Traders Are Buying Euro Dollar But Should I sell EUR/USD?

According to the FXCM SSI, a proprietary indicator that tracks the positioning of more than 30.000 traders, retail traders have been aggressively buying EURUSD.

Traders Are Buying Euro Dollar. Should I sell EUR/USD?

Yesterday, the U.S. Federal Reserve left the Fed Funds rate unchanged at 2 percent as widely expected by the market and retail traders have been taking new long positions. In fact, long positions are up by 13.2% since yesterday and the ratio of long to short positions in the EURUSD stands at 1.73 as nearly 63% of traders are long. Yet, in the past, the SSI has been working really well as a contrarian indicator, particularly during trending markets, and the EURUSD could sell off more in the next few days.

Why contrarian traders are normally more profitable?

Generally speaking, more long positions don't necessary suggest more confidence in the direction of the current trend. Indeed, when traders start having adverse movements against their position, many tend to increase the size of their position with the purpose to average down their entry price in one last attempt to recover from previous losses. However, the higher the number of short orders in a bull market the more dangerous is to take additional shorts because many of those traders who just entered the markets are also leaving their protective stop losses just above the current price action. The current positioning for the world’s most heavily traded currency pairs is located in the table below.



What is the FXCM SSI?

SSI stands for Sentiment Speculative Index. The SSI is based on proprietary customer flow information. It is a real-time snapshot of the positioning of more than 30K retail traders given by the FXCM Execution desk. The absolute number of the ratio itself represents the amount by which long orders exceed short orders or vice versa. A negative number indicates that the majority of traders are net short while a positive number indicates that the majority of traders are net long. The FXCM SSI is published every week on DailyFX.com.

(http://dailyfx.com)

Freddie Mac sinks to $800m loss

By Daniel Pimlott in New York

Published: August 6 2008 13:59 | Last updated: August 6 2008 14:41

Freddie Mac slipped to a deeper net loss in its second quarter and revealed plans to slash its dividend as its credit losses doubled because of rising delinquency rates and higher foreclosures.

Freddie recorded a loss of $821m, or $1.63 a share, in the second quarter compared with a $151m, or 66 cents a share, loss in the previous quarter. The loss is its fifth in the last six quarters.The company made a profit of $729m in the same quarter a year ago, and revenues have fallen 28 per cent to $1.69bn since then.

Richard Syron, chief executive, said he still planned to raise capital even after Hank Paulson, the Treasury secretary, stepped in to bail out the company and larger rival Fannie Mae. The two giant mortgage financiers have taken billions of dollars of mortgage losses.

Freddie Mac and Fannie Mae, created by Congress to increase mortgage financing, own or guarantee 42 per cent of the $12,000bn in outstanding US home loans. The companies have massively expanded their role in the mortgage industry in the wake of the subprime crisis, after many other lenders went out of business or dramatically scaled back their mortgage operations.

Freddie shares fell 14.5 per cent to $6.87 in early Wall Street trading. Fannie, which is scheduled to report earnings later this week, dropped 11 per cent to $12.06.

Credit losses doubled to $2.8bn, while the company wrote down the value of subprime and Alt-A securities by $1bn.

It plans to reduce its quarterly dividend to 5 cents or less a share from 25 cents a share.

Congress last month extended authority to the US Treasury to buy unlimited equity stakes in Fannie and Freddie and offer them financing to bolster confidence after their stock price plummeted. The Federal Reserve was also given permission to lend directly to them.

Freddie said that its estimated regulatory core capital was $37.1bn at the end of the quarter, about $8.4bn above its statutory minimum requirement, and $2.7bn above the 20 per cent mandatory surplus applied by its regulator.

“We are capitalised above regulatory requirements and we continue to have open access to the debt markets,” said Buddy Piszel, chief financial officer.

“Freddie Mac was created to ensure the continued flow of funds to America’s homebuyers, and we are pleased to be fulfilling that important mission,” Mr Syron added. ”At a time of severe stress in the housing and credit markets, we are successfully providing critical liquidity and stability.

“We remain committed to raising $5.5bn of new capital and will evaluate raising capital beyond this amount depending on our needs and as market conditions mandate.”

Copyright The Financial Times Limited 2008

Sen. McCain on whether Sen. Obama should have given a speech in Berlin

Questioning speech, forgetting Canada

Posted: Thursday, July 24, 2008 3:35 PM by Mark Murray

From NBC's Mark Murray
In his interview with NBC's Kelly O'Donnell, which will air on NBC's Nightly News tonight, McCain questions whether Obama should have given a speech in Berlin before becoming president.

"I would rather speak at a rally or a political gathering any place outside of the country after I am president of the United States," McCain told O'Donnell. "But that's a judgment that Sen. Obama and the American people will make."

However, on June 20, McCain himself gave a speech in Canada -- to the Economic Club of Canada -- in which he applauded NAFTA's successes. An implicit message behind that speech was that Obama had been critical of the trade accord. Also, McCain's trip to Canada was paid for by the campaign. Questioning speech, forgetting Canada Posted: Thursday, July 24, 2008 3:35 PM by Mark Murray

(http://firstread.msnbc.msn.com)