by Sean Hyman, Contributing Writer
This month’s King of the Mini winner made 322% on his money. Download his trading statement to see how he did it. The King of the Mini Contest awards cash prizes to the top five traders with the highest percentage monthly gains, who also get bragging rights for their respective countries!
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Standing |
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Country |
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Name |
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%Gain |
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Cash Prize |
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1st |
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China |
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Anonymous |
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322% |
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$2500 |
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2nd |
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US |
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Barbara Bennett |
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243% |
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$1000 |
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3rd |
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China |
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Anonymous |
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214% |
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$500 |
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4th |
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US |
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Anonymous |
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209% |
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$250 |
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5th |
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US |
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Anonymous |
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169% |
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$100 |
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Over
$4000 in cash prizes awarded monthly.Learn
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The USD/CHF gained a full 500 pips in February!Taking a closer look we can see what moved this pair into an upward trend for the month. We came into the month with one more Fed rate hike from the United States of .25% (labeled on the chart as Fed Hike) with many believing there could be more hikes coming since the US data has still been coming in strong overall. Plus, the market likes to be forward looking. When it feels more hikes are coming it may try to “price them in” the market. This is one of the biggest fundamental forces behind price movements in the market.
Next we had the Non-Farm Payroll numbers come out on the 3rd. This is a highly watched number because it shows how many jobs may have been added in the United States (not considering farming jobs). While the immediate look didn’t appear great with the number coming in at 193,000 vs. 250,000, the December numbers were revised upward from 108k to 140k; which almost soaked up the difference.
Then we had a better than expected unemployment rate come in at 4.7% vs. 4.9% previously. The market, considering the whole picture, rallied on this information. This also gave a greater anticipation of a rate hike from the Fed on the March 28th meeting. The Fed funds futures also priced in a 90% chance of a rate hike in the trading of that contract.
On the 6th, we had comments from Secretary Snow stating that he felt the 1.1% growth in GDP would end up being revised upward. This was interpreted in the markets as being good news for the Dollar, once again. Fed governor Fisher also confirmed Snow’s comments with his own, as well.
Around the 9th we had comments come out from the Fed’s Moskow. Moskow stated that interest rates were at neutral, however more rate hikes might be necessary to keep inflation expectations anchored. Also the jobless claims came out and gave indications that the labor market remains healthy. We also had the emersion of the 30 year treasury bond which could also draw money back into the dollar.
At the mid month mark, retail sales rose to an impressive 2.3%. This was the biggest retail gain since May of 2004 and if you exclude autos then that would make it a 6 year high.
Ben Bernanke spoke on the 15th. The market seemed to like his straight shooting approach vs. the mystical speech that Greenspan gave. Keep in mind this is the first time in 20 years we’ve changed Fed Chairmen. Bernanke made an important comment that “monetary policy makers will be closely reviewing all the data, trying to make out the best assessment of the economy.” With consumer spending holding strong, this could lean toward more rate hikes if he feels he needs to keep inflation contained.
In the following days the PPI (Producer Price Index) came out which measures inflation at the producer level. PPI climbed .3% which is the biggest gain in a year. Here, the higher inflation could lead to future rate hikes.
The US Dollar was the driver’s seat for this pair. However, the Swissie did have some good economic news; but they are not good enough yet to raise its interest rates. It’s also a much smaller economy. The KOF Leading Indicator report came out and hit its highest reading in 5 ½ years at 1.30 up from 1.22 the month prior. Keep in mind though, that this is a leading indicator, so it indicates times could be good in the future. This report comes out in Zurich, Switzerland from the Swiss Institute of Business Cycle Research.
Switzerland also exports quite a bit to Germany. Germany consumer confidence has been rising as of late and could help the Swissie out in the future should this continue. Switzerland doesn’t appear to be hinting at a rate hike just yet. This is KEY. You have a country with rising interest rates poised against a smaller economy that is not currently raising rates or sending a message they are going to do so. When you take all of these factors into account, you can see why this produces what technicians call an “uptrend” for the month. You can see that it continually put out “higher highs” and “higher lows” throughout the month overall.
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