Hot money and currency war.

Fed Chairman Ben S. Bernanke said in remarks at a Boston Fed conference that the central bank may expand asset purchases or change the language in its statement, while saying “nonconventional policies” have costs and limitations. “There would appear -- all else being equal -- to be a case for further action,” Bernanke said.
The central bank will release on Oct. 20 its Beige Book survey of regional Fed banks. Last month, the report found the economic rebound showed signs of slowing. Minutes of the Fed’s September meeting released on Oct. 12 indicated that policy makers were poised to take more easing steps “before long.”
The U.S. Treasury Department said it will delay a report on international currencies, including China’s yuan, while citing progress in the acceleration of the pace of the yuan’s rise.
The yuan advanced 0.5 percent this week and touched 6.6406, the strongest level since the central bank unified official and market exchange rates at the end of 1993.
The report will be delayed until after the meetings of the Group of 20 nations in the coming weeks, according to a statement from the Treasury.
The greenback has tumbled 5 percent against the yen since Sept. 15, when Japan acknowledged intervening in the market by selling the currency to prevent its strength from undermining the nation’s export-dependent economy.
Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF),quoted that "There is clearly the idea beginning to circulate that currencies can be used as a policy weapon.
"Translated into action, such an idea would represent a very serious risk to the global recovery," he said.
Unilateral action by one central bank can, therefore, set off or fuel disputes in other parts of the world. Although America sees itself as a victim of global currency intervention, many people argue that its own policies are the cause.
Meanwhile short-term capital flows(hot-money) are disturbing emerging economies and it can be a catastrophe.The US is the epicentre, causing chaos over the rest of the world by printing cheap money.
Tracking the Friday's Dow,(Index Futures Expiry Day)
Asian Index Futures expiry,29/10/10.Pre-rollover contracts,22/10/10

09:30am:--A bullish 40.0 points gap-up with a bearish dark cloud cover.
10:30am:--Index nosedived to session low,bullish hammering out the low.
11:30am:--Rebound to MAV resistance line,graveyard doji confirmation.
12:30n00n:--After pulling back to the bear pivot support,a rebound at this moment failed to kiss the MAV resistance line.Hangman checkmate.
1:30pm:--A second attempt to test the resistance fall short of target.Graveyard doji again.
2:30pm:--Another rebound that failed the MAV resistance test.
3:30pm:--Fallback to bear pivot support line,morning star followed.
4:00pm:--A third MAV resistance attempt,complete failure.Bears overwhelmed the bulls in today's tug of war.
Two bearish dojis,covering back the whole of Wednesday's candlestick body greeted the Index/options futures expiry day.
On the whole the three pairs are still hoovering above the bull pivot support and it's still a bullish play.
Friday's early bulls cheered the market after a speech by U.S. Federal Reserve Chairman Ben Bernanke pointed to another round of monetary easing from the central bank.
The University of Michigan's Consumer Sentiment Index fell in October thus giving the bears a bigger leeway to find a reason to sell the market.

Easing the economic pain.

Economists — at least some economists — believe that when you want to improve the economy you need to get more money out there, circulating around.
Hence the government must spend money or the Federal Reserve can cut interest rates, which makes it cheaper to borrow. So people borrow more, buy more, build more new things.
But with this financial crisis, for the first time in U.S. history, those two tools won't work.
With quantitative easing, the Fed comes along and do the midas touch--Create new money, get it out there, everyone wins.
The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system.
A central bank implements QE by first crediting its own account with money it creates ex nihilo ("out of nothing").It then purchases financial assets, including government bonds, agency debt, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus induce a hopeful stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.
The Dow is 5 market days to index futures expiry.

Monday,11/10/10 is Columbus Day.
9:30am:-A 20.0 points opening gap up.
A loss of 95,000 nonfarm jobs and the unemployment rate holding at 9.6% holds back an early trust.

10:30am:--Pullback to find an early session low with a morning star.

11:30am:--Retracement to morning high again,bullish inverted hammer noted at the 11,000 mark for the first time.

12:30noon:--Bulls are still holding tightly near the high.A combination of modest private-sector job growth combined with dragging employment on the state and local government levels could be a trend that continues for many months ahead.

1:30pm:--Bearish engulfing pullback to the MAV support line.

2:30pm:--Technical rebound.The October crash anniversary is now celebrated with a bullish reversal,contrary to the annual belief.

3:30pm:--A new session high.A weak jobs report increases the possibility the Fed would pump more money into the financial system—known as quantitative easing—to help spur growth.

4:00pm:--Profit taking to the bullish support line.

The Dow is now very near to the 52 weeks high of 11,309.00

The bulls general pattern to date:

Nov'09:--Bear crash.Dec & Jan bulls.

Feb'10:--Bear crash.Mac & Apr bulls.

May'10--Bear crash.Jun & July double dip.

Aug'10:--Bull .

September:--Early anniversary crash.

October Bull & November pre-election bull.

December:--Year end dip,post election??

The Fed,mind your language,too sensitive to market.

A tepid economy.

The Federal Reserve is likely to take additional action to rejuvenate the economy and lower unemployment, an influential member of the central bank's policymaking group said Friday.
William Dudley, president of the Federal Reserve Bank of New York, said the pace of economic growth has been disappointing. And he worries that if the economy doesn't strengthen, the risk of an outbreak of deflation rises. Deflation is a dangerous and widespread decline in goods and services, wages and in the values of homes and stocks.
The Fed is considering buying more government debt to force down rates on mortgages and other loans to entice Americans to spend more. Doing so would bolster the economy.
Charles Evans, president of the Federal Reserve Bank of Chicago, also said on Friday that more action by the Fed would be "desirable." Evans said he's still assessing the best way to provide more aid as well as how much. Evans, who will become a voting member of the Fed's policy group next year, made the comments in a speech delivered in Rome.
The Fed's next meeting on Nov. 2-3.
The Fed is weighing that option, known as quantitative easing, because its traditional interest-rate lever to help the economy is already at a record low near zero and can't be cut further.

Tracking the Dow on Friday,1/10/10.
9:30am:--An early opening 60.0 points booster.Personal income rose half a percent in August.

10:30am:--Shooting star near session high.Pullback filling the opening gap.

11:30am:--A dragonfly doji near session low.

12:30pm:--Retracement time,now holding near the MAV resistance line.

1:30pm:--A technical rbound failed to test the bull pivot resistance.

2:30pm:--Pullback near the bear support line,dragonfly doji checked the decline and now attempting the bull pivot resistance again.

3:30pm:--Bearish harami at the bull resistance.

4:00pm:--Bears pull it back to the MAV support line dangerously spinning to find a bottom.

Friday's short-covering attempt to recover the previous day's candlestick body did not materialised.

Trading was jittery after the Institute for Supply Management said the U.S. manufacturing sector expanded in September, but at a slower pace than in August.

Backlogs and new orders were down and inventories were way up, which portends declining economic growth in the next few quarters.

Fresh support by the Fed needed if the economy falters.