Forex Forecast: End 4Q and 2006

Date: December 1st 2005 15:00GMT
Expert: Bernardo A. Martinez Garza, Founding director of Nexum Capital Markets

FOREX FORECAST end 4Q and 2006
-Interest rate differential
-USD strength/weakness
-Bernanke as new Economic Leader

Who is Bernardo A. Martinez Garza?
Bernardo A. Martinez Garza is the founding director of NEXUM CAPITAL MARKETS in Mexico, founded in 2005 for clients services that wish to learn how to trade FOREX and become themselves into mature and expert traders, by the hand with our company, we help all our clients to know and learn every different angle into the market and how to take advantage to the maximum power of all opportunities the markets brings us. As a Financial Consulting Manager in Latin America, our company started off in 1995, with the sole objective to give over 35% annual profits to all our clients, no matter how big or small they might be, basing their principals to their higher standard, mostly into FOREX Markets. As owner of a National Restaurant Franchise as well, Bernardo Martinez has a wide vision and knows where the market will be following the economic fundamentals, as well as the general consumer public, opportunity areas, and growth potential, as well as possible changes in monetary policy.

FOREX FORECAST end 4Q and 2006

We have had a great deal of phone calls and emails since a couple of weeks ago now, asking about certain questions they would like answered… so we decided to formulate a complete Q&A session for your sake and ours!  Some of the questions we have received are about NASDAQ, Mexican stocks, Japanese stocks, etc.  we have seen new records for NIKKEI(Japan), IPC(Mexico), as well as others.  We have also presence an incredible strength by USD against mayor currencies like EURO, GBP, CHF, JPY, etc.  and have presences as well a strong weakness against CAD and MXP.

For this special report at the beginning of Dec, we would like to begin stating that even though we cannot attribute these effects to one single macro-microeconomic effect.  One of the principal things we have considered, variables that push such financial markets to new records since 2 years ago… for Mexican peso, Canadian dollar, Japanese yen, USD, etc. is the following:

Day to day we live in a world that enjoys incredible cash flow, what makes our world a more susceptible investment world.  People with enough cash flow and little to left to buy, tends to invest in whatever market they find in the first hand, this is one of the reasons a bubble is growing inside our financial markets and one more reason why stocks will fall and currencies will keep simply rising and moving with great volatility.  These people who before hand had little or none possibilities of investment, have absolutely NO CLUE where to invest, and invest wherever they find it more comfortable to… another reason why currencies in 2006 will take great advantage and make lots of profits yet once more.  Our recommendation is as follows:

DO NOT WAIT UNTIL THIS APPARENT BUBBLE BURSTS, BEFORE TAKING IN THE PROFITS, MAINTAIN A DAILY CARE TO YOUR STOCKS AND INVESTMENTS, EITHER IN YOUR OWN COUNTRY AS IN THE OUTSIDERS, KEEP MOST OF YOUR PORTFOLIO DIVERSIFIED OVER INVESTMENTS IN IMMEDATE LIQUIDATION (SHORT TERM).
MAINTAIN VARIBLE INVESTMENTS AT SHORT TERM PROFITS (currencies, short term bonds) and STAY AWAY FROM LONG TERM INVESTMENTS WITH FIXED PROFITS (outside stocks, 5 and 10 year bonds

POSITIVES:

September NET FLOWS $51.1bln

Stock US buys by foreign buyers raised 540% to $24.5bln

US residents shopping decreased 56%, to $7bln only.

Treasury bonds maintain record levels, China and UK being 3% and 5% respectively to $252bln & $182bln respectively.

Non official interest (banks) for Us treasury bonds (private flow) consignated more than $21.7bln in foreign inflow.

NEGATIVES:

Record deficit over $66bln

Foreign central banks are primary sellers for Us bonds, arriving to $1.1bln in Sept., after only achieving 13% and 11% net flows for July and Aug respectively.

Foreign bond buying by US residents has increased 153% towards $9.1bln.  we estimate this is due to the fact that USD has been increasing its value considerably, in which US residents have now more power with its dollars and have begun buying other countries stocks, taking day by day essential money USA need to control inflation, currency momentum, and interest rate differential stable.

I will now give my personal outlook for most popular currencies in the near future.

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Q&A SESSION:   

FXstreet Moderator (Dec 1, 2005 9:44:01 AM)
hello all we will begin in 15 minutes

Bernardo (Dec 1, 2005 9:47:22 AM)
Hi

FXstreet Moderator (Dec 1, 2005 9:54:55 AM)
We will begin in 5 minutes Thank you

FXstreet Moderator (Dec 1, 2005 9:59:41 AM)
Thank you for joining today’s Live Q&A Session. We will begin with the pre-registered users’ Questions in approximately 5 minutes. Meanwhile please read the text speech that you will find on the left of this chat window

FXstreet Moderator (Dec 1, 2005 9:59:55 AM)
Thank you for your participation.

FXstreet Moderator (Dec 1, 2005 10:00:28 AM)
Please find the whole speech of our guest in the left box of the chat. Be sure to read the whole speech at once without any interruption, making its reading and comprehension easy. You won’t miss a single thing from our guest host.

Bernardo (Dec 1, 2005 10:01:19 AM)
hi

Bernardo (Dec 1, 2005 10:01:32 AM)
lets get started...

FXstreet Moderator (Dec 1, 2005 10:02:59 AM)
Today I am delighted to welcome back our good friend and guest speaker Bernardo A. Martinez Garza, Founding director of Nexum Capital Markets

Bernardo (Dec 1, 2005 10:03:41 AM)
it is nice for me to be here once more

Bernardo (Dec 1, 2005 10:04:26 AM)
i would like to begin todays session with a brieg intro of todays topic, which will certainly be in the interest of most of you, as today we saw something really special happen wth eUr/USD

Bernardo (Dec 1, 2005 10:04:45 AM)
i will let you know my thoughts of todays moves as well as my estimates for friday

Bernardo (Dec 1, 2005 10:06:04 AM)
i will now begin your questions left for me a couple of days ago...

Bernardo (Dec 1, 2005 10:06:21 AM)
please feel free to ask anything you like, simple or complicated and i will try to nswer acoordingly

Bernardo (Dec 1, 2005 10:06:27 AM)
Is there a chance that the usd will go down back to the 1.30 to the euro within a year from now?? kamal8nov

Bernardo (Dec 1, 2005 10:07:00 AM)
the chance for EUR/USD to break 1.1500 is very much possible, however improbable

Bernardo (Dec 1, 2005 10:07:34 AM)
now.. as you might see in my complete report, i mention my technical staff does not see a further reaction south of our graphs...

Bernardo (Dec 1, 2005 10:07:59 AM)
you might find my complete weekly reports at fxstreet/technical signals, as well as real time signals to buy/sell possitions

Bernardo (Dec 1, 2005 10:08:31 AM)
1.300 is well on the books for yself and my staff, as well as for several ig fishes, such as tom hobson(meryll Lynch)

Bernardo (Dec 1, 2005 10:08:45 AM)
but we will have to be VEEEEEEEERY patient...

Bernardo (Dec 1, 2005 10:09:07 AM)
Q-im new in trading on net i need from you please to tell me how can i find an information about the latest news about it please

Bernardo (Dec 1, 2005 10:09:28 AM)
A- Sure, you can gather lots of information be reading my weekly reports, or you can get yourself a PERFECT idea where the EUR/USD is going in that EXACT momento by getting my "real time NEXUMSYS alerts" which will tell you to sell or buy, having a 93.7% productivity per year! Win more than 35% annual profit with my system and make your own decisions reading my reports every Monday and every Quarter.

Bernardo (Dec 1, 2005 10:09:46 AM)
Q- what is your view on the dollar? when will it turn?

Bernardo (Dec 1, 2005 10:09:58 AM)
A- It has already began turning itself to the upper side, but we might actually find ourselves for a few momentos/sesions at 1.1600 again some time soon, we do not disregard that posibility, however remember the primary trend is still upwards towards 1.2500

Bernardo (Dec 1, 2005 10:10:15 AM)
Q- where do you find Precious metals , esp Gold in 2006 ?

Bernardo (Dec 1, 2005 10:10:29 AM)
A- You might find them at your local jewelry store... probably another 33% more expensive each year… we might be watching how gold reaches $600 by yers end. Dec 2006.

FXstreet Moderator (Dec 1, 2005 10:10:56 AM)
Thank you for that Bernardo

FXstreet Moderator (Dec 1, 2005 10:11:22 AM)
Lets begin Live questions now please begin posting as you like

JSB (Dec 1, 2005 10:12:07 AM)
Are u saying that more Americans are buying US Treasuries and this will reduce the need for foreign Central Bank purchases? Will this force the world's exporting countries into improving local consumption?

Bernardo (Dec 1, 2005 10:12:45 AM)
you might be correct

Bernardo (Dec 1, 2005 10:12:56 AM)
however take in mind there are lots of more important variables at playhere

Bernardo (Dec 1, 2005 10:13:29 AM)
as americans buy national trasuries, they begin rising the price

Bernardo (Dec 1, 2005 10:13:58 AM)
and afterwards, in my personal oppinion they will be paid off with a much weaker USD that that with which they bought the treasuries in the first plce.

JSB (Dec 1, 2005 10:14:16 AM)
Why the big disconnect in ur forecast between EUR/USD and USD/CHF?

Bernardo (Dec 1, 2005 10:14:17 AM)
keep aways from trasuries at this point

Bernardo (Dec 1, 2005 10:14:49 AM)
EUR/USD has always been greatly affected mostly by USD, while CHF is affected mostly by EZ currencies

Bernardo (Dec 1, 2005 10:15:20 AM)
my fear is that EZ will start growing dramatically, while US stops and U turns its way to incrased deficit, etc.

Boykie (Dec 1, 2005 10:15:37 AM)
What is your opinion of the twin US deficits on the dollar?

FXstreet Moderator (Dec 1, 2005 10:15:50 AM)
Please continue posting questions...

Bernardo (Dec 1, 2005 10:15:56 AM)
they have not been afecting as much as they should...

Bernardo (Dec 1, 2005 10:16:51 AM)
however, finantial markets have turned their heads towards interest rate differentials, and when this news starts boring people out... they will have no further remedy than to start punishing USD for their twin deficits.

Bernardo (Dec 1, 2005 10:17:14 AM)
they are cnsidered a big problem now, however, retail buys are into 4% rates! still!

Bernardo (Dec 1, 2005 10:17:45 AM)
market should not continue punishing EURO in the medium term future...

Bernardo (Dec 1, 2005 10:18:08 AM)
and will start focusing on increased rates getting to a stop.

Bernardo (Dec 1, 2005 10:18:53 AM)
reber the basic principle in FORED markets

Bernardo (Dec 1, 2005 10:19:16 AM)
when everyone wants to sell, there is only one way for it to go... and that is ABSOLUTELY NOT DOWN!

Bernardo (Dec 1, 2005 10:19:31 AM)
ow can you sell something that has nothing left to sell?

Bernardo (Dec 1, 2005 10:19:58 AM)
todays coments by Trichet were not surprising... everyone and their neighbor expected them just like they were said today

Bernardo (Dec 1, 2005 10:20:31 AM)
as you might see in fxstreet, or if you receive my real time signals, we went SHORT EUR?USD at 1.1790

Bernardo (Dec 1, 2005 10:20:46 AM)
and have now good profit on our hands.

Bernardo (Dec 1, 2005 10:21:03 AM)
you can receive those alerts by emailing me at: bernardo.martinez@nexumcapital.com

Bernardo (Dec 1, 2005 10:21:35 AM)
we might actually see soe lONG dip buying at these levels

hercules (Dec 1, 2005 10:21:57 AM)
What are your views on the yen? Do you think it will rally soon? Same for Swiss Franc.

Bernardo (Dec 1, 2005 10:22:03 AM)
as we watch ISM manufacturig index come lower at 58.1, instead of 59.1

Bernardo (Dec 1, 2005 10:22:48 AM)
i strongly beleive USD/JPY will soon make a strong correction towards 113.00, as it breaks today to new historical high levels in our graphs.

Bernardo (Dec 1, 2005 10:23:23 AM)
when USD starts loosng strenght the most important benefactors will be: in order of strenght...

Bernardo (Dec 1, 2005 10:23:25 AM)
JPY

Bernardo (Dec 1, 2005 10:23:26 AM)
EUR

Bernardo (Dec 1, 2005 10:23:28 AM)
GBP

Bernardo (Dec 1, 2005 10:23:32 AM)
CHF

Bernardo (Dec 1, 2005 10:23:33 AM)
CAD

robertfirestone (Dec 1, 2005 10:23:59 AM)
I see Euro zone growth being limited by the strict labor laws, short work week and the high cost associated. Do you expect to see major changes in labor laws across europe?

Bernardo (Dec 1, 2005 10:24:27 AM)
remember EZ vs US basics...

Bernardo (Dec 1, 2005 10:24:42 AM)
Europeans work to live, while Americans live to work!!!

Bernardo (Dec 1, 2005 10:24:59 AM)
however, watch how spending and credit cards SOAR to the roof!

Bernardo (Dec 1, 2005 10:25:15 AM)
they have been skyrocketing since i have notion of being able to speak

Bernardo (Dec 1, 2005 10:25:49 AM)
our world today is surrounded by an incedible liquity, everyone has enough cash in their pockets, cards, to buy themselves whatever they want...

Bernardo (Dec 1, 2005 10:26:42 AM)
however, they do not need those things, and small companies and medium companies grow very drastically, fecting the countries economic growth, as they begin to slow down on their production and increase their inventories, and spend even more on publicity, etc.

Bernardo (Dec 1, 2005 10:28:13 AM)
plesae remember you can email me at any time

Bernardo (Dec 1, 2005 10:28:27 AM)
bernardo.martinez@nexumcapital.com

Bernardo (Dec 1, 2005 10:28:47 AM)
i will be more thn glad to help you out and send you my automatic alerts

Bernardo (Dec 1, 2005 10:29:08 AM)
for those of you who actually have short positions open... now might be a food time to close them out and take profits

Bernardo (Dec 1, 2005 10:29:19 AM)
my system has just triggered a long EUr/USD ;o)

WISE_MAN (Dec 1, 2005 10:30:05 AM)
IN YOUR OPINION, WHAE ARE WE GOING TO SEE TREND CHANGING IN USD?? IS 93 TOPPING FOR DOLLAR?

Bernardo (Dec 1, 2005 10:30:21 AM)
93?

Bernardo (Dec 1, 2005 10:30:32 AM)
remember we actually REMAIN at an unpsde BIAS

Bernardo (Dec 1, 2005 10:31:07 AM)
however, secondary trend is strongest one right now, and that one is DOWN... we still keep 1.2000 in our minds, even before we might actually see 1.1500

Bernardo (Dec 1, 2005 10:31:41 AM)
you can calculate trrends taking into consideration fundamentals only, or you can help yourself with technical analisys.

Bernardo (Dec 1, 2005 10:31:55 AM)
or simply send me an email and ask what is the actual trend for today? haha

Boykie (Dec 1, 2005 10:32:31 AM)
How do you see the primary trend at 1.25 as it seems going opposite?

Bernardo (Dec 1, 2005 10:33:01 AM)
fundamentals and macro economic indicators are the ones we use to develop trnd direction...

Bernardo (Dec 1, 2005 10:33:38 AM)
remember EUR might actually fall to 1.1660 again, however, IT WILL IN MY PERsONAL OPINION regain strenght towards 1.2500 eventually, while it MIGHT NEVER GET TO 1.1500

Bernardo (Dec 1, 2005 10:33:59 AM)
so what should we do? why stick to selling and be surprised if someday you cannot take way your positions?

Bernardo (Dec 1, 2005 10:34:08 AM)
look at EUR climbing right now...

Bernardo (Dec 1, 2005 10:34:20 AM)
a few 20 or 30 pips more and we can take profit now :o)

Bernardo (Dec 1, 2005 10:34:29 AM)
lets say... 1.1745

Boykie (Dec 1, 2005 10:34:58 AM)
What are your favourite indicators?

Bernardo (Dec 1, 2005 10:35:10 AM)
fundamental ones...

Bernardo (Dec 1, 2005 10:35:32 AM)
i almost never trade with technicals, only use them for tming, like today, and for take profit point... like 1.1745

Bernardo (Dec 1, 2005 10:35:35 AM)
i just talked about

Bernardo (Dec 1, 2005 10:36:15 AM)
im sorry i have to leave

FXstreet Moderator (Dec 1, 2005 10:36:33 AM)
Thank you Bernardo for you time and answers..

Bernardo (Dec 1, 2005 10:36:43 AM)
have lots of appointments for today, but we will keep in touch, one of my associated Sergio will be directing another chat 13 Jan

Bernardo (Dec 1, 2005 10:36:46 AM)
2006

FXstreet Moderator (Dec 1, 2005 10:37:03 AM)
I hope you all found it benefical and educating...

Bernardo (Dec 1, 2005 10:37:06 AM)
please remember to stay focused and be patient

FXstreet Moderator (Dec 1, 2005 10:37:11 AM)
Jan 3rd it is...

Bernardo (Dec 1, 2005 10:37:18 AM)
Jan 3 it will be

Bernardo (Dec 1, 2005 10:37:20 AM)
:o)

FXstreet Moderator (Dec 1, 2005 10:37:22 AM)
Jan 3rd 15:00GMT

FXstreet Moderator (Dec 1, 2005 10:37:41 AM)
Thank you for joing us today any feedback welcome at any time ..

Bernardo (Dec 1, 2005 10:38:22 AM)
if you find any other questions, coments, etc. please feel free to let me know asap

FXstreet Moderator (Dec 1, 2005 10:38:22 AM)
Topic suggestions are a must please send you ideas so I put them to the FX expert ...

Bernardo (Dec 1, 2005 10:39:08 AM)
thank you all!

FXstreet Moderator (Dec 1, 2005 10:39:12 AM)
Please join us at 16:30GMT 11:30EST for another session Futures Versus Forex

Bernardo (Dec 1, 2005 10:39:34 AM)
have a nice weekend, and i hope you all make lots of money today!

FXstreet Moderator (Dec 1, 2005 10:39:41 AM)
Please sign in here at this link: http://futures.fxstreet.com/futures/chat/chatsigned.asp

FXstreet Moderator (Dec 1, 2005 10:39:52 AM)
Thank you all again...

Bernardo (Dec 1, 2005 10:40:08 AM)
ciao ciao

FXstreet Moderator (Dec 1, 2005 10:43:49 AM)
If you want to contact Bernardo for further iniformation please do so at ..

FXstreet Moderator (Dec 1, 2005 10:43:51 AM)
bernardo.martinez@nexumcapital.com