Foreign Exchange Trading

USD/JPY tests support at 86.55

2009-12-01T14:24:00.001-08:00

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

2009-12-01T14:22:00.000-08:00

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

2009-12-01T14:21:00.000-08:00

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

2009-12-01T14:19:00.000-08:00

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

2009-12-01T14:18:00.000-08:00

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 ecPulse.com 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.

GBP/USD rises back above 1.6400

2009-11-30T14:34:00.001-08:00

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

2009-11-30T14:33:00.001-08:00

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

2009-11-30T14:32:00.001-08:00

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

2009-11-30T14:31:00.001-08:00

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

2009-11-30T14:30:00.001-08:00

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

2009-11-30T14:27:00.000-08:00

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.

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

2009-11-19T15:03:00.001-08:00

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

2009-11-19T15:01:00.000-08:00

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

2009-11-19T15:00:00.000-08:00

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

2009-11-19T14:59:00.000-08:00

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

2009-11-19T14:58:00.001-08:00

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

2009-11-19T14:56:00.001-08:00

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 ecPulse.com 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 Forex.com 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.”

AUSTRAIAN PRIVATE SECTOR CREDIT +0.1% IN APR VS MAR

2009-05-28T20:09:00.000-07:00

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

2009-05-28T20:08:00.001-07:00

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.

EURO REMAIN BULLISH

2009-05-28T20:06:00.000-07:00

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.

USD/JPY CURRENT PRICE: 95.85

2009-05-27T19:22:00.003-07:00

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.

USD BACK REGAINING MAJOR FUNDING STATUS

2009-05-27T19:22:00.001-07:00

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.

USD/CAD NEARING POTENTIALLY MAJOR SUPPORT

2009-05-27T19:21:00.001-07:00

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.

DOLLAR RISES AFTER WALL STREET ENDED LOWER

2009-05-27T19:20:00.000-07:00

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.

EUR/USD CURRENT PRICE: 1.3994

2009-05-26T19:04:00.000-07:00

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 FXstreet.com . Bullish strength seems to be beginning to recede in bigger time frames.

GBP/USD GAINS FRESH HIGH

2009-05-26T19:02:00.000-07:00

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 FXstreet.com. 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

2009-05-26T19:00:00.001-07:00

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

2009-05-26T18:57:00.000-07:00

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.

Dollar Ends Mixed As Stocks Stall in Afternoon

2009-04-30T15:55:00.000-07:00

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
EBS.

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
Wright.

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

2009-04-30T15:52:00.000-07:00

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
US$1=C$1.2030.

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

2009-04-30T15:51:00.000-07:00

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

2009-04-30T15:47:00.000-07:00

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

FED Leaves Rates Near Zero; Econ Outlook Improved

2009-04-29T16:21:00.000-07:00

THE EVENT:

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.

THE REACTION:

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.

DOW JONES COVERAGE OF THE FED DECISION:

=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

2009-04-29T16:18:00.000-07:00

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

2009-04-29T16:16:00.000-07:00

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

2009-04-29T16:14:00.000-07:00

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.

UK Brown: Deflation Is Main Concern In Short Term

2009-03-25T09:56:00.000-07:00

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

2009-03-25T09:55:00.000-07:00

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

2009-03-25T09:54:00.001-07:00

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

2009-03-25T09:52:00.000-07:00

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.

DOLLAR STYMIED BY REBOUND IN RISK APPETITES

2009-03-10T15:55:00.000-07:00

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 STILL BOUNCES OFF LOWS

2009-03-10T15:50:00.000-07:00

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.

DOLLAR BACKS OFF EARLY HIGHS VERSUS YEN, POUND

2009-03-09T15:57:00.000-07:00

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

SAFE HAVEN DOLLAR RAISES, POUND HITS 6-WEEKS LOW

2009-03-09T15:54:00.000-07:00

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.

USD/CAD TAKING A PEAK OVER C$ 1.3000 AGAIN

2009-03-09T15:53:00.000-07:00

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.

BoE's Blanchflower-Bank should have cut rates sooner

2008-11-27T05:25:00.000-08:00

Policymakers should have started cutting interest rates much sooner to help prevent an economic crisis in Britain, Bank of England policymaker David Blanchflower was quoted as saying on Thursday.

"This is not someting I wanted to get right," Blanchflower told the
Guardian in an interview. "That's why I warned that this was going to happen unless we acted -- I wanted to prevent the crisis. I'm not saying everything would have been wonderful, but at least if we'd acted earlier we would be ahead of events and not reacting to them."

The BoE slashed interest rates by 1.5 percentage points this month to
shore up the economy against a deep recession. Blanchflower, who has voted to cut interest rates every month since last October, said the bank was now "doing the things we should be doing". "All hands are to the pump and I get the sense that people have absolutely got it right.

Swiss employment growth slows in Q3

2008-11-27T05:23:00.002-08:00

Employment growth in Switzerland slowed in the third quarter and is likely to continue to weaken as the economy cools, data showed on Thursday.

Switzerland's non-farm payrolls rose 2.0 percent year-on-year in the
third quarter to 3.956 million compared with growth of 2.4 percent in the
previous three months, the Federal Statistics Office said. The statistics office said the forward-looking indices pointed to a further slowing of employment growth as the outlook index fell 2.7 percent to 1.04 points, while the index of vacancies rose 0.5 percent to 207.3 points.

The survey among manufacturers for the Swiss Purchasing Managers' Index
in October showed that firms cut back staff for the first time since 2005, while the unadjusted Swiss unemployment rate inched up in the month to 2.5 percent. Switzerland is in the middle of a severe economic crisis and will see negative growth next year, Swiss National Bank board member Philipp Hildebrand was quoted on Wednesday as saying.

The SNB slashed rates last Thursday by a surprise full percentage point
and analysts expect the SNB to cut again, possibly as early as next month.
Jan-Egbert Sturm, head of the KOF Swiss Economic Institute that produces
the leading growth barometer, said the bank could cut by another 25 basis points in December.

"In theory there is still room to cut. A further central bank interest
rate step downwards is therefore not unlikely, perhaps there will be a rate cut still this year," Sturm told the Basler Zeitung daily in an interview.
The November KOF indicator, which points to the economy's likely
performance in six months' time, is due out on Friday.

ECB has room to cut interest rates

2008-11-27T05:23:00.001-08:00

The European Central Bank has room to cut interest rates because inflation is falling and the euro zone economy is contracting, Governing Council member Ewald Nowotny was quoted on Thursday as saying.

"We have to assume that there will be another downward revision" of the
ECB staff growth forecasts, and also that inflation would fall below 2 percent,
he was quoted as saying in a statement by Austria's Chamber of Commerce.

"This also means that the ECB has room again to cut interest rates," he
was quoted as saying in the statement, which was issued after a meeting of the Chamber at which Nowotny spoke.

Trichet says ECB can cut rates on inflation relief

2008-11-27T05:22:00.001-08:00

European Central Bank President Jean-Claude Trichet said on Wednesday the bank could cut its main interest rate next week as long as there is evidence that inflation pressures have eased. "We will have a lot of new information and we did not exclude to decrease rates again if the upside risk to prices alleviate," Trichet said at a news conference.

When asked if fourth quarter economic data would be worse than the third
quarter data that confirmed the euro zone was in recession, Trichet said: "Next week we will have a lot of new information, we will have our own projections... "we will see when we have the figures."

Following China's 108 basis point interest rate cut Trichet said: "I am
sure what has been done by my colleagues in China has done is appropriate for the Chinese economy." "We are all striving for maintaining price stability which is a prerequisite for financial stability," he added.

Aussie dollar slips as growth concerns dominate

2008-11-27T02:45:00.000-08:00

* Australian dollar slipped below 65 U.S. cents on Wednesday, retreating further from recent two-week highs, as waning risk appetite and a gloomy outlook for the global economy kept investors away from commodity-linked currencies.

* Regional stocks were lower, hurt by a fresh batch of weak data from the world's largest economy. Data showed the U.S. economy shrank at its fastest pace in seven years in the third quarter as consumer spending plunged to a 28-year low. Another
report also showed U.S. home prices plunged in September.

* The U.S. Federal Reserve announced plans to buy up to $100 billion of debt issued by government-sponsored mortgage enterprises, and a $200-billion program to help consumer finance, but scepticism remained about these measures with interbank
lending rates creeping up, suggesting credit conditions were tightening again.

* Shortly after midday, the Aussie was at $0.6480 against the U.S. dollar, up from $0.6436 late here on Tuesday, but well below a near two-week high of $0.6618 struck in offshore trade.

* The Aussie eased against the yen, falling to 61.57 yen. It pulled away from a one-week high of 63.70 yen struck on Tuesday as investors turned risk averse and unwound leveraged carry trades.

* Gold prices retreated further from a six-week high in Asian trade. The CRB index fell 2.4 percent on Tuesday as prices of oil, precious and base metals fell on worries of a dour economic outlook. BHP Billiton's decision to dump its $66
billion bid for rival Rio Tinto also weighed down.

* Australian bond futures were firmer, aided by safe-haven inflows, but eased from highs as investors booked some profits. Three-year Australian bond futures were indicated 0.03 points higher at 96.405, while the 10-year contract added
0.06 points to 95.375.

ECB's Nowotny says more room for rate cut

2008-11-27T02:43:00.000-08:00

Receding worries about inflation have made room for another interest rate cut by the European Central Bank, Governing Council member Ewald Nowotny told Japan's Nikkei newspaper. Europe is facing major difficulties and the euro zone economy could
contract next year due to the impact of the financial turmoil, Nowotny was quoted as saying in the paper's Wednesday morning edition. Inflation expectations, on the other hand, are receding, making room for another ECB rate cut, said Nowotny, who is also governor of the Austrian central bank.

On the euro's recent weakening against the dollar, Nowotny said the dollar's current rises were unsustainable and that rapid currency moves should be avoided. Two quick-fire 50 basis point cuts since October have brought benchmark euro zone interest rates to 3.25 percent. Analysts think they could fall to 2 percent or lower next year if the region's recession evolves into a major long-term slump. The ECB next meets on Dec. 4.

BOJ Mizuno Voted Against 20,25 bps Cuts

2008-11-27T02:41:00.001-08:00

All but one Bank of Japan board member agreed that the central bank should lower interest rates to help the economy and stabilize money markets, but they disagreed over the appropriate size of the rate cut at their Oct. 31 policy board meeting, minutes released by the central bank showed Thursday.

"In reducing the policy interest rate, even a difference of five basis points
(has) an effect that can be ignored," one board member said. The BOJ board split 4-4 at the Oct. 31 meeting on a proposal to cut rates by 20 basis points to 0.30%. BOJ Gov. Masaaki Shirakawa ultimately cast the tiebreaking vote to cut rates. Three members favored an alternate proposal to cut rates by 25 basis points. Board member Atsushi Mizuno both opposed both rate cut proposals, the minutes showed.

BOJ Oct 31 minutes: Mizuno called for steady rates

2008-11-27T02:39:00.000-08:00

Bank of Japan board member Atsushi Mizuno opposed cutting rates at the Oct. 31 policy meeting, saying it was unclear how the effect of such a move would spread to the economy when financial market functions were decreasing, minutes released on Thursday showed.

Board members Hidetoshi Kamezaki, Seiji Nakamura and Miyako Suda proposed cutting rates to 0.25 percent instead of to 0.3 percent, which was turned down by a 5-3 vote, the minutes showed. At the meeting, the Bank of Japan cut interest rates for the first time
in seven years, to 0.3 percent from 0.5 percent, joining global efforts to contain the financial crisis. The decision was made by a split vote, with board members Mizuno,
Kamezaki, Nakamura and Suda dissenting. The central bank kept rates on hold at

Dollar gains on fresh evidence of economic woes

2008-11-27T02:37:00.000-08:00

The dollar rose against most other major currencies Wednesday as weak reports on housing, employment and manufacturing added to worries about the economy. The 15-nation euro dropped to $1.2899 from $1.3022 late Tuesday, while the
British pound fell to $1.5350 from $1.5440. The dollar edged up to 95.73 Japanese yen from 95.65 yen. The Labor Department said new claims for jobless benefits fell to 529,000 last week from a 16-year high of 543,000 the previous week. The four-week
average for initial claims, however, rose to 518,000, its highest point since
January 1983. Meanwhile, the Commerce Department said consumer spending fell by 1 percent in October. Spending by consumers makes up two-thirds of the country's economic activity, and the monthly decline was the biggest since 2001. The government also released grim reports on housing and manufacturing. Sales of new homes plunged 5.3 percent in October to their lowest point in nearly 18 years, while the median price of a home fell to 2004 lows. Factory orders for durable goods dropped 6.2 percent in October, with heavy declines in auto and airplane demand. Stocks started lower after three days of gains before recovering as President-elect Barack Obama named former Federal Reserve Chairman Paul Volcker as a senior adviser and hammered home his message that help is coming for the economy. The Dow Jones industrials rose nearly 250 points Wednesday to cap the index's first four-day advance since last spring.

"The dollar is coming off lows," said Meg Browne, senior currency strategist
at Brown Brothers Harriman in New York. "There's been some shift in trading,
(but) it doesn't mean that this period of consolidation for the dollar is over.
There's risk for the dollar weakening further next week." The dollar was also helped, she said, by investors' relief over policy responses from government officials in the U.S. and abroad. On Tuesday, the Fed said it would spend $800 billion to help bolster the consumer lending and mortgage markets. On Wednesday, the European Commission
called on the 27 European Union governments to spend 200 billion euros ($257 billion) over two years to prompt economic recovery. In other New York trading, the dollar gained to 1.2035 Swiss francs from 1.1878 late Tuesday, but slipped to 1.2271 Canadian dollars from 1.2282.

Dollar Appears Safe For Now

2008-11-26T05:09:00.000-08:00

The Federal Reserve's campaign to pump additional billions into ailing credit
markets is unlikely to hobble the U.S. dollar, at least not yet.
Faced with a struggling economy and a dysfunctional financial system, the Fed
has vastly expanded its own balance sheet, essentially creating money to fund a
variety of new programs. That includes the ones announced Tuesday, which will
lend money to support securities backed by credit-card and auto loans and also
buy debt issued by mortgage giants Fannie Mae and Freddie Mac.
The risk is that massive injections of cash by the Fed eventually could cause
rampant inflation, something that is bad for the dollar because it erodes a
currency's value. But some investors say the Fed will curtail liquidity -- by
raising interest rates, among other things -- well before that happens. And in
instances of similar policy moves to push money into the system, like in Japan
earlier this decade, the impact on the currency was ambiguous.
Tuesday the dollar weakened against the euro, the Japanese yen and the British
pound amid choppy trading for stocks. Late in New York, one euro bought $1.3067,
up from $1.2902 a day earlier. One dollar fetched 95.47 yen, down from 96.98 yen
on Monday. Selling the dollar on inflation fears is "premature," says David Gilmore of Foreign Exchange Analytics, a Connecticut research firm. "People will have to
determine that [Fed policy] is generating inflation before the currency is
attacked." Indeed, one of the major risks the Fed is trying to avert is a deflation
scenario -- a vicious cycle of falling prices and contracting credit.
The Fed's moves toward less-conventional measures to stimulate the economy are
partly because it doesn't have much room left to maneuver on interest rates. It
has already lowered the federal-funds rate to 1% and, although more cuts are
likely, zero is fast approaching.

For many observers, the Fed's approach now resembles Japan-style policy
earlier this decade, when Tokyo was pouring money into its economy to combat
stagnant growth and falling consumer prices. This strategy can involve a variety of tools, but is generally referred to as "quantitative easing," because it tackles the quantity of money in the financial system rather than its cost -- in other words, the interest rate. Japan officially adopted this approach in early 2001, pushing money into the system through a number of measures, including direct purchases of Japanese
bonds, asset-backed securities and even stocks, according to a recent report by
BNP Paribas. Japan also sold yen to weaken the currency. Despite those efforts, the yen actually strengthened against a basket of currencies from early 2002 until early 2005, noted Derek Halpenny, a senior currency strategist at the Bank of Tokyo-Mitsubishi UFJ. In the following two years, however, the yen weakened significantly as capital exited Japan in search of better opportunities in an environment of robust global growth. Mr. Halpenny expects something similar to unfold in the U.S. and doesn't anticipate a weaker dollar over the next six months. "There are inflation risks, but that's the later story," he says. "We don't even know the depths of the current downturn."

The global context also will be critical to the buck's fortunes. With the
world economy heading toward recession, other central banks may end up following
the Fed's lead in bolstering their own malfunctioning financial systems. If
other countries also adopt measures akin to quantitative easing, then there is
much less reason for the dollar to weaken against those currencies.
In the end, say investors, the question of whether the Fed moves are negative
for the dollar will depend on your view of inflation over the medium term.
"As long as officials continue to emphasize that they will wind down the extra
liquidity as soon as feasible when markets start to normalize," the expansion of
the Fed's balance sheet is unlikely to cause runaway inflation problem, wrote
strategists at UBS on Tuesday. "Demand for [a] safe, liquid store of wealth will
support the U.S. bond market and keep the U.S. dollar afloat."
By late afternoon in New York, the U.K. pound rose to $1.5496 from $1.5148 a
day earlier, while the Swiss franc fell to $1.1853 from $1.1967.

US Economy Weaker In 3Q Than First Thought

2008-11-26T05:06:00.000-08:00

The U.S. economy was a little softer during the third quarter than first believed, according to government data Tuesday showing weaker consumer spending and overseas sales. Gross domestic product dropped at a seasonally adjusted 0.5% annual rate July through September, the Commerce Department said in a new, revised estimate of third-quarter GDP. It was the weakest performance since a 1.4% decrease in third-quarter 2001 GDP. Originally, the government had estimated third-quarter 2008 GDP fell 0.3%. Second-quarter 2008 GDP climbed 2.8%.

Corporate profits kept retreating in the third quarter. Profits after taxes fell by 3.0% to $1.302 trillion, after sliding 0.4% in the second quarter and 7.7% during the first quarter. Year over year, profits were down 9.9%. Price inflation gauges were lowered in the government's revisions to the economic data. GDP is a measure of all goods and services produced in the economy. Wall Street expected a slightly bigger adjustment; economists surveyed by Dow Jones Newswires had called for a 0.6% decrease in revised third-quarter GDP. The data revisions showed third-quarter spending by consumers dropped 3.7%. That was down from a previously reported 3.1% decrease; it was also below the second quarter's 1.2% increase. Consumer spending accounts for about 70% of economic activity. The 3.7% decrease took 2.69 percentage points from GDP in the third quarter; the original estimate was a reduction of 2.25 percentage points. Purchases of durable goods tumbled 15.2% in July through September, below the previously reported 14.1% drop and below the decrease of 2.8% in the second quarter. Durable goods are expensive items designed to last at least three years, such as cars.

Third-quarter non-durables spending fell by 6.9%. Services spending was flat.

Trade gave less to the economy than first estimated. Imports dropped 3.2% instead of the originally reported 1.9% decrease. Exports were revised down, rising 3.4% instead of rising 5.9%. Trade boosted GDP by 1.07 percentage points in the third quarter. Originally, trade was seen contributing 1.13 percentage points to GDP.

Businesses decreased spending more than previously thought. Outlays fell by 1.5% July through September, which was bigger than the originally estimated 1.0% decrease. Business spending rose 2.5% in the second quarter. Third-quarter investment in structures increased 6.6%; equipment and software fell 5.7%. Residential fixed investment, which includes spending on housing, plunged by 17.6% in the third quarter, a tumble less than the originally estimated 19.1% plunge. Second-quarter spending fell by 13.3%. The report showed businesses lowered inventories in the third quarter, a drop of $29.1 billion. Originally, Commerce estimated a $38.5 billion decrease. Companies had liquidated stocks by $50.6 billion in the second quarter. The smaller drawdown of goods in the third quarter elevated GDP during that period by 0.89 percentage point. In its original report on third-quarter GDP, Commerce said inventories added 0.56 percentage point to GDP. Real final sales of domestic product, which is GDP less the change in private inventories, declined 1.4%, revised down from an earlier estimated 0.8% decrease. Second-quarter sales rose 4.4%. Federal government spending increased by 13.6%, revised down from an initially estimated 13.8% increase. Second-quarter spending climbed 6.6%. State and local government outlays rose 0.8%.

As for inflation gauges within the report, the government's price index for personal consumption increased 5.2%, below the previously estimated 5.4% increase but above the second quarter's 4.3% increase. The PCE price gauge excluding food and energy climbed 2.6%, below the previously estimated 2.9% increase but higher than the second quarter's 2.2% increase. The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 4.7%, below the previously estimated 4.8% climb but above the second quarter's 4.2% increase.

Rates May Be Slashed to 50-Year Lows, Fed Minutes Show

2008-11-20T03:58:00.000-08:00

In its Oct 28-29 meeting the Federal Reserve made it clear that it could invoke a near zero interest rate policy (ZIRP) if the economic perspective continued to worsen. Rates below the current 1.0% have not been seen in 50 years.

The U.S. economy contracted -0.3% in the third quarter and may force Fed governors ⦥uro;œto further lower its target for the federal funds rate in the future⦥uro;? if output continues to plunge. ⦥uro;œSome suggested that additional policy easing could well be appropriate at future meetings,⦥uro;? according to Fed minutes from the latest meeting.

In the three weeks leading up to the meeting, the bank slashed rates 100bp. Despite such aggressive action, FOMC board members thought ⦥uro;œsubstantial downside risks⦥uro;? would remain. In June the reserve had forecast 2009 GDP growth to range between 2.0% and 2.8%. Developments over the last two months have led them to again cut their outlook for the following year. GDP growth is to range between -0.2% and 1.1% in the upcoming year, according to their estimates. As if that wasn⦥uro;™t enough, the contraction is expected to last through at least mid-2009.

Labor markets are also expected to continue deteriorating. Fed estimates call for a year-end unemployment rate of between 6.3% and 6.5%, an increase from the previous forecast of 5.5% and 5.7%

On inflation the Fed remained optimistic, stating that the rate of price increases would ⦥uro;œdiminish materially in coming quarters⦥uro;? to ⦥uro;œlevels consistent with price stability.⦥uro;? Wednesday⦥uro;™s Consumer Price Index release lent credence to their position as the metric shrank by -1.0%. Excluding food and energy from the mix, the metric shrank -0.1%, bringing the yearly core inflation rate to 2.2%. The rate of expected inflation declination is of some concern, however. ⦥uro;œSome saw a risk that over time inflation could fall below low levels consistent with the Federal Reserve⦥uro;™s dual mandate of price stability and maximum employment,⦥uro;? minutes showed.

UK retail sales fall less than expected in Oct

2008-11-20T03:26:00.000-08:00

British retail sales fell less than expected in October and the public finances showed their first deficit for the month since 1994, official data showed on Thursday. The Office for National Statistics said sales fell 0.1 prcent last
month, leaving them 1.9 percent higher on the year. That compared to analysts' forecasts for a fall of 0.9 percent on the month and a rise of 1.4 percent on a year ago.

Separately, the ONS said the public sector posted a net cash repayment
of 4.906 billion pounds last month. However, the government's preferred
accruals-based measure showed its first deficit for an October since 1994, with public sector net debt coming in at 1.382 billion pounds.

Dollar falls against the euro, pound and yen

2008-11-20T02:46:00.000-08:00

The dollar fell against the euro, pound and yen Wednesday as consumer prices continued to drop, paving the way for more interest-rate cuts at home. Meanwhile, European bankers suggested more rate cuts were in the works as well, and stocks sank.
The 15-nation euro inched up to $1.2602 in late New York trading Wednesday from $1.2579 late Tuesday, coming off an overnight high of $1.2814 as U.S. stocks recoiled. The Dow Jones industrials fell below the 8,000 mark for the first time since 2003.

The British pound rose to $1.5025 from $1.4916, while the dollar slipped to 96.37 Japanese yen from 96.46. The U.S. Labor Department said Wednesday that its index of consumer prices fell by 1 percent in October, the largest one-month drop since 1947, when record-keeping began. On Tuesday, the government released its producer price index. Wholesale prices in October fell 2.8 percent, a record drop. Falling prices give the Federal Reserve room to cut interest rates as worries about inflation subside. Cutting interest rates can spark economic activity but currencies often suffer as investors move their money in search of better returns.

"This week's CPI and PPI data keeps the door wide open for further Fed rate
cuts over the next several meetings," said Michael Woolfolk, senior currency
strategist at Bank of New York Mellon Corp. in New York. Speaking in London Tuesday evening, European Central Bank President Jean-Claude Trichet said he wouldn't exclude decreasing interest rates further as long as the bank has confirmation that risks to price stability are easing. Meanwhile, the Bank of England on Wednesday released minutes from its meeting earlier in November, at which it cut its benchmark rate by 1.5 percentage points to a 53-year low of 3 percent, that hinted at more rate cuts in the future as Britain grapples with recession. In other New York trading, the dollar edged up to 1.2483 Canadian dollars from 1.2375 late Tuesday, and traded up to 1.2102 Swiss francs from 1.2043 francs late Tuesday.

Euro Fall VS Dollar On Drop In US Stocks

2008-11-20T02:36:00.000-08:00

The euro was whipsawed Wednesday and finished the New York trading session down against the dollar, overcome by a drop in U.S. stocks. The Dow Jones Industrial Average declined more than 400 points late Wednesday, encouraging investors to escape positions back into the major funding currency, the dollar.

The euro fell to an intraday low of $1.2520. The same flight-to-safety flows supported the yen against higher-yielding rivals. The dollar fell to an intraday low of Y95.70, and the euro dropped to Y119.92. "Investors want to hold cash, U.S. dollars and Treasurys in lieu of equities. What we're seeing is a shift of capital. It's literally tracking equities tick for tick," said Greg Salvaggio, vice president of capital markets at Tempus Consulting in Washington.

The release of the Federal Open Market Committee meeting minutes in the afternoon did nothing to help sentiment. Federal Reserve officials said they were ready to slash interest rates to levels not seen in half a century if the economic picture keeps worsening. "The minutes just continue to drive home the message that this is going to be a prolonged recession," Salvaggio said, and that is a supportive message for the buck. Wednesday afternoon in New York, the euro was at $1.2537 from $1.2626 late Tuesday, while the dollar was at Y95.94 from Y97.00, according to EBS. The euro
was at Y120.27 from Y122.49. The U.K. pound was at $1.4974 from $1.4947, and the
dollar was at CHF1.2132 from CHF1.2014 late Tuesday.

The euro actually rallied against the dollar and yen early in the session,
scoring intraweek highs of $1.2815 and Y124.30, after a raft of disappointing
U.S. data and on a technical move following range-bound trading since Monday.
The rally may have been cut short by bargain hunters, in addition to the
action in equities. "We would continue to view dollar weakness - such as today - primarily as buying opportunities," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank.

At first, the euro gained on a knee-jerk reaction to October U.S. consumer
prices, which took the biggest plunge in 61 years. The consumer price index
dropped 1.0% on a seasonally adjusted basis compared to the previous month, the
Labor Department said. It was the largest drop since February 1947 - a sign that
"nobody's spending money," said Salvaggio. In other data, home construction took its fourth tumble in a row in October, falling to a new record low. Housing starts decreased 4.5% to a seasonally adjusted 791,000 annual rate, after falling 3.0% in September, the Commerce Department said.

The euro then advanced more as it breached certain levels above $1.27.
But analysts said the rally was technical and didn't reflect any material
change in the global economic outlook. Therefore, the rise wasn't sustained.
"We're in a world where currency liquidity is extremely thin, even in euro
versus dollar," said Michael Klawitter, a currency analyst at Dresdner Kleinwort
in Frankfurt. He said his trading screens show a very small number of trades with relatively small volumes, yet these transactions are affecting foreign exchange prices "in a meaningful way." Consequently, the rationale behind the surge in the euro, "does not necessarily link to fundamental data," Klawitter said.

US banks help cut losses on locked hedge funds

2008-11-19T05:57:00.000-08:00

The same Wall Street dealers that offered sophisticated derivatives that allowed investors to magnify their risks are now pitching elaborate instruments designed to reduce exposure to cratering hedge funds. Dealers say they are seeing strong demand for these derivatives as hedge funds make it harder for investors to withdraw funds. But some investors are skeptical. "It looks great on paper but we are not willing to stick our necks out with a new product," said Steve Braverman, president of investment advisory services at Harris myCFO, a unit of BMO Financial Group that manages money for wealthy families.

These products, offered by banks, including BNP Paribas SA and Nomura
Holdings Inc, are based on mathematical models of expected hedge fund returns. That could make it difficult to win over investors in a credit crunch that was largely created by faulty assumptions fed into flawed models. "I don't think it will be an easy sell," said Frank Partnoy, professor of law at the University of San Diego. "But it does show that Wall Street, even on its death bed, will keep kicking as long as it's alive."

Bankers say there is demand as the $1.2 trillion hedge fund industry
experiences its worst investment losses on record, having fallen more than 20 percent this year. As investors clamor to bail out of the funds, many funds have refused to hand client money back, arguing that redemptions will force them to sell assets at depressed prices.

That is where banks come in, offering derivatives known as swaps that are
meant to offer investors the opposite of returns in hedge funds: if the funds
fall 10 percent in value, these swaps should rise 10 percent. And while banks have been pitching these derivatives for some time, it was not until indexes showed the hedge fund sector nosediving 5 percent in September alone that investor interest picked up. "Nobody was really interested in these products September triggered the need," said Fabrice Hugon, head of fund derivatives sales at BNP Paribas in New York. "Now every day we are having conversations about this with clients." BNP Paribas has sold about $350 million of these structures since mid September and Hugon thinks this could double by year end.

Japan Sept all-industries index -0.1 pct mth/mth

2008-11-19T05:54:00.000-08:00

Japan's all-industries index, which covers a broad range of economic activity including the tertiary activity index, dipped 0.1 percent in September from the previous month, matching a consensus forecast, government data showed on Wednesday.
A new index for final demand components in all industries decreased 0.9 percent from the previous month. The all-industries index adds data from the primary sector --
comprising fishing, farming, forestry and mining -- and the secondary or manufacturing sector to data from the tertiary sector.

The services sector employs more than half of Japan's work force and spending on services such as retailing, dining and travel is closely tied to changes in income and consumer confidence.

FOMC may need to set reserves target

2008-11-18T02:49:00.000-08:00

The Federal Reserve, with little room to cut interest rates further, has shifted to a policy of intentionally flooding the banking system with reserves and should consider setting an explicit reserves target, a top Fed economist said. That, in turn, could force a change to the way the Fed relays its actions to the market, Glenn Rudebusch, the San Francisco Fed's associate director of research, said in the FedViews newsletter posted on Monday on the bank's website. "It may be that going forward the post-Federal Open Market Committee meeting statement may have to be recast to contain a discussion of reserve quantities," Rudebusch said. The Fed has slashed its benchmark federal funds rate to 1 percent from 5.25 percent since September 2007. Some Fed officials, most recently Philadelphia Fed President Charles
Plosser last week, have cited difficulties in cutting the overnight interbank
target lending rate further.

However, "it is not the case that the Fed is necessarily 'on hold.' Indeed, the Fed has already started to employ alternative means," Rudebusch said. Quantitative easing, a strategy of aggressively expanding the size of the Fed's balance sheet to boost the level of reserves in the banking system and induce banks to make more loans, was started in September, he said. Rudebusch said the FOMC, which traditionally has deliberated about monetary policy mostly in terms of interest rates, needs to rethink that strategy. "It may be appropriate to shift to a reserves quantity target in addition to or in place of the interest rate target, both in the policy discussion and in the operational directive" made to the New York Fed's trading desk, he said.

The jury is out on whether another tactic adopted by the Fed, altering
the composition of its balance sheet by selling Treasuries and buying private
debt such as commercial paper, is helping to boost the economy, Rudebusch said.
The Fed economist said a third key strategy at a time short-term rates
are pinned near zero would be for the Fed to project "a credible public
commitment to keep the funds rate low for a sustained period of time."
Rudebusch noted that the 10-year U.S. Treasury note yield is still
relatively high, near 3.67 percent. "When the Bank of Japan promised in 2001 to keep its policy rate near zero as long as consumer prices fell, it was able to help push the rate on 10-year government securities down below 1 percent," he said.
Some Fed policy-makers have taken the opposite approach, though,
stressing the need for the Fed to start raising rates once the economy turns up.

ECONOMY UNDER PRESSURE INTO MID-2009
Rudebusch forecast that the U.S. economy would bottom out in the fourth
quarter of 2008, with a decline in gross domestic product of more than 3
percent, followed by smaller declines in the first two quarters of 2009.
The U.S. jobless rate will likely peak at about 7.5 percent in mid-2009,
he said. A retrenchment in the outlook for global growth opens the door to far
lower inflation, he said. San Francisco Fed economists now see headline inflation falling from above 4 percent to below 1 percent by the middle of 2009. Core inflation, stripped of food and energy costs, could fall to about 1.5 percent by the end of 2009.

Aussie Dollar battles sliding stocks, recession fears

2008-11-18T02:47:00.000-08:00

The Australian dollar was battling to hold its ground on Tuesday as a late slide in U.S. stocks and persistent concerns of global recession hurt riskier investments
to the benefit of sovereign bonds.

* Australian dollar holding around around $0.6490, having bounced from $0.6350/60 support on Monday to reach as high as $0.6597 before running out of steam.
* Aussie was initially aided by poor economic news from the United States which dragged on the U.S. dollar, but began to tire late in New York session as stocks turned lower once more.
* A New York Fed gauge of manufacturing showed activity in the region fell to a record low, while Citigroup intends to cut up to 50,000 jobs, or 15 percent of its work force.
* The late drop in U.S. equities added to risk aversion and benefited the safe-haven Japanese yen. The Aussie dipped back to 62.55 yen, from a 64.11 peak.
* The same focus on safety boosted bonds, with short-term futures reaching record highs and bill futures almost fully priced for a 100 basis-point rate cuts from the Reserve Bank of Australia (RBA) next month.
* The RBA will release the minutes of its November meeting at 11:30 a.m. (0030 GMT) and may explain why it chose to cut rates by a surprisingly large 75 basis points to 5.25 percent.
* Three-year bond futures firmed 0.035 to 96.245, having touched an all-time high of 96.305 earlier. The 10-year contract added 0.045 points to 95.070.
* Commodities were mostly weaker. Oil lost $1.94 to
$55.10, while the CRB index shed 1.51 percent to 243.84.

Dollar climbs against euro, falls versus the pound

2008-11-18T02:46:00.000-08:00

The dollar was mixed against major currencies Monday after a summit of world leaders in Washington failed to provide specific guidelines to ease the global financial crisis, while a reading of industrial production showed a bigger-than-expected rebound.

The 15-nation euro fell to $1.2677 in late New York trading, compared with
$1.2797 it bought late Friday. Meanwhile, the British pound, which hit a 6 1/2
year low against the dollar and a record low against the euro last week, rose to
$1.5023 on Monday from $1.4949. The dollar drifted lower to 96.90 Japanese yen from 97.57 yen. Leaders from 21 nations, including China, and four international
organizations attended the emergency two-day summit over the weekend intended to
address the financial crisis sweeping the globe. Summit participants vowed at the conclusion of the conference to cooperate more closely, keep a sharper eye out for potential problems and give bigger roles to fast-rising nations. But they avoided many of the harder details, leaving them to be worked out before their next summit, after U.S. President George W. Bush is gone and President-elect Barack Obama is in the White House. "There has been a negative reaction to the G20 statement, which really did not provide any material or immediate measures to help resolve the global
imbalances problem and general financial crisis," said Michael Woolfolk, senior
currency strategist at the Bank of New York Mellon Corp.

Meanwhile, the Federal Reserve said Monday that industrial output rose 1.3
percent last month, after plunging in September by the largest amount in over 60
years. The increase was bigger than the 0.2 percent rise that economists
expected. Woolfolk said the dollar is expected to remain well-supported by safe-haven
flows this week as crude oil and equity prices continue to slide. On Monday, oil
prices fell below $56 and gasoline futures plunged to a new 52-week low.
The Dow Jones industrials fell as much as 340 points Monday as Citigroup
Inc. said it will cut another 53,000 jobs in the coming quarters, a signal that
banks are still struggling from massive losses tied to bad mortgage debt.
Investors were also nervously waiting to see whether the nation's troubled
automakers would get a bailout. In other trading late Monday, the dollar advanced to 1.2225 Canadian dollars from 1.2186 it bought late Friday, and rose to 1.1982 Swiss francs from 1.1852.

Currency Trading: Support Seen For Dollar, Yen

2008-11-17T07:42:00.001-08:00

The statement issued Saturday by the Group of 20 developed and
emerging-market nations is unlikely to assuage fears of currency investors
plagued by the financial and economic crises. G-20 officials vowed bold action in various areas in the statement released during the group's weekend summit in Washington. The group's statement was more
elaborate than the one released by the Group of Seven leading industrialized
nations in October. But currency strategists said the G-20 statement focuses on future plans and lacks specificity on action items. The absence of a "wow" factor may disappoint investors who had high hopes for the summit's outcome, they said.

As a result, investors are likely to keep seeking safety in low-yielding
currencies such as the U.S. dollar and the yen at the cost of other currencies
amid worries about recession, especially in countries with relatively bleaker
economic outlooks and in weaker fiscal health, such as the U.K. Turkey and South Africa. "On this statement alone the dollar will get support as will the yen as it includes nothing specific," said Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. in London. Mr. O'Neill said there is a large "to do" list for the G-20 and that if they achieve much of it by March, "the world will be a better place. Then risky assets will be performing better. The dollar and yen will be lower."But in the near term, the situation remains grim, with the continuing financial crisis and the rising risk of a prolonged and deep global recession. Adding to the poor sentiment is the continued trend of a reduction in the use of borrowed money to
magnify returns, as investors world-wide shy away from risk. That may gain
momentum as the year-end approaches.

Strategists said that the G-20 statement may quickly fade into memory as
investors turn their attention to macroeconomic data and headlines about banks, auto makers and hedge funds. The performance of global stock markets, which have become an indicator of investors' appetite for risk, likely will continue to be among the forces driving the currency market.
Commodity-linked currencies, ranging from the Australian, New Zealand and
Canadian dollars to the Norwegian krone, may suffer further declines if
crude-oil prices continue to fall. Late Friday in New York, the euro was at $1.2691 from $1.2853 late Thursday, while the dollar was at 97.10 yen from 97.82 yen. The euro was at 123.90 yen from 125.73 yen. The dollar was at 1.1920 Swiss francs from 1.1834 francs Thursday, while the U.K. pound was at $1.4795 from $1.4888.

Analysts expect the euro to trade this week in a wide range between $1.23 and $1.2950, with a risk that it drops below that range. Meanwhile, the dollar could trade between 91.50 yen and 98.50 yen. The U.K. pound was one of the biggest losers last week, dropping below $1.50 for the first time since 2002. The pound tumbled to a record low versus the euro as the British economy slid into recession.

"The pound is vulnerable," said Boris Schlossberg, director of currency
research at GFT Forex in New York. "There is concern that the U.K. may be the next Iceland." There is no regular measure of daily trading volumes across foreign-exchange markets, but analysts and traders in various banking institutions confirm that low liquidity has contributed to high levels of currency-market volatility. This culminated in late October, when one-month at-the-money euro-dollar implied volatility rose near 30.0%, while dollar-yen volatility rose above 40.0% and euro-yen volatility rose to 54.0%. These levels have since eased, but they remain elevated.
Many traders believe the worst volatility, and low liquidity, is over. Thanos
Papasavvas, head of currency management at Investec Asset Management, said his team has put on more risk this month compared with the past six months, and is looking for opportunities to take positions.

Japan Economy Shrinks For 2nd Straight Quarter in July - Sept

2008-11-17T07:40:00.000-08:00

Japan's economy shrank 0.1 percent in the third quarter, sending the world's second-biggest economy into recession and lagging market expectations for anaemic growth of 0.1 percent. The contraction confirmed that the global financial crisis has sabotaged growth in yet another major economy, with the euro zone already in recession, using the most common definition of two consecutive quarters of contraction. Japan's gross domestic product figure translated into an annualised fall of 0.4 percent, lagging a consensus market forecast for a 0.3 percent expansion, government data showed on Monday.

The euro zone is already in recession, using the most common definition
of two straight quarters of contraction, and analysts say much of the developed world will follow. The quarterly figure translated into an annualised growth of zero percent growth, lagging a consensus market forecast for a 0.3 percent expansion, government data showed on Monday.
In April-June this year, the Japanese economy shrank a revised 0.9
percent from the previous quarter.

The financial crisis continues to wreak havoc on the world's major
economies. The 15-nation euro zone economy shrank 0.2 percent for the second straight quarter and most economists say the United States is probably already in recession, although official data showing that will not come until January.

UK faces sharp downturn, big rise in jobless-CBI

2008-11-16T23:27:00.000-08:00

Britain will suffer its sharpest economic contraction in almost two decades next year and the number of people out of work could rise to nearly 3 million by 2010, the Confederation of British Industry said on Monday.

It said it expects the British economy to contract by 1.7 percent in 2009
and blamed the fallout from global financial turmoil for the massive revision to the 0.3 percent growth forecast it had issued in September. The global economy is suffering its worst financial crisis in 80 years, with governments around the world injecting trillions of dollars into the banking system to keep it afloat. "What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting," said John Cridland, CBI deputy director-general.

"The banking system has come under immense strain, sending consumer and business confidence plummeting in its wake." The CBI said it expected unemployment to reach 2 million by the end of this year and rise to 2.88 million, or 9 percent of the workforce, in 2010 -- the year by which the ruling Labour Party must call a general election. That would be the highest jobless total since the last quarter of 1993. Official figures released last week showed British unemployment rose to its highest since 1997 in the three months to September, with 1.825 million people out of work.

The CBI said a deteriorating labour market and weak consumer confidence
would weigh on household spending. It predicted household consumption would contract by 1.8 percent in 2009. "This latest forecast shows that 2009 is going to be a very tough year for business, with the sharpest fall in GDP since 1991," said Ian McCafferty, the CBI's chief economic adviser. Reduced spending and falling commodity prices will ease price pressures,
the CBI said, predicting the inflation rate would fall to 1.7 percent by the end
of next year from 4.2 percent last quarter.

According to its forecasts, inflation could drop as low as 1.1 percent in
2010, well below the Bank of England's 2 percent target. That will give the
central bank room to reduce interest rates further, possibly to as low as 1.5
percent, the CBI said.

The Bank of England this month slashed interest rates by an unexpected
1.5 percentage points, taking them to 3 percent. The CBI predicted fixed investment would fall by 3.8 percent in 2008 and by 10.5 percent in 2009 as firms would be hit hard by slowing demand and difficulties in obtaining credit.

Japan's Yosano says economy in recession

2008-11-16T23:26:00.000-08:00

Japanese Economics Minister Kaoru Yosano said on Monday the nation's economy was in recession. "As for the outlook, the downtrend in the economy will continue.

Yosano told a news conference after government data showed that Japan's economy shrank 0.1 percent in the third quarter to mark the second straight quarter of contraction.

JPMorgan plans to ramp up job cuts

2008-11-16T23:24:00.000-08:00

JPMorgan Chase & Co. will likely cut thousands of jobs worldwide next year, Britain's Sunday Telegraph newspaper reported. The report, which cited people close to JPMorgan, said the bank has begun consulting on job cuts, and the cutbacks will likely be on a comparable scale to those of JPMorgan's rivals. Citigroup and Goldman Sachs have cut about 10 percent of their work forces, a proportion that if applied to JPMorgan would mean more than 3,000 jobs cut, the Telegraph reported.

A JPMorgan Chase spokesman declined to comment on the report. The bank has already been eliminating some jobs due to big profit hits from the financial crisis, and redundancies following the buyouts of failed thrift
bank Washington Mutual Inc. and investment bank Bear Stearns Cos.

U.S. auto bailout support battle heats up

2008-11-16T16:37:00.000-08:00

A key Republican Senator said on Sunday it was "pretty clear" a $25 billion bailout proposal for U.S. automakers will fail in the U.S. Senate, while Democrats argued saving the industry was critical to the U.S. economy.

The Senate is slated on Monday to begin debating emergency legislation to
General Motors Corp, Ford Motor Co, and Chrysler LLC in a special post-election session to deal with the economic crisis.

The leading Democratic plan would authorize up to $25 billion in loans
from the Treasury Department's $700 billion corporate rescue program to help Detroit survive its financial crisis. In return, the government would take
equity stakes in the companies and impose limits on executive compensation.

On television news shows Sunday, Republican critics argued the government
should not be in the business of choosing which companies survive and which
fail, while Democrats said an auto industry collapse would hurt millions of
workers beyond the auto industry and undermine the U.S. manufacturing base. Arizona Republican Sen. Jon Kyl told "Fox New Sunday" the Democrats
appeared to be trying to score political points by pushing the bill now "since
it's pretty clear that it's not going to pass." He said they should wait until
next year.

"The people who would be paying the bill for this, the average worker in
the United States, I don't think should be burdened with bailing out the auto
companies that have been sick for a long time," he said. Kyl is the second
ranking Republican in the Senate. Democratic Sen. Byron Dorgan of North Dakota conceded it "might be the
case" that Congress would only be able to pass a more modest plan to expand unemployment benefits during the lame duck session before the new Congress is seated on Jan. 6.

"We're going to try to do more," he told Fox News and repeated his
party's argument that millions of jobs were at risk and that a fraction of the
$700 billion was a small price to pay to maintain U.S. manufacturing viability. "This is not just about an industry or three companies. This is about
jobs -- 350,000 direct, probably as much as three to five million jobs in
total," he said. "I don't think you long remain a strong economic power in this world unless you have a manufacturing base," added Dorgan.

Michigan Democratic Sen. Carl Levin, co-chairman of the Senate Auto
Caucus, said he saw bipartisan backing for helping the car sector survive the
economic crisis, which he argued was "a different issue from the need to
restructure the auto industry." Levin told NBC's "Meet the Press" he would support calls for a shake-up in the auto industry management in order to get the bailout bill passed. Critics say management is to blame for Detroit's troubles. "I'd be happy to tell Rick Wagoner that he ought to consider resigning if that is the difference between getting this kind of support and not," he said. Wagoner is GM's CEO.

U.S banks all cashed up, nowhere to lend

2008-11-16T15:14:00.000-08:00

The latest U.S. effort to get more money flowing to consumers assumes that there are plenty of credit-worthy households eager to borrow and spend.
That may not be the case. Rising unemployment and foreclosures are driving more people out of the "prime" credit category, in which banks are still fairly willing to lend. At the same time, consumer confidence has fallen so far that even wealthier people with little trouble getting credit are cutting their spending.

U.S. Treasury Secretary Henry Paulson announced last week that he was
redirecting a $700 billion rescue package to focus on consumer loans in an
effort to spur lending and get the economy going again. It was the third incarnation of a program launched last month that was initially touted as a way for the government to buy bad assets from banks and unclog credit channels. Instead, it has been used primarily to buy stakes in banks in the hope that the capital cushion would encourage lending.

So far, there is little sign that banks are loosening their grip on cash,
much to the frustration of the U.S. government and countries around the world that rely on a healthy U.S. consumer to drive economic growth.
That will no doubt be a major topic this week as investors brace for
another round of grim economic data from many advanced economies and leaders in Washington consider whether even more spending is needed to stave off a deep recession.

Charles Dallara, managing director of the bank lobby group Institute of
International Finance, said that just because banks have billions of taxpayer
dollars in hand, it was unrealistic to expect normal lending to resume
immediately. "Capital does not automatically create credit-worthy borrowers," he said. "In an environment where banks are already recovering from serious losses on
earlier lending, it's not only natural -- it's inevitable that there is a
substantial degree of caution built in to lending activities."

Euro Plunges as European Consumer, Industrial Sentiment Turns Increasingly Pessimistic

2008-10-31T05:33:00.000-07:00

After running in to resistance at 1.3250, EUR/USD pulled back sharply throughout the day to test support at the 50 percent fib of 1.2328-1.3296 at 1.2813. The pair managed to recover above 1.2900 later in the day, but the fundamentals of the Euro-zone remain resoundingly bearish.

The European Commission reported this morning that their index of consumer confidence plummeted to a nearly 15-year low of -24 while industrial confidence dropped to match the lowest level in more than 12 years at -18. Nearly every sector in the region is suffering in the wake of restrictive monetary policy, rising unemployment, tight credit conditions, and the global economic slowdown. As a result, Friday Eurostat estimate for Euro-zone CPI will be very important.

Indeed, the figure is projected to show at 6:00 ET that inflation growth eased to a 3.2 percent pace in October from 3.6 percent. Given European Central Bank President Jean-Claude Trichet more bearish stance on economic growth and the bank participation in the October 8 coordinated rate cuts, a weaker-than-expected CPI reading could exacerbate the market speculation that the ECB will cut rates next week on November 6. We also have to consider that the Euro-zone unemployment rate will also be released at the same time and is forecasted to hold steady at 7.5 percent. Considering the dismal conditions plaguing the region economies, there is a risk that the unemployment rate will tick higher, and combined with a drop in CPI, the euro could plunge.

ECB's Weber in Rate Cut Mode, Euro-Zone Growth May Near Zero

2008-10-31T05:32:00.001-07:00

ECB's Weber said "if the economy cools, then rates have to come down rapidly so one doesn't risk falling behind the curve". He added that "interest rates have to be appropriate for the economic environment." Weber stressed that his comments should not be seen as referring to the ECB's current monetary policy deliberations as the central bank is in its one week blackout period ahead of next week's meeting, but the comments clearly indicate that even mega hawk Weber is in rate cut mode and we now see a 50 bp cut from the ECB next week.

In addition, ECB's Bini Smaghi also signaled at " a possibility" of another rate cut at their next meeting in November. He added that the ECB is reducing rates in line with its strategy. It seems officials are this week not quite sticking to the usual black out period and continue to prepare the ground for a cut next week. We are now looking for a 50 bps move as growth is confidence is eroding rapidly.

Meanwhile, ECB's Quaden expects inflation to fall, and does not see a depression as in the 1930's. Quaden also says that he believes it would be better to regulate the financial system on a worldwide level, if not on a Europe wide level. Quaden also sees Belgian GDP growth closed to zero in 2009 than 1 percent, adding to the view that the Euro zone is slowing quickly.

Dollar, euro extends losses vs yen on stock slide

2008-10-31T05:31:00.001-07:00

The dollar and the euro extended losses against the yen on Friday as a steep fall in Tokyo share prices renewed investor concern over riskier assets.

The dollar fell as low as 96.35 yen after hitting the day's high at 99.05 yen
on trading platform EBS. The U.S. dollar was trading at 96.50 yen, down 2.1
percent on the day.

The euro dropped 3.9 percent to 122.25 yen, sliding from the day's peak at
127.54 yen.

Economic Calender

2008-08-14T03:49:00.000-07:00

Click the picture above to see in a bigger size, thanks

Economic Calender

2008-07-31T02:23:00.000-07:00

Date (GMT) Country Event Actual Cons. Previous

Jul 31

05:00 Japan Housing Starts (YoY) (Jun) -16.7% -17.8% -6.5%

05:45 Switzerland Consumer Price Index (MoM) (Jun) 0.4% -0.4% 0.2%

05:45 Switzerland Consumer Price Index (YoY) (Jul) 3.1% 3.0% 2.9%

06:00 Germany ILO Unemployment Rate (Jun) 7.3% 7.4% 7.4%

06:00 United Kingdom Nationwide Housing Prices s.a (MoM) -1.7% -0.9%

06:00 United Kingdom Nationwide Housing Prices n.s.a (YoY) (Jul) -8.1% -6.3%

07:55 Germany Unemployment Change (Jul) -20K -20K -36K

07:55 Germany Unemployment Rate s.a. (Jul) 7.8% 7.8%

09:00 European Monetary Union Consumer Price Index (YoY) (Jul) 4.1% 4.1% 4.0%

09:00 European Monetary Union Unemployment Rate (Jun) 7.3% 7.2% 7.3%

12:30 United States Continuing Jobless Claims (Jul 19) 3155K 3107K

12:30 United States Employment Cost Index (2Q) 0.7% 0.7%

12:30 Canada Gross Domestic Product (MoM) (Jun) 0.2% 0.4%

12:30 United States Gross Domestic Product Annualized (2Q) 2% 1%

12:30 United States Gross Domestic Purchases Price Index (2Q) 3.6%

12:30 United States Initial Jobless Claims (Jul 26) 390 406K

12:30 United States Personal Consumption Expenditure (QoQ) (2Q) 1.4% 1.1%

13:45 United States Chicago Purchasing Managers' Index (Jul) 49.0 49.6

Aug 1

05:00 Japan Vehicle Sales (YoY) (Jul) -3.6%

n/a Germany Retail Sales (MoM) (Jun) -0.5% 1.3%

n/a Germany Retail Sales (YoY) (Jun) -0.7% 0.7%

06:30 Australia RBA Commodity Index SDR (YoY) (Jul) 37.8%

08:00 European Monetary Union PMI Manufacturing (Jul) 47.9 49.2

08:30 United Kingdom PMI Manufacturing (Jul) 45.5 45.8

12:30 United States Average Hourly Earnings (MoM) (Jul) 0.3% 0.6%

12:30 United States Average Hourly Earnings (YoY) (Jul) 3.4%

12:30 United States Average Weekly Hours (Jul) 33.7 33.7

12:30 United States ISM Manufacturing (Jul) 49.2 50.2

12:30 United States Nonfarm Payrolls (Jul) -75K -62K

12:30 United States Unemployment Rate (Jul) 5.6% 5.5%

14:00 United States Construction Spending (MoM) (Jun) -0.3% -0.4%

Aug 3

22:45 New Zealand Labor Cost Index (QoQ) (2Q) 0.8% 0.7%

23:50 Japan Official Reserve Assets (Jul) 1001.4B

Aug 4

01:30 Australia House Price Index (QoQ) (2Q) 1.1%

01:30 Australia House Price Index (YoY) (2Q) 13.8%

07:30 Switzerland SVME - Purchasing Managers' Index (Jul) 54.9

08:30 United Kingdom PMI Construction (Jul) 38.8

08:30 European Monetary Union Sentix Investor Confidence (Aug) -9.3

09:00 European Monetary Union Producer Price Index (MoM) (Jun) 1.2%

09:00 European Monetary Union Producer Price Index (YoY) (Jun) 7.1%

12:30 United States Core Personal Consumption Expenditure - Prices Index (MoM) (Jun) 0.1%

12:30 United States Core Personal Consumption Expenditure - Prices Index (YoY) (Jun) 2.1%

12:30 United States Personal Income (MoM) (Jun) 1.9%

12:30 United States Personal Spending (Jun) 0.8

14:00 United States Factory Orders (Jun) 0.6%

Aug 5

n/a United Kingdom Halifax House Prices (MoM) (Jul) -2%

n/a United Kingdom Halifax House Prices (YoY) (Jul) -6.1%

03:00 New Zealand ANZ Commodity Price (Jul) 0%

04:30 Australia RBA Interest Rate Decision 7.25%

07:55 Germany Purchasing Manager Index Services (Jul) 52.1

08:00 European Monetary Union Purchasing Manager Index Services (Jul) 49.1

08:30 United Kingdom Industrial Production (MoM) (Jun) -0.8%

08:30 United Kingdom Industrial Production (YoY) (Jun) -1.6%

08:30 United Kingdom Manufacturing Production (MoM) (Jun) -0.5%

08:30 United Kingdom Manufacturing Production (YoY) (Jun) -0.8%

08:30 United Kingdom Purchasing Manager Index Services (Jul) 47.1

09:00 European Monetary Union Retail Sales (MoM) (Jun) 1.2%

09:00 European Monetary Union Retail Sales (YoY) (Jun) 0.2%

14:00 United States ISM Non-Manufacturing (Jul) 48.2

18:15 United States Fed Interest Rate Decision 2%

23:01 United Kingdom Nationwide Consumer Confidence (Jul) 63

23:01 United Kingdom NIESR GDP Estimate (Jul) 0.2%

Aug 6

01:30 Australia Home Loans (Jun) -7.9%

01:30 Australia Investment Lending (Jun) -6.8%

05:00 Japan Coincident Index (Jun) 103.3%

05:00 Japan Leading Economic Index (Jun) 92.9

09:30 United Kingdom BRC Shop Price Index (YoY) (Jul) 2.5%

10:00 Germany Factory Orders n.s.a. (YoY) (Jun) -2%

10:00 Germany Factory Orders s.a. (MoM) (Jun) -0.9%

11:00 United States MBA Mortgage Applications (Aug 1) 1.3%

14:00 Canada Ivey Purchasing Managers Index (Jul) 69.6

14:35 United States EIA Crude Oil Stocks change (Aug 2) -0.1M

22:45 New Zealand Unemployment Rate (2Q) 3.6%

23:50 Japan Core Machinery Orders (MoM) (Jun) 10.4%

Aug 7

01:30 Australia Employment Change (Jul) 29.8K

01:30 Australia Unemployment Rate (Jul) 4.2%

06:00 Germany Trade Balance (Jun) 14.4B

10:00 Germany Industrial Production s.a. (MoM) (Jun) -2.4%

10:00 Germany Industrial Production s.a. w.d.a. (YoY) (Jun) 0.8%

11:00 United Kingdom BoE Interest Rate Decision 5%

11:45 European Monetary Union ECB Interest Rate Decision 4.25%

12:30 Canada Building Permits (MoM) (Jun) 1.1%

14:00 United States Pending Home Sales (MoM) (Jun) -4.7%

19:00 United States Consumer Credit (Jun) $7.78B

23:50 Japan Money Supply M2+CD (YoY) (Jul) 2.3%

Aug 8

05:45 Switzerland Unemployment Rate (Jun) 2.3%

05:45 Switzerland Unemployment Rate s.a. (Jun) 2.5%

11:00 Canada Net Change in Employment (Jul) -5K

11:00 Canada Unemployment Rate (Jul) 6.2%

12:30 United States Nonfarm Productivity (2Q) 2.6%

12:30 United States Unit Labor Costs (2Q) 2.2%

14:00 United States Wholesale Inventories (Jun) 0.8%

About The Forex Trading System and Market

2008-07-02T10:33:00.001-07:00

Definition of FOREX (Foreign Exchange) Market

The foreign exchange (currency or forex) market exists wherever one currency is traded for another. Forex market is the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Retail traders (small speculators) are a small part of this market may only participate indirectly through forex brokers or market maker or banks.

The Foreign Exchange

MarketAccording to the BIS study Triennial Central Bank Survey 2004, average daily turnover in traditional foreign exchange markets was estimated at $1,880 billion. Daily averages in April for different years, in billions of US dollars, are presented on the chart below:

With international trade, the currency of one country must be exchanged for that of another for settlement of a transaction. Institutions and corporations in the international market place oftentimes need a certain currency to complete a deal, or to guard themselves from the effects of currency swings and rate changes. This system involving the exchange of different currencies has created the Foreign Exchange market, or FOREX, or FX. and more correctly known as the Global Interbank Currency Exchange Market.Like stocks, gold and real estate investments, Foreign Exchange has become a very important tool for the investment community. Forex trading provides certain additional advantages:

Margin System You can enjoy the benefits of leverage on contracts up to fifty times your margin deposit. That is, with 1% of the absolute value of contracts, you can enter the largest marketplace in the world. As long as you are able to maintain your margin requirements on the full contract value, you can remain indefinitely in the market.

Maximum LiquidityBeing the largest market in the world with over $1.6 Trillion bought and sold daily, huge volume of transactions are readily executed and cleared. Unlike futures or the stock market, there is never a lack of buyers or sellers on the forex market. Therefore, it gives the investor the prerogative to open or close a position at will.Attractive PricingForex quotes are based on spot prices regardless of the transaction size. Prices are quoted on a net basis.

Effective ExecutionForex trade orders are executed and confirmed online or manually via a recorded phone call. Customers know immediately the rate at which the order is executed. Confirmed orders will always receive a single price execution.Flexible SettlementForex system contracts opened can be rolled over daily for an indefinite period subject to roll-over fees.Hedging ToolInvestors involved in international trade can minimize their currency exposure risks by using a Forex trading system

Operation Of The Forex Market

The International Forex Market is a non-physical market and has no central exchange. The major participants in this foreign exchange trading market are Central Banks, prime multinational banks, large corporations, brokerage houses and individual investors. Forex agents offer various services to investors, including financial analysis, information gathering and market situation updates. Most transactions are conducted via the telephone or through online forex trading system.

The high liquidity in the forex market is due to the enormous volume of transactions generated by the primary market called the "interbank market" where banks, large financial institutions, insurance companies and other large corporations deal with each other in huge quantities to manage their own currency risks. The secondary over-the-counter market, where retail clients participate in forex transactions, has benefited from this liquidity provided by the big institutions.

The growth of the average daily volume of Forex trading has been phenomenal and is now currently trading currency to the tune of $1.6 trillion a day, having grown 50% in the last decade from an already large $1.0 trillion a day in 1992. It reached a high level in 2001 with approximately $2.2 trillion but adjusted back to the current $1.6 trillion by 2003. This was likely due to the birth of the single Euro currency in place of the then existing 12 European currencies.

The largest part of the largest financial market in the world consists overwhelmingly of speculation, in the form of spot forex trades (95%). The remaining 5% consists of companies swapping currencies back to their home currency to repatriate profits, forwards moves, and all other transactions.

The Traded Currencies

The six major currencies of Forex dominate the overall market share. 76% of all trades have both currencies in the currency pair as a major, and more than 98% of all trades involve at least one major.

Both of these figures are well beyond what would be expected if foreign currency trading were based solely on the majors' share of world GDP (74.5%), demonstrating the value the majors command abroad relative to other currencies. Another way thinking about the majors' predominance in the currency markets is to compare the rest of the world's economic output (25.5%), to the less than 2% share of Forex speculation that does not have a major on either side of the currency pair.

The most common currency pairs are EUR/USD (30%), USD/JPY (20%), GBP/USD (11%), and USD/CHF (5%), which together totals 66% (two-thirds) of all Forex spot trades.

The Dollar, Euro, Yen, and Pound are the most traded currencies. The six majors combine for a huge bulk of the trading transactions in a single day. Corporations and banks have known this for years, and have often used Forex for hedging purposes. With the increase in global trade, multinational corporations have likewise used the forex market to manage their risk in changes in currency rates.(Source: SGFS; Bank of International Settlements, Triennial Central Bank Survey.)

Why Trade Forex?

The transformation of the world economy into a global dimension and the dawn of technological advancement create unprecedented opportunities particularly with the emergence of new markets with considerable growth potential. This scenario likewise underscores the fact that up-to-date information in this modern age is a valuable commodity made possible by breakthroughs in information technology. Now world events are digested in a matter of seconds providing the backbone for vital investment decision making. Among the most dynamic of the markets which is highly sensitive to political and economic changes is the Foreign Exchange Market (FOREX).

Whether we like it or not, radical changes in foreign exchange rates affect an individual's or institution's overall investment portfolio. If your holdings are all in US Dollars, you have chosen to hold the dollar and give up other major currencies. Indirectly, this makes you a currency investor. By investing in, and with, the US currency, then your portfolio becomes dependent on the integrity and value of the US Dollar. Without realizing it, this may have worked against you due to the decline of the value of the US Dollar against other major currencies.

The FOREX market provides the investor a valuable tool in managing the effects of the foreign exchange risk by taking advantage of fluctuations in exchange rates. It is a means by which one can readily access this global market 24 hours a day and be able to hedge his/her outstanding US Dollar-based holdings. In a time when the speed of business increases on a daily basis, you need the ability to react swiftly. This change has created a condition that may leave investors out of the game without being aware of lost opportunities or erosion in their capital assets.

Technical Analysis

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Technical analysis is the examination of past price movements to forecast future price direction. Technical analysts are sometimes referred to as "chartists" because they rely almost exclusively on charts for their analysis.

Technical analysis is applicable to stocks, indices, commodities, futures or any tradable instrument where the price is influenced by the forces of supply and demand. Price refers to any combination of the open, high, low or close for a given commodity/security over a specific timeframe. The time frame can be based on intraday (tick, 5-minute, 15-minute or hourly), daily, weekly or monthly price data and last a few hours or many years. In addition, some technical analysts include volume and/or open interest figures with their study of price action.

Money managers, traders and investors who find ways to outperform the market must also remain flexible and innovative. A method that works today does not mean it will work tomorrow.

The Beginning of Technical Analysis

At the turn of the century, the Dow Theory laid the foundations for what was later to become modern technical analysis. Dow Theory was not presented as one complete amalgamation, but rather pieced together from the writings of Charles Dow over several years.

Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, investors, portfolio managers, market strategist, technical analysts, fundamental analysts and many others. It would be folly to disagree with the price set by such an impressive array of people with impeccable credentials. Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.

A technician believes that it is possible to identify a trend, and market turning points, invest or trade based on the trend and make money as the trend, or turning points unfolds. Because technical analysis can be applied to many different timeframes, it is possible to spot both short-term and long-term trends.

The IBM chart below illustrates a view on the nature of the trend. The broad trend is up, but it is also interspersed with trading ranges. In between the trading ranges are smaller uptrends within the larger uptrend. The uptrend is renewed when the stock or commodity breaks above the trading range. A downtrend begins when the stock or commodity breaks below the low of the previous trading range.

What is more important than Why?

It's been said, "A technical analyst knows the price of everything, but the value of nothing". Technicians, as technical analysts as they are called, are only concerned with two things:

1. What is the current price?

2. What is the history of the price movement?

The price is the end result of the battle between the forces of supply and demand for any particular item. The objective of analysis is to forecast the direction of the future price. By focusing on price and only price, technical analysis represents a direct approach. Fundamentalists are concerned with 'why' the price is what it is. For technicians, the 'why' portion of the equation is too broad and many times the fundamental reasons given are highly suspect. Technicians believe it is best to concentrate on 'what' and never mind why. Why did the price go up? It is simple, more buyers (demand) than sellers (supply). After all, the value of any item is only what someone is willing to pay for it. Who needs to know why? You may never know why.

Many technicians employ a broad-based, longer term, macro, long-term analysis first. The larger parts are then broken down to base the final step on a more focused/micro short-term, perspective. Such an analysis might involve three steps:Broad market analysis through the major indices such as the S&P 500, Dow Industrials, NASDAQ and NYSE Composite, or Commodity Futures Index, or other broad indexes of various types.

Group analysis to identify the strongest and weakest groups within the broader market groupings, i.e. Indexes, Meats, Grains, Currencies, Metals, Energies,Individual analysis to identify the strongest and weakest within each group.The beauty of technical analysis lies in its versatility. Because the principles of technical analysis are universally applicable, each of the analysis steps above can be performed using the same theoretical background. You don't need an economics degree to analyze a market index chart or commodity group. Charts are charts. It does not matter if the timeframe is 2 days or 2 years. It does not matter if it is a, market index, currency or commodity. The technical principles of support, resistance, trend, trading range and other aspects can be applied to any chart. While this may sound easy, technical analysis is by no means easy. Success requires serious study, dedication and an open mind. Technical analysis can be as complex or as simple as you want it.Overall Trend:

The first step is to identify the overall trend. "The trend is your friend". This can be accomplished with trend lines, or moving averages, or both. A Moving Average (MA) is an average of data for a certain number of time periods. It "moves" because for each calculation, we use the latest "x" number of time periods' data. As long as the price remains above its uptrend line, or selected moving average or previous lows, the trend should be considered bullish. The trend theory holds that an uptrend remains intact as long as each successive intermediate high is higher than those preceding it and each reaction low stops and holds at a higher point than did earlier reaction lows. Conversely, a downtrend prevails when each intermediate decline allows prices to fall below previous lows and rallies fall short of earlier rally highs.

Support and Resistance Areas:

Support and resistance levels are unquestionably among the most important of all technical considerations. They are areas, which prices are expected to have difficulty moving above and beyond (resistance and support), and they therefore deserve especially careful considerations in buying and selling decisions. Support areas are areas of price congestion or previous lows, below the current price, which mark support levels. A break below support would be considered bearish. Resistance areas are areas of congestion or previous highs above the current price which mark resistance levels. A break above resistance would be considered bullish. The basic idea behind resistance and support theory is simply that price levels that were significant in the past will have significant impact on price action in the future.

Random Walk Theory:

The basic "random walk premise" is that price movements are totally random. Prices move at random and adjust to new information as it comes available. The adjustment to this new information is so fast that it is virtually impossible to profit from it. Furthermore, news and events are also random and trying to predict these (fundamental analysis) is also a lesson in futility. While there are some good points to be gleaned from the random walk theory, it appears to be a bit dated and does not accurately reflect the current investment climate. Random walk theory was introduced over 25 years ago when institutions dominated the market. These institutions had superior access to resources and the individual was at the mercy of the large brokerage houses for quality research. With the advent of online trading, power and influence are shifting from the institutions to the individual. Resources are now widely available to all at minimal cost, if not free. Not only can individuals access information, but the internet ensures that everyone will receive it almost instantaneously. They also have access to real time data and can trade like the pros. With the availability of real time data and almost instant executions, individuals can act on information like never before.

General Chart Analysis:

What Are Charts?

A price chart is a sequence of prices plotted over a specific timeframe. In statistical terms, charts are referred to as time series plots, usually containing the open, high, low, and closing prices.

Chart Patterns:

Much of our understanding of chart patterns can be attributed to the work of Richard Schabacker. His 1932 classic, Technical Analysis and Stock Market Profits, laid the foundations for modern pattern analysis. In Technical Analysis of Stock Trends (1948), Edwards and Magee credit Schabacker for most of the concepts put forth in the first part of their book. We would also like to acknowledge Messrs. Schabacker, Edwards and Magee, and John Murphy as the driving forces behind our understanding of chart patterns.

Pattern analysis may seem straightforward, but it is by no means an easy task. Schabacker states: *The science of chart reading, however, is not as easy as the mere memorizing of certain patterns and pictures and recalling what they generally forecast. Any general chart is a combination of countless different patterns, some being continuation patterns and some reversal patterns, and its accurate analysis depends upon constant study, long experience and knowledge of all the fine points, both technical and fundamental, and, above all, the ability to weigh opposing indications against each other, to appraise the entire picture in the light of its most minute and composite details as well as in the recognition of any certain and memorized formula.

To name just a few there are; Double tops and bottoms, Head and Shoulder tops and bottoms, Wedges, Flags, Triangles, Channels, Gaps (four types), Key Reversals, Island reversals, and more. There are also Candlestick charts which provide a different way of looking at, and analyzing, the same basic price data, open, high, low, and close. A few other tools used on charts are Trend Lines, Support and Resistance areas, percentage retracements, Fibonacci retracements, Time cycles, Elliot Wave Theory Analysis, Gann Analysis, and more. Technical Indicator Analysis:

There are many ways to crunch the numbers and endless combinations. Here is a list of some of the more popular Technical Indicators:
1. Accumulation Distribution

2. Advance-Decline lines and ratios

3. Arms Index (TRIN)

4. Bollinger Bands

5. Commodity Channel Index

6. Moving Averages (of various types)

7. Moving Average Convergence Divergence

8. McClellan Osc

9. Momentum

10. On Balance Volume

11. Parabolic SAR

12. Relative Strength Index (RSI)

13. Stochastic (fast and slow)

14. Volatility

Markets move on anticipation, and often reverse on realization! A twist on the old stock market adage buys the rumor, sell the news.Trade the expectation, reverse on the realization!

Fundamental Analysis

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Aside from technical analysis, another primary approach to analyzing currency market fluctuations is called fundamental analysis. Fundamental analysis is the examination of economic indicators, asset markets and political considerations when evaluating a nation's currency in terms of another. The key to fundamental analysis is to gather and interpret this information and act before the information is incorporated into the currency price. The lag time between an event and its resulting market response presents a trading opportunity for the fundamentalist.

Here some major fundamental factors that can affect currency prices :
1. Decisions on interest rates made by central banks such as the US Federal Reserve or the European Central bank (ECB) monthly.
2. Quarterly GDP figures. Only preliminary national GDP figures generally have the effect of changing market sentiment.
3. Market sentiment data. Market expectations are formed from one week to two days before the event. Participants become well positioned based on expectations. If the figures are not a surprise, profit taking is often the only result.
4. Political Events. National elections, the September 11th attacks, and the war in Iraq are examples of events that have affected currency values.
5. Major indices. Inflation indices, Institute of Supply Management (ISM) in the US and the Purchasing Management Index (PMI) in Europe are also carefully followed by traders.
6. National industrial production figures.
7. US nonfarm payrolls (indicating new jobs created), Michigan sentiment figures in the US, the western German business climate or IFO index, and the Tankan quarterly survey in Japan.

There are times that governments through their Central Banks stand in the way of market forces impacting their currencies, and hence, intervene to keep currencies from deviating markedly from undesired levels. Currency interventions have a notable and oftentimes temporary impact on FX markets. A central bank could undertake unilateral purchases/sales of its currency against another currency; or engage in concerted intervention in which it collaborates with other central banks for a much more pronounced effect. Alternatively, some countries can manage to move their currencies, merely by hinting, or threatening to intervene.

Online Forex Currency Exchange Trading FAQs

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What Is Foreign Exchange?

The Foreign Exchange trading market, also referred to as the "Forex" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.9 trillion. Forex is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example EURO/USD or USD/CHF.

Who Are The Participants In The FX Market?
The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

What Is Margin?
Margin is required collateral for taking a forex trading position. It allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. In the forex market leverage ranges from 1% to 2%, giving investors the high leverage needed to trade actively whereas equity market only provides leverage of 50% (double the buying power).

What Does It Mean Have A 'Long' Or 'Short' Position?
A long position is one in which a forex trader buys a currency at one price and aims to sell it later at a higher price; the investor is benefiting from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate; the investor is benefiting from a declining market. The risk of having either long or short position will be the same.

How Do I Manage Risk?
The most common risk management tools in forex online trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. The liquidity of the Forex market ensures that limit order and stop loss orders can be easily executed. Please see Risk Statement.

Trading FAQ

What Is Limit Order?
A limit order is an order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 112.00/05, then a limit order to buy USD would be at a price below 112.05. (ie 111.50).

What Is A Stop Loss Order?
A stop loss order is an order type whereby an open online forex trading position is automatically liquidated at a specific price. As an example, if an investor is long USD/YEN at 112.35, they might wish to put in a stop loss order for 111.75, which would limit losses should the dollar depreciate, possibly below 111.75.

What Is A Position Order?
Position orders are directly related to individual positions. These forex currency trading orders are only active for as long as the position remains open and can be a stop loss or limit order.

FX VIRTUAL TOUR

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Thanks for your interest in the Foreign Exchange (FX or FOREX) Market. I would like to give you a closer look of the forex market and how it can work for your investments. Contact me for a personal meeting. I am quite sure that i am capable enough to discuss this exciting investment opportunity with you anytime. Meanwhile, take a look at this presentation to give you a basic idea of the FOREX market.