Is the Recession Over?

Today, the dollar got a big boost from Federal Reserve Chairman Ben Bernanke. He said the economy is "beginning to emerge" from a recession after aggressive action by central banks and governments. “After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good.”

He also did warn, however, that lending is not back to normal, and that the difficulty consumers and businesses are having obtaining loans will be a challenge. This is why the rebound will not last. The banks are not getting money to businesses and consumers despite very low interest rates and TARP money. If consumers don't spend, our economy stalls.

Well, it isn't the first time I disagree with the Fed Chairman and it certainly won't be the last. He's saying what he has to say and what the markets want to hear. However, the third and fourth quarters this year will not be pleasant at all. It is true that the gains over the last five months and today's speech have propelled the Dow Jones above 9,500 for the first time since Nov. 4, 2008.

His remarks from Jackson Hole, Wyoming certainly gave the stock markets a boost along with the US dollar. The dollar rallied sharply after earlier losses in the day. The pound ended the day almost where it began, likewise did the yen. The euro and swiss franc still gained on the dollar for the day.

The trading volume was particularly heavy on all the currencies, on some almost double the norm. Much of the movement was immediately after Bernanke's speech and the Existing Home Sales report.

As for my trading day, it was another good one to top off a good week. I did 18 new trades today, 16 winners including 2 from previous days, no losses, and 7 open trades currently. The net pips for the day is +251.5 pips, or a 10.93% gain.

For the week, the net pips is +856.6 pips, or a 52.85% gain. Keep in mind that the account is still small, so the percentages are quite large. As the accounts grow from deposits and gains, the percentages will be lower. A better gauge is the amount of pips the account is growing by.

Here are the daily stats for Friday, August 21, 2009.

Open

High

Low

Close

Pip Interval

GBP/USD	1.6503	1.6621	1.6418	1.6496	203
EUR/USD	1.4253	1.4374	1.4207	1.4333	167
USD/CHF	1.0628	1.0654	1.0552	1.0568	102
USD/JPY	94.18	94.70	93.41	94.35	129
GBP/JPY	155.44	156.54	153.53	155.65	301

What this means:
The volatile up and down action this week have the currencies in a turmoil. The euro, swiss franc, and yen have made modest gains on the dollar, but the pound is about the same as when the week began. This may continue for the next week or two, but September will likely be a whole different story.

Til next week ... Have a good weekend!

Again, if you need any help understanding forex or any terms, go to www.babypips.com. The lessons and encyclopedia are great learning tools. Another good website is www.chartpatterns.com.

May the pips be with us!

The Pipmaster
Email: titangroupfx@gmail.com