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Tuesday, December 1, 2009

USD/JPY tests support at 86.55

Greenback has lost most of the gains against the Yen. USD/JPY is testing levels below a support at 86.55, if it falls below, the Yen could gain momentum. The pair declined more a hundred pips from intra-day highs to current levels at 86.51/55, that lie 0.19% above today’s opening price. Immediate support lies at 86.40 and below at 86.15 and 85.85. To the upside resistance levels lie at 87.05/87.10 and above at 87.50 session high, and 88.00 (Oct 7 low).

Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, comments on a wider view: “Through to year-end, amid generalised US dollar weakness, the Yen is expected to outperform other currencies so that Yen crosses drop towards January’s lows. If we are correct then USD/JPY will see a series of lower highs between now and March 2010, and lower lows, taking it down to 83.00 and probably the all-time low of 79.75 some time in Q1.”

EUR/USD holds near intra-day highs

Stocks continue rising in the U.S. weakening the Dollar. Greenback remains near the lows of the day against the Euro. EUR/USD trades above 1.5100 near daily high that lie at 1.5120. Gold prices trade near record highs at 1,198. If it rallies above 1,200 the Dollar could fall further across the board and the Euro could rise to test year highs.

Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, comments on a wider view: ”The Euro held up better than expected last month, the US dollar under constant pressure, and has just managed weekly and monthly closes above the psychological 1.5000 level. This might add some bullish momentum for a short-squeeze into year-end, so allow for a rally to an area of poorly defined resistance between 1.5145 and 1.5465.”

GBP/USD: Cable rises further

The Pound is extending it gains across the board. GBP/USD recently rose to 1.6645, fresh intra-day high and currently trades at 1.6637/42, 1.25% above today’s opening price. The pair is posting at the moment the biggest daily gain in more than a month. To the upside, resistance lies at 1.6650 (Nov 23 high) and above at 1.6695/1.6705 and 1.6730 (Nov 26 high).

Andrew Wilkinson, affirms: “One of the biggest gains against the dollar came today from the British pound following a further increase in home prices according to data from the Nationwide and Halifax building societies. Both companies have different composition methods for their data, but the Nationwide showed a 0.5% monthly and 2.7% year-over-year increase in prices for homes. The pound added despite data from the CIPS indicating a slower pace of manufacturing expansion during November. “

USD/CHF finds support at 0.9970

The Swiss Franc is consolidating important gains against the Dollar. USD/CHF fell below parity to 0.9966 reaching the lowest price of the day. Greenback found support at 0.9970 and currently trades at 0.9991/96, 0.60% below today’s opening price. Greenback failed to confirm last week gains and is again under pressure. EUR/CHF failed to break above 1.5100 and pulled back finding support at 1.5070.

Valeria Bednarik, affirms: “Despite all SNB (Swiss National Bank) efforts to avoid Swiss Franc appreciation, pair is right now under parity, and tending lower. The fact is that SNB is watching more closely the relationship with Euro, than with Dollar, and as long as EUR/CHF remains above 1.5050, another intervention seems unlikely.” She concludes: “bigger time frames are strongly bearish, pointing for a retest of the yearly low, around the 0.9920 area.”

U.S. markets finished with gains; Dollar consolidates losses and Gold holds near record highs

Wall Street finished in positive helped by better-than-expected economic data in the housing and construction sector that offset a positive but weak reading on manufacturing. The Dow Jones rose 1.23% and finished at the highest level in 13 months. Greenback is consolidating losses despite moving away from the lows. Gold holds near 1,200.

The analysis team affirms: “The yellow precious metal hit a record today above $1,200 an ounce as the green Benjamin lost momentum considerably throughout the currencies market since trader's appetite of risk returned and corroded accordingly the refuge appeal of the Federal currency due to mounting hopes caused by today's overall cheerful news concerning the housing sector, knowing of course that these two have an inverse strong unbreakable relation.”
Crude oil also rose but failed to break above $79 a barrel and currently trades at $77,80. Long term treasuries tumbled sending yields to the highest level in a week.

Dollar moved away from the lows of the day but is still facing important losses. EUR/USD is back below 1.5100, the pair peaked earlier at 1.5118, a few pips below year highs. USD/CHF trades near the parity level after finding support at 0.9970. GBP/USD holds above 1.6600 and currently trades at 1.6610/15, 1.08% above today’s opening price. The pair reached the highest price of the day at 1.6647.

The Yen is also lower today even against the Dollar. USD/JPY lost most of the gains during the European and the American session but still trades above the opening price. The pair found support at 86.55 and at the moment trades at 86.70/75, 0.39% above today’s opening price.

Monday, November 30, 2009

GBP/USD rises back above 1.6400

Cable decline has found support at 1.6380. GBP/USD rose back above 1.6400 and at the moment trades at 1.6418/24, 0.50% below today’s opening price. Despite recent recovery from the lows of the day, Cable is 170 pips far from 1.6593 (intra-day high). To the upside immediate resistance lies at 1.6440 and above at 1.6465 and 1.6505.

Michael J. Malpede, affirms: “GBP traded lower with gains limited by report of an unexpected decline in UK consumer confidence and comments from BOE's Posen that it's too early for the BOE to exit monetary stimulus.” Regarding the technical outlook he comments that is negative “as GBP trades below 1.6400. Expect near-term support at 1.6272 the November 27th low with resistance at 1.6595 for November 30th high.”

EUR/USD hovers around 1.5000

The Euro has been moving sideways against the Dollar in the last hours hovering around 1.5000. EUR/USD found support at 1.4970 and from there rose to test levels above 1.5000 but failed to hold on top. Currently trades at 1.4992/95, 0.15% below today’s opening price. The pair is still moving with a downside bias for the day.

To the upside, resistance lies at 1.5020 and above at 1.5060 and 1.5080/85 (intra-day high). Support could be located at 1.4970 and below at 1.4950 and 1.4920/30.

James Hyerczyk, comments: “The inability of U.S. equity markets to follow-through to the upside after the Dollar weakened has helped the currency reverse its early morning course. The Dollar broke overnight as debt problems in Dubai eased over the week-end.”

Canada Afternoon: C$ Ends Modestly Higher Amid Less Risk Aversion

The Canadian dollar ended higher Monday, as a rebound in commodity prices and relatively less global alarm over the debt crisis in Dubai served to lessen the risk aversion that had weakened the Canadian currency in recent sessions.

The U.S. dollar was trading at C$1.0558 at 3:34 p.m. EST (2034 GMT), from C$1.0585 at 8:00 a.m. EST (1300 GMT), and from C$1.0612 late Friday.

Movements for the Canadian dollar were fairly narrow in contrast to last week, as the currency consolidated some of the recent big moves amid some subsidence in the concern about the potential for another global financial crisis from the problems in Dubai.

The Canadian dollar also got some muted supported from Canada's third quarter gross domestic product report, which underperformed expectations but nonetheless contained some encouraging underlying details that had analysts predicting a much stronger final quarter of 2009.

Canada's GDP posted positive growth in July-September--signaling an end to recession--after three consecutive quarters of decline, but the third quarter's 0.4% annualized pace of expansion was less than the 1.0% rate seen in the consensus forecast.

Notwithstanding the tepid headline figure however, components of the report such as merchandise trade, consumer and business capital spending suggested a more robust performance may be in the offing for the economy in late 2009 and heading into 2010.

So long as commodities and the global risk environment remain supportive, most currency watchers still expect to see a stronger tone from the Canadian dollar over the relatively near-term, even if caution heading into year-end results in a continued range trade for a while longer.

"By and large, the market is probably biased to take the Canadian dollar a bit stronger," said Jack Spitz, director of foreign exchange at National Bank in Toronto. "As long as the market is biased to favor risk and commodities remain supported around these levels, I think the Canadian dollar is likely to outperform, but still within the range."

Senior currency strategist Shaun Osborne of TD Securities in Toronto said that with many accounts focused on capital preservation heading into the year-end, conservative positioning and continued trading within a fairly well-defined range of about C$1.0400 and C$1.0750 are likely in coming weeks.

These are the exchange rates at 3:34 p.m. EST (2034 GMT), 8:00 a.m. EST (1300 GMT), and late Friday.

USD/CHF finds resistance at 1.0065

he Dollar’s recovery from 0.9993 has found resistance at 1.0065. USD/CHF lost momentum in the last hour and fell from 1.0065 to test a support at 1.0040. If the pair falls below the Swiss Fran could gain momentum and approach to the parity level. Greenback has lost previous gains and currently trades at 1.0039/44, the same price it had at the begging of the day.

Michael J. Malpede, affirms: “CHF traded mixed Monday supported by broad USD weakness sparked by improving risk sentiment. The improvement in risk sentiment is attributed to report that the UAE central bank is standing behind local and foreign banks in Dubai. (…) The SNB was rumored to have sold CHF on November 26th as the CHF rose to parity versus the USD and a five month high versus the EUR. In addition, SNB's Roth indicated that central banks may need to end stimulus measure soon. His comments would likely undermine SNB intervention efforts.”

ForexLive New York wrap-up; Choppy end to the month

Canadian GDP rises 0.4% in Q3; weaker than expected Chicago PMI rises to 56.1 in November from 54.2 in October Goldman: US banks have raised enough capital to cover two-thirds of losses Trichet: If non-standard measures pose threat to price stability will removed immediately Dubai World seeks to renegotiate $26 bln of its $59 bln in debt Yacht with 5 British crew seized by Iran Stocks turn up at close on Dubai World restructuring news; ends up 0.4%; S&P rises 5.7% in November Gold, oil rally late. Gold ends at $1178; Oil at $77.20 As ever, month-end proved choppy and unpredictable. Flows overshadowed fundamentals for most of the US session with sales of EUR/USD a major feature at the London fixing and for the several hours following the fixing. About 30 prior to the 16:00 Fix, the selling began in earnest and EUR/USD began its slide from the 1.5045 area to a low at 1.4975. Demand was found in that region on three pushes lower and we recovered in afternoon trade as news that Dubai World is seeking to renegotiate about half its debts was taken as a positive by the market. We rebounded toward 1.5020 before stalling. GBP/USD was sold heavily in late London trade, extending GBP weakness that had been in place for much of the session. Chinese buying in the 1.6400/10 slowed the decline but we ultimately dipped to 1.6385 before rebounding to 1.6445 late. AUD/USD perked up late in the session, rising ahead of the RBA meeting and a slightly better risk appetite among early Asian traders who are trading on a December P&L. New Yorkers are trading in November, and keeping a low profile ahead of month-end.AUD ends close to US session highs, now at 0.9155. USD/CAD slipped late as well, with oil and gold showing late strength. We trade at 1.0553 late. USD/JPY rallied to 86.75 before heavy EUR/JPY selling for the 16:00 GMT foxing pushed prices as low as 86.00. We spent the afternoon recovering and end near 86.45. Traders await another barrage of Japanese verbal intervention on Tuesday. Perhaps the government will have its story straight this time...

Wall Street finish in positive; Dollar pulls back

Stocks finished with gains at Wall Street on a last hour rally. The Dow Jones rose 0.34% and the Nasdaq 0.29%. Fears over the Dubai debt eased and the Chicago Purchasing Manager’s index came better-than-expected. Gold rebounded at 1,163 and rose back above 1,175. Greenback pulled back from the highs of the day.

EUR/USD is back above 1.5000 after finding support at 1.4970. The pair trades near the same level it had at the beginning of the day. Greenback was able to recover after falling during the Asian session.

Cable is consolidating losses across the board. Despite rising in the last hours the Pound is heading toward a daily decline. GBP/USD recently rose to 1.6460 as the pair continues to recover from 1.6380 (intra-day low).

The Yen rose during the American session across the board. USD/JPY holds above 86.00. Greenback managed to rise after falling to 85.85 but is still under pressure.

Thursday, November 19, 2009

EUR/USD moves away from the low and consolidates above 1.4900

The Euro is extending its recovery against the Dollar but still trades 0.30% below today’s opening price. EUR/USD is testing level above 1.4920, the next resistance lies at 1.4940 and above at 1.4970 (intra-day high). The pair fell earlier to 1.4840 (intra-day low) but Greenback failed to hold below 1.4900.

Michael J. Malpede, analyst at Easy Forex affirms: “EUR traded lower pressured by a drop in risk appetite as global equity markets decline and in reaction to a warning from a German think tank that Germany may face a double dip recession in late 2010. (…) The technical outlook for the EUR is mixed as the EUR falls below is 1.4900. Expect EUR support at 1.4808 the November 17th low and 1.4740 with resistance at 1.4999 the November 17th high.”

C$ Down But Off Lows As U.S. Dollar Advances

The Canadian dollar ended substantially lower Thursday as the U.S. dollar advanced and stocks, commodities and other risk-sensitive assets sold off.

It managed to recover somewhat from its earlier lows in more settled afternoon trading.

The U.S. dollar was trading at C$1.0633 at 3:43 p.m. EST (2043 GMT), from C$1.0623 at 8:00 a.m. EST (1300 GMT), and from C$1.0563 late Wednesday.

The greenback reached a high at C$1.0690, its highest level since Nov. 9, according to EBS via CQG, before surrendering some of its gains.

Analysts said the Canadian dollar's retreat Thursday was reflective of the broader move away from risky assets and towards the U.S. dollar rather than any specifically Canadian developments.

"Oil is still down $2. Gold's come back, but it's still a little bit softer [and] equities are all in the red," said Jon Gencher, director of foreign exchange sales at BMO Capital Markets in Toronto.

The Canadian dollar's retreat in recent sessions came at the same time as significant declines in its Canadian counterpart, he said.

Although trading has been somewhat volatile of late, the U.S./Canadian dollar pair remains essentially rangebound, Gencher said. "Volumes have been very, very light. [There's a] lack of conviction, a lot of players are on the sidelines," he said.

"Most of the other currencies were weaker today, and it was sort of a down day in some of the commodities, especially earlier in the day," said Aaron Fennell, senior market strategist at Lind-Waldock Canada in Toronto. Some commodities recovered partially in afternoon trading, he added.

"Overall, the market's just seemed to be a little edgy today, and there was some of that flight to the U.S. dollar, flight to quality trade that we've become so familiar with the last few months," Fennell said.

"The U.S. dollar's been really strong against all the major currencies except the yen," said David Pierce, director of GPS Capital Markets in Sault Lake City.

That dollar strength is accompanied by downward pressure on commodities prices, which in turn have a big impact on the Canadian dollar, he said.

Pierce said the U.S./Canadian dollar pair is sitting near a technically significant 12-month resistance line at $1.0662. "If we can push through and close above C$1.0662, I'd expect to see the Canadian dollar to continue to weaken tomorrow towards the C$1.0737 level," he said.

The downside space for the pair is "really wide open" until C$1.0236, Pierce said. "Really, most of the pressure and the trend has been for a stronger Canadian [dollar] against the U.S.," he said.

On a longer-term basis, Pierce expects the Canadian dollar to strengthen unless it breaks through some of the nearby technical levels. His forecast for the year end level for the U.S./Canadian dollar pair is C$1.0400.

"I think, for the balance of the year, we're going to see it in a range trade," said Lind-Waldock's Fennell.

Market players appear inclined to sell the U.S. dollar around the C$1.0640 area and buy it in a broad zone between C$1.0300 and C$1.0200, he said

"Because the speculators are thinking that way, I think it will start to carve out a range. Eventually, it will press the topside of that," although that's unlikely to happen until the New Year, Fennell said.

There are no significant data scheduled for Canada or the U.S. on Friday.

At 6:05 p.m. EST (2305 GMT), Bank of Canada Governor Mark Carney will speak to the Foreign Policy Association in New York on the topic "The Evolution of the International Monetary System."

A copy of his remarks will be released on the bank's website at 5:50 p.m. EST (2250 GMT). Carney will hold a news conference at approximately 7:00 p.m. EST (0000 GMT), the Governor will hold a press conference.

There are no significant Canadian data releases planned for Friday.

Forex: USD/CHF fails to break above 1.0200 and falls below 1.0130

The Dollar lost most of the gains against the Swiss Franc during the American session. USD/CHF peaked at 1.0195 and failed to break above 1.0200. From there the pair pulled down to 1.0125. Currently trades at 1.0128/31, 0.31% above today’s opening price. Despite rising after falling in the last two days, Greenback trades closer to the lows of the day and far from the highs.

The Swiss Franc also recovered against the Euro. EUR/CHF jumped to 1.5145, reaching the highest price in two week but then pulled back to 1.5110, which is located a few pips above the opening price.

Wall Street ends with losses; Dollar consolidates gains

Wall Street finished in the negative side following a slide in European stocks. Crude oil also retreat and fell more than 2.50%. Dollar is consolidating gains but moved away from the highs. The best performer so far is the Yen that is rising across the board.

The Dow Jones lost 0.89% and The Nasdaq lost 1.66% on worries about the economic recovery. The S&P500 ended below 1,100 after falling 1.34%. Crude oil trades below $78 a barrel. Gold did not reach new historic highs but managed to recover from below $1,130 and is back above $1,140.

Dollar is rising across the board expect to the Yen. During the American session Greenback’s rally eased and moved away from the highs. EUR/USD trades above 1.4900 but the pair failed to break above 1.4920. Cable managed to hold above 1.6605. GBP/USD trades at 1.6658/63, 0.50% below today’s opening price. The Yen is consolidating gains across the board. USD/JPY is testing level above 89.00 after falling to 88.60.

AUD/JPY weekly technicals

The market rally stopped at the major 61.8% retracement level which is a good sign for the bears. Nevertheless there is a very strong daily uptrend to be broken before the reversal is confirmed. The daily uptrend comes in around 80.00, and there is more solid support in the form of a daily low and the 100-day MA around 79.50 which will also lend support. A daily close below the latter will confirm my analysis that a reversal is underway.

Dollar and Yen finish with gains on falling stocks

The Dollar finished with gains across the board, falling only to the Yen. Majors are still moving in ranges. Stocks fell worldwide on worries about the economic recovery favoring Greenback and the Yen. Cable continues to weaken and currencies tied to commodities are moving away from multi-month highs.

The analysis team affirms: “The U.S stocks declined by the end of today’s trading session as the worse than expected fundamentals released from the U.S. economy, whereas US Leading Indicators for October plunged to 0.3%; worse than the forecasted reading of 0.4% and the prior reading of 1.0%.”

EUR/USD fell losing part of yesterday’s gains but managed to recover from 1.4840 and finished above 1.4900. GBP/USD fell for the third day in a row and accumulates a decline of more than 150 pips. Cable rebounded at 1.6605 but found resistance at 1.6670. The Pound also weakened against European currencies and continues to pull back after rising sharply on Monday and Tuesday.

The Yen appreciated across the board. Against the Dollar rose to a fresh one-month high. USD/JPY currently is hovering around 89.00, if the Yen manages to stay below it could gain momentum. GBP/JPY tumbled to 147.30 posting a fresh two-week low.

Currencies tied to commodities also fell against the Dollar, particularly during the European session. AUD, CAD and NZD are currently trading at the lowest level in more than a week against Greenback.

The Research Desk comments on the coming session: “Looking ahead to the Asia session, we have New Zealand credit card spending and the Bank of Japan rate decision due up. Both events should elicit little in the way of price action but if global equity marts follow US shares into the depths, look for the US dollar to come back better bid on the follow.”

Thursday, May 28, 2009


Credit to the Australian private sector rose a seasonally adjusted 0.1% in April from March and rose 4.6% from a year earlier, the Reserve Bank of Australia said Friday.

Housing sector credit rose 0.7% in April from March and rose 7.1% from a year earlier, the RBA said.

Personal sector credit fell 0.3% in April from March and fell 6.6% from a year earlier, while business sector credit fell 0.5% from March and rose 3.5% from a year earlier, the RBA said.


USD/JPY Current price: 96.48. After a 200 pip rise, pair is correcting and has just reached the 38.2% of the last up leg in 4 hours charts at 96.43.

Price under 20 SMA, bearish momentum and CCI crossing the 200 line, suggest under current low, correction could extend first to 96.20, 50% of the mentioned rally and then to the 95.80/90 zone.

“If the pair manages to regain the 96.80 level, expect a fresh high in the next hours,” said Valeria Bednarik.


EUR/USD, hourly charts remain bullish in the pair despite choppy trade over the past few hours. 20 SMA remains with a nice bullish slope, while indicators have no clear bias at this hour. Bigger time frames show the pair has lost some of the upside strength, yet not signaling further falls.

“Watch the descendant trend line around 1.3980 to confirm further rises, while under 1.3910, base of a small triangle, pair could extend losses to the 1.3810 zone,” said Valeria Bednarik.

Wednesday, May 27, 2009


USD/JPY Current price: 95.85. Break above 95.50 trigger some bullish momentum in the pair early Asia, as better than expected macro news trigger some risk appetite and yen safe haven sell.

With hourly hours a bit exhausted, yet bigger time frames suggesting further upside in the session, expect some downside correction to the 95.50 zone before a new rise to the 96.10 zone. “Break above this last, will confirm the pair continuation north,” said Valeria Bednarik.


Greenback firmed against major rivals Wednesday, despite a sell-off in other U.S. assets, as dollar benefit as the major funding currency in times of fear. A very choppy American session closed with dollar stronger across the board, even against Japanese yen, that have been strong for the past two weeks.

Early Asia, EUR/USD comes under fresh pressure as traders react to overnight news that Moody's affirmed its U.S. AAA rating, which could continue favoring greenback once Japan open its doors. Gbp was the main mover early in the day, breaking through 1.6050 barriers and triggering stops as high as 1.6085. EUR/GBP slumped through key support at 0.8720 and the 200-day moving average at 0.8677 on the way to 0.8654 lows.


In the May 13th email on $/cad and the market bouncing from a retest of the Nov low at 1.1470/80, said that the downside pattern was not “complete”, and with a resumption of the longer term declines to new lows favored after. Unfortunately, did not reach the sell target at 1.1865 (reached 1.1815), before reversing sharply lower and taking out those 1.1470/80 lows (Nov/May 11th).

Currently, the market is quickly nearing important, longer term support at 1.1050/00 (both the bullish trendline and a 50% retracement from the Nov 2007 low at .9060, see longer term below). Note too that the market is oversold after the last few months of declines, and is likely within the final downleg in the fall from the April high at 1.2715 (wave 5, see numbering on daily chart below).

This in turn suggests that risk is rising for at least a few weeks of correcting and minimum 600-700 tick bounce, and with the key 1.1050/00 support area a “logical” area to form such a bottom. However from a position standpoint, there are still no signs “pattern-wise” that such a bottom is in place while the downside momentum remains strong, so still too risky to just buy here. "Instead for now, would just be patient for a better risk/reward entry ahead (expected to be on the long side)," said David Solin.


Markets in Wall Street fell today. Dow Jones lost 2% and Nasdaq 1.11% on the day that Treasuries slumped and General Motors failed to reach an agreement with bondholders. Crude-oil futures on the other side, ended at their highest level since November 5. The Dollar moved most of the session with no clear direction reaching new multi-month lows against GBP, CAD and AUD. Afterward greenback recovered.

Dollar rises after the closing bell

EUR/USD is falling 1% so far today from the opening price. Dollar was able, after several attempts to stay below 1.3900. Current price is 1.3840 near intra-day low at 1.3823.

USD/JPY is up 0.38%. The pair has been moving in a range the last hours between 95.15 and 95.30. Early in the session the pair bottomed at 94.64 but it was rejected from that zone.

GBP/USD is now below 1.6000.Early in the American session the Pound rose to a fresh 5-month high but was enable to stay in those levels. After the closing bell in Wall Street the Dollar got stronger and now GBP/USD is falling further to 1.5950.

Tuesday, May 26, 2009


EUR/USD Current price: 1.3994. Pair regained the upside after Wall Street positive boost, and pair returned to consolidation mode around the 1.4000 zone. Small descendant trend line at 1.4000 seems to be the first resistance to consider, as the pair rebounded on it a couple of times.

“Momentum seems a bit exhausted in the hourly, but price action seems to be well supported by 20 SMA,” said Valeria Bednarik, collaborator at . Bullish strength seems to be beginning to recede in bigger time frames.


GBP/USD, fresh high for the pair in the first hours of Asia, corrective movements seem quite limited in the pair that looks decide to regain the 1.60, thus bigger time frames indicators are presenting divergences.

“1.6000 first resistance above actual high, is followed by 1.6040 zone, where we could see the 38.2% retracement of the last monthly free fall from 2.0158 to 1.3502,” said Valeria Bednarik, collaborator at Level should offer some rebound at least as a first attempt. Despite divergences, downside correction don’t seem likely at this time.

US Stocks Up As Consumer Confidence Spurs Broad Gains

A more confident consumer translated into a rallying stock market Tuesday as JPMorgan Chase and American Express paced a nearly 200-point jump in the Dow Jones Industrial Average, with a flood of consumer stocks going along for the ride.

With the Conference Board saying its index of consumer confidence for May jumped to its highest reading since September, investors pushed into nearly every sector. Financials were led by JPMorgan Chase, up 2.13, or 6.2%, to 36.54, and American Express, up 1.17, or 5%, to 24.57.

Notably, market veterans say the improvement in consumer confidence has already been felt in the equities market as portfolio managers' biggest concern in 2008 -- massive redemptions -- has nearly vanished. In a Tuesday report, Barclays Capital and Investment Company Institute said that since bottoming in the beginning of March, inflows into equity funds have picked up in the past nine weeks, with $16.2 billion going into long-term mutual funds in its latest weekly report.

"There is a positive correlation between consumer confidence and market confidence," says Quincy Krosby, chief investment strategist for Hartford Financial Services. She noted the fact "that there isn't a flood of money coming makes a big difference."

Overall, the Dow Jones Industrial Average gained 196.17 points, or 2.37%, to 8473.49, snapping a four-day losing streak. The index, which had its biggest point and percentage gain since May 18, is off 6.2% from its 2009 closing high of 9035, hit on Jan. 2.

Among other indices, the Standard & Poor's 500 index rose 23.33, or 2.63%, to 910.33, also snapping a four-day losing streak. Every sector in the S&P 500 traded in the green, with financials and consumer discretionaries pacing the move.

Home builders were particularly strong, with D.R. Horton tacking on 46 cents, or 5.1%, to 9.47. Other consumer stocks moving higher included Tiffany, up 1.67, or 6.3%, to 28.09, and Host Hotels & Resorts, up 81 cents, or 9.9%, to 9.01.

In addition, Polo Ralph Lauren gained 4.36, or 8.7%, to 54.38, ahead of its quarterly report on Wednesday.

Technology started out strong even before release of the consumer confidence figure, and it stayed higher, with the Nasdaq Composite Index closing up 58.42 points, or 3.45%, to 1750.43. The Nasdaq marked its highest close since May 6.

Still, not all the economic news was rosy. The S&P Case-Shiller home-price indexes showed that prices continued to tumble in March, as 15 of 20 major metropolitan areas showed price declines of more than 10% from a year earlier.

Ahead of reports later in the week on existing- and new-home sales, David Resler, chief economist for Nomura Securities International, said he believes the housing market has seen the bottom in terms of production. More broadly, he said the economy is nearing the end of its decline, but cautioned he expects depressed levels of economic growth for a while.

"We need to have stability in the housing market in both prices and production before the economy can look optimistically to a future of growth," said Resler.

Volume was relatively light following the Memorial Day holiday with the activity dominated by high-frequency traders. These traders noted paltry short-covering during Tuesday's gains could be a positive sign for the rest of the week.

A possible Achilles' heel for the rally Tuesday was that consumer confidence was alone in spurring it, with Hartford's Krosby cautioning that weekly and monthly reports continue to point to still-weak labor markets.

"If the unemployment rate takes an unexpected leap, that same individual with boosted confidence is now going to cash out," she said.

Helping lift the Nasdaq, Apple (Nasdaq) jumped 8.28, or 6.8%, to 130.78. Morgan Stanley boosted its rating on the technology giant to overweight from equal-weight saying the iPhone "is feeding earnings growth that the market is missing."

First Solar (Nasdaq) fell 12.21, or 6.4%, to 179.51, after FBR Capital Markets analyst Mehdi Hosseini said the solar-power modules maker's stock will be pressured by the decline in polysilicon prices amid weak demand in Europe.

Also rising in the consumer sector, Wendy's/Arby's Group gained 22 cents, or 5.2%, to 4.42, as it said it will open more than 35 Wendy's locations in Singapore over the next decade as the fast-food chain continues to expand outside of North America.

Shares of mining-equipment companies Joy Global (Nasdaq), up 3.07, or 11%, to 32.30, and Bucyrus International (Nasdaq), up 2.13, or 8.9%, to 25.96, climbed as KeyBanc upgraded both stocks, saying a climb in commodity prices should eventually pull companies back to the mine shafts.

Analysts at JPMorgan raised their rating on multimedia company Qwest Communications International to overweight from neutral, citing "relatively strong enterprise revenue trends, conservative guidance, upside from potential M&A, as well as an attractive valuation." Qwest closed up 32 cents, or 8%, at 4.33.

Bucking the trend of strong financials, Regions Financial Corp. slid 21 cents, or 5.2%, to 3.83

UAW Wins Right To Name One GM Board Member

The United Auto Workers union, in a key cost-cutting deal with General Motors Corp. (GM), has agreed to accept at least 17.5% of GM's stock, $6.5 billion in preferred stock, and representation on the company's board in exchange for concessions on future health-care obligations.

The UAW will also receive a $2.5 billion note that will be repaid in installments through 2017, and stock warrants for an additional 2.5% of the company. The $6.5 billion in preferred stock includes a 9% cash dividend that will pay out $585 million annually.

The details of the agreement, spelled out in an informational brochure obtained by The Wall Street Journal, come as GM moves toward a June 1 deadline on deciding on whether it will file for bankruptcy protection.

The agreement represents a significant change from the original outline of GM's government-led restructuring, which would have left the union's health-care trust holding a 39% stake in the company.

The outcome of another critical piece of GM's reorganization -- a $27 billion debt-for-equity exchange with bondholders -- is expected late Tuesday or Wednesday. GM has offered bondholders a 10% stake in the company in exchange for at least $24 billion in debt, but bondholders have complained, mainly because they were supposed to get a much smaller stake in the company than the UAW.

Because the UAW is taking 17.5% stake in GM, rather than GM's initial 39% offer, there is a chance the company could sweeten its deal to unsecured bondholders.

The offer to the bondholders is set to expire Tuesday night. It needs the approval of 90% of the bondholders to go through.

Securing a revised agreement with the UAW is an essential piece of the company's reorganization effort. The company has said it could file for bankruptcy protection by June 1.

The key issue facing the UAW is related to renegotiating GM's contribution to a Voluntary Employee Benefits Association, or VEBA, fund that the union will manage and use to cover the cost of health care for retired workers.

GM owes $20 billion in cash to the health-care trust. GM has already set aside $10 billion in assets for the VEBA, and that will be given to the UAW in January. That $10 billion, however, "have been negatively impacted by conditions in the investment market."

Because GM -- which has accepted $19.4 billion in government loans -- doesn't have the financial strength to meet its obligation, the Treasury Department has demanded that the UAW take half of what it is owed in company equity.

According to the UAW, Treasury officials "insisted" that retirees take immediate reductions in benefit levels. The UAW said that the government has committed to "providing massive additional financial support to assist GM in completing its restructuring," and avoid a liquidation of the company.

In order to win additional funding guarantees, however, the UAW was "was required to support a series of changes to retiree medical and VEBA agreements."

Thomas Summers, vice president of UAW Local 22 in Detroit representing thousands of GM workers, said having a stake in the company gives the union a great reason to ensure the auto maker's viability. "Right now it's about just that, it's about survival," he said.

Still, Summers said most of the workers he represents expect GM to file for bankruptcy any day now. "Let's not be naive about it," he said, "I think everybody's been preparing for it."

The UAW and GM have been renegotiating VEBA agreement, which was struck in 2007, in recent weeks. Instead of just getting common stock in GM, the UAW has been promised a variety of instruments designed to pay for the future medical expenses of hundreds of thousands of retirees.

In addition to renegotiating the VEBA, the UAW has agreed to additional buyout offers for the 60,000 people employed at GM factories in the U.S. GM aims to cut at least $1.5 billion in annual labor costs under the new agreement.

GM workers are slated to vote on the deal on Wednesday and Thursday. GM spent $8 billion on hourly labor costs in 2008, but needs to cut that significantly if it hopes to be competitive with Asian competitors building cars in the U.S., and remain viable at much lower auto sales level than normal.

Much of the UAW agreement mirrors concessions granted to Chrysler LLC last month, including a suspension of cost-of-living allowances, bonuses and some holidays, people familiar with the agreement said.

The agreement also includes a provision for future job buyouts, as well as to forbid strikes until 2015, these people said. Wages are expected to remain unchanged, but employees who are on temporary layoff will see a reduction in supplemental unemployment pay.

Thursday, April 30, 2009

Dollar Ends Mixed As Stocks Stall in Afternoon

The dollar put in a mixed performance Thursday, gaining
against the yen but ending
little changed against the euro as stocks rallied in early trading and then
stalled in the afternoon.

Some risk-sensitive currencies, such as the U.K. pound and the Canadian dollar,
advanced against the greenback.
Thinning liquidity ahead of the May Day holiday in several key European countries
on Friday and month-end
flows complicated currency trading Thursday, resulting in a relatively
directionless session.

"It's the last trading day of the month, and there could be some month-end flows
that are driving markets
beyond the usual fundamental sphere," said Dustin Reid, director of G11 forex
strategy at RBS Greenwich
Capital Markets in Chicago.

Currency markets weren't visibly roiled by news at midday that Chrysler LLC
filed for bankruptcy protection
in a plan that would provide new ownership for the ailing auto maker. The owners
will include the U.S.
and Canadian governments, Italian car maker Fiat SpA and a health-care trust fund
for union retirees.

The Chrysler bankruptcy wasn't a major disturbance in the market in part because
it appears the company
will re-emerge in a restructured form, Reid said.

While the euro remained contained against the dollar Thursday, seesawing during
the session between gains
and losses against the greenback, the Canadian dollar continued to push higher.
"The Canadian dollar has been the big mover of the last few days," said Tyson
Wright, senior foreign exchange
trader at Custom House, a currency services firm in Victoria, British Columbia.
Technical factors rather than economic data appeared to be supporting the
Canadian currency, although
it also drew sustenance from expectations of a global economic rebound towards
2010, he said.

Late Thursday, the dollar was trading at C$1.1933, up from a session low at
C$1.1867 but below C$1.2032 late Wednesday.
The euro was at $1.3237, off from 1.3250 late Wednesday, and at Y130.48, up from
Y129.10. The dollar traded
at Y98.62, up from Y97.42 late Tuesday, according to EBS.
The dollar was at CHF1.1413, up from CHF1.1380, while sterling was at $1.4803, up
from $1.4770.

The dollar advanced against the yen as that currency's role as a safe-haven
proved detrimental to it Thursday,
when equities were in positive territory for much of the session.
The dollar reached a high of Y99.00 before ceding some of its gains, according to

The dollar/yen pair will likely continue to trade in recent broad ranges, said
Reid, of RBS Greenwich
Capital Markets. "I think, in general, dollar/yen's going to be rangebound
between Y93.00 and Y100.00
and just continue to bounce around there," he said.

How long equity markets will be able to maintain their positive momentum, and
thus provide support for
risk-sensitive currencies, remains open to question.
"I'm not sure this is sustainable in the short term, because there is still lot
of bad news out there
and this could be more of a bear market equity rally than an actual bull market,"
said Custom House's

Such a development would tend to curb recent strength by the euro, the Canadian
dollar and other similar currencies against the U.S dollar, he said.

The Mexican peso remained under pressure due to persistent concerns about the
swine flu outbreak, with
the U.S. dollar trading around MXN13.8035 in late trading, above MXN13.705 at
Wednesday's close.

A report from Brown Brothers Harriman in New York said the outbreak is
dramatically affecting liquidity
in the peso. "The drop of in liquidity is causing not only greater volatility,
but also a widening of
the spreads between the bids and offers," BBH said

Canada Dollar Pares Early Strength

The Canadian dollar was trading at a firmer level versus
its U.S. counterpart at midday on Thursday but had fallen from its nearly
four-month high.

The Canadian currency's significant early strength was fuelled by broad-based
U.S. dollar weakness, risk appetite on the belief that the worst of the global
economic downturn may have passed and by advancing crude oil futures, according
to market watchers.

However, causing the Canadian currency to pare its gains by midday was news
that U.S. auto maker Chrysler Corp. plans to make a Chapter 11 bankruptcy filing
Thursday after a breakdown in talks with its lenders, market watchers said.

Concern that the move could have a negative impact on the Canadian economy due
to job losses at the company's Canadian plants weighed on the Canadian currency,
they said.

Also undermining the Canadian dollar at midday was a pullback in crude oil
futures and equities, as well as losses in gold futures, traders said.

However, domestic news in Canada on Thursday was mildly supportive. The 0.1%
decline in Canada's gross domestic product in February was in line with
expectations, while a 0.3% increases in industrial product prices in March was
considered positive.

At 1:03 p.m. EDT, the Canadian dollar was trading at 83.61 U.S. cents, or
US$1=C$1.1960, which compares with 83.89 U.S. cents, or US$1=C$1.1920, earlier
in the day and Wednesday's North American close of 83.13 U.S. cents, or

At midday on Thursday the Toronto Stock Exchange was slightly higher, up 19.6
points at 1:03 p.m. EDT to sit at 9,436.0.

USD Reaches New Daily High Vs JPY

USD recently notched a session high at Y98.90, according to
EBS, reflecting the general
improvement in risk sentiment. While JPY had lost its status as the ultimate safe
haven for a while after
the weak 4Q data from Japan, it has recently resumed that status and is therefore
vulnerable in times
of general risk appetite, says Dustin Reid, director of G11 forex strategy at RBS
Greenwich Capital Markets
in Chicago. "With equities bid going into the end of the month, you're seeing
dollar/yen bid," he said.

EURO Regaining Lost Ground As Stocks Rally

EUR regains ground lost earlier in the session as stronger
stocks provide solid underpinning for single currency.

EUR is currently around $1.3275, up from session low at
$1.3190 but still down from
overnight high at $1.3385, according to EBS. GBP has also recovered in recent
trading and is at $1.4846

Wednesday, April 29, 2009

FED Leaves Rates Near Zero; Econ Outlook Improved


U.S. Federal Reserve policy makers Wednesday left the target federal-fundsrate for interbank lending in a range near zero and the discount rate at 0.5%while signaling they might increase the size of programs to buy mortgage-relatedand Treasury securities if needed to keep borrowing costs down and ease theeconomy's path out of recession. The announcement came at the end of a two-daymeeting.

THE DETAILS: The Federal Open Market Committee voted unanimously to keep the target federalfunds rate for interbank lending in a range between 0.0% and 0.25%, where it hasbeen since December. Officials reiterated their pledge to keep rates"exceptionally low" for an extended period. Both rate decisions were universallyexpected by Wall Street economists. Officials also gave a nod to some signs of stability in the economy, echoingrecent remarks by Fed Chairman Ben Bernanke and top White House officials, butstressed that conditions are likely to remain weak. "The economic outlook has improved modestly since the March meeting," thoughit should remain weak "for a time," the FOMC said in a statement. "The pace ofcontraction appears to be somewhat slower," the FOMC said, and officials notedthat consumer spending "has shown signs of stabilizing but remains constrained"by job losses, lower home values and tight credit. The Fed repeated that inflation will remain "subdued" and that it sees somerisk that inflation may stay below rates that best foster economic growth andprice stability. The FOMC wasn't expected to announce major policy steps, as they did on March18, when they presented plans to buy as much as $300 billion in Treasury bondsto keep other interest rates low.


Stocks, which were up sharply before the announcement, rose further after theFed's release, with the DJIA closing up 168.78, or 2.11%, at 8185.73. The S&P500 finished the day up 18.48 points, or 2.16%, at 873.64. The NASDAQ Compositeened up 38.13 points, or 2.28%, at 1711.94.

Treasurys prices mostly sank at the long end amid disappointment over a lackof any new action. The 10-year yield rose to 3.10%. The 30-year yield rose to4.03%.

The dollar was generally higher after the Fed said it might increase the sizeof programs to buy mortgage-related and Treasury securities WHAT THEY'RE SAYING:

-The Fed still sees green shoots and believes the U.S. economy will begin torebound later this year, says Sherry Cooper, chief economist at BMO CapitalMarkets. "The Fed also feels inflation will remain low despite its running theprinting presses and despite massive fiscal red ink," she says.

-"It's not over the top, but certainly hopeful," Stephen Stanley, chiefeconomist at RBS Greenwich Capital, said of the FOMC's statement that the U.S.economic outlook has improved modestly.

-"Emphasizing the timing of such purchases is a warning to market participantsto expect either accelerated purchases or more aggressive purchases whenconditions warrant," Tony Crescenzi, strategist at Miller Tabak, said of theFOMC's statement that it will continue to evaluate the timing and amounts ofsecurities purchases.

-With the Fed announcement past, the Treasury market can now focus on themassive amount of supply coming next week, said Sean Simko, head of SEI fixedincome management, and given supply, yields are likely to continue to pushhigher.


=WSJ:Fed To Continue Aggressive Efforts To Revive Fincl System 2nd UPDATE: Fed Leaves Rates Near Zero; Outlook Has Improved US Stocks Rally Continues After Fed Statement

=Treasurys Fall, Dollar, Stocks Gain As Fed Turns Slightly Upbeat

=WORLD FOREX: Dollar Falls Vs Most Despite Less Downbeat Fed

=FED WATCH: FOMC Meeting Sign Of Somnolent Times To Come CREDIT MARKETS: Debt Markets Gain On Fed's Positive Turn

=POINT OF VIEW: Stock Market Takes Fed As Best Of Both Worlds

=OFF THE RUN: On The Path To Higher Yields

=Treasurys Prices Drop, Yields Hit Year Highs On Fed Statement

Eurodollar Futures See Sub -1% Libor In June

Leading up to FOMC announcement, Jun Eurodollar futuresmatches its highest level of the day, reflecting expectations for underlying3-month dollar Libor to fall below 1%.

Recently at day's high of 99.04, up 4.5BP, seeing Libor at 0.96% when contract expires June 15.

Canadian Dollar Holds Onto Early Gains

The Canadian dollar was trading at a sharply higherlevel against its U.S. counterpart at midday on Wednesday. The Canadian dollar held on to its early advances as the improved marketsentiment that lifted the currency in early activity showed no signs of fading,analysts said.

There is cautious optimism that the global economic slowdown is running out ofsteam, which is helping to ease risk aversion, they said. Commodity-sensitive currencies, including the Canadian dollar, were alsounderpinned Wednesday by strength in crude oil futures, which at middaycontinued to trade about US$50 a barrel.

Technically-based buying interest and suggestions that the Canadian dollar hasfurther upside potential further helped to lift the Canadian currency, traderssaid. In domestic news, Statistics Canada reported Wednesday that non-farm payrollemployment fell by 79,600 in February, down 0.5% from a month earlier.

Thelargest declines were seen in the manufacturing sector. At 12:58 p.m. EDT, the Canadian dollar was trading at 83.24 U.S. cents orUS$1=C$1.2013, which compares with 83.22 U.S. cents or US$1=C$1.2016 earlier inthe day and Tuesday's North American close of 81.93 U.S. cents or US$1=C$1.2205.

At midday on Wednesday the Toronto Stock Exchange was higher, up 73.4 pointsat 12:58 p.m. EDT to sit at 9,421.4.

USD/CAD Notches New Daily Low

Selling pressure on USD/CAD is persisting in light of the robust tone in stocks,with USD/CAD just registering a sessional low at 1.1993 before popping back to the 1.2010 area, accordingYou can use this link on the day this article is published and the following day.

Wednesday, March 25, 2009

UK Brown: Deflation Is Main Concern In Short Term

The U.K. government will do whatever is necessary to revive growth, with deflation the main danger in the short term, Prime Minister Gordon Brown said Wednesday.

"I think in the short term everybody is concerned about the problems that could come from deflation," Brown said in an interview with The Wall Street Journal in New York.

Brown said his government is doing "what is necessary to resume growth in the economy," through fiscal and monetary policy and fixing the banking system.

The prime minister said he believes governments of the Group of 20 industrialized and developing nations will sign on to taking similar action at the upcoming G20 leaders' summit in London April 2.

"Nobody is suggesting that we will come to the G20 meeting and put on the table" national budget plans, he said.

"What we are suggesting is that we have, together, to look at what we have done so far cumulatively...what's the effect of quantitative easing and then say what should happen next. And I see a consensus not a disagreement on that."

Brown's government Tuesday received a warning from Bank of England Governor Mervyn King that there seems to be little room for the government to launch further fiscal stimulus efforts, on top of the GBP20 billion effort already undertaken.

Brown brushed off differences with King on the issue, saying the governor has signed on to the G20 finance ministers' communique calling for policy makers to take whatever monetary and fiscal policy action is needed to revive growth.

U.K. Chancellor of the Exchequer Alistair Darling will lay out his budget April 22. The government hasn't yet said whether it will seek to implement a second fiscal boost. Brown said that, on monetary policy, many central banks have already moved to very low interest rates and quantitative easing. He also said that, while European Central Bank interest rates are "a lot higher" than in the U.K. and the U.S., his "expectation is that they will bring them down further."

The Bank of England's benchmark interest rate stands at 0.5%, while the ECB's refinancing rate is 1.5% and the U.S. Federal Reserve's target funds rate stands close to zero.

On trade, Brown said the Doha round of talks isn't dead, despite the many deadlines that have come and gone.

He said the biggest stumbling block to an advance - differences between India and the U.S. - is "solvable" and said "people around the world are agreed" on the need for a new trade deal.

He also reiterated his view that protectionism "is the road to ruin."

Brown pointed to the absence of trade credit as one of the "big problems" for trade. The April G20 summit is expected to produce an initiative to address this.

The U.K. prime minister said that, while the short-term economic focus will be on deflation, longer-term inflationary threats like higher oil prices, once global growth resumes, will need to be dealt with.

"That is a problem we're going to have to look at again...We really have to be better at looking at how we can make agreements that can deal with the most volatile of commodities that affect the most vulnerable of people," he said.

The interview came on the second leg of a global tour by the prime minister, who took office in 2007, ahead of the April London summit.

Brown's Labour party must face an election by mid-2010 and is behind in the polls, raising the stakes for a successful outcome to the April 2 summit. Brown, who spoke at the European Parliament Tuesday, travels to Brazil and Chile later this week.

GBP/USD: Pound is back below 1.4650, its previous range

The Pound is back to its previous range, testing the 1.4650 support. It jumped to 1.4740 after Geithner affirmed he's willing to consider the Chinese plan to a global reserve currency.

Below 1.4650, next support level could be 1.4595 (Mar 19 and 20 high), and below here, intra-day low at 1.4540. On the upside, bouncing up at 1.4650, next resistance level could be 1.4720, and above there, 1.4775 (Mar 24 high).

US Markets open on strong note; Dollar tumbles after Geithner’s comments on global currency

U.S. markets have opened with increases on Wednesday on the back of unexpectedly good new home sales data, although the happening of the session has been Dollar’s dip after Geithner’s affirmed its openness towards the plan for a new global reserve currency.

Wall street gains 2.18% after the first two hours of trading, reaching its highest level in the last two weeks, with general Electric, Bank of America and Alcoa leading the gains. The Nasdaq index adds 1.93%.

Macroeconomic indicators have beaten expectations, U.S. durable goods orders have increased unexpectedly 3.4% in Feb against market expectations of a 2.0% decline, and new Home sales rose 4.7% for the first time in seven months.

Dollar picks up from session lows

Geithner’s affirmation of being open to consider Chinese and Russian proposal to create a new global reserve currency unleashed a wild sell out fever for the dollar which lost about 200 points with the majors in a matter of minutes, although currency crosses have returned close to previous levels after he made clear its commitment to maintain the Dollar as key reserve currency.

The Euro rocketed more than150 pips jumping from below 1.3500 to maximum levels around 1.3650, to return to levels around 1.3550. At the moment the Euro seems to have found support at 1.3540 level.

GBP/USD has returned below1.4650 support the previous range , giving away most of the ground gained after Geithner’ speech. The Pound rose from about 1.4620 to an intra-day high at 1.4740. At the moment the Pound drops below exponential moving averages in the hourly chart, and above intra-day low at 1.4545.

USD/JPY dropped from 98.00 to a intra-day low at 96.90, but the pair has managed to pick up and trades above 97.35 support level towards 98.00 resistance.

Dutch Government Launches EUR6 Billion Stimulus Package For Econ

The Dutch government will launch a EUR6 billion stimulus package for the economy, Prime Minister Jan Peter Balkenende said Wednesday, addressing the parliament.

"The global economic crisis is putting our society under strain. We are facing a shrinking economy, rising unemployment and a widening budget deficit", Balkenende said.

The stimulus package will enable the government to invest in jobs, education, infrastructure and energy-saving and fiscal measures, the prime minister said. The package while announcing an additional EUR1.5 billion stimulus from the Dutch provinces.

He said public finances will suffer in the coming years, pointing to the latest budget deficit forecast of 5.6% of gross domestic product in 2010, from the government's planning agency CPB.

To reduce the budget deficit, the Dutch government will launch a set of cost-saving measures for 2011 and after, including a rise of the state pension age to 67 years from 65, the prime minister said.

The Dutch economy is set to shrink by 3.5% in 2009 and by 0.25% in 2010, according to data from CPB. This would be the largest contraction in the country since 1931.

Separately, Balkenende told parliament that a "change of culture" is needed within the financial sector.

He added that the government aims to strengthen financial supervision, also on an international level, and promised "appropriate measures" for bonus structures at financial institutions that have received state-aid.

Tuesday, March 10, 2009


The pendulum of risk avoidance and risk alleviation temporarily swung back against the dollar Tuesday, setting off some profit-taking on recent safe haven-inspired dollar gains. The dollar spent much of the day on the defensive as stock markets in the U.S. and overseas rallied, but by late Tuesday had managed to claw back most of the ground lost earlier on both the euro and the yen.

Late Tuesday, the euro was at $1.2657 from $1.2602 late Monday and Y124.94 against the yen from Y124.55, according to EBS. The dollar was at Y98.74 from Y98.82 and at CHF1.1629 from CHF1.1595 Monday. The U.K. pound fell to $1.3737 from $1.3792. The driving force against the dollar throughout much of the day Tuesday was the worldwide rebound in sentiment that lifted equity markets, dampening the safe-haven demand for dollars that held sway on Monday.

The catalyst for Tuesday's equities rally was unaccustomed good news from Citigroup, one institution that has recently come to exemplify the distress of the U.S. and global banking systems. A memo from Citigroup's chief executive said the bank is currently enjoying its best quarter since the third quarter of 2007, triggering Tuesday's rebound in risk appetites.

While that initially sent the dollar to a two-week low against the euro and
also back from recent gains against other currencies, the dollar by late in the
day had bounced considerably from its intraday lows even as U.S. stocks held
onto their gains.

Currency watchers said the reversal is testament to the fragility of risk
appetite in the currency market, where the dollar is widely considered the only
reliable safe-haven currency at the moment.

Accordingly, episodes of intraday weakness such as Tuesday's are being taken
by many currency players as opportunities to buy dollars on dips at more
attractive levels. "Few people are convinced that the dollar is in any sustainable kind of downturn, and I don't think anybody really buys that today's bounce in equity
markets is durable," said senior currency strategist David Watt of RBC Capital
Markets in Toronto. "Underlying views haven't changed, and there's still a lot
of reasons for people to be wary."

Elsewhere Tuesday, Hungary's central bank indicated it has been actively
intervening in the foreign exchange market to support the Hungarian forint,
which has depreciated some 22% against the euro so far this year and last week
hit a record low. National Bank of Hungary Governor Andras Simor said in a televised interview that the central bank is ready to defend the forint by all its policy means, given that the currency has fallen to "sensitive levels."

A report Tuesday from currency strategists at Brown Brothers Harriman in New
York suggested that the currencies of Hungary, Romania, Ukraine and other East
European units are likely to remain under pressure, given the economic problems
still facing the region.


USD/CAD ending down but off intraday lows, as CAD rebounded from Mon's four-and-a-half year low in line with a bounce for global equity markets and at least a momentary comeback in risk appetites. Along with many other currencies Tue, CAD couldn't hold onto its earlier gains however, testifying to fragility of risk acceptance in a market where USD is the only safe haven currency and economic gloom is never far from the minds of traders.

Monday, March 9, 2009


Dollar comes off early highs versus yen, pound and euro into, after pound hit six-week
low of $1.3747 off the BofE's quantitative easing plans and the ongoing bailout of Lloyds TSB. The yen fell close to the four-month low struck Thursday after Japan reported the first current account deficit in 13 years. Dollar rose to Y99.19. Euro hit session low in New York of $1.2555,
but rose to $1.2625 by afternoon from $1.2641 late Friday. Dollar at Y98.83 from Y98.27 late Friday. Euro at Y124.83 from Y124.21. UK pound at $1.3829 from $1.4066 Friday. Dollar at CHF1.1590 from CHF1.1597


The dollar rose versus its major rivals Monday as global
investor sentiment sank deeper, with a decline in U.S. stocks and following a World Bank report that said global growth will contract in 2009 for the first time since World War II. The World Bank statement, released Sunday, is the latest kernel of disappointing news to lean against
investor sentiment, but the pile has been mounting for months. The upshot has been a strengthening dollar on its status as a safe haven.

The Dow Jones Industrial Average declined 80 points Monday. The U.K. pound came under particular pressure Monday, falling to a six-week low of $1.3747 off the Bank of England's quantitative easing plans and after the U.K. government announced it would take a majority
stake in Lloyds Bank through the Asset Protection Scheme. The yen also neared the four-month low it had struck versus the dollar last Thursday. The dollar rose to Y99.19, off the high of Y99.69, on data that showed Japan posting its first current-account deficit in 13 years.

The Australian dollar and Canadian dollar also tumbled against the greenback. The
Australian dollar fell to a three-session low of $0.6311 from $0.6429 late Friday. Meanwhile, the U.S. dollar advanced to a four-year high of C$1.3065 after breaking through key technical trading levels. Monday afternoon, the euro was at $1.2602 from $1.2641 late Friday. The dollar
was at Y98.82 from Y98.27 late Friday. The euro was at Y124.55 from Y124.21. The U.K. pound was at $1.3792 from $1.4066 Friday. The dollar was at CHF1.1595 from CHF1.1597.
The euro was little changed from its levels Friday. Pressure remains on the common currency from its exposure to Eastern and Central Europe. However, European Central Bank governing council member Ewald Nowotny said Monday that euro-zone accession rules will not be eased to aid Eastern and Central Europe nations.


After hovering below the C$1.3000 peak for most of the
late-morning period, USD/CAD is taking a peak above again as equity markets
prove wobbly. USD is currently around C$1.3020, still significantly below
session high at C$1.3065, according to EBS.