido initially spooked investors. It triggered a drop in U.S. bond yields and a slide in the dollar against the yen, which tends to benefit during times of crisis on the assumption that Japanese investors will repatriate funds.

The greenback later recovered, with U.S. equities rising on Tuesday and the U.S. 10-year Treasury yield pulling up from 9-month lows.

The U.S. 10-year Treasury yield last stood at 2.148 percent. On Tuesday, the U.S. 10-year bond yield fell as low as 2.086 percent, its lowest level since Nov. 10.

North Korean leader Kim Jong Un guided a launch of an intermediate-range ballistic missile on Tuesday in a drill to counter the joint military exercises by South Korean and U.S. militaries, the North’s official KCNA news agency said on Wednesday.

KCNA quoted Kim as saying it was necessary for the North Korean military to undertake more exercises focused on operations in the Pacific.

While North Korea-related risks haven’t gone away, the fact that the dollar managed to bounce back sharply from Tuesday’s lows could lend support to the greenback in the near term, said Andrew Bresler, deputy head of sales trading in Asia-Pacific for Saxo Markets in Singapore.

“We’ve certainly remained pretty cautious on the outlook for risk here, and definitely not buying fully into the discounting of the North Korean tensions,” he said.

In the wake of the sharp swings seen in the dollar against major currencies on Tuesday, it is difficult to have a clear view on the dollar’s near-term outlook, Bresler said, adding that U.S. economic data would be a focus in coming days.

Friday’s closely-watched U.S. employment report for August is expected to show employers added 182,000 jobs, according to the median estimate of 60 economists polled by Reuters.

Investors are also gauging the potential economic fallout of Tropical Storm Harvey, which brought catastrophic flooding to Texas this week and shut down nearly a fifth of the U.S’s crude oil refining capacity.

The euro edged up 0.1 percent to $1.1981 EUR=, having retreated from Tuesday's high of $1.2070, its strongest level since January 2015.

The Australian dollar was the standout mover of the Asian session, jumping 0.5 percent to a four-week high of $0.7995 AUD=D4.

Australian construction spending boasted its biggest rise on record last quarter as miners splashed out on major engineering projects, a surprise that could lift economic growth well above initial expectations.

Reference: Lisa Twaronite & Masayuki Kitano

Sterling hits two-week highs as dollar struggles broadly


LONDON (Reuters) - Sterling rose to two-week highs against the dollar on Tuesday after escalating tensions in the Korean peninsula added to the greenback’s woes.

The pound has risen more than 1 percent against the dollar since Friday since Federal Reserve Chair Janet Yellen failed to offer any support to the dollar at a central bank conference last week.

With a general risk-averse mood prevailing broadly across financial markets following a missile launch from North Korea, the dollar struggled against its major rivals, falling to more than a 2-1/2 year against a trade-weighted basket

“I would say what is really helping sterling against the dollar is more of dollar weakness,” said CMC Markets analyst David Madden.

“The dollar index is down over a quarter of one percent, while the pound is up just over 0.2 percent against the dollar, so if anything sterling is underperforming.”

By 0745 GMT, sterling was 0.2 percent higher at $1.2951, after hitting $1.2963 earlier, its highest level since August 15.

It hit fresh 10-month lows versus the single currency, falling 0.3 percent to 92.92 pence per euro.

Analysts say sterling’s recent moves against the dollar and the euro have largely been a result of broader shifts in the dollar as investors worry about the ability of the U.S. administration to follow through on its economic agenda.

Investors also had their focus trained on the third round of Brexit negotiations which started on Monday, with the European Union’s chief negotiator saying he was concerned at the slow progress of the talks.

The British government has laid out a series of position papers that have outlined compromises over some of the issues likely to block progress in talks this year, but EU officials say Britain needs to settle its divorce bill with the bloc before a trade agreement can be discussed.

"We've been seeing a bit of back and forth about the requirement to finalise divorce terms before negotiating a trade deal or beginning that negotiation," said Caxton FX analyst Alexandra Russell-Oliver.

"That could put some downward pressure on the pound."

Reference: Ritvik Carvalho

Dollar falls to four month low vs yen after North Korea fires missile


TOKYO (Reuters) - The dollar slumped to a four-month low against the yen early on Tuesday after North Korea fired a missile that passed over northern Japan, the latest act of provocation by Pyongyang that has ramped up tensions in the region over the past month.

The dollar was down 0.55 percent at 108.660 yen after hitting 108.330, its lowest since April 18.

A risk-averse mood prevailed in the region following the missile launch, with Japan’s Nikkei falling to a four-month low.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world’s biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialise.

North Korea fired a missile early on Tuesday that flew over Japan and landed in the Pacific waters off the northern region of Hokkaido, South Korea and Japan said, in a sharp escalation of tensions on the Korean peninsula.

“Based on past patterns in which the yen has gained on such incidences, speculators reacted immediately to the North Korean missile headlines, taking dollar/yen to the intraday lows,” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.

“But dollar/yen trimmed some of the losses after the reports that the missile actually flew over northern Japan.”

The last North Korean projectile to fly over Japan was in 2009. The United States, Japan and South Korea considered that launch to have been a ballistic missile test while North Korea said it was a rocket carrying a communications satellite into orbit.

The Swiss franc touched a one-month high of 0.9497 franc per dollar before pulling back slightly to 0.9532.

The euro lost 0.6 percent to 130.040 yen, dragged back from a three-week high of 130.965 set overnight.

The dollar was already on the defensive, particularly against the euro, after Federal Reserve Chair Janet Yellen did not mention monetary policy at a central bankers’ summit in Jackson Hole last week, and as European Central Bank President Mario Draghi’s held back from talking down the euro at the same meeting.

The dollar had also weakened after Tropical Storm Harvey paralysed Houston, Texas, spurring worries about the storm's potential impact on the U.S. economy.

The euro was down 0.1 percent at $1.1965 following an ascent to $1.1986, its highest since January 2015.

The dollar index against a basket of six major currencies was steady at 92.274 after slipping as low as 92.137, its weakest since May 2016.

Reference: Shinichi Saoshiro

Tuesday, 29 August 2017

Gold Trading


An Educational Article


On August 11, 2011, the Chicago Mercantile Exchange (CME) raised the margins on gold futures by 22%, effectively reducing the demand for gold. CME group is the world's largest gold futures market which takes measures to reduce certain risks associated with volatility. The organization can have an effect on the price of gold by making it harder or easier to trade futures contracts. This was not an isolated decision; Shanghai Gold exchange also raised its requirements to 11% from 10%. If you are a hedger or a speculator, gold and silver futures contracts offer a world of profit-making opportunities.

Margins

A margin is basically a set of funding requirement which must be met in order to receive a type of loan for trading. The trader can use this loan to purchase more of a security. These requirements are made up of the initial margin which is the amount of money that a trader needs to contribute to open a position. This was raised 22% from $6,075 to $7,425 on COMEX 100 Gold Futures. There is also the maintenance margin which is the lowest value the position can reach before the participant either needs to deposit more money or sell their position (known as a margin call).
This was raised from $4,500 to $5,500. These requirements are typically different based on the institution, and the type of security. These futures margin amounts are set by CME Clearing and changes are announced 24 hours in advance, so this was announced on August 10, 2011 and implemented August 11, 2011. The price of gold dropped 1.5% on the news.

How is This Regulation Going to Affect Traders and the Price of Gold?

In the short term, this increase in margin will reduce demand and ease the upward trend of the precious metal. The volatility should decrease as well because fewer traders will speculate on the price of gold. The change will not be drastic, but the intention is to increase predictability with lower swings in price.
In the long term, other factors contribute to the price of gold such as demand for industrial use, or in electronics. Also if individuals feel there might be an increase in inflation they might move to gold as a hedge to the loss in buying power of their currency.

Some traders use gold as an alternative to exposure to the stock market if they feel the markets are due for a tumble. With the new credit rating drop in the U.S., and other poor economic reports coming out such as smaller than expected rises in the retail sales numbers, gold might be used as an alternative "safe haven" for investors. In the long run, gold's price is hardly affected by these margin increases or decreases. There is a strong correlation between gold's value and the strength of currencies trading on foreign exchanges.

Who Sets This Margin Price?

The CME Clearing house is integrated with CME Group and acts as the counter party between sellers and buyers. They are the central futures clearing mechanism for the Chicago Mercantile Exchange. They normally act as a neutral participant and attempt to set margins so market participants such as traders have enough money contributed to cover most movements. Higher movements (known as high volatility) mean margin requirements need to be increased.
Due to many factors such as fear in the markets, and global economic challenges, gold can see new heights. These increased margins are one measure that the GME Clearing uses to decrease risks associated with high volatility and essentially lending money to traders. It does affect short term gold prices, but long term gold is based more on fundamental external factors.


Reference: Peter Cherewyk

For more information and learn how to trade:  http://www.tradingprofits4u.com/

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Stocks tumble, yen gains after North Korea fires missile over Japan


TOKYO (Reuters) - U.S. stock futures and Asian share markets tumbled on Tuesday, while the yen jumped to four-month highs against the dollar after North Korea fired a missile over northern Japan, fuelling worries of fresh tension between Washington and Pyongyang.

S&P mini futures ESc1 fell as much as 0.85 percent on the news before paring losses to trade 0.55 percent down. On Monday, the index was little changed as investors tried to assess the fallout from Tropical Storm Harvey.

European shares are expected to fall, with spread-betters looking at a lower opening of 0.5 to 0.6 percent for Britain’s FTSE .FTSE, France’s CAC .FCHI and Germany’s DAX .GDAXI.

Japan’s Nikkei .N225 was down 0.9 percent to a four-month low at one point, then pared losses to be 0.5 percent off.

South Korea’s Kospi .KS11 shed as much as 1.6 percent, helping to drag down MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS 0.6 percent.

“All sectors are tumbling, which clearly shows that North Korea risks are the reasons behind it,” said Cho Byung-hyun, a stock analyst at Yuanta Securities in Seoul.

North Korea fired a missile early on Tuesday that flew over Japan and landed in the Pacific about 1,180 kilometers (735 miles) off the northern region of Hokkaido, in a sharp escalation of tensions on the Korean peninsula.

North Korea has conducted dozens of ballistic missile tests under young leader Kim Jong-Un, but firing projectiles over mainland Japan is his first.

“The missile flew across Japan this time, so the implications will likely be a bit different from previous ones,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

North Korea threatened earlier this month to fire missiles into the sea near the U.S. Pacific territory of Guam, a host to major U.S. military installations, after President Donald Trump warned Pyongyang would face “fire and fury” if it threatened the United States.

The yen rose 0.8 percent to 108.33 to the dollar, its highest since April, despite Japan’s proximity to North Korea, and last stood at 108.79.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world’s biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialize.

The safe-haven Swiss franc hit a one-month high of 0.9498 franc to the dollar and last traded at 0.9523 franc on the dollar CHF=, up 0.3 percent. The Swiss currency gained 0.4 percent versus the euro to 1.1396 per euro.

The euro hit a its 2 1/2-year high of $1.1986 and last stood at $1.1970, maintaining its uptrend after European Central Bank chief Mario Draghi did not express concern about the currency’s recent rise in his speech at Jackson Hole.

Gold also jumped 0.9 percent to $1,324 per ounce, hitting its highest level since Nov 9.

Investors also rushed to the safety of U.S. Treasuries, pushing down the 10-year yield to a two-month low of 2.122 percent.

On the other hand, the South Korean won KRW= retreated 0.8 percent against the dollar to 1,127 won.

“Financial markets think the only realistic option for the U.S. and North Korea will be to sit down and talk at some point because other options are too costly for everyone involved,” said Masayoshi Kichikawa, chief strategist at Sumitomo Mitsui Asset Management.

“But no one cannot rule out the risk of accidents. Markets think the chicken game will continue for now and North Korea will remain a risk,” he added.

However, North Korea is not the only problem Trump is facing.

Investors are looking at what will happen to his push for tax reforms. He is expected to begin a major effort this week to convince the public of the need for them.

He would also need to work with the Congress to raise the debt ceiling and pass a budget by the end of next month, and investors expect acrimonious negotiations.

On Monday, U.S. shares were narrowly mixed as investors tried to assess the damage from Harvey, the most powerful hurricane to strike Texas in more than 50 years.

Crude oil prices bounced back a tad on the back of supply disruptions in Colombia and Libya, a day after U.S. crude futures dropped on worries that refinery shutdowns caused by to the flooding could boost inventory.

U.S. West Texas Intermediate crude futures rose 20 cents, or 0.4 percent, to $46.77 a barrel, after having falling to as low as $46.15 in the previous session.

U.S. gasoline price RBc1, which surged as much as 7 percent to a two-year peak of $1.7799 per gallon on Monday, traded at $1.7381 in early Tuesday trade.

Reference: Hideyuki Sano

Euro hits 2-1/2-year high near $1.20



LONDON (Reuters) - The euro climbed to a 2-1/2-year high close to $1.20 in thin trade on Monday, extending gains made at the end of last week after the head of the European Central Bank held back from talking down the buoyant currency.

A public holiday in global foreign exchange capital London kept the market subdued, with most currencies trading in narrow ranges.

By 0740 GMT, the euro was up 0.1 percent at $1.1926 EUR=, having touched $1.19665 in Asian trade, its highest since January 2015. It was on track for a sixth straight month of gains against the dollar – its best run in five years.

The common currency surged about 1 percent on Friday after ECB President Mario Draghi made no mention of the euro’s strength at the Jackson Hole conference in Wyoming, focusing instead on subjects such as global trade.

“This is about what he did not say,” said Commerzbank currency strategist Esther Reichelt, in Frankfurt. “He does not seem to be overly concerned with the current euro levels, which is the market’s justification to move the euro higher.”

The euro was also boosted by Federal Reserve Chair Janet Yellen’s not mentioning U.S. monetary policy. Markets are currently only pricing in one rate hike by the end of next year, Reichelt said.

“The market’s view was confirmed, which justifies a bit more dollar weakness,” she added.

The euro was broadly expected to remain firm, at least in the short term, with investor focus on the ECB – which meets next week – and whether it announces plans to reduce debt-buying at its September policy meeting.

The dollar index – which tracks the greenback against six major rivals – fell to as low as 92.372 .DXY, its weakest since early May 2016, before recovering a little to trade down 0.3 percent at around 92.489.

Imre Speizer, Westpac markets strategist, said Tropical Storm Harvey, which has caused catastrophic flooding in Texas, was likely to further weigh on the U.S. dollar because it was “a major negative weather event” and “obviously bad for the economy”.

The greenback slipped 0.3 percent against the safe-haven Japanese yen at 109.155 yen, clear of the four-month low of 108.605 touched on Aug. 18.

The pound was flat at $1.2895 after briefly touching a 13-day peak of $1.2946 .


Reference: Shinichi Saoshiro

Monday, 28 August 2017

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U.S. gasoline futures surge as Harvey swamps Texas, euro holds at 2-1/2 yr high




SINGAPORE (Reuters) - U.S. gasoline futures hit a two-year high on Monday as Tropical Storm Harvey pummelled the heart of America’s energy industry, while the euro hit a 2-1/2-year peak after the European Central Bank President refrained from talking down the single currency.

Gasoline futures soared as much as 6.8 percent at one point as the storm, which came ashore on Friday as the most powerful hurricane to hit Texas in more than 50 years, continued to batter the state.

The region is home to a quarter of U.S. crude oil refining capacity, and some areas are expected to see a year’s worth of rainfall in the span of a week. At least two people have died so far, and the toll is expected to rise as the storm triggers additional tidal surges and tornadoes.

Harvey has knocked out a quarter of oil production from the Gulf of Mexico, prompting fears it could overturn years of U.S. excess oil capacity and low prices. Some U.S. traders were seeking to import oil product cargoes from North Asia, several refining and shipping sources told Reuters.

“The rain is expected to last through to Wednesday so the disruptions could last for some time yet,” said William O’Loughlin, investment analyst at Rivkin Securities in Sydney.

U.S. economic growth more than halved in the quarter after Hurricane Katrina mauled Louisiana in August 2005, but quickly bounced back by early 2006 as reconstruction began and gasoline prices moderated.

U.S. gasoline futures were up 5.9 percent at 0342 GMT.

After surging on Friday, crude oil prices were mixed on Monday as markets tried to gauge Harvey’s impact on oil production.

Brent futures, the global crude oil benchmark, rose 0.4 percent to $52.62 a barrel, adding to Friday’s 0.7 percent increase. But U.S. crude futures pulled back 0.3 percent to $47.67, paring Friday’s 0.9 percent gain.

Despite gains in energy shares across the region, Asia-Pacific stock indexes got off to a subdued start as investors waited to see how much damage the storm had inflicted.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose less than 0.1 percent, while Japan’s Nikkei .N225 slipped 0.1 percent. Japanese property and casualty insurers’ shares skidded as investors fretted about the broader impact of U.S. storm.

Chinese blue chips .CSI300 rose 1.4 percent, extending this summer’s blistering rally to nearly 11 percent, while Hong Kong’s Hang Seng .HSI added 0.7 percent.

Australian shares slid 0.7 percent, and South Korea’s KOSPI  was down 0.4 percent.

Markets mostly dismissed the firing of three short-range missiles by North Korea into the sea off its east coast early on Saturday, as the U.S. and South Korea conducted annual joint military drills that the North denounces as preparation for war.

U.S. Secretary of State Rex Tillerson said on Sunday the test was a provocative act but that the U.S. will continue to seek a peaceful resolution.

The Korean won strengthened 0.7 percent to 1,120.3 won to the dollar as the greenback faltered.

The euro hovered at its highest level since January 2015, retaining gains made on Friday after ECB President Mario Draghi, speaking at the U.S. Federal Reserve’s annual conference in Wyoming, did not cite the common currency’s strength as a concern or discuss monetary policy specifically.

Instead, Draghi said the central bank’s ultra-easy monetary policy was working and the euro zone’s economic recovery had taken hold.

“The EUR bulls will feed off anything they can get that suggests a less accommodative stance going forward,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

The euro rose to as high as $1.19665 early on Monday and was little changed at $1.1923, holding Friday’s 1 percent gain.

The dollar fell 0.3 percent to 109.15 yen , adding to Friday’s 0.1 percent slide, after Federal Reserve Chair Janet Yellen focused more on financial stability in a speech at the same event as Draghi.

Yellen’s remarks disappointed some investors who had hoped for hints on the Fed’s plans for interest rates, though most analysts had not either Yellen or Draghi would stray much from their expected scripts.

The dollar index, which tracks the greenback against a basket of other major currencies  fell 0.3 percent to 92.521, its lowest level since January 2015.

"Markets (were) disappointed with the Yellen speech and they sold the dollar and pushed bond yields down," said Imre Speizer, markets strategist at Westpac.

He said Harvey would likely further weigh on the U.S. dollar since it's "a major negative weather event "and "obviously bad for the economy."

The 10-year U.S. Treasury yield was at 2.1746 percent on Monday, from Thursday's 2.194, further undermining the dollar's yield appeal.

But lower bond yields gave Wall Street a slight boost, with the Dow and the S&P 500 both ending about 0.15 percent higher on Friday, although the Nasdaq. closed about 0.1 percent lower.

Spot gold crept up 0.2 percent to $1,293.45 an ounce, extending Friday's 0.4 percent gain.

Reference: Nichola Saminather

Euro surges as ECB's Draghi does not mention currency strength


NEW YORK (Reuters) - The euro soared to its highest level in more than two years against the dollar on Friday after European Central Bank President Mario Draghi did not express concern about a strong euro zone currency, as some analysts had expected.

Some analysts had suggested that Draghi could use the Jackson Hole, Wyoming central bankers’ conference to talk the euro down. When he did not do so, traders took that as a green light to buy euros.

The dollar index dropped to a more than one-year low following Draghi’s speech and after Federal Reserve Chair Janet Yellen made no reference to U.S. monetary policy in her speech.

Europe’s single currency has climbed 13 percent so far this year against the dollar, as it benefited from political dysfunction in Washington and the Federal Reserve’s gradual monetary tightening pace. A strong euro is a headwind for the export-driven euro zone economy.

Instead of the surging euro, Draghi, in his speech at the Jackson Hole, Wyoming central banker’s conference, instead focused on other aspects such as a solid global recovery.

“Primarily the dynamic that traders are betting on now is that the European Central Bank is not concerned about the euro’s strength despite the impact that the euro is having on core inflation and growth metrics throughout the euro area,” said Karl Schamotta, director of global market strategy at Cambridge Global Payments in Toronto.

He added that traders had expected Draghi to jawbone the currency downward, following up particularly on the minutes of the last meeting, “in which it was very clear that the governing council had become increasingly concerned about the euro’s strength.”

The euro hit a high of $1.1940, its strongest level since January 2015. It was last at $1.1929, up 1 percent on the day, its best daily percentage gain in two months.

Against the yen, the dollar fell 0.2 percent to 109.31, while the dollar index slid to 92.542 .DXY, down 0.8 percent.

“At this point, there isn’t too much for Yellen to add,” said currency strategist Sireen Harajli of Mizuho Corporate Bank in New York.

"The FOMC (Federal Open Market Committee) has been very clear in terms of communicating their intention to continue tightening policy very gradually, and I don't think they see anything to change that view."

Instead, Yellen focused on U.S. regulations, saying those put in place after the 2007-2009 crisis had strengthened the financial system without impeding economic growth, and any future changes should remain modest.

Reference: Gertrude Chavez-Dreyfuss;

Sunday, 27 August 2017

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Saturday, 26 August 2017

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Friday, 25 August 2017

Forex Candlestick Charts


Trading Education

Japanese candlestick charts have provided traders with a unique insight into the future direction of markets since their invention by a Japanese trader in the mid-1700s.
Candlestick charts - unlike conventional open, high, low, and close or OHLC charts - convey all of the same information, in addition to whether the instrument was up or down for the period in question.

Besides plotting the candlesticks which make up the most basic element of this sophisticated charting technique, the Japanese also developed a detailed system for the interpretation of the different chart formations. In the process, they often gave colourful descriptive names to the chart formations.
Candlestick Charts History

The candlestick charting technique was invented in the 1700s by a famous Japanese trader by the name of Homma Munehisa (1724 - 1803), who was also known as Sokyu Homma or Honma.
A trader of Ojima rice from the city of Sakata in Japan, Munehisa attained the stature of being one of the most successful traders the world has ever known. History has it that he managed to rack up the present-day equivalent of over $100 billion in trading profits over his illustrious trading career, even making as much as $10 billion over a year's time, in some cases.

The formidable candlestick charting technique Munehisa invented was subsequently popularized in the West by Charles Dow in the early 20th century. Charles Dow had a number of business publications which published several indexes, including the Dow-Jones Industrial and the Dow-Jones Transportation
average. In addition, Dow was the inventor of the Dow Theory, a popular stock market analytical system.

Since their introduction in the West, candlestick charting techniques have become increasingly popular among technical analysts and they remain in wide use today among forex traders.
Basic Candlestick Chart Theory

Unlike the more common "open, high, low, close" bar charts, candlesticks provide some additional informational elements, starting with a two-colour scheme that was originally black and white, although red and green are also commonly used these days.
Black candles represent days or periods in which the market declined, while white candles represent the days or periods that the market closed higher.
Each candle on the chart consists of two parts: the body and the shadows.

The Body
The body of the candle consists of the rectangle or "candle" that is drawn between the opening and closing prices. The opening price would be at the bottom of a white candle and the top of a black candle.
If the body of the candle is white, then the price of the instrument or currency has gone up for the time period represented by the entry. The opening price would be at the bottom of the white candlestick body while the closing price would be at the top.

Conversely, if the currency has declined, then the body of the candle would be black with the opening price at the top of the body and the closing price at the bottom.
The Shadow
The shadow or wick of a candlestick extends from both the top and the bottom of the body of the candle, and represents the upper and lower trading ranges outside of the opening and closing prices.
Shadows can be on both the top and bottom of the body. A long shadow represents a wide range of trading activity, while a short shadow represents a narrow trading range.

Common Types of Candlesticks
Candlesticks can be either long or short and this provides different market implications depending on the trading range and opening and closing prices.
Long candlesticks represent a definite commitment to the market direction given the wide trading range. On the other hand, short candlesticks generally signal market indecision and a possible reversal in market direction.
Some of the most common candlestick types include the following:

§ Marubozu - a candlestick without "wicks" or shadows. Because of the lack of upper or lower shadows, this candlestick represents strong buying or selling pressure and is often a long candlestick.

§ Spinning Top - a short body formation with long upper and lower shadows. This candlestick indicates indecision in the market because of the wide trading range and the proximity between the closing and opening prices.

§ Doji - a classic reversal pattern, this candlestick typically has the same closing and opening price which will give it the appearance of a cross or a T. The T shaped candlestick is known as a Dragonfly Doji, while an inverted T is known as a Tombstone Doji.

Interpretation of Candlestick Charts
Candlestick chart interpretation typically analyses formations of several different candlesticks. These candlestick chart patterns usually make up either reversal formations or continuation formations.
The Japanese traders who developed this technique have given colourful names to the different chart patterns and have incorporated sound trading principles behind the classic interpretation of each particular pattern.

Understanding Candlestick chart patterns can be a powerful trading tool for just about any trader operating in any market.
Nevertheless, since it is beyond the scope of this article to elaborate further, other articles will follow on the subject of the interpretation of specific candlestick chart patterns.

Reference: Forextraders

For more educational information, go to: http://www.tradingprofits4u.com/

Stocks heading for best weeks in six ahead of Yellen, Draghi speeches


LONDON (Reuters) - World stocks climbed toward their best week in six on Friday, as a near three-year high in emerging market shares and a roaring rally in metals bolstered the year’s global bull run.

Moves were mainly small ahead of speeches later by Federal Reserve and European Central Bank heads Janet Yellen and Mario Draghi at one of the highlights of central banking calendar, the Jackson Hole, Wyoming, symposium, but there was some traction.

European shares overcame an early wobble after reassuring business confidence data from Germany and as the week’s 3 and 7 percent rises in metals copper and nickel gave the region’s miners a 4 percent weekly gain.

London’s FTSE, which has a heavyweight mining contingent, led the way with a 0.4 percent rise on the day and 1.5 percent for the week. It was also being boosted by the fourth straight weekly drop in the Brexit-bruised pound, which helps internationally-earned profits.

Fast charging emerging markets helped Asia secure a 1.6 percent weekly rise, while Wall Street looked set to open higher despite a rumbling row for Donald Trump as the United States approaches its self-imposed government debt limit.

“Our current assessment of the overall risk and reward picture keeps us overweight global equities in our tactical asset allocation,” UBS Wealth Management chief investment officer, Mark Haefele, said in a monthly note.

“Earnings and economic growth are strong enough, and central bank policy is still sufficiently loose to suggest that, in the absence of a shock, markets are likely to trend higher over the next six months.”

With focus increasingly turning to Yellen and Draghi’s speeches, scheduled for 1400 and 1900 GMT respectively, currency and bond market traders began to square up their positions.

The dollar added marginally to its best week against the Japanese yen in seven as it hovered at 109.66 yen.

But it couldn’t keep the high-flying euro at bay after the German data. The euro zone currency has had another strong week. It is back about $1.18 and is at its highest against the pound in eight years barring sterling’s “flash” crash last October.

FARCE CEILING

Emerging markets have been a strong driver of the global stocks rise this year.

MSCI’s 24-country EM index hit a near three year high on Friday. Asia-Pacific shares ended the week 1.6 percent higher, having shrugged off the overnight dip on Wall Street as a rift between Trump and Congress over the country’s debt level rumbled on.

In a post on Twitter, Trump said Congress could have avoided a legislative “mess” if it had heeded his advice on raising the amount of money the government can borrow.

Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit, 49 times under Republican presidents and 29 times under Democrat ones.

But the Trump factor is making markets jittery. His latest tweet came after he said on Tuesday that he would be willing to risk a government shutdown to secure funding for a wall along the U.S.-Mexico border.

The standoff has also been one of the reasons why U.S. bond yields have nudged up for a second week running. Fed head Yellen is not expected to give any bold signals on raising U.S. interest rates later but she could bolster the view that they will at least continue to go higher.

There is just as much focus on Draghi, though he too is expected to avoid inflaming the debate on when the ECB scales down its 60 billion-euro-a-month stimulus programme.

Portugal’s 10-year bond yield rose to its highest level in almost a month on Friday and was set for its biggest weekly jump since January, as renewed focus on the ECB’s plans weakened sentiment towards lower-rated euro zone debt markets.

METALS SHINE

In commodities, oil prices rose on expectations that one of the strongest U.S. hurricanes in more than a decade could hit U.S. and Gulf of Mexico production.

Hurrican Harvey as it has been named, is packing winds of up to 125 miles per hour (200 kph), and is forecast to drive a 12-feet (3.7-metre) surge in sea levels and dump up to 35 inches (97 cm) of rain over parts of Texas.

U.S. crude futures rose 0.7 percent to $47.75 a barrel, and global benchmark Brent advanced 0.7 percent to $52.43. They had fallen as much as 2 percent on Thursday as refiners in the path of Harvey shuttered production.

Industrial metals were heading for a dazzling week. Copper remained near a three-year high hit on Thursday on signs of stronger demand in top consumer China while inventories in London warehouses fell.

Nickel which is used in stainless steel was up more than 6 percent for the week and benchmark Chinese iron ore futures were up for an eighth straight week.

Gold meanwhile was up slightly at $1,287.07 an ounce, heading for a 0.2 percent gain for the week.

"I share the view that copper is over-extended and that a correction is due, but every correction needs a trigger," said Julius Baer, commodities research analyst Carsten Menke in Zurich.

"One potential trigger is a rebound of the U.S. dollar, which could come over the weekend, depending on what is discussed in Jackson Hole, or from U.S. economic data."


Reference: Marc Jones

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Asia stocks resilient, dollar up before Yellen, Draghi speeches


SINGAPORE (Reuters) - Asian stocks advanced on Friday, once again shrugging off a sluggish day on Wall Street, and the dollar strengthened as attention shifted to the central bankers’ symposium that began on Thursday in Jackson Hole, Wyoming.

Europe looks set for a similar start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 .FTSE to open little changed, and Germany’s DAX .GDAXI and France’s CAC 40 .FCHI to start the day up 0.1 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS, was up 0.25 percent, set to end the week 1.6 percent higher.

Overnight, Wall Street indexes closed between 0.1 percent .IXIC .DJI and 0.2 percent .SPX lower as a rift between U.S. President Donald Trump and Congress appeared to widen.

In a post on Twitter, Trump said Congress could have avoided a legislative “mess” if it had heeded his advice on raising the amount of money the government can borrow, known as the debt ceiling.

That came after Trump said on Tuesday that he would be willing to risk a government shutdown to secure funding for a wall along the U.S.-Mexico border.

A late-September deadline looms for the United States to raise the its debt ceiling or risk defaulting on debt payments.

The MSCI World index .MIWD00000PUS was steady, heading for a 0.7 percent weekly gain.

Japan’s Nikkei .N225 advanced 0.6 percent, heading for a flat end to the week.

China’s Shanghai Composite index .SSEC jumped 1.5 percent to its highest level since January 2016. Hong Kong’s Hang Seng .HSI gained almost 1 percent.

South Korea’s KOSPI, climbed almost 0.1 percent and Australia’s S&P/ASX 200 index was little changed.

The dollar rose as investors turned their attention to the Jackson Hole central bankers’ meeting at which Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are due to speak on Friday, although no new policy messages are expected from either.

Yellen and Draghi will are scheduled to speak at 1400 and 1900 GMT respectively.

“Expectations for further rate hikes (by the Fed) this year have been tempered by the stubbornly low inflation with some Federal Reserve members calling for a halt to the rate hiking plan,” said William O’Loughlin, investment analyst at Rivkin in Sydney.

“Mario Draghi is also set to speak, with markets hoping he will reveal details of the ECB’s tapering plans.”

The dollar was also helped by fewer-than-expected U.S. initial jobless claims for the week ended Aug. 19.

The dollar was slightly stronger on Friday at 109.64 yen JPY=D4, extending Thursday’s 0.5 percent gain, and heading for a weekly rise of 0.4 percent.

Japanese core consumer prices rose for the seventh straight month in July, a sign the economy is making steady but painfully slow progress toward meeting the central bank’s 2 percent inflation target, although the increase was still largely driven by higher fuel bills.

The dollar index .DXY, which tracks the greenback against a basket of six major peers, was little changed at 93.29. It is poised to end the week 0.15 percent lower.

The euro was steady at $1.17975, set for a weekly gain of 0.3 percent.

In commodities, oil prices rose on Friday as production was shut down on expectations Tropical Storm Harvey would become a major hurricane when it reaches the Texas coast on Friday night or early on Saturday.

That came after crude prices fell overnight as some refiners shut down as Harvey crossed the Gulf of Mexico, reducing their short-term crude demand.

Harvey could turn out to be the most powerful hurricane to hit the U.S. mainland in 12 years, packing winds of up to 125 miles per hour (200 km per hour), driving a surge in sea levels as high as 12 feet (3.7 meters), and dumping up to 35 inches (97 cm) of rain over parts of Texas.

U.S. crude futures rose 0.7 percent to $47.75 a barrel, after Thursday's 2 percent slump. They're on track for a weekly fall of 1.55 percent.

Global benchmark Brent advanced 0.7 percent to $52.41, and is headed for a drop of 0.6 percent for the week.

Copper remained near a three-year high hit on Thursday on signs of stronger demand in top consumer China while inventories in London warehouses fell.

Benchmark copper on the London Metal Exchange CMCU3 inched up 0.35 percent to $6,712 a tonne, extending Thursday's 1.9 percent gain and set to end the week up 3.5 percent.

Gold was up slightly at $1,287.07 an ounce, heading for a 0.2 percent gain for the week.

Reference: Nichola Saminather

Dollar steadies ahead of Jackson Hole meetings


LONDON (Reuters) - The dollar recovered some ground on Thursday after another politically-driven slide against the euro and yen, helped by uncertainty over what message Federal Reserve policymakers will send over coming days.

The dollar has dropped 14 percent against the euro this year, driven by a collapse in expectations for tax cuts and other pro-growth moves by the Trump administration that has weakened the case for further rises in U.S. interest rates.

But the U.S. central bank remains the only of the world's big monetary authorities to have begun raising rates and it is also seeking to rationalize the huge stores of securities it has built while pumping cash into the economy in the past eight years.

Any harder signal on that issue from Fed chair Janet Yellen when she speaks on Friday at the meeting of central bankers at Jackson Hole would be liable to help the greenback. The U.S. currency gained around 0.2 percent in Europe to trade at $1.1788 per euro.

"The market is short dollars already and from a risk-reward point of view, it makes sense to close some of those positions, just in case Yellen said something hawkish," said Jane Foley, a strategist with Rabobank in London.

"The ECB might be more concerned about the strength of the euro and hence we are near $1.20 and not $1.25. But I don't get the feeling that this uptrend (for the euro) is over yet."

The dollar rose around a quarter of a percent to 109.28 yen. and 0.2 percent against the basket of currencies used to measure its broader strength.

That was still just a minimal recovery from losses since President Donald Trump on Tuesday suggested that a shutdown of the government was possible and threatened to terminate the North American Free Trade Agreement.

His remarks, made ahead of a debate in Congress over a spending package and a rise in the debt ceiling, also prompted Fitch Ratings to warn about the impact on the government's credit rating.

Congress will have about 12 working days, when it returns on Sept. 5 from its summer break, to approve spending measures to keep the government from shutting. Also, a deadline is nearing for raising the cap on how much the federal government may borrow.

Traders from Citi told clients in a morning briefing that they leaned towards expecting a bullish message for the dollar from Yellen.

"Our base case is for Yellen to be mildly hawkish," they said. "If (the Fed is) going to hike again this year, it will have to be due to loosening financial conditions and stability risks. If she concentrates on laying the groundwork for that, we think the market will take this as USD-positive."

Reference: Patrick Graham