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Freedom Rocks: Forex Hedging (Part 3)

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Mike QC

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Yup yup grabeh para tayong may mga kanya kanyang ATM sa bahay ah hehe.  

@ yellowminded, that was because of the release of the French Industrial Production which unexpectedly grew over the month of August. Economists had forecasted a 0.3 percent decline in French factory output over the month. Instead, the market was met with a 0.3 percent increase to back up the upwardly revised 1.7 percent jump recorded in July.

Also, the Italian Industrial Production sees its biggest monthly jump since April of 2005 kaya hindi talaga matinag-tinag itong Euro and it just kept flying high. Conversely, the Swiss Franc has to contend with a central bank that appears unfazed by the recent slide in their currency as the Swiss national, having effectively ruled out a near term rate hike, avoided using the verbal intervention tool to support the free falling Franc. :applause:

« Last Edit: Oct 10, 2007, 09:41 PM by Mike QC »


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anybody has any insights about the upcoming news on US September retail sales? I had a blast riding last night's rally thanks to walmart.  :applause:

Mike QC

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Yup last night was awesome indeed! And tonight is another great night. The Retail Sales gains for September exceeded our expectations. :D


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pareng mike, just wanted to ask, has there been any opinions by anyone as to why the inverse correlation exists and continues to maintain itself?  I think its an important question, since it seems to be the underlying assumption of FR.

Mike QC

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Dude, based on my research, here's a very good explanation about these 2 currency pairs' very strong inverse correlation...


It is a fact that over the long term (one year) most currencies that trade against the U.S. dollar have an above 50% correlation. This is the case because the U.S. dollar is a dominant currency that is involved in 90% of all currency transactions. Furthermore, the U.S. economy is the largest in the world, which means that its health has an impact on the health of many other nations. Although the strong relationship between the EUR/USD and USD/CHF is partially due to the common dollar factor in the two currency pairs, the fact that the relationship is far stronger than that of other currency pairs stems from the close ties between the eurozone and Switzerland.  

As a country surrounded by other members of the eurozone, Switzerland has very close political and economic ties with its larger neighbors. The close economic relationship began with the free trade agreement established back in 1972 and was then followed by more than 100 bilateral agreements. These agreements have allowed the free flow of Swiss citizens into the workforce of the European Union (EU) and the gradual opening of the Swiss labor market to citizens of the EU. In fact, 20% of the Swiss workforce now comes from EU member states. But the ties do not end there. Sixty percent of Swiss exports are destined for the EU, while 80% of imports come from the EU. The two economies are very intimately linked, especially since exports account for over 40% of Swiss GDP. Therefore, if the eurozone contracts, Switzerland will feel the ripple effects.  

Hope this helps!


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thanks pre.

the reason why i asked was that (and I hope you guys don't throw me out on my ear for this) I'm just wondering the relationship will hold for the long term, say after 5 years, if the US economy goes south in a really bad way.  I see all this news about the impending credit crisis with citicorp, the bad home mortgage situation and the Fed announced that they'll have to lower interest rates by December, and I can't help but recall Kiosaki's portents of doom for the US economy.

Mike QC

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No problem bro! That was actually a good question to ask that I'm glad to answer and so everyone can also digest. :)  

I'm sure you guys enjoyed the ride again tonight. I just closed out all my positions and once again I'm getting ready to reallocate & reenter my new hedge positions and just waiting for the proper always!  

The DOW has finally recovered a bit during the early morning today buoyed by some solid corporate earnings reports after being battered for 2 consecutive days but a collapse in "Housing Starts" to a 14 year low during September and a jump in inflation raised renewed concerns about the broader economy so time your entries carefully. :D

« Last Edit: Oct 18, 2007, 01:01 AM by Mike QC »

Mike QC

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Another great Friday closing for me tonight as the high-flying EUR/CHF lifted my equity once again. The DOW also rallied today after a higher profit forecast by Microsoft Corp. lifted all three major indexes and an upbeat outlook by lender Countrywide Financial Corp. This is also a sign that Wall St. investors are expecting the Federal Reserve to cut interest rates when it meets next Wednesday.


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@mikeqc sabi na nga ba mag-uupdate ka e.. ang ganda nga ng movement ng market kanina binantayan ko nga e hanggang magclose e..  :applause:
di ko natiis na di mag-open ng position sa AUD/USD tsaka NZD/USD... ganda ng outcome especially sa AUD....  :cool2: i love this 2 pairs


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hi, guys! malaki ba talaga chance ng another rate cut by the fed? is it risky to open new positions when the hourlies reach OS levels? medyo nakakatakot lang kasi baka double top yun nagfo-form sa daily. yikes!

i tried an intra-day tres amigos yesterday since the gbpchf was at the appropriate levels. ang saya pala. hehehe. pero ingat lang kasi parang bearish pa rin ang long term ng cross pair na to.

goodluck to everyone!


« Last Edit: Oct 30, 2007, 03:33 PM by yellowminded »


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