The Learn About Futures Insider for June 23, 2011: Treasury Notes

#1
Larry Levin Daily Review : Currency War

The Federal Reserve's newest dollar trashing strategy is having major currency effects across the globe. Multiple countries from Brazil to Japan, and many in between, feel like they must intervene in the Forex market to offset the Fed's policy.

As a direct result of the Fed's soon-to-be-launched QE2 currency debasement, the US dollar has already been slammed nearly 10% in a few short weeks. Because of this, all other currencies are rising relative to the US dollar, which is not what other countries want because it makes their exports more expensive. Now, if the United States admitted to this everyone may be able to work out an amicable solution. Sadly, the arrogance of U.S. officials knows no bounds: they blame everyone BUT the Federal Reserve.

In an effort to give the ^$!#g banksters more money and spur the manufacturing sector (via a lower US dollar), which is only 14% of the US economy, the idiots at the Fed are starting a global currency war and risking hyperinflation. Since they're government employees, I'm sure the Keynesian-clown-posse in the Fed will be promoted soon.

The following piece sums it up nicely...

A currency war is spreading as the dollar's value against major world currencies has continued to decline in recent days. Some developed countries have begun to intervene in their exchange rates. The recovery of the global economy will suffer a negative impact if this trend is not checked.

It is the dollar that triggered the currency war. Seemingly a market move, the depreciation of the dollar is actually active.

The U.S. Federal Reserve's statement that it might restart quantitative easing — a policy central banks use to increase money supply — triggered the depreciation of the dollar. The dollar's value against the basket of currencies has decreased by 7 percent since the U.S. Federal Reserve began talk of possible quantitative easing.

The move nominally aims to further drive down the interest rate in America to prevent the occurrence of a double dip. But it will affect the value of the dollar too, prompting the dollar's devaluation. In light of the history low short-term interest rates in the United States, a further decrease in the interest rate will drive the flow of short-term capital toward markets of emerging economies, quickening the appreciation of their currencies.

Second, the U.S. government's strategy to double its exports within five years needs the considerable depression of the dollar. For America, boosting exports is a must in the post crisis era, because it cannot pin its hope for economic growth on the prosperity of its real estate market and consumption based on borrowing money.

Obviously boosting exports relying on the competitiveness of U.S. companies is not realistic in the short term. Nor is it possible to be realized by the strong demand of its trade partners. None of America's trade partners — except those emerging economies — are able to achieve growth independently. Judging from the course of history after World War II, considerable depreciation of the dollar is the sole possible option that enables America to realize the goal. In this sense, driving down the value of the dollar has become an important choice in policy for the United States to recover the sluggish economy..

The last but the most important point is that in the long run the considerable depreciation of the dollar will help America to transfer its debts to others. If we say the international financial crisis nationalized the private debts, then in the post-crisis era, the United State sees an urgent need to internationalize its debts.

A great amount of bad debts of American financial institutions have been converted to government debt through government aid measures. In 2009, America's fiscal deficit stood at 1.42 trillion dollars, 3.1 times the 2008 level. The deficit ratio surged from 3.2 percent in 2008 to 10 percent to a new high since World War II. The debt of the federal government increased to 6.7 trillion dollars, representing 47.2 percent of its GDP. In 2010, the fiscal deficit is expected to be around 1.32 trillion dollars. How America retains economic growth while reducing the deficit is a big problem for the country.

Historic experiences show debt-to-GDP ratio is not directly linked with economic growth and inflation (even devaluation) in most countries. But the United States is an exception because the dollar serves as the world currency. For instance, the ratio decreased from 121.2 percent in 1946 to 31.7 percent in 1974. Of that number, inflation accounted 52.6 percentage points, economic growth contributed nearly 56 percentage points and federal surplus contributed negative 21.51 percentage points. Even if the United States denies its motives to transfer their debts, it will unavoidably happen in reality.

Given a sluggish economy and huge amount of debts, driving the value of the dollar down is in line with America’s interests, both in short term and in long term. The international community ought to stay vigilant about the strong motive for active devaluation under the guise of a market-based move.

By Li Xiangyang, translated by People's Daily Online

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.


Larry Levin
[email protected]
Trading Advantage
xxxxxxxxxxxxxxxxxx
 
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#2
The Learn About Futures Insider for May 12, 2011: Canadian Dollar

In 1858, the Province of Canada debuted a Canadian dollar and pegged it at par with the U.S. dollar. Following the Uniform Currency Act in April of 1871, various provincial currencies were replaced by the common Canadian dollar. Since then, the Canadian dollar has be changed to a floating currency, and - according to the Bank for International Settlements - become the seventh most-traded currency in the world. The following contract specifications will refer to the Canadian Dollar/US Dollar contract from the foreign exchange futures listings on CME Group.

Contract Size: 100,000 Canadian dollars

Price Quote & Tick Size: $.0001 per Canadian dollar increments ($10.00/contract). $.00005 per Canadian dollar increments ($5.00/contract) for CAD/USD futures intra-currency spreads executed on the trading floor and electronically, and for AON transactions.

Contract Months: March, June, September, December

Trading Specs: Open outcry is 7:20 a.m.-2:00 p.m. and Globex hours are Sundays: 5:00 p.m. - 4:00 p.m. Central Time (CT) next day. Monday - Friday: 5:00 p.m. - 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT.

Daily Price Limit: Consult exchange.

Trading Symbols: CD, 6C on Globex


Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Canadian Dollar Facts​
The Canadian dollar replaced earlier currencies like the Canadian Pound, Nova Scotian dollar, the British Columbia dollar, and others. Notable milestones for the currency include:

-The gold standard was abolished in April 1933, following temporary abandonment during the First World War.
-During the Second World War, the exchange rate between the U.S. and Canadian dollars was fixed at 1:1, 1 Canadian $ = 1 U.S. dollar.
-This exchange was brought back to parity in 1946.
-The Canadian dollar was allowed to float in 1950, but was again pegged to the U.S. dollar until being allowed to float in 1970.

According to the Bank of Canada, the all-time high and low for the U.S. dollar/Canadian dollar exchange are:

October 1950 - present

Low
Date: 01/21/02
$1 CAN = 0.6179 US

High
Date: 11/07/07
$1 CAN = 1.1030 US

Monetary policies for the currency are determined by the Bank of Canada; however, the inflation-control target is set jointly by the Bank and the federal government. Exchange rates and changes can be found on their official website.


The relationship between the currencies of the U.S. and Canada are relevant since over 80 percent of exports from Canada are destined for the U.S. and over 50 percent of imports into Canada are from the U.S.

The service industry is the primary employment sector, but Canada's logging and oil industries are important to the overall economy. They are a net exporter of energy and are home to the Athabasca Oil Sands - one of the world's largest know oil reserves. Alberta is also home to important natural gas resources.

Agricultural products are also important and the Canadian prairies are among the world's top producers of wheat, canola, and other grains.

Other natural resources like mining contribute to the economy - Canada is the world's largest producer of zinc and uranium and also sits among the leaders in gold, nickel, aluminum, and lead production.

Manufacturing in Canada includes automobiles and aviation equipment. Some of these manufacturers are branches of larger U.S. or Japanese companies.

Canada has often posted low unemployment and large government surpluses although the recent global economic conditions have likely affected both of these numbers. According to official Bank of Canada releases, the GDP was projected to grow through this year per the following illustration:



Inflation projections can be illustrated in the following:



Canada is a member of the Organisation for Economic Co-operation and Development (OECD) and a member of the G8.

Reports relevant to the overall economic condition of Canada are available through Statistics Canada and their official website.

Key terms for this market include:

Loonie - slang for Canada's one dollar coin which bears an image of a common loon.
Dollar parity - when the Canadian dollar and US dollar are equal in value.

Key Uses​
Besides the obvious implications and uses for currency, the Canadian dollar has investing applications as well. As a financial instrument, Canadian dollar futures are often used as a means to hedge currency exchange risk.

Key Concerns​
Several factors within a nation can have a significant effect on the currency exchange rates and the relative importance of each is the subject of debate, however, it is important to be aware of some of the key fundamentals. In addition to these fundamentals, traders who participate in this market should be aware of the trading prices of commodities generally associated with the Canadian economy.

Inflation: It is generally believed that countries with consistently lower inflation exhibit a rising currency value while countries with higher inflation may see currency depreciation.

Interest Rates: High interest rates may attract foreign investors and that can lead to an exchange rate increase while the opposite scenario is possible in a country with low interest rates.

Overall Economic Conditions: Everything from a country's balance of trade to the size of their deficit or surplus can serve as a barometer of the condition of the country and the likelihood of default. Investors look for countries with stronger economic foundations and the better the economic foundation of one country versus another may increase the value of the country's currency.

Perception: The so called "flight to quality" exists within foreign currencies as investors will often seek what they perceive as "safe haven" currencies during times of political or economical instability.

To get FREE access to Learn About Futures Insider,
please visit Learn Futures Trading!

________________________________________________________​
Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 
#3
The Learn About Futures Insider for May 19, 2011: Euro Currency

Named in 1995, and introduced in 1999, the euro is the official currency of more than half of the member countries of the European Union. According to the International Monetary Fund (IMF), the euro zone may represent the second largest economy in the world, a likely driving force behind the apparent interest in the exchange of this currency. The following contract specifications will refer to the Euro/US Dollar contract from the foreign exchange futures listings from the CME Group.

Contract Size: 125,000 euro

Price Quote & Tick Size: $.0001 per euro increments ($12.50/contract). $.00005 per euro increments ($6.25/contract) for EUR/USD futures intra-currency spreads executed on the trading floor and electronically, and for AON transactions.

Contract Months: March, June, September, December

Trading Specs: Open outcry is 7:20 a.m.-2:00 p.m. and Globex hours are Sundays: 5:00 p.m. - 4:00 p.m. Central Time (CT) next day. Monday - Friday: 5:00 p.m. - 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT.

Daily Price Limit: Consult exchange.

Trading Symbols: EC, 6E on Globex


Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Euro Facts​

The euro replaced the European Currency Unit on the world financial market in January of 1999; however, the euro banknotes and coins did not enter circulation until three years later. It is divided in a similar fashion to dollars with each euro divided into one hundred cents. To distinguish these cents, the moniker euro-cents is occasionally applied. The euro is currently the sole currency of the following member states of the European Union (EU) and these are collectively referred to as the "eurozone":

* Austria
* Belgium
* Cyprus
* Estonia
* Finland
* France
* Germany
* Greece
* Ireland
* Italy
* Luxemburg
* Malta
* The Netherlands
* Portugal
* Slovakia
* Slovenia
* Spain



Other nations have pledged to adopt the euro at some point. To participate in the currency, member states had to meet certain criteria. These criteria included strict debt ratio and inflation parameters, as well as having to have an interest rate close to that of the EU average.

Euro administration and management fall to the European Central Bank (ECB) which is based out of Frankfurt. Like many central banks, the ECB sets monetary policy. The euro is the second most common reserve currency, meaning it is held as part of foreign exchange reserves by many governments and institutions. It is also considered a hard currency, one which is perceived as a reliable store of value and is globally traded. Several countries outside the Eurozone have pegged their currency directly to the euro.

As with many other central banks, the ECB sets interest rates, attempts to maintain price stability, and promote smooth operation for member banks. Key information is frequently updated on the ECB's official website.

The EU is often represented as a single entity in terms of its economy. Many official statistics for this area come from Eurostat, including agricultural, financial, energy, and labor themes. Many of these releases are offered free of charge on their official website.

Among the key economic notes for the EU, it may be important to bear in mind the following:

- The EU has large coal, oil, and natural gas reserves. The North Sea Oilfields may be of primary interest.
- The EU is the largest exporter in the world.
- It is also the second largest importer.
- Manufacturing makes up roughly 28.4 percent of the GDP and the services sector accounts for 69.4 percent. Agriculture comes in at 2.3 percent.
- Tourism is an important part of the EU's economy

Key terms for this market include:

EMS - European Monetary System - simplified, this refers to an arrangement in which countries linked their currencies to try to prevent large relative fluctuations.

EFSF - European Financial Stability Facility - a creation aimed at providing loans to Eurozone countries facing financial crises following the global economic downturn.

Key Uses​

Besides the obvious implications and uses for currency, the euro has investing applications as well. As a financial instrument, euro futures are often used as a means to hedge currency exchange risk. Since the euro is such a huge part of international trade, this can be a significant market for other businesses as well.

Key Concerns​
Several factors within a nation can have a significant effect on the currency exchange rates and the relative importance of each is the subject of debate, however, it is important to be aware of some of the key fundamentals.

Inflation: It is generally believed that countries with consistently lower inflation exhibit a rising currency value while countries with higher inflation may see currency depreciation.

Interest Rates: High interest rates may attract foreign investors and that can lead to an exchange rate increase while the opposite scenario is possible in a country with low interest rates.

Overall Economic Conditions: Everything from a country's balance of trade to the size of their deficit or surplus can serve as a barometer of the condition of the country and the likelihood of default. Investors look for countries with stronger economic foundations and the better the economic foundation of one country versus another may increase the value of the country's currency.

Perception: The so called "flight to quality" exists within foreign currencies as investors will often seek what they perceive as "safe haven" currencies during times of political or economical instability.

_______________________________________________________________________________________
Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 
#4
The Learn About Futures Insider : Japanese Yen

This Eastern Asian currency is one of the most widely traded currencies in the foreign exchange market, second only to the US Dollar and Euro, according to trading surveys. The official national currency of Japan, the name yen means "round object". The following contract specifications will refer to the Japanese Yen/US Dollar contract from the foreign exchange futures listings from the CME Group.

Contract Size: 12,500,000 Japanese Yen

Price Quote & Tick Size: $.000001 per Japanese yen increments ($12.50/contract). $.0000005 per Japanese yen increments ($6.25/contract) for JPY/USD futures intra-currency spreads executed on the trading floor and electronically, and for AON transactions.

Contract Months: March, June, September, December

Trading Specs: Open outcry is 7:20 a.m.-2:00 p.m. and Globex hours are Sundays: 5:00 p.m. to 4:00 p.m. Central Time (CT) next day. Monday through Friday: 5:00 p.m. to 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT.

Daily Price Limit: Consult exchange.

Trading Symbols: JY, 6J on Globex

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Japanese Yen Facts​

In the late nineteenth century, Japan embarked on a period of economic expansion. Part of this was built on a base of embracing a free market economy concept from Western contemporaries. The mid to late twentieth century was a period of large overall economic growth in Japan, but that growth slowed in the 1990s following an economic bubble. According to the IMF, Japan is the second largest economy in the world, nearing a nominal GDP of nearly $5 trillion. This data was compiled prior to the recent recessionary period as well as the natural and nuclear disasters, but the significance of the island nation on a global level is still apparent.

The following chart shows the GDP growth as a percent change from the preceding year:

Japan has enjoyed lower unemployment rates, around 4 percent, as well as some of the highest worker salaries in the world, according to the Big Mac Index. Well known companies in Japan are Toyota, Canon, Honda, Sony, Nintendo, Nipon Steel, and Mitsubishi. Banking, insurance, retail, and transportation are among the key industries in Japan and roughly three quarters of the GDP is from the service sector.

Exports are also a key component of Japan's economy, mostly of transportation equipment, motor vehicles, and electronics, and the main export markets are as follows:

United States - 22.8%
European Union - 14.5%
China - 14.3%
South Korea - 7.8%
Taiwan - 6.8%
Hong Kong - 5.6%

Imports, including mainly food, machinery, and fossil fuels, come from China (20.5%), the United States (12.0%), the European Union (10.3%), Saudi Arabia (6.4%), the United Arad Emirates (5.5%), and others.

The Japanese Yen was adopted officially in 1871 and Japan was moved onto the gold standard. After losing a significant portion of value following World War II, the yen was fixed to the US dollar. Abandonment of the Bretton Woods System - monetary management rules among major industrialized states - in 1971 eventually led to the yen being among those currencies allowed to float.

The Bank of Japan - the nation's central bank - sets monetary policies. Updates and information can be found on their official website.

Key terms for this market include:

Nichigin - the short form name of the Bank of Japan.

Asset price bubble - references an economic bubble that Japan experienced between 1986 and 1991.

Key Uses​

Besides the obvious implications and uses for currency, the Japanese Yen has investing applications as well. As a financial instrument, Japanese Yen futures are often used as a means to hedge currency exchange risk.

Key Concerns​

Several factors within a nation can have a significant effect on the currency exchange rates and the relative importance of each is the subject of debate, however, it is important to be aware of some of the key fundamentals. In addition to these concerns, the Japanese Yen has been the subject of government intervention when the exchange rate is perceived as detrimental to business exports, although this is not a guarantee of future intervention, especially with changes within the government. Also, Japan has frequently experienced natural disasters which can alter the economic landscape. Most recently, an earthquake and tsunami led to a nuclear crisis.

Inflation: It is generally believed that countries with consistently lower inflation exhibit a rising currency value while countries with higher inflation may see currency depreciation.

Interest Rates: Interest rates in Japan have been kept low by the central bank in an effort to spur economic growth. This low interest rate has attracted investors to borrow in Japan to invest in other countries, a practice which is known as carry trade.

Overall Economic Conditions: Everything from a country's balance of trade to the size of their deficit or surplus can serve as a barometer of the condition of the country and the likelihood of default. Investors look for countries with stronger economic foundations and the better the economic foundation of one country versus another may increase the value of the country's currency.

Perception: The so called "flight to quality" exists within foreign currencies as investors will often seek what they perceive as "safe haven" currencies during times of political or economical instability.
_______________________________________________________________________________________

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 
#5
The Learn About Futures Insider: British Pound

According to the Triennial survey, the British Pound is likely the fourth most-traded currency after the U.S. dollar, the Euro, and the Yen. Official currency of the United Kingdom - as well as a few Crown dependencies - the Pound can trace its origins back to Anglo-Saxon times. The following contract specifications will refer to the British Pound/US Dollar contract from the foreign exchange futures listings from the CME Group.

Contract Size: 62,500 British pounds

Tick Size: $.0001 per British pound increments ($6.25/contract).

Contract Months: March, June, September, December

Trading Specs: Open outcry is 7:20 a.m.-2:00 p.m. and Globex hours are Sundays: 5:00 p.m. - 4:00 p.m. Central Time (CT) next day. Monday - Friday: 5:00 p.m. - 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT.

Daily Price Limit: Consult exchange.

Trading Symbols: BP, 6B on Globex

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

British Pound Facts​

The British Pound, or Pound Sterling, is represented by the symbol which originated from the Latin word for pound - libra. The pound used to represent twenty shillings. Each shilling was worth twelve pence, so a pound would be two hundred and forty pence. In 1971, system of decimalization was adopted whereby one pound was equal to one hundred new pennies.

The Bank of England - the central bank for the United Kingdom - was established in 1694. Its functions include policies aimed at maintaining price stability and promoting the economic policies of the British Government. When the Labor Party took the majority in the House of Commons in 1997, they worked to give power to the bank to set interest rates. The bank also issues banknotes for England and Wales. Scottish and Northern Irish banks may issue their own banknotes, but they must be backed by deposits in the Bank of England. Information on the bank - including current rates and news releases - may be found on their official website.

Although the United Kingdom is a member country of the European Union, it has not elected to adopt the euro currency. The annual deficit to GDP may currently be above the defined threshold to allow for the adoption of the euro.

The economic history of the British Empire has undergone many changes over the centuries. From the Age of Mercantilism to the Industrial Revolution and the New Imperialism, England and the empire had periods of distinct development. The late 20th century was marked by politics which likely provided the catalyst to Black Wednesday - a day in which the pound was withdrawn from the European Exchange Rate Mechanism after it fell below its agreed limit.

Currently, the United Kingdom is a major financial center for international business. The service sector claims the largest share of jobs, but other sectors are present. Around 16 percent of the national output is from manufacturing, with engineering topping the largest sector within. Agriculture only accounts for around 1 percent of the workforce, nearly the same amount as the energy sector. In 2004, just over 74 percent of the electricity production in the United Kingdom came from fossil fuels; however, an initiative to build nuclear generators may boost energy reserves.

The United Kingdom produces around 60 percent of its overall food requirements; therefore foodstuffs are an important key when discussing imports. Other items imported to the Isles include: machinery, fuels, and manufactured goods. Tourism also plays a large role in the economy of the United Kingdom.

Trade values can be illustrated per the following chart:


Key terms for this market include:

Quid - a slang term for the British Pound.
GBP - abbreviation for Great British Pound, or pound sterling.
Chancellor of the Exchequer - the government minister responsible for the financial and economic issues in the UK, including setting the Bank of England's inflation target.

Key Uses​

Besides the obvious implications and uses for currency, the British Pound has investing applications as well. As a financial instrument, British Pound futures are often used as a means to hedge currency exchange risk. The British Pound plays a large part in international trade.

Key Concerns​

Several factors within a nation can have a significant effect on the currency exchange rates and the relative importance of each is the subject of debate, however, it is important to be aware of some of the key fundamentals.

Inflation: It is generally believed that countries with consistently lower inflation exhibit a rising currency value while countries with higher inflation may see currency depreciation.

Interest Rates: High interest rates may attract foreign investors and that can lead to an exchange rate increase while the opposite scenario is possible in a country with low interest rates.

Overall Economic Conditions: Everything from a country's balance of trade to the size of their deficit or surplus can serve as a barometer of the condition of the country and the likelihood of default. Investors look for countries with stronger economic foundations and the better the economic foundation of one country versus another may increase the value of the country's currency. Sovereign credit ratings from places like Moody's or S&P can impact the perception of a nation's growth and stability.

Perception: The so called "flight to quality" exists within foreign currencies as investors will often seek what they perceive as "safe haven" currencies during times of political or economical instability.
_______________________________________________________________________________________

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 
#6
The Learn About Futures Insider: Swiss Franc

This official currency of Switzerland and Liechtenstein is the only remaining European currency bearing the name franc or frank. It is often represented by the abbreviation or currency symbol CHF. The Swiss Franc has its roots in the Helvetic Republic of the late eighteenth century. The following contract specifications will refer to the Swiss Franc/US Dollar contract from the foreign exchange futures listings from the CME Group.

Contract Size: 125,000 Swiss Francs

Tick Size: $.0001 per Swiss Franc increments ($12.50/contract). $.00005 per Swiss Franc increments ($6.25/contract) for CHF/USD futures intra-currency spreads executed on the trading floor and electronically, and for AON transactions.

Contract Months: March, June, September, December

Trading Specs: Open outcry is 7:20 a.m.-2:00 p.m. and Globex hours are Sundays: 5:00 p.m. - 4:00 p.m. Central Time (CT) next day. Monday - Friday: 5:00 p.m. - 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT.

Daily Price Limit: Consult exchange

Trading Symbols: SF, 6S on Globex

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Swiss Franc Facts​

In the world of investment, Switzerland is often thought of as a kind of haven for investors and as such developed an economy which is deeply dependant on foreign investment. This relatively small nation also relies on specialty industry and trade for individual livelihood. Marked by low unemployment rates and a low budget deficit, the Swiss economy has also been perceived as one of the world's most stable. Zurich and Geneva have been ranked by Mercer Consulting as having among the highest quality of life in the world.

The main industries of Switzerland include:

* Machinery
* Chemicals
* Watches
* Textiles
* Precision Instruments

As the destination for over 20 percent of exports and the source of over 30 percent of imports, Germany is by far the main trade partner for the Swiss. The US, Italy, France, the UK, Austria, Spain, and the Netherlands are the other trading partners.

Domestic food production supplies approximately 60 percent of the food consumed in Switzerland. High import tariffs and domestic subsidies protect the agricultural industry. Power generation is mostly from hydroelectricity (56%) and nuclear power (39%).

Since the early twentieth century, Swiss banknotes have been issued by the Swiss National Bank. This central bank is also responsible for the monetary policy of Switzerland. The bank also manages the approximately 1145 tons of official gold reserves of Switzerland. Their governing board is composed of three members. Information for the bank - as well as monetary policy details - can be found on their official website.

Key terms for this market include:

CHF - the ISO representation for Swiss Franc currency.
Landwirtshaft - agriculture, the sector of the eonomy considered the primary sector which employs less than 10% of the population. Industrie - industry, the secondary sector which employs around 40% of the population.
Dienstleistungen - services, the tertiary sector which employs nearly half the population.

Key Uses​

Besides the obvious implications and uses for currency, the Swiss Franc has investing applications as well. As a financial instrument, Swiss Franc futures are often used as a means to hedge currency exchange risk.

Key Concerns​

Several factors within a nation can have a significant effect on the currency exchange rates and the relative importance of each is the subject of debate, however, it is important to be aware of some of the key fundamentals. In addition to these concerns, Swiss Franc's specific image as it relates to foreign investment may also falter if the perceived degree of banking secrecy is altered under external political pressures.

Inflation: It is generally believed that countries with consistently lower inflation exhibit a rising currency value while countries with higher inflation may see currency depreciation.

Interest Rates: High interest rates may attract foreign investors and that can lead to an exchange rate increase while the opposite scenario is possible in a country with low interest rates.

Overall Economic Conditions: Everything from a country's balance of trade to the size of their deficit or surplus can serve as a barometer of the condition of the country and the likelihood of default. Investors look for countries with stronger economic foundations and the better the economic foundation of one country versus another may increase the value of the country's currency. Sovereign credit ratings from places like Moody's or Standard & Poor's can impact the perception of a nation's growth and stability.

Perception: The so called "flight to quality" exists within foreign currencies as investors will often seek what they perceive as "safe haven" currencies during times of political or economical instability.
_______________________________________________________________________________________

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 
#7
Treasury notes are debt obligations issued by the US Treasury. They are often viewed as a way to speculate in or hedge against future interest rate changes and are globally valued markets to use when trying to manage risk of the same.
2-year Treasury Notes

Contract Size: One U.S. Treasury note having a face value at maturity of $200,000.

Price Quote & Tick Size: Points ($2,000) and quarters of 1/32 of a point. For example, 109-16 represents 109 16/32, 109-162 represents 109 16.25/32, 109-165 represents 109 16.5/32, and 109-167 represents 109 16.75/32. Par is on the basis of 100 points. Minimum tick size is one-quarter of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), including intermonth spreads.

Contract Months: March, June, September, December

Trading Specs: Trades open outcry and Globex (electronic) per the following schedule:
Electronic: SUN FRI: 5:30 p.m. 4:00 p.m. Central Time
Open Auction: MON FRI: 7:20 a.m. 2:00 p.m. Central Time

Daily Price Limit: None as of publishing date, but it is wise to consult the exchange.

Trading Symbols: TU, ZT

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

5-year Treasury Notes


Contract Size: One U.S. Treasury note having a face value at maturity of $100,000.

Price Quote & Tick Size: Points ($1,000) and quarters of 1/32 of a point. For example, 119-16 represents 119 16/32, 119-162 represents 119 16.25/32, 119-165 represents 119 16.5/32, and 119-167 represents 119 16.75/32. Par is on the basis of 100 points. Minimum tick size is one-quarter of one thirty-second (1/32) of one point ($7.8125, rounded up to the nearest cent per contract), including intermonth spreads.

Contract Months: March, June, September, December

Trading Specs: Trades open outcry and Globex (electronic) per the following schedule:
Electronic: SUN FRI: 5:30 p.m. 4:00 p.m. Central Time
Open Auction: MON FRI: 7:20 a.m. 2:00 p.m. Central Time

Daily Price Limit: None as of publishing date, but it is wise to consult the exchange.

Trading Symbols: FV, ZF

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

10-year Treasury Notes

Contract Size: One U.S. Treasury note having a face value at maturity of $100,000.

Price Quote & Tick Size: Points ($1,000) and halves of 1/32 of a point. For example, 126-16 represents 126 16/32 and 126-165 represents 126 16.5/32. Par is on the basis of 100 points.; minimum tick size is one-half of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), except for intermonth spreads, where the minimum price fluctuation shall be one-quarter of one thirty-second of one point ($7.8125 per contract).

Contract Months: March, June, September, December

Trading Specs: Trades open outcry and Globex (electronic) per the following schedule:
Electronic: SUN FRI: 5:30 p.m. 4:00 p.m. Central Time
Open Auction: MON FRI: 7:20 a.m. 2:00 p.m. Central Time

Daily Price Limit: None as of publishing date, but it is wise to consult the exchange.

Trading Symbols: TY, ZN

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Treasury Note Facts​

The United States Treasury has been responsible for federal finances for over two hundred years. The means through which it takes on debt are securities sold both domestically and to foreign investors. Treasury notes are issued in terms of 2, 3, 5, 7, and 10 years. Auctions for notes are held every month and a tentative schedule of upcoming auctions may be viewed online.

Chart data courtesy of treasury.gov

When discussing Treasury notes, the term yield comes into focus regularly. When the note is purchased at par, the yield is equal to the interest rate. Usually, if the price of the note goes down, the yield goes up while a higher price reduces yield.

Yield curves may also be important and are often cited in analysis of economic conditions. These are constructed from the yields for various maturities placed on a graph. A normal yield curve is one in which longer-term yields are higher than shorter-term. This is usually ascribed to the perception of higher risk or rising rates for longer term investments. An inverted yield curve has the opposite structure, with shorter-term yields higher than longer-term. This may often be associated with falling or anticipated fall in interest rates. Flat yield curves may also be present if a forecast of little difference exists between the yield rates for different maturities.

It is important to note that the futures contract delivery date is not associated with the maturity date of the Treasury note.

Key terms for this market include:


Coupon Rate the stated interest rate for a bond or note when it is issued, so-called because some bonds had coupons on them to detach for interest payment redemption. A bond or note with an 8 percent coupon rate would have an 8 percent interest rate.

Yield Curve the shape of the line on a graph plotting the interest rates of different maturity debts. There are three kinds of yield curves: normal, inverted, and flat.

Key Uses​

Other than speculator participation within futures markets, Treasury note contracts may also be used for hedging a portfolio of non-US government securities or other interest rate risk. They are also used in trades intended to capitalize on changes in the yield curve.

Key Concerns​

Interest rates or the forecasted changes in interest rates can have a profound effect on the futures price of Treasury notes. Daily Treasury yield curve rates are available on the US Treasurys official website. Inflation or the possibility of inflation may also influence prices. The commonly watched factors which may affect trade include economic reports or events. This may include the following:

Retail Sales
Unemployment Claims
Personal Income
PPI
CPI
New Home Sales
FOMC Meetings & Member commentaries

During the recent global recessionary period, there has been some discussion about Chinas concerns over the safety of their assets in terms of their US holdings. These kinds of discussions may also impact futures prices.

____________________________________

Disclaimer:
There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 
#8
The Learn About Futures Insider: Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA) is a widely recognized name in finance. Following his nineteenth-century roots in publishing, Charles Dows first stock averages creation included nine railroads and two industrials. Today, the DJIA is an index of 30 companies. While exploring the history and components of the DJIA this newsletter will refer to specifications for the futures contract traded on the CME.

Contract Size: $10 x DJIA ($10) futures price

Tick Size: Minimum fluctuation is 1.00 index points=$10

Contract Months: March, June, September, December

Trading Specs: Trades open outcry and Globex (electronic) per the following schedule:
Electronic: Mon -Thurs: 3:30 p.m.-8:15 a.m. (daily maintenance shutdown from 4:30 p.m.-5:00 p.m.) Sun: 5:00 p.m.-8:15 a.m. Central Time
Open Auction: Mon-Fri: 8:30 a.m. -3:15 p.m. Central Time

Daily Price Limit: RTH: Successive 10%, 20%, 30% limits (downside only)
ETH (overnight): 5% up or down
Please consult exchange for additional details on limits.
Trading Symbols: DJ, ZD Globex


Past performance is not indicative of future results.
***chart courtesy of Gecko Software

DJIA Facts​

The DJIA is a widely recognized stock market index and was named for Charles Dow and ones of his associates, Edward Jones. In the companys overview, it indicates that the DJIA serves to provide a clear, straightforward view of the stock market and, by extension, the U.S. economy as the thirty component companies represent a diverse group. The current components and their weights are:



On June of 2009, Cisco and Travelers replaced Citigroup and General Motors. Changes have been made historically most often due to mergers. Other reasons for changes include the shifts in technologies over time.

Although the term industrial contributes to the name, the DJIA is meant to represent the broad market. Former components include Goodyear, Sears Roebuck & Co, Bethlehem Steel, Woolworth, Eastman Kodak, Honeywell, and many other recognizable names.

Calculating the index involves totaling the component stocks prices. The divisor for the average is not straightforward since it has to be adjusted to accommodate stock splits or other fundamental changes. This helps maintain continuity. According to the website for the indexes, "Over time, the divisor has been adjusted several times, mostly downward (it stood at 0.125552709 at the end of 2008), which means that it has become, in effect, a multiplier." The DJIA is often the subject of criticism since it is price-weighted and not all the components may be open for trading at the same time.

The worst and best days according to the DJIA website were as follows:



Past performance is not indicative of future results.
The worst and best years were as illustrated:



Past performance is not indicative of future results.
Key terms for this market include:

Averages Committee - As of March 2010, when Dow Jones Indexes became part of CME Group Index Services LLC, the Managing Editor for the Wall Street Journal, the head of Dow Jones Indexes research, and the head of CME Group research are the ones who select components of the DJIA.

Price weighted - For an index, this refers to the components being included based on their quoted prices.

Key Uses​

As a benchmark index, the DJIA can be used by fund managers, speculators, analysts and rating companies as a performance standard against which they can compare their own performance or the performance of others. The DJIA futures contract has also been used to accommodate a range of both speculator and hedger trading strategies.


Key Concerns​

For the futures contract on the DJIA, the commonly watched factors which may affect trade include economic reports or events. This may include the following:

Retail Sales
Unemployment Claims
Personal Income
PPI
CPI
New Home Sales
FOMC Meetings & Member commentaries

In addition to weekly and monthly reports, corporate earnings and activities such as mergers and acquisitions may affect price and volatility. There are nearly countless national and global events that can be considered in relation to how they may affect member shares and the overall index value.

________________________________________________________________

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
 

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