Money Making Lounge

Japan New Minister

2011-10-03T21:00:00.000-03:00

Japan has appointed a new Prime Minister, the sixth in five years. Already, the former finance minister, Yoshihiko Noda, could formally get the job. The challenges are enormous and Noda faces include primarily the help Japan recover from devastating natural disasters related to nuclear power. The problem is that in Japan there is no leadership, no consistency to follow. According to the final solution could be Noda.

The most important issues are the recovery from the tsunami and a too strong yen, which affects the power of the nation and the strength of the Nipponese companies. The politicians up to now have not been able to show any clear direction on what to take in the coming months on. For Japan is at stake in these days could not be higher.

Almost six months after the tsunami that devastated the country, the government has yet to begin rebuilding in earnest and continues to leak radiation. The opposition strategy is to tie the legislation, Japan is in a political deadlock that discredits the government. Noda for his part promised to work with the opposition.

Another serious problem is the yen, as strong as ever in recent decades, which is damaging the competitiveness of exports. Noda is the finance minister, knows everything about the situation of the Japanese currency, then the markets would be likely to welcome his election. Luna fundamental part of the work of Noda will be to raise taxes to finance reconstruction after the tsunami. Obviously this will not improve the economy of Japan, but for many it is essential.

Noda will replace the former Prime Minister Naoto Kan, even after 15 months in office, which has been criticized for his handling of the disaster of March. We'll see what happens.

Bernanke's speech in Jackson Hole

2011-10-02T20:58:00.001-03:00

Those whose expectations were low relative to the speech by Federal Reserve chairman, Ben Bernanke, held in Jackson Hole, were not disappointed. Those who sought a recovery in the words of Bernanke are disappointed, as when the same Fed chairman last year has provided the basis for further purchases by the Fed, what became the QE2, which led to 600 billion dollars purchases of Treasury securities.

This year, the Fed chief said in essence that the temporary problems are less to blame than previously thought. The structural problems, particularly in the area of housing, preventing monetary policy to have its usual effect on the economy.

Bernanke mentioned the word "tax" 15 times as much "money". The Fed chief said that most of the economic policies that sustain robust economic growth in the long run are beyond the powers of the central bank. But the Fed chief did not specify other economic initiatives, which should be revealed next month. The proposals could include a cut in taxes and spending for public works.

Meanwhile, the FOMC will consider all options available to him in a meeting of the expanded two-day, on 20 and 21 September in order to give full practical implementation issues still outstanding.

In reality there is much to talk about, including the idea of a lengthening of maturities of the securities portfolio of the Fed, in an attempt to bring down interest rates in the long term. What the Fed is planning to do does not depend on the length of the next FOMC meeting, but the current economy. Bernanke admitted that growth has remained significantly behind the expectations that the Fed did itself.

Summary currencies

2011-09-10T20:17:00.001-03:00

We see in what way the currencies most famous and known market have moved in the week just ended. Among the events of a fundamental nature that we must consider is Bernanke's speech in Jackson Hill, held yesterday, when the Fed chairman, as usual every year, highlights the situation of markets and transactions that the central bank the United States can accomplish in the coming months to help the market recover.

The currency pair euro / dollar moved in a rather side with a high volatility. Next week we might consider opening a position in favor of the euro, since the situation is critical in the U.S. and the Fed, it is understood, does not know how to move without "hurting" or preventing the transactions carried can help one side and other damage.

The pound has rather lost ground steadily against the U.S. dollar, for the next week we could instead think of a trend in favor of the British currency. Aware of the strong resistance level at 1.6600 share, to consider if this currency pair should arrive in the vicinity of the value.

The exchange rate between U.S. dollar and Japanese yen has seen a move sideways until mid-week, then a peak in favor of the dollar recedes completely yesterday. For the next week of trading could still expect a trend in favor of the yen, but we await confirmation before entering the market.

The euro has gained much ground against the British pound, reaching almost a height of 0.8900, a value that could be broken during the next week. We'll see the economic news arriving from Europe and how the euro area will be able to handle the economic crisis that is gripping.

FED, the effects of a QE3

2011-09-10T20:14:00.002-03:00

The situation is critical in the U.S., so that the Fed could think of a new measure of quantitative easing, the QE3. The moment, however, the central bank of the United States had considered the QE2, the last year these days, it was believed that the 862 billion dollar stimulus program would have to create 3.5 million jobs. Something that has not happened. Why?

In principle, there are three ways in which a quantitative easing could help the economy. The first is to stop the classic liquidity crisis, the second is to give a stop to the crisis of confidence, stopping those who want to take their investments from the market, then by increasing aggregate demand. Of course, there is also the possibility that a QE could damage the economy, by reducing the value of the dollar, rising inflation and inflationary expectations.

Just a crisis of confidence was probably due to concerns about the financial situation of European banks, which hold large amounts of defaulted sovereign debt of countries. This crisis of confidence is evidenced by the incredibly low market rates of interest on Treasury securities.

Most people believe that an inverted yield curve heralds a recession, we are now in a time when we have an inverted yield curve at the point where it is assumed that new money should go into the economy. Not surprisingly, therefore, see the economic indicators that signal a recession. With inflation accelerating, the specter of stagflation again looms over the country.

America does not need a QE3, needs a complete reversal of policy the Fed should announce an upper limit for the price of gold and use open market operations to the reserves as necessary to enforce this maximum price. To do this, the Fed should leave interest rates are set by markets.

The ultimate solution for a stable U.S. dollar, the stable economy and stable financial markets require that the Fed can keep the dollar stable.

FED thinks about a QE3, but the QE2 as it went?

2011-09-02T23:08:00.000-03:00

This week the Federal Reserve is holding its annual conference in Jackson Hole, Wyoming. Speculations abound regarding the concern and the question of whether the Fed will launch another round of "quantitative easing", the QE3, in order to shore up the economy and its failures. Many people think that if the QE2 has not worked, not even the QE3 work.
The quantitative easing is when the Fed buys a specific volume of Treasury securities. Technically, the QE is no different from the normal operations of the Fed's Open Market, since it involves the purchase of bonds on behalf of the Fed, paying with newly created bank reserves.
The QE2 was carried out for eight months, from November 2010 to June 2011. During this period, the Fed has purchased about 566 billion dollars of securities. The QE2 was a bold initiative and a spectacular failure.
During the first 8 months of the QE2, total employment had increased by 420,000 jobs. In the 8 months of QE2 total employment increased by 273,000 jobs. During the 3 quarters of the QE2, real GDP grew at an annual rate of 1.33%, while during the 3 quarters prior to the QE2 was increased by 3.41% per annum.
However, if the Fed's target was to increase inflation, then the QE2 has been a great success. During the first 8 months of the QE2, the figure was an increase of 0.6%, while during the 8 months of the QE2 has increased by 2.3%. If the purpose of the QE2 has been to increase stock prices, again failed. During the 8 months of the QE2, the Dow Jones Industrial Average rose by 9.2%. However, since the price of gold has increased by 20.3% over the same period, the Real Dow or the Dow divided by the price of gold fell by 9.2%. The movements of the Real Dow reflected the relative cost to invest in jobs in the production of goods, like factories or in containers of inflation, like gold.

Bernanke Speaks on Friday, Great Expectations

2011-09-02T19:26:00.000-03:00

When the Federal Reserve chairman will speak at its annual meeting in Jackson Hole, Friday, the markets will be looking for something that would indicate if there are any new stimulus measures being created. Only a year ago, after all, the economy was almost exactly the same position: slow job growth, slow growth of output, fears of falling into another financial shock in relation to the debt crisis in Europe, warning of a double-dip recession . And a year ago in this same conference, the Fed chairman, Ben Bernanke, had acutely described all the weapons that the Fed had at his disposal to save the economy.

Several months later, the Fed has opened its "arsenal" and started to put together a major program of asset purchases aimed at stimulating growth.

Given the reluctance of Congress to engage in a major fiscal stimulus, and is planned to decrease spending, analysts and investors are wondering if history does not repeat itself, especially if the economy deteriorates further. Equity markets have experienced a rise in the week, partly on hopes that Bernanke might be a sign of more monetary stimulus on the road, or at least that would indicate such stimulus conditions would most likely put in place.

Among the options that Bernanke and can tell the public this Friday, there is another round of major asset purchases, or another quantitative easing, which aims to reduce long-term interest rates, lowering the rate of interest that the Fed pays banks for their reserves, or extending the average maturity of the Fed's current portfolio analysts are eagerly awaiting this action and the decision that will follow.

Guide to Build a Trading Strategy Part III

2011-09-02T17:01:00.000-03:00

Many people make the mistake of adding or decreasing the size of a position simply because they feel that something is going to happen good or bad thing. These two actions, if they have been carefully planned ahead of time, can be very useful as part of a trading strategy. The essential condition is that the trading rules to be written before it is inserted into a position.

Making trading on an emotional way, however, lead to disaster. It 'amazingly easy to be misled by their emotions, even without realizing it. We must be able to be aware of what a trading system does and how to trade as he says the system could keep us away from emotions and make you able to earn money.

If emotions are able to affect the system in the least degree, the whole strategy could be invalidated. With the creation of a specific trading plan, which includes when to enter a location, get out when and how much leverage must be used, you will be free to run its own position without the fear of emotions.

The benefits of this way of trading are far reaching and once you've learned to respect the plan, you are free to start experiencing the emotions that come with being a successful trader, but without entering them in the same trading

Emotions are not an enemy per se, but they can become when you allow them to influence its strategy. The objective should be pursued is not to turn into machines or to remove emotions from the human spirit, but to create a lifestyle that can promote a sense of inner fulfillment. Only then will you be able to operate in order to be successful in this market and you will have the opportunity to earn money.

Guide to Build a Trading Strategy Part II

2011-08-28T20:19:00.000-03:00

The second important step in building a trading strategy is to calculate in an exact way the exit from the market. After entering a position, you should already have an exit strategy. The decision to exit a position may include variables such as duration, or if you do not want to stay in one position for more than 2 days regardless of whether you are in a position of profit or loss.

Their exit strategy may also be the basic price, ie the decision to close a position when you reach a certain level of profit or loss. But you can also use a combination of the two criteria mentioned above. And 'possible to implement other exit strategies, including those based on the use of technical and fundamental indicators, but the important thing to keep in mind is that an exit strategy should always be considered before entering a position .

In forex you can not put into practice improvisation, the goal is not to constantly invent and reinvent the role of traders and positions. If the goal is to become an expert trader in the currency market, you need to make a precise operational plan before entering the market and devote to it, according to what the plan says. In this way you will be on track to achieve the goal of profit.

When does Forex is also important to establish the right to use leverage. The lever is undoubtedly a fundamental part of any successful trading system. Knowing how to use leverage can make the difference between the gain or loss. The level of leverage that you want to use must always be predetermined before entering the position, it is essential to know better what to do at any time.

Guide to Build a Trading Strategy Part I

2011-08-25T02:58:00.001-03:00

To trade the foreign exchange market is an important thing if you want to earn money. Credibility is undoubtedly the most precious resource of a market, but how do you ensure the credibility and success in the Forex market? With the development of a winning strategy el'attenersi to it. Let's see how we can accomplish this task going to explore 3 easy steps in this and future articles.

A trading system is a simple way to say how does a trader to decide when to enter or exit the market when, how much leverage should be used for each exchange, and as it does take a whole series of decisions that are related to the exchange. There are 3 elements that are part of a successful business. The lever is a key component, as we are also the timing of entry and exit from the market. These three elements are those that must be considered when looking at the quality of a trading system.

The quality system must also be reflected by the amount of time a professional trader is willing to commit themselves to your operating system. For example, if you are usually available from 08:00 to 16:00, then it is logical to develop a system that makes you enter the market from 02:00 to 6:00. We must therefore choose carefully the time you are willing to engage in the market, as this will affect the quality of exchanges.

Needless to say, there are many traders who spend almost 24 hours a day at the computer for fear of losing a great movement of currencies. This is not what it means to be a successful trader. If you have so much time at the computer, you may lose concentration and do not go well in the market, with consequent loss of money.

We are on the brink of another recession?

2011-08-19T19:38:00.000-03:00

Europe and America are on the brink of recession, according to the bank Morgan Stanley. In a research note titled, rather disturbing, the investment bank means that next year the global growth forecasts are still for almost all major economies, not only in the Eurozone or the U.S. but also China and 'India.

In a sense, this analysis is absolutely right, because the world economy is facing the prospect of a new downturn, perhaps it could be worse than the first. And 'know that the crisis is not over in 2008, given that bank loans have been transferred over time, leading a much larger crisis. It 'also known that the major economies of the world can slow down again.

But we must consider that the prospects for growth around the world are far from equal with each other. To understand why, we need to look at the data of growth of money. These statistics measure the amount of money that revolves around an economy. The Bank of England checks these statistics and economic theory says that there is a direct relationship between monetary growth and the increase in GDP. So if you look at the rate of monetary growth, the study shows that the real problem is not in Europe, but in the U.S..

Yet, despite the economic crisis, the European Central Bank has decided to raise interest rates twice in the 2011, putting new pressure on people. The decision to raise rates this year was, according to many, one of the most egregious errors of monetary policy in recent decades.

Britain will face further phases of the storm, but so far, remains the country that is better than anyone. Borrowing costs remain low, the economy is expanding, albeit slowly, and it is believed that Britain is one of the few countries not on the brink of recession.

Currency Analysis for August 19, 2011

2011-08-19T07:55:00.001-03:00

EUR / USD

This currency pair has so far registered a decline for the day today we see the opening of a new long position if the price were to break the rising share of 1.4350, with the primary objective, and 1,437 share as a second objective part 1439. If the price falls to 1.4245 share to break downward, then we could open a short position with the first goal at a height of 1.4230 and 1.4210 share for the second goal.

EUR / GBP

Long route for this cross currency, the pound is gaining more strength. For this meeting as we open a position in the purchase if the value of the exchange rate should break the rising share of 0.8750, setting a first target share and 0.8770 share of 0.8780 as the second goal. If the price of this exchange ratio of 0.8650 share should break downward, we could open a short position with the first goal at a height of 0.8630 and 0.8620 share for the second goal.

USD / JPY

For today's session about this exchange ratio could open a new long position if the value of the exchange ratio would exceed the quota of 76.85 upwards, with the first goal at a height of 76.90 and 77.00 seconds at an altitude goal. If the price had yet to descend downward to break the share of 76.45 could then open a new sales position by setting the first target share of 76.30 seconds and the goal is reached at an altitude of 76.20.

GBP / USD

For today's session we open a long position in case the value should go up to break up the rising share of 1.6530, setting a first target share and 1.6550 share of 1.6570 as the second goal. If the price falls to the bottom and break the share of 1.6430, then we could open a short position with the first goal at a height of 1.6420 and 1.6410 share for the second goal.

The price of gold continues to rise

2011-08-18T21:58:00.000-03:00

The price of gold futures rose to a record high for the second consecutive day after the costs of the wholesale sector of the United States rose more than expected in July, boosting demand for precious metals as a hedge against inflation.

The index of producer prices gained 0.2 percent last month, according to the Labor Department said. Economists predicted an increase of 0.1 percent. From the standpoint of currencies, instead, the dollar fell to 0.8 percent against a basket of six currencies. From all this it earns gold, which also yesterday reported a rise in its value, for a total of 26 percent this year, reaching an intraday high of 1,817.60 dollars an ounce on 11 August.

According to the history of inflation is returning, with the weak dollar which helps increase the value of gold.

Remaining currencies on the speech, but moving in Europe, German Chancellor Angela Merkel and French President Nicolas Sarkozy has rejected an extension of the rescue fund Poer the euro area, while the Swiss central bank said it will take further measures if necessary to counter the strength of the Swiss currency.

Here, among all these statements, the gold remains the most attractive assets in the short term, considering that the uncertainty about the future of the euro zone will not end anytime soon.

And 'historically known fact that when the currencies go wrong the price of gold rises, as the yellow metal is seen as a safe haven, so the only way to save their capital in case things turn start to go wrong. If the dollar and the euro should therefore continue to have difficulties in the coming weeks and months to come, it is very likely that the price of the yellow metal rises again.

Currency Analysis for August 18, 2011

2011-08-18T14:56:00.000-03:00

EUR / USD

For today's the day we might consider opening a location in buying if the exchange ratio would go up and exceed the rising share of 1.4450, with the first goal at a height of 1.4470 and 1.4490 share for the second goal. If the price of this cross should continue to go down to break down the share of 1.4350, we could open a new sales position by fixing the first goal at a height of 1.4330 and 1.4310 share for the second goal.

EUR / GBP

For today's session we could open a new long position, in the purchase, if the value of the exchange rate should break the rising share of 0.8780, setting the first goal to achieve the price target at 0.8790 and the second value is reached 0.8800. If the exchange ratio of 0.8690 should break the price, we could open a new sales position by fixing the first goal at a height of 0.8680 and 0.8670 share for the second goal.

USD / JPY

For today's session we open a long position if the price of the exchange rate between U.S. dollar and Japanese yen were to overcome the rising share of 76.80, placing the first goal at a height of 76.90 and 77.00 seconds at an altitude goal. If the price of this break exchange ratio would fall below the quota of 76.35, we could open a new short position with the first goal at a height of 76.20 and the second target at an altitude of 76.10.

GBP / USD

With regard to this relationship of currencies, for the session today we open a long position if the price were to break the rising share of 1.65950, setting the first goal at a height of 1.6620 and 1.6640 share for the second goal. If the price were to fall below the break of 1.6395 share, we open a position for sale by fixing the first goal at a height of 1.6380 as the second goal and the share of 1.6360.

Technical Currency Analysis With Fibonacci

2011-08-17T23:25:00.002-03:00

Fibonacci tools special relationships that occur naturally in nature to help predict the points of support or resistance. Fibonacci numbers are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, etc. The order is determined by adding the previous two numbers (ie 1 +1 = 2 produced, 2 +3 = 5) The primary relationship used in 0618, this is by a Fibonacci number in the next number in the Fibonacci sequence (55/89 = 0.618) scores. The logic used by traders Fibonacci base, such as the Fibonacci numbers are the creations of nature and nature in stocks, futures and foreign exchange markets - people. Therefore, the Fibonacci sequence to the financial markets will be applied. Fibonacci There are many tools used by traders, including fibonacci retracement, fibonacci Arcs, fibonacci fans,fibonacci time extensions.

Undoubtedly the most frequently used instrument is the Fibonacci retracement. To calculate the Fibonacci retracement levels, a significant decrease, and maximum is important. From there, the prices on the original dispute (low to high or too low) in a ratio of the Fibonacci sequence, typically 23.6%, 38.2%, 50%, 61 back, 8% and 76 , falling 4%.

The examples in this section, the S & P 500 Depository Receipts (SPY) according to the logic of the S & P 500 is a measure of human nature is to be used should also be applied to the Fibonacci sequence very well. However, the Fibonacci sequence on individual stocks, commodities and foreign exchange currency pairs are used quite regularly. The table above shows the decline of 38.2%, which acts as a support to prices.

Note that a trend line is a significant decline (of trend) lead to a significantly high (end of the trend), trading software calculates the retracement levels.

Note down in the S & P 500, the price retracement level of 23.6% was recovered and then rotated quickly. Later, after the break of the resistance a few months, the decline was from 23.6% to support. Price to the level of 50% retracement, when met with resistance. Price remains between retracement level of 38.2% (which serves as a carrier) and the level of 50% retracement (which acts as resistance) vary.

Fitch affirms the ranking U.S. AAA

2011-08-17T16:01:00.006-03:00

Fitch Ratings, one of the best known rating agencies in the world, has confirmed the AAA rating for the United States, saying that the outlook is stable, citing the role that the nation has the global financial system. Standard & Poor's, however, on Aug. 5 had cut the credit rating of the United States, from AAA to AA +, citing the fact that legislators have failed to cut spending in an important enough to reduce the record deficits.

Since S & P has downgraded the U.S., the yield on the 10-year benchmark for everything from mortgages to auto loans, fell to its lowest ever, 2.03 percent, up from of 3.77 percent reached this year.

According to Fitch, however, the United States could be assigned a negative outlook, indicating more than 50 percent chance the nation will be downgraded in the next two years. In order for this to happen, though, you should have a weak economic growth, or there should be the failure of Congress to launch the plan in denominations of 1,200 billion U.S. dollars of which the Congress itself had already granted.

U.S. government debt is outstanding, rose to 9.4 trillion dollars from 4.34 trillion dollars in mid 2007, when the government borrowed money to save the banking system and bring the economy out of recession. The United States has gone from having the average budget surplus of 139.7 billion dollars, from 1998 to 2001, to a deficit of 1,290 billion dollars last year, according to figures that were shown.

Fitch also expects that public ownership of federal debt will stabilize at 85 percent of gross domestic product and gross public debt will be by 105 percent, more than any other country that has a AAA ranking.

Analysis of the Currency August 17, 2011

2011-08-17T13:59:00.009-03:00

EUR / USD

Continues to move sideways for this exchange ratio, for the session today we might consider opening a location in the same purchase if the value exceeds the rising price of 1.4440, 1.4460, and share with the first goal with a second objective part 1.4480. If the price of the exchange ratio should break down the value of 1.4360, then we could open a short position with the first target 1.4340 and 1.4330 second goal.

EUR / GBP

For the trading day today we open a new long position if the price were to break the rising share of 0.8780, setting the first goal at a height of 0.8810 and 0.8830 share for the second goal. If the price of this exchange ratio would rather break the downward the share of 0.8740, then we could open a new short position by placing the primary objective of the share as 0.8720 and 0.8700 share of the second objective.

USD / JPY

Regarding the value of this currency could open a long position if you go up to break the rising share of 76.80, with the first goal at a height of 76.70 and 76.80 seconds at an altitude goal. If the price of this break exchange ratio would fall below the quota of 76.60, then we could open a new location for sale with the first goal and second goal share 76.50 76.40 fee.

GBP / USD

For this exchange ratio could predict the opening of a new long position if the price were to break the rising share of 1.6480, 1.6490, and share with the first goal with a second objective part 1.6500. If the price were to break downward the value of 1.6385, then we could open a short position with the first goal and second goal share 1.6360 1.6340 share.

European Central Bank continues buying, but until when?

2011-08-17T11:58:00.006-03:00

The last count of the cost to be incurred to save the euro area has come from the immediate collapse, 22 billion euros. This is what the European Central Bank has spent the week ended August 9 last year for the purchase of government securities of euro area countries. The ECB has succeeded in its primary aim of calming the market, but the biggest question is whether and when the ECB will stop buying.

The ECB has so far purchased a lot. The Italian and Spanish titles in 10 years have yields that are about 5%, below the rate of 6% threat that sparked panic in early August. But the stakes are higher than before. The previous purchases were aimed at relatively small markets such as Greece, Ireland and Portugal. The ECB will need to spend more money to buy the Spanish and Italian titles.

It is not clear how the ECB can spend. In the worst case, the estimates of some analysts suggest several hundred billion euros. The real test for the European Central Bank could take place when Spain and Italy were to resume the sale of their debt in late August and early September. While the ECB is trying to finance purchases with the European Financial Stability Fund, may still be forced to support the market for longer and with greater quantities than they had expected.

Meanwhile, the clamor of bonds linked to euro area as a way out of this crisis is growing. Rescue operation for the ECB shows the need to find a solution that is permanent. Accumulate a growing number of bonds at the ECB will only el'EFSF that investors still lack confidence in the finances of the eurozone.

China aims to stabilize inflation

2011-08-16T13:37:00.005-03:00

China has recently returned to the forefront of the news for having invited both the U.S. and Europe to review and correct their own debt. The People's Bank of China also stated that it will continue with its policy of price stabilization, as this is a top priority. Also one of the things that the Chinese central bank set as a goal in the coming months is to support the country's economic growth. Based on the national economic situation and international, the Chinese central bank will work to make its monetary policy more focused, flexible and forward looking.

The Chinese central bank will use various monetary instruments, including the management of interest rate, exchange rates and open market operations to control liquidity and to maintain the country's finance office, to a reasonable level. To manage inflationary expectations, the bank will aim to use the correct monetary policy, namely the rate of interest, with which you can control the demand for capital investment and savings.

Meanwhile, China said it would increase efforts to promote the country's credit facility, including a strengthening of the agricultural sector and small and medium-sized enterprises, which are the basis of the country. In addition there will be some very strong guidance to the market, with the exchange rate reform and improve the formation mechanism of the yuan in order to add flexibility.

The country is still going well, as the index of consumer prices, which is an indicator of inflation, was 6.5 percent in July, well above the government target, fixed at 4 percent. The situation seems to favor the growth of the Chinese economy.

Why so much on Forex Scalping

2011-08-16T09:32:00.002-03:00

Making the foreign exchange market scalping is a tactic that most traders try, sooner or later. This mode of operation leads to small gains, typically up to a maximum of 3 times the spread, in a short period of time, which could be several minutes or less. It is often seen as a risky strategy. Other times it is described as one of the strategies by which more difficult to earn money. But is it true?

One problem with scalping is that many brokers do not like, for two reasons. The first is that according to their business model may not be able to cover the position on the market before the scalpers close the transaction, leaving the broker with a loss. The second reason is that many traders in the past have developed strategies for scalping within the spread, which prevent the broker to earn the full amount of the spread the same on every single transaction.

One of the reasons why a broker can close the accounts of traders scalping is when they do, especially if you are making a profit. So, first thing, be sure that your broker will allow you to scalping. Otherwise, you may need to find a new broker with which to operate. In addition, other problems are inherent to the characteristics of short-term scalping.

The scalping strategy is attractive to novice traders, because of the speed with which transactions are made. Most novice forex are anxious if they leave a position open for an extended period. I do not usually like to leave a position open for more than a few minutes or even overnight. They feel they have more control on the market if you close the positions very quickly. Instead, you must make decisions very quickly, but do not sit all day in front of the computer to control them.

Another reason why scalping is attractive to traders is the ability to make instant profits. Attention to the risks, however, given that the scalper uses leverage to the maximum, and this is risky.

Briefly About Currencies

2011-08-15T21:30:00.000-03:00

Major currencies during the week just ended, they went out for a gain of refuge currency status by the British pound. With the economic situation in the U.S. and Europe is in crisis, the British currency is considered the safest among the other two, although to be fair it must be said that the economic situation in the United Kingdom is not of the most peaceful.

Regarding the exchange rate EUR USD, we have seen high volatility, which has pulled this currency peaks and lows of 1.4420 1.4120, 300 pips difference well. During the next week we expect a more volatile performance, since markets have not yet made a precise definition. For those who want to invest money in this exchange ratio, you must wait before confirmation.

The British pound has lost significantly against the U.S. dollar, breaking even decreasing the proportion of 1.6100. For the next week our graphs tell us that this exchange ratio may continue in this direction, even if at the end of the week we saw a partial recovery of the British currency. In any case wait for confirmation before acting.

Instead the dollar has lost ground against the Japanese yen, reaching an altitude of below 76.00, a clear sign that the Japanese government's intervention in an attempt to lose its strength to its currency has not yielded the desired results. For the next week we could see, however, a slight recovery of the U.S. dollar.

The exchange rate between the euro and British pound has seen our share of currency touched 0.8870, before falling again. Next week we might even see a trend in favor of the British pound, but before opening of the new positions are waiting for confirmation. But the fact that the situation in the euro zone's scary to investors could favor the exchange ratio to a decline.

USA, the super committee is ready

2011-08-12T14:18:00.002-03:00

The representative of the U.S. House, Nancy Pelosi, has appointed three people to join the "supercommittee" wanted by Obama, who has the task of finding at least 1,200 billion dollars in ten years. Democrat Pelosi appointed as a representative James Clyburn, Xavier Becerra and Chris Van Hollen.

The task of the Committee shall be to raise the prosperity of the country, which will then reflecting the prosperity of all Americans will enjoy. Pelosi said in a statement which called for a focus on economic growth and the creation of new jobs in order to reduce the deficit.

Inltre that this Committee should make decisions on investment, spending cuts and revenue increases in the reeds so as to stimulate growth while reducing the deficit. The Republicans have vowed to reject any tax increase and said that any increase in revenues resulting from revisions to the tax code should be offset by other cuts, while Democratic leaders have pushed to increase taxes on the rich and government-backed companies. The goal is to make a grand bargain that would reduce the frightening deficits when the country is in these moments, while strengthening Medicare, Medicaid and Social Security. The goal is really important, and we must work hard.

The United States is still in a critical situation, having lost the Triple A for the first time in their history. The key thing, to ensure the welfare in the long run, it is economic growth. This necessarily entails also an increase in jobs and a reduction in expenditure. But the question is one that keeps unemployment in check, according to economists and industry experts, the country.

Analysis of the Currency August 12, 2011

2011-08-12T12:04:00.001-03:00

EUR / USD

For the day today in relation to this cross currencies might consider opening a new long position if the price of the exchange ratio should break upward 1.4275, with the first goal at a height of 1.4290 and 1.4300 share for the second goal. Should the price rather than decreasing the share of 1.4130, then we could open a short position with the first goal at a height of 1.4120 and 1.4110 second goal.

EUR / GBP

For today's session we might consider opening a location where the purchase value of the exchange ratio of 0.8780 should break upward, staring as the first objective the achievement of quota and 0.8810 as the second objective, the share of 0.8830. If the price of this exchange ratio would fall below the value of 0.8720, then we could open a short position by setting a first target 0.8710 and 0.8700 as the second goal.

USD / JPY

For the trading day today we open a position in the purchase if the value of the exchange ratio would exceed the rise in the share of 77.05, setting the first target value of 77.15 and the second objective value of 77.30. If the price of this exchange ratio should break the downward part 76.50, we could open a downward position by placing first goal as a share of 76.40 and 76.20 second objective part.

GBP / USD

In today's session we could open a new long position if the value of the exchange ratio should break upward the value of 1.6245, with our first goal at a height of 1.6260 and 1.6280 share for the second goal. If the price of this exchange ratio would rather break the downward the share of 1.6195, then we could open a position in sales as our first goal by setting the share of 1.6180 and as our second objective, the share of 1.6160.

The price of gold rises, the EU area is scary

2011-08-11T17:18:00.000-03:00

The Gold Rush marked the movement of the whole community of global investors, with prices of yellow metal, which rose to just under $ 1,800 for ounce on fears that France could lose its rating level. Gold is regarded as a safe haven, since it is a hedge against the economic and political risks because it tends to retain its value better than stocks or other assets.

French President Nicolas Sarkozy has interrupted a vacation to hold a cabinet meeting unscheduled where the government has said it would consider tax increases, spending cuts and other fiscal measures to support the country's fiscal position.

But concerns remain that the European financial system. If he will still have other problems of sovereign debt, which are initiated by small economies such as Greece and Ireland, the same could also spread in the major economies such as Spain, Italy and France.

Greece is smaller than Italy, Spain and France. The main reason why there is an increase in the gold price is because of the nervousness caused by Europe. People are trying to preserve their wealth and do not see many other options except gold.

Gold was also a record during the last week, before and after the U.S. reached an agreement last minute to increase their debt ceiling, then even after the unprecedented decision taken by Standard & Poor's of to downgrade the U.S. debt. However, while gold prices are rising fast, the risk of a sharp pullback is increasing. For this reason, should be careful who wants to invest in yellow metal in the coming weeks, as you might find to buy at the wrong time.

Analysis of the Currency August 10, 2011

2011-08-11T15:03:00.001-03:00

EUR / USD

For today's the day we might consider opening a new long position if the price were to break the rising share of 1.4410, with the primary objective of reaching an altitude of 1.4430 as the second goal and the achievement of 1.4450 share. If the price of this exchange ratio would have to overcome the downward the share of 1.4205, then we could open a new short position with the first goal at a height of 1.4180 and 1.4160 share for the second goal.

EUR / GBP

For today's session for this exchange ratio could open a long position if the price were to break upward 0.8850 share, setting a first target share and 0.8870 share of 0.8890 as the second goal. If the price of this exchange ratio exceeds 0.8750 share down, then we could open a short position as the first goal setting and how to share 0.8730 0.8710 share of the second goal.

USD / JPY

For today's the day we might consider opening a new long position if the price exceeds the exchange ratio up 77.20 share, with the first goal at a height of 77.40 and 77.60 seconds at an altitude goal. If the price exceeds this cross down 76.50 fee, we could open a short position with the first goal and second goal share 76.30 76.10 fee.

GBP / USD

The pound is gaining in the beginning of this week, for this meeting as we might think of opening a long position if the price were to break upward the value of 1.6380, setting a first target share and 1.6400 share of 1.6420 as the second goal. Should the price instead of breaking the support level at 1.6180 share, then we could open a new short position with the first target 1.6170 and 1.6160 second goal.

Downgrade of the U.S., what does it mean for the country? Part 2

2011-08-11T10:01:00.000-03:00

After the USA downgraded by Standard & Poor's, there have been many comments that have come also from outside. China, for example, has wasted no time. The official spokesman of the government, Xinhau, said that since they are large economies, the United States and the European Union exert an enormous influence on the world and have a great responsibility in the eyes of the world economy. Faced with a series of debt crises they need to reflect on their modes of economic and social development and to adopt concrete measures to help solve the problem of imbalance in the global economy.

Many say, however, that there are good reasons to question the methods that were used by S & P to evaluate the sovereign credit. In the same way you bring into strong question the methods used in particular with which the United States were evaluated.

Now the U.S. government should be and decide what to do. Obama said that despite everything is still a country to be triple A, even though it is no longer written on paper. But as it is, the loss of AAA status highlights the failure of American policy. Here, then, that the work of the leadership of the country must now focus for maintaining the global position.

Some, however, the downgrade will not affect that much, at least from a financial point of view, the United States, which remain the strongest country in the absolute and the center of the world economy, is that with two three "A ". The issue that is political questions of themselves, or to understand and correct the behavior of American politicians, who failed to reach agreement quickly on this issue and it will be called, in the future, to take other important and very fast, which can not react the same way.

Downgrade of the U.S., what does it mean for the country?

2011-08-10T17:53:00.000-03:00

What does it mean for a country to have an AA rating? The answer to this question depends on that to which you are concerned. From an economic perspective, if you are concerned that this rating ruin the economic situation of a country, you can rest easy for now. Traders and economists generally agree that the impact on U.S. government borrowing rates will be manageable. The main issues, namely an increase in borrowing costs for the United States, the posting of Global Treasury, the decline in the stock market, all are little affected by the downgrade.

This is not a reason to celebrate. Standard & Poor's has made this move for two main reasons. First, the situation that has arisen in discussions about the U.S. government debt, pursued by politicians in a way that many Americans called "comedy" was so surprising that S & P has lost faith in Washington in ability to make tough decisions quickly on spending and taxes.

Secondly, there are several things that make you think they think that S & P does not believe that tax cuts will be sufficient.

If you are concerned about the global position of the United States, the country's prestige as a world leader, in this case you should feel quite worried. This downgrade is mainly a vote of no confidence in the American political system. Weakens the country's ability to influence their allies and trading partners, and damages efforts to prove the superiority of democracy and capitalism on a global level.

This is a profoundly serious. The center of American politics is collapsing, so the ability to address the serious structural and economic problems is one thing that now must prove he can do.

USD / CHF maintains daily earnings and is approaching the highs of the day

2011-08-10T15:13:00.001-03:00

The Swiss Franc is losing ground against the dollar on Wednesday after recording on Tuesday one of the largest hikes since 2009. The USD / CHF is relatively stable, moving with volatility levels below those seen in previous days.

In the European morning climbed to 0.7325, but was not sustained and fell back to find support at 0.7180 area. From there the pair has been rising slowly and is currently trading at around 0.7300, consolidating and gain 240 pips away from historic lows.

Earlier, the Swiss central bank announced further measures to inject liquidity in Swiss francs in order to slow the appreciation of the currency.

Dollar Rises and Brazil Real depreciate

2011-08-01T23:05:00.002-03:00

The Brazilian currency demonstrated a biggest drop against the US dollar this year today, as the government introduced a new tax on FX derivatives investments, and the dollar jumped up against the other major currencies.

During the day the Brazil real demonstrated a loss of about 2 percent (before returning to current levels), which is the biggest single-day decrease for this currency in more than 12 months. The Brazil authorities will now charge 1 percent tax on some derivatives operations on the foreign exchange market, which supposedly will curb the demand for the local currency, cooling down its extraordinary fast appreciation rally.

Another factor that forced the real down against the US currency was the gain of the latter against the other major currencies today. It followed some vague news about John Boehner‘s debt-relief plan gaining a positive review among Republicans in US Congress. Nonetheless, the situation remains far from its solution point with the US debt ceiling.

USD/BRL rose from 1.5395 to 1.5580 as of 18:20 GMT; it was at its daily maximum at 1.5710 earlier today.

If you have any questions, comments or opinions regarding the Brazilian Real, feel free to post them using the commentary form below.

Forex Brokers - They Can Help You to Maximize Your Success

2011-07-29T06:04:00.002-03:00

A Forex broker is a broker dealing in foreign currency, as well as real estate agent working in real estate and property. Simply, a Forex broker is an advisor who advises the foreign exchange market. However, Forex is the ideal place to play with a novice and beginner as there are many critical situations involved with skills much risk. Beginners can quickly get their fingers badly burned. But inexperience is not the only reason to use a Forex broker to trade on the high-risk international currencies.

So Forex broker is an advisor who advises you on the forex market and allows you to work 24 hours a day with major currencies such as euro, yen, pounds, francs, etc. against the dollar on the spot, namely, accordance with current market prices, exchange rates. But the level of profit depends only on their skills, as well as your timely decision.

Although the role of the Forex broker is relatively redundant as a result of technological advances and increased awareness, we can not underestimate its role. Paradigm shift was a new kind of democratizing effect on financial markets and in the years that followed, many banks and brokerages have extended the range of services in a new market for the packaging of their trading online for the retail market, allowing investors to trade more modest on the computer screen - even before the reach of foreign markets. This is where the real role of Forex broker starts.

PIP is nothing special but the price points of interest. In the forex market currencies are always priced in pairs. The price shown is the level at which a market maker willing to buy / sell the currency pair. On the wholesale market, currencies are quoted to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one / 10,000 Exchange rate (USD / JPY is / 100, so you can find others).

To see more information about Spread. Like all financial products, forex quotes include terms like "bid" and "ask". "S" offer ", in simple terms is the price that a trader is willing to buy (and clients can sell) the base currency of exchange." Heaven "is the price at which dealer will sell (and clients can buy) the currency basis, in exchange for money against. The difference between the offer and sale price is mentioned that spread. The spread defines the cost of training, which can be recovered with a favorable movement in foreign exchange market. The value of a pip depends on the currency pair being traded, the rate which currency pair is trading and the size of the position being traded.

There are many great Forex brokers, like COESfx that support tight spreads and competitive in four major currencies against the dollar, and a total of 17 currency pairs including USD / CAD and AUD / USD. Some of the main features of COESfx are:

Real-time streaming prices
The certainty of the market price orders
Competitive prices
3.5 Fixed PIP spread

EUR/USD pair goes up in Asia

2011-07-20T21:13:00.004-03:00

Money Making Lounge is back, if you thought your forex blog would be taken down you were wrong. Now back and for real, check the first headline.

The Euro was higher against the U.S. Dollar last week. EUR/USD pair was at 1.4261, 0.33% at time of writing. The pair was likely to find support at 1.4015, Monday’s low, and resistance at 1.4274, Wednesday’s high.

Meanwhile, the Euro was up against the British Pound and the Japanese Yen, with EUR/GBP gaining 0.22% to hit 0.8821 and EUR/JPY rising 0.40% to hit 112.43.

Serviço de taxi em Salvador

2010-12-13T19:48:00.002-03:00

Ola pessoal, hoje passo por aqui apenas para postar uma dica para você que está viajando para Salvador, conheça a empresa abaixo que oferece serviço de táxi em Salvador com ótima qualidade e preços bastante atrativos.

SeuTaxi tem como objetivo atender seus clientes com qualidade oferecendo-lhes profissionais qualificados e preparados para atender as necessidades de quem visita a cidade de Salvador.

Serviços oferecidos: Táxi em Salvador - Serviço de táxi - Táxi executivo -Receptivo - Congressos e Feiras - Transporte de grupos de turistas em Salvador- Pacotes de passeios turísticos - Traslado para Aeroporto/ Rodoviária

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The New MML

2008-07-26T11:26:00.003-03:00

Hello everybody,

Money Making Lounge blog has been sleeping for some time, after this long period without feed you with the best information about online money making we decided that this blog will no more bring up just news about long terms ventures. We are changing our model and starting from August's second week you will see here posts about sites where you can make good cash without spending much time either money.

I hope you all enjoy our new style and I apologize for this long period away.

Kind Regards.

Weight Loss Basics: Simple and Effective

2008-07-20T00:20:00.005-03:00

There is a lot of content online and offline about how to lose weight. If you are looking to lose weight, don't desesperate, you are not the only one. There are many people worldwide trying new ways to lose weight, criativity is something natural for human kind, so we've mixed our creativity and problems to solve many products. Problem is because there are lots of diets that claim to be good and help you to lose weight, fact is that a small percentage of them really work. Further more, many of them guide you through dangerous steps that may cause serious complications as well as drive you to gain pounds you dropped again.

Anyway what you really need is to suppress your appetite down so that you are consuming a healthy amount of calories that will be enough for your energetic daily needs. Drinking water is a very good way to do that, it helps your metabolism and makes you feel your stomach is filled.

You can ally a good "lose weight" program with healthy habits such as physical activity, moderate calorie intake etc. You have to mantain the habit of practing excersices, avoid junk food, breath good air and enjoy plain water more. A combination of dieting and exercise is very important if you want to lose weight quickly.

ConsumerPriceWatch.net can help you to achieve your goal, they offer a set of very good products that will drive you into a balanced diet. Check a review about the Best Diet Pills by visiting them.

And remember: Losing weight may be easy, but just if you have it as goal.

Wild Treasure: Get fun and money

2008-07-13T12:16:00.004-03:00

Wild Treasure is the ultimate social networking treasure hunt experience. It is a place where you can individually or with a team solve puzzles, challenge others and participate in discussions. There is a big range of games and you resolving the treasure maps you win cash prizes free.

No purchase necessary to win cash prizes. It's 100% free, just sign up and start playing. Wild Treasure offers such opportunity due sponsorships they firm, you can also sponsor a hunt and have your brand name advertised over thousands of clients, it's good exposure. You can make your requirements such as request that member visit your site to find answers to solve a challenge.

It's a wonderful concept, all you have to do is sign in-pick a treasure map to play-solve the various quests to win the prize. You can play as many Treasure Hunts as you want. There is no limit on how often or what you can win at Wild Treasure. You can play challenge by yourself or create a group to help you solving this challenge, it's up to you.

Join today and Win Cash Prizes FREE!

U.S. Personal Spending Rises in April

2008-05-30T22:13:00.001-03:00

Personal consumer expenditure (PCE) rose 0.2% in April in line with market expectations. This represented a slowing in growth from the 0.4% gain seen in March. Personal income rose 0.2%, a touch faster than market expectations, although down from the 0.4% gain in March.

On a volumes basis, spending was down slightly in April. The level of spending was essentially unchanged in April compared to the first-quarter average. Consumer spending growth should accelerate through the second and third quarters as the rebate cheques (which equate to roughly 12% of personal income) buoy income levels.

From a policy perspective, this report does not alter the landscape in any substantial way. In the near-term, we expect the Fed to remain on hold as it assesses the impact on the economy of their substantial policy actions and the sizeable fiscal stimulus package.

Top 5 Tips For Good Home Loans

2008-05-26T16:54:00.006-03:00

Buying a house and making it your home is a dream for almost everyone. Fortunately we have services that help buyers make their dreams come true faster: such as home loans. The world of home loans is varied, full of layers and sometimes confusing. However, many companies offer support and a set of options for new borrower. It makes easier the moment of choosing which loan best fits your situation.

Good home loans are easy to be found if you know where to search and how to negotiate. Low interest rates can make a sizeable difference in your savings, both on a long term and short term basis. It can be decisive in the moment of choosing a larger space as well. I've prepared some tips that may help you in order to get the best interest rate on your first home loans:

1. Research a good lender

It's very important that borrower do a lot of research to discover the lender best fits his needs. Even when you are opting for a home loan and you don't have a good credit history, you can look around and choose the one that is best suited to your financial situation.

2. Bad credit is not a big problem

You are not destined to take the very first opportunity that you find just because you suffer from bad credit. If you have such an attitude you may suffer for long time due high interest rate. You may end up being not able to meet the commitment and this may worsen your financial credit score.

3. Compare the interest rates

The mortgage rates tend to vary depending on the type of loan. Choosing adjustable home loan make sure you are aware such loan has possible risks associated. Don't hesitate to ask about taxes, costs, terms and other issues. Mortgage brokers are likely to serve you with the best services to beat enemies.

4. Bargain and negotiate

Now that you chose the lender it's time to get the best deal. Usually, loan officers and brokers can help you get some really good discounts on your home loan. Don't show anxiety to get deal closed, be direct and let the company officer knows you have resources. It's also important to state you are not negotiating he unique possible deal for you.

5. Be critical

Remember a loan is like a simple product, but with many terms issued. Seller wants you purchase, he usually show only the good factors. You should have critical sense to decide and bargain for better prices. Doing this you assure you got the best lender and closed the best deal.

Get more quality information and services for home loans.
Visit: Choice Home Loans

Personal Loans: Resolve Financial Problems

2008-05-26T14:56:00.005-03:00

We all know that the global economic system is passing through the rough and trough of credit crunch which occurred in the global financial market. Faced with this critical situation, the banks are pulling the belt tight as far as the credit give-away is concerned. Under such conditions not only the people with bad credit are suffering, but also the people with decent credit history are facing many difficulties in availing finance to resolve their problems. Still the UK financial market has the strength and capability to cross such dire straits and keep providing the necessary loans like the personal loans which the clients need so much in order to meet their personal requirements.

These unsecured personal loans are multi-functional in the sense that the borrower is at liberty to utilize the funds in any way he or she wants them to. Thus, this aspect adds to the suitability and likability of these loans in the eyes of people who are looking for more and more funds to add to their status, socio-economically. A loan seeker can go for debt consolidation, tours, asset purchasing, funding medical and educational bills or any other personal need coming in his or her way during the fluctuating aspects of life.

The unsecured personal loans can be differentiated on accounts of the total sum, the tenure, package's APR which in turn are determined by such factors as the credit past of the borrower, the credit priorities of the loan provider, the client's individual profile, the borrower's disposal income, repayment history and other loans availed by the the loan seeker.

For availing personal loans, the clients can compare different online quotes provided by numerous financial institutions working in tandem with the clients and the financiers. Therefore, before deciding upon a particular loan scheme one should compare different quotes available with different loan providers. As various borrowings deserve different interest rates, so making comparison can be the best way to arrive at the best and affordable loan deal. The best part of such loans is that these loans are provided to the unemployed people too. Thus, the loans for unemployed are also easily available in the market.

There is adequate information available online to help one in getting the affordable loan plan. The immense pool of information available can help one in garnering the amount between 500 pounds to 250000 pounds without facing much hassles and consumption of time. Simply by filling up the online application form one can have the loan to fulfill his desires. As these online service providing teams work in close cooperation with reputed lenders, these expert teams can arrange even unsecured loans without consuming more time.

The Vulnerabilities of the US Dollar

2008-05-23T23:04:00.001-03:00

- Euro: Headed Back to 1.60?
- Can the British Pound Hold Onto its Gains?

The Vulnerabilities of the US Dollar

The US dollar weakened significantly this past week as rising oil prices revealed the vulnerabilities of the US economy. Companies are beginning to struggle and have been forced to come up with more creative ways to deal with the energy crisis. With crude oil prices hitting $135 a barrel and gasoline in many states topping $4 a gallon, US companies are making cuts across the board. Ford Motors Co for example plans on reducing production while American Airlines will be lowering capacity by 15 percent and adding bag charges. According to the futures market, some traders even expect gas prices to hit $7 to $8 a gallon. However the US is not alone in having to deal with the oil crisis which is one of the major reasons why the dollar has weakened. Over the past few weeks, the market had been slowly pricing in a pause from the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to cut interest rates. The surge in oil prices and hawkish comments from the European Central Bank, the Bank of England and the Reserve Bank of Australia dramatically altered the outlook for these central banks. With strict inflation targets, traders came to realize that interest rates for these 3 countries will remain unchanged for the foreseeable future and as a result, currency rates adjusted for these expectations. In the coming week, the vulnerabilities of the US economy may become even more apparent. The US markets are closed for Memorial Day on Monday, but we still have a busy week ahead of us with consumer confidence, new home sales, durable goods, first quarter GDP, personal income, personal spending and Chicago PMI due for release. We expect most of these numbers to be dollar bearish as US consumers continue to struggle under the weight of deteriorating personal finances.

Euro: Headed Back to 1.60?

The Euro staged a dramatic recovery against the US dollar this past week as hawkish comments from the European Central Bank fueled speculation that a rate hike may be around the corner. Although we think that a rate hike would be a dramatic move, the stability of recent Eurozone economic data is certainly encouraging as the market's focus shifts from fears for growth to inflation. Earlier this week, German business confidence for the month of May showed a surprising improvement. Today, the PMI numbers explain why German businesses are not worried. Service and manufacturing PMI numbers both deteriorated from the prior month, but remain in expansionary territory. Next week, it may be US rather than Eurozone economic data that help the EUR/USD inch towards 1.60. The only significant reports from the Eurozone are German employment, Retail PMI and German retail sales. We expect the labor market in Germany to continue to improve because the employment component of the manufacturing PMI report actually accelerated this month. Meanwhile it will also be a busy week for Switzerland who will be releasing their trade balance, UBS Consumption and KoF leading indicator reports. The currency has performed very well against the Japanese Yen this past week and it remains to be seen whether this strength can continue.

Can the British Pound Hold Onto its Gains?

It has been a great week for the British pound, which rallied more than 300 pips against the US dollar. Upside surprises in economic data as well as hawkish minutes from their latest monetary policy meeting confirmed that it will be months before we see another rate cut from the Bank of England. In fact, for all intents and purposes, the next move from the BoE may have to be a rate hike. Unlike the US, the Bank of England has a strict inflation target and if inflation is more than 3 percent, the central bank governor is forced to write a special letter to the Chancellor to explain why inflation has increased and to outline the time frame for bringing inflation back to target. Earlier this month, consumer prices hit 3 percent on a yearly basis, and now, the BoE must do all that they can to rein in inflation. The recent stability in economic data has helped their cause as long as the economy does not fall back into a downward spiral. With no major economic data due for release next week, the British pound stands a chance at holding onto its gains as long as there isn't surprisingly strong US data.

Great Week for the Australian, New Zealand and Canadian Dollars

Rising commodity has been the story of the week, helping to take the Australian, New Zealand and Canadian dollars higher. The Aussie rose to a 24 year high, putting itself within an arm's reach of hitting parity against the US dollar. Rising inflationary pressures and stronger economic data leaves the RBA far closer to a rate hike than any of the other major central banks. We do not believe that they are ready to raise rates, but tighter monetary policy could be a final option. The lack of meaningful economic data next week leaves the action for the Canadian and New Zealand dollars. Canada will be releasing its Current Account balance and GDP while New Zealand will be reporting its trade balance.

Fate of USDJPY Tied to Movements in the Dow

This past week, the fate of USD/JPY has been tied to the movements in the Dow but there has been vastly divergent behavior in all of the Yen crosses. EUR/JPY, AUD/JPY and CHF/JPY for example have performed well while USD/JPY has remained depressed. The sell of in US stocks continued to help the Yen, but the slew of market moving data scheduled for next week will heighten the event risks for the low yielding currency as we expected much of the data to reflect the pressure of rising oil prices. On the economic calendar are the retail sales, jobless rate, consumer prices and industrial production reports.

DailyFX

Dollar Slides as US Housing Recession Deepens

2008-05-23T23:03:00.001-03:00

The lack of improvement in the housing sector continued to weigh on the US dollar, and kept traders from bidding the currency before the extended holiday weekend. Looking at price action, the low yielding Yen and Swiss franc rounded up the biggest gains against the US dollar. In turn the euro regained its footing and pushed back to yesterday highs just short of 1.58. The British Pound however held steady throughout the session as growth concerns led the currency to hold in the 1.98 range. The greenback also declined against the Australian and New Zealand dollar as commodity prices pushed higher - though the Canadian dollar didn't join the crowd as traders squared their books for the weekend.

On the economic front, the National Realtors Association's existing home sales report dampened hopes that the worst housing recession in a quarter century may be coming to an end. Sales fell 1.0 percent in April - posting its eighth consecutive decline in the past nine months. And, though this figure did have a positive side in that it was better than the 1.6 percent drop forecasted, the details of the report clearly spelled out a deteriorating market. Buyers continued to search out bargains though the median housing price dropped 8.0 percent from the same month a year ago. Interestingly enough, prices actually rose on a monthly basis for the second time, which may have in turn led inventories to rise to a new record high.

Rising commodity prices mixed with falling home prices pressed on the stock markets, and led investors to cutback on high risk-reward investments. As a result, the DJIA fell 145.99 points to 12,479.63 points, with 27 of the 30 components declining. The broader S&P500 also slipped 18.42 points to hold off at 1,375.93 points, with 172 stocks falling to a new 52 week low.

Heightened economic concerns fueled demands for US Treasuries, and led risk-adverse investors to seek the safe haven of risk-free bonds. As a result, the benchmark 10-Year yield fell to 3.852 percent from 3.911 percent, while the 2-Year yield plunged to 2.446 percent from 2.528 percent.

US capital markets will be closed through Monday due to the Memorial Day holiday; and the dollar will suffer from the low liquidity and could experience high volatility in turn. When US-based traders return to the markets, fundamentals will be there to meet them. Tuesday is packed with the S&P/Case-Shiller housing data, new home sales report and consumer confidence. Looking over the entire week's listings, there will be particular interest in the first quarter GDP revision which is expected to benefit from a boost in consumer spending and exports.

DailyFX

U.S. Market Update

2008-05-23T23:02:00.001-03:00

Dow -147 S&P -20 NASDAQ -33.7

Indices opened and moved lower this morning as oil resumed its upward march, topping $133/bbl overnight. The climbing cost of crude is seen hitting various industries, as RCL-5% was cut overnight at Morgan Stanley. F-4% was still sinking after lowering its outlook yesterday; last night, Ford's CEO declined to say when or whether the company will set a revised profit target. Meanwhile, the US Department of Transportation reported this morning that vehicle miles traveled in March fell 4.3% y/y, representing the first drop in the month since 1979. GM opened lower after reporting that the American Axel strike had further impacted operations, cutting production by 230K units in Q2, with a pretax EPS impact of $1.8B. Several major retailers reported after the close yesterday, painting a broadly mixed to positive picture. FL+10.8% after beating revenue estimates, HIBB+6.8% after guiding significant SSS improvement in May and ZUMZ+5.2%. PSUN-11.7% was the exception, with the company cutting its SSS and earnings guidance. CA+6.3% came in under estimates but guided strong for FY09 (garnering a price target hike at RBC). In M&A news, BUD+8% after the Financial Times reported that the Belgian brewing giant was working on a $46B bid for the company; CNBC's Faber later reported that sources were saying BUD had no interest in answering any potential bid amicably. AGL+30% after announcing it had signed a merger agreement with LEH-4% for $22/shr.

Bond markets are benefiting from the softened equity markets and the better-than-expected headline April US existing home sales data. It is worth noting the figures did reveal April's supply rose to a 22-year high above 11 months, which may have added to the pressure in stocks. The 10-year yield has slipped back below 3.85% after testing 3.95% during yesterday's session.

The USD continued its soft tone in the session as higher commodities continued to weigh on sentiment. The dollar was unable to gain any momentum as growth in European service and manufacturing industries slowed in May. US existing home data was above expectations, but the rise in inventory remains a concern. The spread between the US-German two-year notes continues to widen at -172 bps from -150 a few days back. The JPY was broadly firmer as the BoJ expressed worries on inflation as oil prices continue to rise. In addition, Japan's top economic advisory panel urged diversification in the state-run pension fund. JGB futures were sharply lower overnight as chatter that pension monies would flow out of bonds into equities. Dealers were paying close attention to a downward sloping trendline in EUR/JPY cross that is currently place at the 164.70 approach. A break above would open upside momentum in the cross. Commodity-related currencies are slightly firmer with USD/CAD at 0.9850 and AUD/USD at 0.9615 Thin market conditions will prevail on Monday with both the US and UK on holiday.

Trade The News Staff
Trade The News, Inc.

Housing, HOUSING!

2008-05-23T23:01:00.001-03:00

And that concludes our week dear reader as we head off to the long weekend and the official Memorial Day kick start to the summer; we depart the week with more weakness in the Housing sector. The U.S. session revealed that sales of previously owned homes fell in April though less than expectations but they are still falling and inventories of unsold properties set yet another record high, proving that the problem is far from over in the US economy.

The single currency now is ending the week strongly bullish against the dollar, while now the euro is attempting to build a higher base to continue the new initiated upside wave 1.5690s -1.5670s is going to be the strong demand point for now. While the daily basis heavily saturated with buying orders the weekly basis is still indicating the upside potential; thought the correction might take place which might take the euro down until 1.5611 as the first level and even if it extend the wave will be valid as long as 1.5585 remains intact.

The pound is creating a new upside wave on the medium term as today's closing if manages to be above 1.9779 at least will indicate the breach of the major descending channel and the beginning of a new wave as still on the weekly basis momentum indicators are reflecting upside potential. On the daily basis the pound is heavily over bought still which on the intraday helped the pound decline after setting the high at 1.9850 which is a strong level for the pound that might take the pound down till strong support levels at 1.9770s which as mentioned above need to close above to indicate the upside reversal.

The USDJPY continued the downside headings to set the low at the strong support level of 103.20s yet on the intraday basis reversal signals have appeared as the pair is excessively oversold affected by ongoing carry trades reversals in the market. On the short though as long as the pair remains trading below 104.20s then the downside current waves is still valid.

Crown Forex

U.S. Existing Home Sales Drop; Inventories Soar

2008-05-23T23:00:00.000-03:00

Existing home sales dropped by 1% in April, sending the annualized level down to 4.89 million units from March's 4.94 million level. Markets were expecting a 1.6% drop. The monthly decline reflected drops both in single-family homes (down 0.5%), while condos/co-ops sales dropped 5.2%.

The number of unsold homes on the market soared 10.5%. Measured in terms of months' supply, inventories were at 11.2 months, the highest level on record. The median price of existing homes increased 1.1% in April, although it was 8% lower on a year-over-year basis.

Existing home sales are now a full 3.3% below their September 2005 peak. They are also an annualized 5% lower than their first-quarter average, consistent with our forecast calling for another outsized decline in residential investment in the second quarter. Inventories in the sector jumped 10.5% and are now approximately 1.8 times their historical average. This implies that no near-term bottom is in sight for the housing market. Indeed, the NAHB housing market index ticked lower in May.

The elevated level of inventories also suggests that prices will have to fall further in order to assist in clearing the inventory glut. Eroding household net worth will be a weight on the consumer. However, disposable income has historically been the most important driver of consumer spending and the fiscal rebate checks should prop spending up in the second and third quarters.

RBC Financial Group

Calm as We Await...

2008-05-23T22:58:00.000-03:00

The greenback remains weak against major currencies as the housing slump deepens while the soaring of crude oil prices continue to negatively affect growth in the US economy while upside risks to inflation remain as result of rising food and energy prices. The markets remain calm as we await the release of existing home sales later on this afternoon as sales are projected to decline even more, and if this case happens the USD will remain deteriorating since the US still did not find a bottom to the housing sector.

The Euro Zone released its PMI manufacturing advanced reading for the month of May coming in line with projections at 50.5 but still less than the prior reading of 50.7. As for the services reading, it declined to 50.6 from 52.0 while it was forecasted at 51.7. The composite advanced reading for May also slipped to 51.1 from both the expected and previous readings of 51.5 and 51.9 respectively. Although the service and manufacturing industries grew at the slowest pace since five years due to the massive rise in crude oil prices seen lately, the euro is neutral versus the falling greenback due to banks making it harder to lend companies money. The EUR/USD is currently traded at 1.5723 while recording a high of 1.5741 and a low of 1.5696.

The UK released its first quarter GDP preliminary reading coming in line with predicted and prior readings at 0.4% respectively. As these readings were widely expected in the market it did not move the market much while sterling is neutral too as it awaits for the release of the US fundamental data concerning home sales. The GBP/USD is currently traded at 1.9792 while recording a high of 1.9808 and a low of 1.9755.

Currently in the market people are lacking confidence as investors fear the market while they sell high yielding currencies and buy low yielding currencies in which we call unwinding of carry trades. The yen is finally rebounded gaining some of its losses witnessed the past couple of days at it gains against major currencies. The USD/JPY is traded at 103.62 while recording a high of 104.26 and a low of 103.46.

Crown Forex

Euro Economy Weakening

2008-05-23T22:57:00.002-03:00

The generally weak Euro-zone data will make it difficult for the Euro to regain momentum in the short term.

The Euro pushed to just above the 1.58 level against the dollar in early Europe on Thursday, but was unable to sustain the gains and generally drifted weaker during the day. Energy and gold prices again had an important impact on the US currency.

Oil advanced to a new record high in Asia around US$135 per barrel before a retreat. As gold prices also weakened, there was increased pressure for a Euro correction weaker while there was also pressure for a correction after recent gains.

The latest Euro-zone industrial orders data recorded a 1.0% monthly decline for a 2.5% annual fall, maintaining the recent weak trend. Although the German evidence has been generally firm this week, data from other Euro-zone economies has been less favourable, illustrating the risk of further divergence within the Euro area.

The Euro-zone PMI index for the manufacturing sector weakened to 50.5 in May from 50.7 while the services-sector index dipped sharply to 50.6 from 52.0 and suggests that the economy has stalled given that both sector are close to the 50.0 level. There was also a further reported decline in French consumer spending.

Investica

U.K Grow Yet Outlook Is Bleak

2008-05-23T22:57:00.001-03:00

The week is finally coming to an end, this week though was highlighted by the dollar's weakness which helped push oil prices to hit record highs, and this rise in energy prices is affecting inflation globally and threatening both consumers and businesses.

Both Germany and the Euro Zone reported the purchasing mangers index for May, the PMI manufacturing rose Germany to 53.5 after rising 53.6 back in April and higher than median estimates, while the PMI for services dropped to 53.7 from 54.9 and below the 54.0 expected estimate.

While for the 15-nation economy, PMI manufacturing slowed to 50.5 from 50.7 inline with median estimates, while the services PMI declined to 50.6 from 52.0 and below the 51.7 expected in the markets.

Rising food and energy prices are weighing down on consumers and businesses in the Euro area while the rising Euro is doing the rest, the ECB still see growth in the Euro area though moderating but the outlook remains way better than that in the United States and the United Kingdome, and the ECB accordingly are able to maintain their Hawkish stance to fight skyrocketing inflation.

The Office for National Statistics in U.K reported today that the preliminary Gross Domestic Product estimate for the first three months of this year, the U.K economy grew 0.4% over the quarter unchanged from the previous estimate and inline with the previous estimate, while over an annualized estimate the economy grew by 2.5 percent also unchanged from the previous and inline with median estimates.

Going through the details we can see that investments fell 1.6% after rising 1.8% the previous quarter, while consumer spending rose 1.3% after rising 0.1%, the BOE expected the economy to continue slowing throughout this year, yet the bank seems to have set his eyes on rising inflation…

The BOE are now stuck in a difficult position as prospects of rising inflation would limit the bank's options against downside risks to growth, many members of the MPC have set their eyes on growth even if their worst case scenario suggests the economy might go through contraction, as house prices continue to fall and access to credit is seen to continue tightening…

Global inflation is rising due to the fact that oil and food prices continue to soar, central bankers all around the globe are trying to find their balancing act among growth and inflation, with some expected to go through stagflation while others are seen to go through recession, and both hope that emerging markets alongside China, India, and Russia can weather the storm!

Crown Forex

Dollar Supported by Oil Prices Correction

2008-05-23T22:56:00.001-03:00

After reaching fresh record highs, oil prices eased on Friday, giving the Dollar some support in the early trading; but the US currency stayed in sight for a one-month low against the Euro on worries that inflation could lead to a deeper US slowdown. The Dollar traded at 1.5725 against the Euro at 7:00am GMT. The Dollar tends to move in the opposite direction of the oil, and it registered a hit on Thursday as the oil traded above $135. Also, earlier this week, the Federal Reserve downgraded its 2008 US economic growth forecast and raised its inflation outlook.

The Dollar traded at 104.03 against the Yen at 7:00am GMT, after slipping below 103 Yen yesterday. The Yen came under pressure as rising energy prices would also hurt Japan's growth, which is showing signs of slowdown. Traders said the Dollar was supported by buying from Japanese retail investors and importers but resistance was firm around 105 Yen due to Japanese exporter selling.

The Euro was supported by solid data that came from the Euro Zone's strongest economy, Germany, which leaded to speculation that the European Central Bank was more likely to raise interest rates than to cut, after keeping them on hold at 4 percent this month. The currency was little changed against the Yen at 163.74 in the early trading and it dropped to 163.55 at 8:00am GMT.

The Pound fell against the Dollar before a government report that may show UK economic growth in the first quarter of the year matched the slowest pace in three years. The British currency also traded near the weakest level against the Euro. The Pound traded at 1.9773 against the Dollar and at 0.7949 against the Euro at 8:00am GMT. Later today will be revealed UK's revised GDP, which is expected to stay at the 0.4 percent level.

US sales, revealed later today, probably fell in April to a record low, signalling no let-up in the housing recession and pushing the Dollar down, economists believe. According to a Bloomberg News survey to 67 economists, the National Association of Realtors may report that home resales dropped 1.6 percent to a 4.85 million. “As the Dollar lacks direction, the focus will be on crude if home sales data come weak as expected”, said Tomoko Fujii, Bank of America's head of economics and strategy for Japan.

Finotec Group Inc.

More Housing For U.S

2008-05-23T22:55:00.001-03:00

The week is about to end and our exist queue is to be the sales of previously owned properties in the United States as in April the downside trend for the sector is expected to have continued as not much Americans are convinced yet that it is the time to bargain…

With the vaporizing sentiment in the economy and especially the housing market consumers are not at the place to hunt for new homes since their finances are tight already and face the ghost of unemployment and mounting gas and food prices.

In April Existing home sales are expected to have shed another 1.6% to an annual pace of 4.85 million after 4.93 million in March. The continued degradation in the sector was the leak that spread the contagion into the rest of the economy infecting severely the financial sector as with the collapse of the credit market after subprime loans and households foreclosures mounted the rules have tightened further to mortgage qualifications which is still limiting the drive into the housing spree.

After the dicing and chopping of those mortgages was sold to investors and left no one shielded from the horrific aftermath, still markets are gradually starting to adjust as they try to compensate their losses and strengthen their financial positions. Mortgages to those with bad credit history and the famous products that were highly risky and popular is what set Americans to default on their mortgages and lose their homes, such as those known to be famous with what is called price shocks, which are the negative amortization adjustable rate mortgages, which for the first couple of years allows the borrower the opportunity to pay small monthly payments and then starts escalating at light speed to the extent they can not afford it anymore.

Still the sector's bottoming is one of the major concerns and is one of the bases that need to be achieved to help the U.S economy rise once again. The feds have reached the end of their easing cycle and now the 2.0% rate is lucrative enough to stimulate the economy. Inflation is the concern now especially with the surge in commodities and the amounts of liquidity that was added into the economy whether to the financial sector or the rebates to the public is excess money supply that will reflect the effects of it as well.

The American induced credit crunch has affected world economies as well, as UK is the first runner up to suffer severe slowdown this year. Today will be the second revision to the first quarter GDP estimate which is expected with no change at the sluggish pace seen of 0.4% on the quarter and 2.5% on the year. As for the second European economy it's the advanced PMI day as we are expecting slight softening in May in both the Union and Germany yet rest ashore that till now their fundamentals are 'sound' and they have conquered and survived compared to other nations.

Let's wait and see as the mover will be the home sales in the U.S for today as we are upon the week end squaring as well so be ware, and after the surprise pick up in housing starts you never know we might see one here, which will be taken strongly positive for the dollar, especially that the woes are once more concentrating on the credit turmoil and the need to a bottom in the housing sector. So stay tuned until the data is with us to devour…

Crown Forex

U.S. Market Update

2008-05-22T18:14:00.001-03:00

Dow +25 S&P +4.3 NASDAQ +13.4

Soaring oil prices continued to dominate markets and headlines this morning, although unlike the previous two sessions indices have been gaining ground since the open. Traders appear to be using the heavy losses of the last two days as a buying opportunity, with confidence further bolstered by the better than expected weekly jobless claims data out before the open. Front-month oil hit a new high of $135.09 a barrel before pulling back to trade at $133.05 this morning; OPEC Secretary General Badri responded by calling the oil market "crazy." Ford opened in the red after dropping its standing goal of returning to profitability in 2009 and slashing production for 2008 "to respond to the rapidly changing business environment." Tech name BCSI is down 26% after missing earnings estimates and declining to offer specific guidance for the coming quarter besides saying that results would be "flat." Retailers were reporting a gloomy picture of the US consumer this morning: DKS-16.6% after missing revenue estimates and cutting its earnings and SSS outlook, ANN-4% after guiding SSS "slightly negative" for the year, BONT-5% after a mixed quarterly report and cuts to guidance, and GME-9.4% even after beating estimates and raising guidance. Two retailers managed to buck the trend, with LDG+9.7% after reaffirming its positive outlook and ZLC+10.3% on improving revenues and positive SSS. ESLR was a big winner, opening up more than 20% after reporting two new contracts worth approximately $1B. CPN gained nearly 9% after the company confirmed an unsolicited merger offer from NRG Energy that would create the largest power company in the US. In other M&A news BCE is sliding 14% after a Quebec court upheld an appeal by debt holders who claimed the buyout LBO offer as is it currently constituted is unfair.

Treasury markets are losing some ground, sending the 10-year yield back above 4.90% bringing it back within reach of the 2008 high. There has been some flattening in the benchmark yield curve with the spread dipping below 140 basis points helped by the two-year yield climbing back above 2.50%. The Oct fed fund future has seen the odds of a 25 basis point hike by later this year rise above 25%.

The USD rebounded from its earlier lows against the majors aided by better weekly jobless claims data and cautious comments from European officials on the 2008 growth outlook. The EUR/USD was retesting the 1.57 level after hitting 1.5814 in early European trading. The Italian Business Group noted that a strong euro was harming exports, adding that the ECB must not underestimate the slowdown in GDP. The EU's Juncker stated that he did not expect the euro to develop "extremely favorably" over the coming months, noting that there will not be a recession in Euro Zone while lowing estimates for 2008 GDP to 1.4% "at best" vs the 1.7% EU forecast provided back on April 28. The dollar was also aided by oil retracing from its latest all-time high. The JPY was broadly softer following the downgrading of the Japanese export and housing sector in a report issued by the government. EUR/JPY up 90 pips at 163.50, USD/JPY above 104 and GBP/JPY firmer by 300 pips at 206. The GBP rose to a three-week high of 1.9768 on the back of the smaller-than-expected 0.2% decline in UK April retail sales and an upward revision to UK March retail sales. EUR/GBP was lower by 75 pips to 0.7930 level.

June Bud -28 ticks at 112.69 and June Gilts -75 ticks at 106.18. European equities recovered from earlier losses to move into positive territory ahead of the close. Euro Stoxx 50 flat at 3,795, FTSE unch at 6,200, CAC 40 +0.1% at 5,030 and DAX +0.3% at 7,061

Trade The News Staff
Trade The News, Inc.

Jobless and Dollar!

2008-05-22T18:12:00.002-03:00

The dollar in the US session was able to proclaim some strength as the weekly claims fell more than expected, as woes are still surrounding the labor market in the US as the Feds said that further rise in unemployment is to be seen in the US which was enclosed within the yesterday released FOMC minutes.

The Euro continued its downside wave as it needed the correction, and the drop in industrial orders helped the euro to give up more gains. In the US session the euro hit its intraday low at 1.5726 and now momentum indicators are starting to provide reversal signals as the euro is within oversold areas. On a daily basis the euro set the high early at 1.5814 and though the euro is in an overbought area still no clear signs of reversals are seen confirming the intraday basis which now the euro that trades at 1.5750s might attempt to 1.5770s before declining once again to the downside.

The Pound though was hammered with negative growth data yet the positive momentum was confirmed from rising inflationary pressures confirming the steady rates for the BoE. The upside wave that was seen since the morning in the US session let the pound consolidate at its intraday highs set at 1.9849 as the pound attempted to breach above 1.9850s yet has failed intraday momentum is weakening and shows the pound might drop and on a daily basis sterling is in an overbought area the pair targets 1.9870s while now 1.9770s is a critical level for the pound and if it manages to continue to trade above it and closes higher especially on a weekly basis and new upside wave will be confirmed validating the breach of the upside band for the descending channel.

The USDJPY is still within the upside wave since the morning trading now at its highs near the peak set at 103.76 though on an hourly basis the pair is excessively overbought which might take it down slightly until 103.40s before the upside continuation as now the daily basis is confirming upside headings from an oversold areas which targets 104 levels.

Crown Forex

USD to the Fall...

2008-05-22T18:12:00.001-03:00

The dollar is continuing its fall on anticipations that the soaring oil prices will continue to pressure inflation while slowing growth in the US economy. The greenback is still negatively affected by the housing sector as today a report from Office of Federal Housing Enterprise Oversight will show housing prices are still plunging and this time fell 1.3% percent in the first quarter. As we all know that the housing crisis was behind the fall out of America due to subprime mortgages crisis as this will continue to downgrade the US dollar until they find a bottom to the housing sector.

The EU released its industrial new orders for the month of March coming in at -1.0% worse than both the expected reading of -0.5% and revised previous reading of 0.2% from 0.6%, but this had no affect on the single currency as it did not move the market. The euro is still strong versus the deteriorating greenback due to the ECB remaining hawkish and not expecting a rate cut anytime soon due to the rallying crude prices, and of course this is the best support the euro is witnessing so far. The EUR/USD is currently traded at 1.5764 while trading a high of 1.5814 and a low of 1.5743.

As for the UK it released its retail sales for the month of April showing that sales came in better at -0.2% from the previous reading of -0.4% while the predicted was -0.5%. The better than expected reading showed that consumers are not much affected by the high prices of food and energy as this helped the GBP gain grounds against the weak greenback as the pair tries to break the resistance of 1.9800 as it is currently traded at 1.9767 while recording a high of 1.9782 and a low of 1.9683.

The yen is stable against the dollar due to the greenback weakness but it is falling versus both the euro and the sterling in which we call carry trades. The USD/JPY is currently trading at 103.26 while recording a high of 103.47 and a low of 102.73.

Crown Forex

Dollar Continuing Its Slide As Oil Prices Rises

2008-05-22T18:10:00.000-03:00

The greenback traded near a one-month low against the euro and may weaken to $1.59 per euro and 101 yen in one month on speculation a surge in oil prices to record highs will increase inflation while slowing economic growth in the U.S., which is the world's biggest oil importer. The currency also traded near the lowest level in almost two weeks versus the yen before a government report that will probably show falling U.S. house prices. 'The U.S. economy is vulnerable to surging oil prices,' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital, Britain's third-biggest lender. 'Stagflation risks in the U.S. are rising, buffeting the dollar.' The dollar is currently traded at $1.5766 per euro as of 8:00 a.m. GMT, after falling to $1.5816, the lowest level since April the 24th. The greenback is also trading at 103.14 yen after falling to as low as 102.74 yen, the weakest level since May the 12th. The euro is currently trading at 162.70 yen from 162.76 yen.

Sterling edged higher on Thursday, but stayed near a one-month low against the euro before UK retail sales data that may suggest more sluggishness in consumer spending as the economy continues to weaken. Additional signs of weakness would complicate matters for the Bank of England as it tries to balance an economic downturn with rising inflation risks. Minutes released on Wednesday from the BoE's Monetary Policy Committee meeting earlier this month showed that only policy dove Daid Blanchflower voted for a 25 basis point rate cut from 5 percent, further dampening expectations for a cut next month.

Finotec Group Inc.

Replay The 1970s!!!

2008-05-22T18:08:00.000-03:00

Well, well, well aren't we in an enigma! Doesn't this just sound peculiarly familiar what we are seeing in the US and the global economy, sure it does, reminds us of the era merely behind the terminology STAGFLATION in the 1970s, combining sluggish growth and surging INFLATION!

The FOMC minutes of the last meeting where the feds took rates down to 2.0% indicated clearly that the feds are insecure about inflationary levels and are in no place to lower rates further. They downgraded growth and upgraded their inflation projections, and that surprisingly added to the woes of the US dollar and did not at all support it like what was seen after the decision as market participants predicted the bottoming of the easing cycle.

Growth is to pick up in the second half of this year. That is still the testimony the Feds are holding on to, yet markets already know that and with $135 barrel of oil they see dues to be paid by the American economy as they are to enter the Stagflation Era with no redeemer; and according to the American history of monetary rule they will result to quick reversal to those rate cuts to take the economy into RECESSION before rising up once again and now that scenario is which once was thought the savior for the dollar it is instead its undertaker!

Inflation in the 1970s ear of OPEC rule was approached by the US administration with what is known by the Economic Stabilization Act of 1970 when the president became the Commander in Chief of PRICES, well surely the administration has assumed to take control is the same domineer but by actual military invasion of oil rich nations to secure their supply instead of going through the dilemma once again, yet the messers have become the messees, and now Bernanke is the one in the line of fire.

How is the economy to rise of its predicament, the stimulus if actually convinces consumers to spend that is more inflation, and when the economy adjusts to rising domestic demand still inflation will surge more disposable income at that point will be torn apart and wage increases will be prohibited to not fuel further price pressures, and there comes the more important pickle which is the HOUSING MARKET prices then if they bottom are supposed to rise but with that affordability problem and tight house hold finances are not going to spur them into properties buying mood!

So basically here is the conclusion. Inflation is the ruling power in nowadays economic balance. In the Euro Zone it's the one in charge surely in the United Kingdom it's threatening the stagflation phase as well and today we have data from both economies to weigh the effect. Britons are expected to have trimmed further their shopping sprees as sales are projected to have deepened the fall in April. As for the industrial direction in the Kingdom still at records low and expected with slight improvements on the back of abroad and not domestic demand. As for the single currency nation the industrialized nation is expected to have seen much more softening in that sector in March, as today Europe is taking the lead to add to the woes the surging crude has bestowed upon financial balance in markets and economies.

All are waiting for the knight in shining armor, and all people of the world are looking up to their central bankers and governments for redemption yet are they capable of handling the challenge? Bernanke is now out of ideas for the US and the world needs them to stabilize for no other reason but to secure financial markets stability and restoring of liquidity which has prompted their economies to their nightmares, while the feds now are using the old trick in the book the WAIT AND SEE approach so let's see what good that is going to bring us as we ponder upon the weekly unemployment claims for last week and suffer with the rest of the American public!!!

Crown Forex

Inflation Concerns Pressure USD

2008-05-22T17:56:00.006-03:00

The dollar fell versus most key currencies Wednesday as oil prices surged to a new all-time high increasing inflation concerns. Minutes from the April 29-30 Federal Open Market Committee meeting showed most FOMC members were concerned about inflation as they 'viewed the decision to reduce interest rates at this meeting as a close call.' However, the minutes did not boost the greenback. Inflation concerns are the key driver of the FX market. The oil-price surge is an indication of the Fed's too easy monetary policy as well as a major driver of the dollar's decline. Although the Fed's easy monetary stance increases not only the US inflation rate but also the worldwide inflation rate, investors prefer currencies where inflation targeting has been used, like the euro and dollar block currencies, as they are less prone to inflation. The AUD/USD rose on surging commodity prices and international interests in Australia's commodity companies. The USD/CAD fell to the lowest in more than two months on record oil prices and speculation the Bank of Canada will be less likely to cut rates after a report showed Canadian inflation accelerated in April. The GBP/USD was little changed ahead of tomorrow's UK retail sales data. The risk-sensitive yen and Swiss franc rose as US equities sold off.

The EUR/USD had its biggest two-day gain since March on an unexpected rise in German business confidence, reducing bets the European Central Bank will cut rates anytime soon. The pair is also highly correlated with crude oil that rose above $133/barrel. The EUR/USD looks poised to test the 1.59 resistance or even the all-time high at 1.60. First support is now at 1.57 and second at 1.54.

Financial and Economic News and Comments

US & Canada

- The Federal Reserve signaled no more interest-rate cuts and raised its expectations for unemployment and inflation this year. The minutes from the April 29-30 Federal Open Market Committee meeting showed 'several members noted that it was unlikely to be appropriate to ease policy in response to information suggesting that the economy was slowing further or even contracting slightly in the near term.' The Fed also released updated quarterly economic forecasts with the minutes. The Fed forecast the US GDP to rise between 0.3% and 1.2% this year, down from the last forecast of growth between 1.3% and 2%.
- Canada's consumer-price inflation rose to 1.7% y/y and 0.8% m/m in April, Statistics Canada reported. The rise in the annual inflation rate to 1.7% y/y from March's 1.4% y/y is the first inflation-rate increase since November 2007 driven by an 11.6% y/y rise in gasoline prices. The Bank of Canada's core CPI, which the BOC uses to monitor the inflation target, increased 0.3% m/m, and rose 1.5% y/y in April from March's 1.3% y/y

- Canada's leading economic index rose 0.1% m/m in April, the first increase since January. Six of the index's 10 components rose, led by the stock market and sales of durable goods, Statistics Canada said.

Europe

- German business confidence unexpectedly rose to 103.5 in May from 102.4 in April, the Ifo institute said. The business conditions index rose to 110.1 in May from 108.4 in April, and the business expectations index climbed to 97.3 from 96.7. Although unexpectedly rising, the indicators are mostly below 2007's readings indicating economic momentum is gradually losing speed.

- The Bank of England voted 8-1 to keep its benchmark interest rate unchanged at 5.0%. The majority of BOE policy makers argued that a rate cut risked letting inflation get out of control

Asia-Pacific

- The Australian consumer sentiment index rose to 89.8 in May, the first increase this year, from 87.4 in April, Westpac Banking Corp. and Melbourne Institute reported. The sentiment index recorded its fourth straight reading below 100, indicating pessimists outnumber optimists

FX Strategy Update

	EUR/USD	USD/JPY	GBP/USD	USD/CHF	USD/CAD	AUD/USD	EUR/JPY
Primary Trend	Positive	Negative	Negative	Negative	Neutral	Positive	Neutral
Secondary Trend	Neutral	Neutral	Negative	Positive	Neutral	Positive	Neutral
Outlook	Neutral	Neutral	Negative	Neutral	Neutral	Negative	Neutral
Action	Sell	Sell	Sell	None	None	Stopped Out	None
Current	1.5787	103.01	1.9691	1.0260	0.9847	0.9635	162.57
Start Position	1.5661	N/A	1.9865	N/A	N/A	0.9495	N/A
Objective	1.5100	N/A	1.9380	N/A	N/A	0.9035	N/A
Stop	1.6055	104.65	2.0085	N/A	N/A	0.9635	N/A
Support	1.5700	102.80	1.9400	1.0200	0.9700	0.9500	161.00
Support	1.5400	100.00	1.9200	1.0000	0.9500	0.9300	159.00
Resistance	1.5900	106.00	1.9800	1.0600	1.0000	0.9700	165.00
Resistance	1.6000	107.50	2.0000	1.0800	1.0300	1.0000	167.00

Hans Nilsson
Capital Market Services, L.L.C.

Most Fed Officials Viewed April Rate Cut as 'Close Call'

2008-05-22T17:55:00.000-03:00

Signals no more rate cuts even if economy contracts; says the substantial easing of monetary policy since Sept., the Fed's liquidity efforts [TAF, TSLF], and the fiscal stimulus package should help to support economic activity. "Moreover, although downside risks to growth remained, members were also concerned about the upside risks to the inflation outlook, given the continued increases in oil and commodity prices and the fact that some indicators suggested that inflation expectations had risen in recent months. Nonetheless, most members agreed that a further modest easing in the stance of policy was appropriate to balance better the risks to achiving the Committee's dual objectives."

Notes odds that economy may be 'severely disrupted', financial conditions better, but still fragile, concened about upside inflation risks, signs inflation expectations had risen. Saw rising restraint on consumer spending.

Food, energy pries to keep boosting overall inflation.

Raises 2008 jobless forecast to 5.5-5.7%% from 5.2-5.3% previous

Adjusts 2008 GDP growth forecast to 0.3% -1.2% from 1.3%-2%previous, and 2009 to 2%-3% from 2.1%-2.7% previous

Raises 2008 core inflation forecast to 2.2-2.4% from 2%-2.2% previous, Total Inflation forecast to 3.1%-3.4%% from 2.1%-2.4%

Trade The News Staff
Trade The News, Inc.

U.S. Market Update

2008-05-21T17:39:00.000-03:00

Dow -66 S&P -1.7 NASDAQ -3.8

Markets were trading in the red for a second day in a row this morning as oil continues its long march north, passing the $130/bbl mark before the New York open and hitting $132/bbl in mid-morning trading following weekly inventory data. Airline names are feeling the pain of soaring fuel costs and fresh analyst downgrades, while AMR took the opportunity this morning to say it would make significant capacity reductions in its 2008 domestic schedule and speed up retiring planes. CAL -10% DAL -7.5% UAUA -12.6% LCC -12% JBLU -4.25%. IMH-17% was another big looser after announcing a FY07 net loss of $2B and disclosing an SEC inquiry into its operations. In more positive news, ADLR+6% after the FDA approved its Enterg drug candidate after the close yesterday; GlaxoSmithKline has signed a co-development deal with Adolor for the drug. BGP+14% was surging after the Wall Street Journal reported that Barnes & Noble has assembled a team of executives and advisers to study a bid for Borders, although it remains unclear what sort of antitrust barriers a merger of the US's top two book retailers would face. SOLF+8.3% after crushing the Street in its Q1 earnings report before the open this morning; the Chinese solar manufacturer noted that higher selling prices offset higher raw-material costs and boosted its guidance for full-year production to a maximum of 180MW. Treasury prices are marginally lower sending the 10-year yield back above 3.80%.

The USD was broadly weaker on Wednesday as higher commodity prices and better German economic data weighed upon its sentiment. The EUR/USD probed the 1.5780 area to embark on a potential retest of the 1.60+ all-time high in the pair. Chatter circulated that Asian central banks continued to diversifying dollar reserves into euros throughout the week, before today's German data release. In addition, comments from various members of the IFO noted there was no urgency for a potential ECB rate cut. IFO members also said that the euro's appreciation was a concern, but noted that Euro-Zone exports levels remain positive. German Econ Min Glos stated that the IFO data showed economy on solid footing, hence the robustness that ECB members have pointed out throughout the spring.

Trade The News Staff
Trade The News, Inc.

Canadian Inflation Unexpectedly Rises

2008-05-21T17:38:00.001-03:00

Canadian annual inflation unexpectedly rose 1.7% in April from 1.4% the month prior, for the first time in six months. Consumers shelled out more money for gas, transportation and food. The core index, which is the focus of the BoC, to 1.5% from 1.3% in March, Record fuel costs may be helping the Canadian economy, but they are diminishing the purchasing power of consumers, as the energy component rose 4.9% from 2.7% the month prior. The MPC will now have to contend with inflation concerns and slow growth as its counterparts are across the globe. Growth in the region has remained resilient on the back of the commodity boom, which has spurred hiring. Therefore, the central bank may look to pause its easing policy as it assesses the risks of rising prices.

DailyFX

The Dollar May No Longer Be King

2008-05-21T17:35:00.000-03:00

Constantly rising oil prices may cause an energy crisis that will eventually lead to a new world financial system based on multiple currencies instead of the U.S. dollar, according to a Rice University study. The dollar can no longer buy what it used to, most economists believe that in the very near future most countries if not all will start to diversify the currencies that they buy oil with, Iran and Kuwait have already started the process of excepting Euros and Yens, all in all this would be a huge step forward in fair trade and ending the U.S petrodollar monopoly.

Rising inflation fed largely by oil-producing countries will force Western governments to tighten monetary policies, undermining export-driven economies in China and India, according to a study released by the Houston-based University’s Institute for Public Policy. That would undercut energy demand, ending cheap credit worldwide that is fueled by so-called petrodollars and further undermining the global economy. "We think that energy markets may play an important role in bringing about a financial crisis that may transform the global financial system," the study's authors wrote. The U.S. dollar's status "would likely come to an end."

German business confidence rose in May despite record oil prices and the U.S. slowdown affecting some parts of Europe's economy. German Ifo Business Climate Index came in at 103.5 from an expected 102.1, 8:00 am GMT. EUR/USD currently trading at $1.5728 as of 8:30 am, GMT and expected to rise. Moving on to Britain, billionaire investment guru George Soros said that Britain has yet to suffer the worst fallout from the credit crunch. The acute phase of the global crisis may have passed but the real economy is only just starting to feel the impact. Mr. Soros added the world was set for a period of greater instability with British house prices likely to fall, and no one knows how bad it’s going to get. Delivering his gloomy assessment on BBC Radio, he insisted: “The degree of uncertainty is also uncertain”. GBP/USD currently trading at $1.9666 as of 8:30 am, GMT.

Finotec Group Inc.

German Business Confidence Surprisingly Rises

2008-05-21T17:18:00.002-03:00

German business confidence in May surprised for the fourth straight month, printing at 103.5 against expectations of 102.0. The survey of 7,000 executives improved from 102.4 in April, when it unexpectedly declined. The manufacturing and trade sectors saw the biggest jump in confidence increasing from 13.3 to 15.0 and from 4.0 to 6.2 respectively.The German economy has proven to be resilient as companies increased efficiency and reduced labor costs to remain competitive. The first quarter saw an increase of 1.5% in growth as demand from emerging markets remains strong, with increased automobile sales to China. The survey also showed that executives have grown more confident about the future outlook with the expectations component rising to 97.3 from 96.7 in April. The strong fundamental data will justifies the ECB staunch hawkish stance and focus on price stability, with speculation increasing that a future rate hike is now a possibility.

DailyFX

Subprime Not Gone, Inflationary Oil to Stay

2008-05-20T21:09:00.003-03:00

High inflation and soaring oil prices are once again dictating the action in currencies after hitting a new all time high of $129.50 per barrel. A tumbling dollar has been the order of the day, shadowing all other activity in FX markets. The higher than expected US PPI figures are also a negative for risk appetite and equities as they serve an obstacle to further Fed easing at a time when employment, manufacturing, housing and construction have been on persistent deterioration. The intensifying losses in Wall Street (Dow -200 pts, S&P -15 pts) are speeding up the yen's gains on reduced risk appetite. The latest oil rise started yesterday after OPEC's acting president Khelil indicated the world has enough oil and that the cartel will not have a meeting before its scheduled September meeting. Khelil's comments countered the effect of Saudi Arabia 's earlier agreement to the US demands to raise output by 300K barrels per day. The oil rally was intensified by oil magnate Boon Pickens' prediction for $150 oil.

Euro hits a 3-week high at $1.5680 on the dollar's woes. Germany 's ZEW current conditions index rose to a stronger than expected 38.6 from April's 33.2, while the ZEW economic expectations index fell to an unexpectedly weak -41.4 in May from 40.7 in April. The current conditions index is more closely correlated with ECB interest rates than the expectations index. The euro was also boosted by remarks from ZEW Chief Economist Franz who said he expected the ECB to raise interest rates in the near-term.

But the story may be different from Germany upon tomorrow's release of the more influential IFO survey (4 am EST). Markets consider the IFO survey to be a better indicator of Germany 's economy because it is the survey of business sentiment rather than investor sentiment, which may be skewed by the equity market. The IFO has a strong track record in triggering notable moves in the euro. Major moves in the index have served as catalysts in triggering the euro past big figures ($1.30, $1.40 and $1.50). After having posted an unexpected string of three consecutive monthly increases between January and March, the IFO's climate index finally retreated in April to 102.4 from 104.8, the largest point drop since September 2001 -- was instrumental in dragging the currency from its $1.60 high to $1.5650 in a matter of days. With the euro having consolidated mostly between $1.5650 and $1.5350 over the past 4 weeks, the currency requires fresh direction from the Eurozone for the latest signals in sentiment and growth expectations.

What to Make of Euro's Dollar-Driven Gains? EURUSD firms on a combination of soaring oil prices and the stronger than expected current conditions index of the ZEW survey. We pointed out yesterday the remarks from OPEC's acting president Khelil indicating the world has enough oil and that the cartel will not call an early meeting prior to its scheduled September meeting. Having breached the $1.5650s, EURUSD faces key resistance at $1.5700.

With oil prices surging incessantly and the Eurozone business indicators sending mixed signs, traders may give the benefit of the doubt to the single currency and potentially lifting it past the $1.5720. But another sharp decline in the IFO will is likely lead to losses past 1.56 and 1.5520s.

Aussie Extends to 24-Year High

The Aussie hit fresh 24-yr high against the USD, breaking above 96 cents following a hawkish minutes from release from the Reserve Bank of Australia's interest rate decision earlier this month. The minutes raised the risk of a near-term interest rate hike as they showed the policy board "actively considering" rates from 7.25% to fresh 12-year highs in order to combat accelerating inflation. Although the minutes did acknowledge substantial slowing in financial market conditions, the market still expects a rate hike to be the next policy change by the inflation-targeting central bank. The challenging part about predicting RBA rate decisions based on inflation is that CPI is released on a quarterly basis rather than monthly, which involves substantial time for price pressures to rebound on the back of rising commodities despite a slowdown in the real economy. We expect the RBA to raise rates to 7.50% before the end of the current quarter.

The Aussie has also been boosted by the recent rebound in gold, which emerged on the heels of soaring oil prices and fresh dollar weakness. We have persistently called for our preference for the Aussie to be one of the year's strongest FX performers, and called long AUDGBP as our preferred trade of 2008. The pair is now above 9%.

Technically, the chart below shows the Aussie to have broken above a key trend line resistance prevailing since November, and is now ripe to call up 98 cent as the next key target. The chart also shows the pair is inside a larger upward channel, whose upper bound lies just above the 1.00 level. That means, barring any sharp reductions in global risk appetite (AUD negative) and macroweakness in Australia , traders have all the reasons to probe the parity level. Support climbs to 0.9570, backed by 0.9530. On the longer term, key foundation is firmly cemented at 0.9270.

Sterling Upside Still Untenable

Sterling pushes up to a 2-week high of $1.9724 on a combination of general USD weakness and overall strengthening in the EUR and AUD. The current gains are a reflection of oil-driven dollar weakness than improved fundamentals in the UK , thus paving fertile ground for sterling bears to function in this week on the Bank of England minutes (Wed), retail sales (Thur), CBI survey (Thur) and Q1 GDP (Fri). UK data have shown a remarkable consistency of undershooting forecast, leading to rapid and broad selling in the currency. The chart below shows a possible extension of the gains to reach $1.9755 before renewed selling prevails en route $1.95. Whether $1.9750s emerges first remains questionable, but the eventual path is more likely to end below $1.9550 and en route to 1.9500.

Yen Rallies on Whitney and Dollar Woes

Comments from Oppenheimer's high profile banking analyst Meredith Whitney shedding further pessimism on the banking sector into 2009 are further assaulting risk appetite to the benefit of the Japanese currency. The higher than expected US PPI figures are also a negative for risk appetite and equities as they serve as an obstacle to further Fed easing at a time when employment, manufacturing, housing and construction have been on persistent deterioration.

Anticipating a sharply negative open in Asia , we expect yen gains to reaccelerate and rag USDJPY towards 103.40, followed by 103.00. We expect 102.70 to emerge by end of week. Upside capped at 104.50.

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Ashraf Laidi
CMC Markets Plc

Wholesale Inflation Continues to Climb in April

2008-05-20T21:03:00.002-03:00

In a reversal of what was expected, headline wholesale finished goods prices increased a more modest 0.2 percent while core PPI prices rose a stronger-than-expected 0.4 percent in April. After a large increase in March, food prices remained flat in April while energy prices, on net, slipped 0.2 percent. Inflation in the pipeline continues to build.

Core Rises More Than Expected

* Yr/Yr core PPI has risen to a 16 year high of 3.0 percent.
* Elevated commodity prices have encouraged more investment into the sector. This increased demand for equipment showed up in the April report as solid gains were reported in metal forming machine tools, mining & machinery equipment and oil field & gas machinery equipment.

Profit Margins Remain Under Pressure

- Like last week's CPI report, energy prices slipped as increases in wholesale gasoline did not rise as much as was anticipated by the seasonal adjustment process.
- Wholesalers' profit margins remain under pressure in this inflationary environment. Weak domestic demand is making it difficult to pass along the price increases to retailers.

Wachovia Corporation

U.S. Market Update

2008-05-20T21:02:00.001-03:00

Dow -205 S&P -14 NASDAQ -33

Markets opened broadly lower, selling off in the wake of gloomy PPI data and yet another leg higher in commodity prices. Core prices were seen climbing at twice the expected rate in April, while up 3% on a y/y basis, which was the biggest gain since the early 1990s. Retailers HD-4% and SKS-5.5% were off after reporting earnings this morning. HD came in above estimates but still saw profits for the quarter down 66% y/y and SSS -6.5%. The CFO noted that "all departments had negative sales growth," and that HD sees "softness in construction." Saks missed on earnings but saw improving SSS numbers and guidance for the quarter. Shares of Target were holding up initially following results, but have slipped since management noted they expected to see sluggish top lines sales trends to continue into near term. Organic food distributor UNFI has gained 7% on rising profits and positive guidance. Several Chinese telecom names were taking big hits this morning after recent quarterly reports: handset maker CNTF-16% after narrowly missing on earnings, wireless manufacturer GRRF-15% after just beating estimates. SMOD-19.75% was deep in the red after slashing its next-quarter EPS and revenue guidance due to a "difficult pricing environment" and delays at a supplier. A number of airline stocks were falling this morning, led by UAUA-8% and AMR-5.8%. Traders continue to discount surging fuel costs for the group and the general inability of the multitude of consolidation talk to find its way to fruition. One bright spot in morning trading was PEIX+20%, which was surging for a second day in a row on yesterday's very positive earnings report.

With US stock indices at session lows Treasury prices are testing session highs. The gains have been tempered somewhat by the elevated core PPI data, yields are at session lows with noticeable steepening in the benchmark curve. The 10-year yield is back below 3.80% while the two-year nearing 2.30% again. Piggybacking on this morning's PPI data was another surge higher in commodity prices. The energy complex is again the leader with Boone Pickens latest bullish comments sending oil towards the $130 mark. Pickens noted he sees oil likely to reach $150 a barrel this year. June gold is making fresh one-month highs above $920 along with silver. July corn, wheat and soybeans are trading up 1.5-2% in Chicago helping the CRB add 1% to 427.

In currencies the debate had centered in recent sessions on hawkish inflationary concerns among central bankers and the impact of slowing economic momentum on currencies, a point that the German Bundesbank highlighted in its monthly comments on Monday. The EUR/USD price action had reflected the ongoing debate as it probed the 1.54 to 1.56 range during the latter portion of last week. However, the commodity-related instruments have helped the dollar maintain a softer tone throughout the US morning. Comments from T. Boone Pickens pushed oil above the 129 level; Pickens noted in an CNBC interview that oil prices could rise to $150/bbl in 2008. European currencies were also aided by stronger-than-expected price data earlier in the session in both Germany and Switzerland. The weak German ZEW economic sentiment data was brushed aside for the time being as the weak USD-high commodity price theme resurfaced. The hawkish ECB comments on inflation seem to be having an effect on ZEW President Franz, who said that he personally believes the ECB will raise interest rates in near future. EUR/USD tested the 1.5675 level where chatter circulated of "quasi-government" offers building, capping the pair for the US morning. In addition, the Fed's Kohn noted this morning that the current Fed policy stance was appropriate and added that he saw the economy improving in the second half of 2008 into 2009. Kohn also noted that the USD's decline was helping exports but accentuating inflation concerns.

USD weakness was broad-based as the dollar lost over 100 pips against the majors in the session. USD/CHF probed below the 1.04 level, down 130 pips, while GBP/USD tested above its 100 week average of 1.9677 (up 200 pips in the session). USD/JPY was off 70 pips at 103.70. The AUD/USD hit fresh 24-year highs as it tested 0.9617 and USD/CAD dipped to two-month lows of 0.9875. Risk aversion was mixed in currencies as CHF firmed, while JPY was mixed. ITraxx crossover Index widened to 404 bps from 390 levels seen in early Europe. Weakness in equities helped bolster all sectors of the yield curve in the session. Over all, the curve steepened on safe-have buying. June Bunds +34 ticks at 113.59; June Gilts +23 ticks at 107.45.

Trade The News Staff
Trade The News, Inc.

The U.S. Dollar is at Key Technical Levels

2008-05-20T20:54:00.003-03:00

The economy in the United States stays vulnerable, mostly supported by the international trade. Consolidation, rather than growth, could the be scenario of the next months/years, as the global credit bubble is fading away. The U.S. dollar, in the mean time, reached an important short term top against major currencies.

Consumes to decline further in the U.S.

Lower employment, housing declines and high oil prices might be stronger than the coming fiscal stimulus. Americans are pessimistic about the present and future state of the economy, while inflation is expected to pick up substantially in the coming months. Consequently, consumes should retreat further, although the fiscal package might give a brief boost to sells over the Summer.

The preliminary report of the Reuters/University of Michigan consumer sentiment index slumped 3.1 points to 59.5 (-1.5 expected), the worst numbers in almost thirty years. Retail sales declined 0.2% in April from March's increase of 0.2%. Consumption has been almost flat so far with motor vehicles and parts showing the largest losses. Excluding the autos component, retail sales moved up 0.5% (+0.2% expected).

In reality, latest housing data was better than expected, but results should be observed over a larger period of time, since starts are down almost 30% compared to one year ago. In April, housing starts jumped 8.2%, the strongest move in more than two years, while permits increased 4.9%. Starts were supported by the construction of multi-family homes, as single-family houses declined to the lowest level in seventeen years.

Manufacturing production fading locally

A weak domestic market is subduing manufacturing production in the United States. In April, industrial production slid 0.7% (-0.3% expected). Capacity utilization declined to the lowest level of the past three years at 79.7%. Manufacturing production is very weak locally and moved down 0.8%, after remaining flat in March and falling 0.7% in February. Motor vehicles and part production slumped more than 8.0%. Finally, business equipment production, an indicator of capital spending, decreased 1.1% versus March's up move of 0.7%.

Despite the economy clearly moderating, the Federal Reserve should implement a “wait and watch” approach supported by milder inflation data. Starting in June or the subsequent meeting will depend on the coming economic numbers. In April, the Consumer Price Index (CPI) rose only 0.2% month over month and declined 3.9% from 4.% on an annual basis. The core index fell instead to 2.3% from 2.4%.

A strong GDP in Europe. Will it last?

As more current data is producing weaker numbers in Europe, growth has been quite good during the first three months of the year. In the first quarter of 2008, the Euro zone Gross Domestic Product (GDP) showed a 0.7% growth month on month (+0.5% expected), above the previous 0.4%, and 2.2% year on year. Euro zone industrial production declined instead 0.2% month on month (-0.1% expected) in March, versus February's +0.3%, and is now 2.0% year on year (+2.4% expected).

German and France have been two important assets to the European economy. In fact, in the first quarter of this year, the economy grew 1.5% (+0.7% expected) in Germany compared the 0.3% registered in the last quarter of 2007. Annually, it has been 2.6% (+1.7% expected). In France, growth has been 0.6% month on month (+0.4% expected) and 2.2% year on year (+1.9% expected).

Inflation is ECB's main target

Economic expansion is expected to decline in the second part of 2008, since many emerging markets should surrender to the global slowdown. However, the European Central Bank (ECB) will not change its policy for now, although inflation receded a bit lately. In fact, Euro zone inflation stays strong at 3.0%, but core inflation declined to 1.6%, the lowest level of the past two years.

In April, German Consumer Price Index (CPI) declined 0.2% month on month, after increasing 0.3% in March, and is 2.4% annually versus 3.1%. German inflation represents almost 30% of the total monetary union inflation rate. In France, the Consumer Price Index (CPI) rose 0.3% in April on the top of March's 0.8%. Annually, CPI is now 3.0% from 3.2%..

USD/JPY targeting support again

EUR/USD found an important support on the lower Bollinger band at 1.53. The short term trend is neutral. A move above 1.5690 would lift the European currency to 1.5780, 1.5850. A decline below 1.5170 would instead target 1.5050.

GBP/USD rebounded from the important support a 1.9400/1.9500. The next target could eventually be 1.9650, eventually 1.9750. Only a move below 1.9320 would eventually target 1.9250, 1.9160.

USD/JPY continues to consolidate between 106 and 102. The market appears to be targeting again 103.00/102.60. A move below 101.40 could eventually let prices to slip to 100.40, 100.00. A move above 106.30 would instead lift the USD to 107.00.

Angelo Airaghi
MG Financial Group

5 Most Important Events for the Forex Market This Week

2008-05-20T20:51:00.001-03:00

The majority of forex market-moving economic indicators will be contained to Wednesday, as the Bank of England's May meeting minutes, Canadian CPI, and the Federal Reserve's April meeting minutes will all be released. However, traders should also keep an eye on Tuesday's German ZEW survey of investor sentiment and Thursday's release of UK retail sales.

German ZEW Survey - May 20

Sentiment amongst Germany's investors is expected to improve slightly in May, according to the ZEW survey. The figure is scheduled to be released at 05:00 EDT, and this release tends to be a significant market-mover for the EUR/USD pair on a very short-term basis. Given the instability in the financial markets over the survey period along with signs that the European Central Bank will not even consider cutting rates, there is a risk that the ZEW reading could actually be a bit disappointing.

Bank of England Meeting Minutes - May 21

The release of the minutes from the Bank of England's May meeting - when they left rates unchanged at 5.00 percent - presents major event risk for GBP/USD, as they are likely to reflect much of the hawkish sentiment in the Quarterly Inflation Report, as BOE Governor Mervyn King said "it is likely that, with inflation above 3 percent for several quarters, I will be required to write a number of open letters to the Chancellor over the next year." However, downside risks for the economy loom large as the same report said, "rising energy and import prices will almost certainly push inflation up further, possibly significantly, in the coming months. As those price increases feed through to household bills, they will lead to a squeeze on real take-home pay which will slow consumer spending and output growth, perhaps sharply. So the balancing act faced by the Monetary Policy Committee is even more challenging than it was in February." However, It will be important to watch not only where the BOE's concerns lie, but also the vote count. The May rate decision likely had at least one vote from über-dove Blanchflower for a 25bp rate reduction, and the more votes in favor of a more accommodative monetary policy, the more the markets will sell off the British pound.

Canadian Consumer Price Index - May 21

The release of Canadian CPI data is likely to remind the markets of the Bank of Canada's dovish bias following their 50bp rate cut in April, as the headline CPI reading is expected to hold steady at 1.4 percent, though the Bank of Canada's core CPI measure is anticipated to rise to 1.4 percent from 1.3 percent. Nevertheless, this is still well below the central bank's target, and with many economic indicators out of Canada continuing to deteriorate, the odds remain in favor of another rate cut in June. In fact, the Bank of Canada's monetary policy statement in April noted that "some further monetary stimulus will likely be required to achieve the inflation target over the medium term." However, there is some potential that the surge in oil over the course of April will buoy the headline figure, but either way, if this inflation data proves to be unexpected, the Canadian dollar is likely to respond immediately.

FOMC Meeting Minutes - May 21

On Wednesday, the minutes from the Federal Open Market Committee's April 30 meeting will be released at 14:00 EDT. During that meeting, the Fed cut rates by 25bps, though indications that the Federal Reserve would pause at their next meeting led the US dollar to rally the following day. The key thing to watch for in the release of the minutes is the commentary amongst the FOMC members regarding inflation, especially given the rocketing energy and food prices raise. Currently, fed fund futures are betting that the Fed will leave rates unchanged in June, and are only pricing in a 10 percent chance of a 25bp cut. However, if the FOMC members brush off the inflation factors and focus instead on shaky financial market conditions and the significant US economic slowdown, futures may start to become more aggressive in pricing in a June rate cut, which could weigh heavily on the US dollar.

UK Retail Sales - May 22

Retail spending in the UK is anticipated to slow for the second consecutive month during April and fall 0.5 percent from March to help drag the annual rate of growth down to 4.2 percent. The data would be in line with the British Retail Consortium's (BRC) April survey, which indicated that consumers tightened their purse strings and led same-store sales to tumble 1.5 percent from last year. Furthermore, labor market conditions have started to deteriorate as jobless claims have risen during the past three months, suggesting that consumption growth may have peaked long ago.

DailyFX

Money Making Lounge is Here!

2008-03-26T14:20:00.004-03:00

Hello fellow readers, I'm sorry for letting you without our daily reports for the last couple weeks. This time was needed in order to take things in the right place and now make a better blog for all of you.

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Thanks for your understanding.
A. Mafaltti

Foreign Exchange Market Daily Update

2008-03-13T16:35:00.001-03:00

The US dollar plunged across the board hitting a new all-time low against the euro and below 100 yen for the first time since 1995 as US retail sales fell unexpectedly last month, adding to the concerns that the United States has entered a recession. In other news this morning, a Carlyle Group fund moved closer to collapse, adding to turmoil in financial markets. The dollar approached parity with the Swiss Franc and slumped versus the British pound after Carlyle said lenders will take over assets of its mortgage-bond fund. Carlyle Capital Corp defaulted on $16.6 billion of debt keeping markets expecting more Fed interest rate cuts. The Fed's attempt at boosting liquidity at the beginning of the week was not enough to restore the confidence in investors and risk aversion will continue as US dollar sentiment continues to deteriorate rapidly ahead of March 18th's FOMC meeting.

The euro soared to unchartered territory against the US dollar as credit market stress reared its ugly head again. European Central Bank President Jean-Claude Trichet reiterated in an interview published today that “disorderly movements in exchange rates are undesirable from the point of view of economic growth.” Despite the ECB President's concern over the recent excessive exchange rate movements, particularly against the US dollar, the EUR has strengthened 7% versus the US dollar this year, building on the 12% gains in 2007.

Sterling rocketed versus the weakening US dollar, taking advantage of the growing sense in financial markets that the Federal Reserve's recent actions to ease credit market strains will not work. England offers the highest interest rates in the G7 nations, which benefits the British pound, due to a widening yield advantage. The Bank of England is not going to cut interest rates any time soon as inflation is likely to rise in the near term.

The Japanese yen shot to the highest in a decade versus the US dollar following poor US economic data and renewed liquidity woes. The yen also gained as investors exited so-called carry trades, in which they borrow in a country with low interest rates and buy higher-yielding assets elsewhere, earning the spread between the two. The risk is that currency moves erase those profits. So far in 2008, the yen has strengthened almost 10% against the US dollar and the Nikkei 225 index has fallen nearly 20%.

The Canadian dollar gained against the greenback supported by record oil and gold prices once again, but has not broken out of the recent range. Canada has strong economic ties with the United States, where it sends the bulk of its exports, so the health of the US economy may eventually start to weigh on the performance of the Canadian economy.

The Australian and New Zealand dollars continue trending higher aided by strong commodity prices and concerns about the US economic slowdown.

Union Bank of California
The Bank of Tokyo-Mitsubishi Group

US: More Slowing of Consumer Spending

2008-03-13T16:26:00.002-03:00

Overview:

Retail sales for February disappointed with a total decline of 0.6% m/m. Although much of the weakness was driven by non-core components, there was further evidence that real consumer spending is slowing, as households are bowing to a wide range of strong headwinds.

Details:

The weakness in the February retail spending report was exaggerated somewhat by non-core factors. Firstly, the Commerce Department reported another decline in autos sales (subtracting 0.4pp) although the unit sales figures applied by the BEA for the national accounts showed a minor rise in February. Secondly, gasoline sales declined 1.0% (subtracting 0.1pp); they have now risen substantially again. That said, the report was weak even when excluding these factors. Core retail sales (i.e. excluding autos, building materials and gasoline) were flat at 0.0%. With soft readings in prior months as well, the report therefore provides evidence of a further slowing in underlying retail sales. The three-month annualised growth rate in core sales has slowed to 1.1% - the lowest since 2003.

The report included a downward revision of 0.3pp to total December sales, partly countered by a 0.1pp upward revision to January sales. In terms of real personal spending this will imply a minor downward revision to real consumer spending in Q4 from 1.9% q/q AR to 1.8% q/q AR. Contrarily, real personal spending in January will be revised up from 0.0% m/m to 0.1% m/m. For February the report implies rougly flat real personal spending. This implies that even with another flat reading in March real consumer spending will see an increase of ½% q/q AR in Q1.

Assessment & Outlook:

There is little doubt that US households are currently suffering. A whole range of negative factors including high inflation, declining assets prices, tighter credit and a softer labour market is restraining consumers further. The outlook for consumers remains problematic for next few months until the tax rebate begins to kick in during late Q2. Read more on the prospects for consumer spending in our recent research paper "Research US: Consumers under siege".

For the Fed, today's numbers emphasise that the economy is slowing. The markets are now almost fully discounting a 75bp cut in the Fed funds rate at the meeting next week. Our current forecast stands at 50bp, but we doubt that the Fed will dare to disappoint the markets. We will reconsider our call in the edition of Weekly Focus due out tomorrow.

No doubt! Consumer spending is slowing down

Danske Bank

U.S. Market Update

2008-03-13T16:25:00.002-03:00

Dow -69 S&P -7.25 NASDAQ -12.3

Early on the eye seemed to have passed for the equity markets as storm clouds built again on re-energized fears in the financial stocks. Futures tumbled overnight after Carlyle Capital failed to reach an accord with lenders suggesting their remaining debt could soon enter default. Credit Suisse confirmed they have been selling some Carlyle assets adding to worries of a fire sale. BSC remains one of the market whipping boys losing another 15%+. XLF -2.5% Gold stocks are one group that is shinning after spot gold briefly traded above $1000 for the first time ever. NEM +3.7% ABX +4% GG +4% Select managed care names are seeing a bit of a dead cat bounce after being slammed over the last few sessions. UNH +4% WLP +2% HUM +10% Equity markets have recouped more than half their losses from yesterday's close after comments from S&P sent the markets rocketing higher. Traders look to be clinging to the ratings agency's call that an end of writedowns for the major financial institutions may now be in sight. Government officials including Treasury's Paulson and House Financial Services Chairman Frank are also introducing new legislation designed to curtail the housing and subsequent credit woes. Bond yields were under pressure early in the session as the risk aversion theme had returned, but as equities have found some traction Treasury prices have come off. The 10-year yield is holding below 3.45% while the 2-year stands at 1.53%. That April fed fund future contract sees better than 90% odds again of a 75 basis point cut while August sees nearly a 75% chance of a 1.75% fed funds rate. Crude remains extremely volatile after making a new high at $111 it has slipped back into negative territory.

The USD remains broadly weaker throughout the latter portion of the European session. Financial market turmoil continues to play havoc on central bank credibility and its ability to find a resolution to the growing credit situation. EUR/USD hit fresh all-time highs above 1.5625 after the Carlyle announcement. USD/CHF also hit life-time lows near parity at1.0040 and USD/JPY broke below the 100 level for the first time since November 1995. Record highs in both NYMEX front month crude futures and spot gold are keeping the USD on the defensive. The risk aversion theme is putting a bid in both JPY and CHF currencies, as carry-related pairs are unwound. As noted in Wed session, FX Dealer chatter continues to center on fixed-income hedge funds, which remain under stress despite recent Fed operations to improve liquidity conditions. Verbal intervention is growing among the central bankers as Trichet stated that central bankers are now “preoccupied” with excessive Forex moves. US Treasury's Paulson reiterated a strong USD is in the nation's interest. The SNB and Norway's central banks kept their interest rates steady as expected. Dealers now ponder when and if central banks will perform the rare task of coordinated intervention. Whatever the outcome, volatility will continue to be on the upper end of recent ranges for numerous currency pairs. Dealer chatter circulating that China may enact a "one-off" revaluation of its currency. Dealers note rumors circulating that China's PBoC may use the current USD weakness environment to enact a onetime revaluation of CNY by over 8% to a rate of 6.50 level from the USD/CNY rate of 7.10. Friday's tend to be the favorite day of implementing new policies. With Oil at all-time highs, FX dealers ponder if US would even consider opening the Strategic Petroleum Reserves (SPR) in an attempt to indirectly strengthen the USD.

Trade The News Staff
Trade The News, Inc.

No Spending = No Sales

2008-03-13T16:25:00.001-03:00

So what else is new? The surprise isn't that the reading came in bad, but it actually was much lower than expected... THAT was the shock! The worse is obviously has yet to come as we will see more and more dreadfulness in the world's largest economy.

Starting off with the Retail Sales, the Commerce department released their report showing that retail sales fell 0.6% in the month of February compared to the 0.3% rise in January. Retail sales excluding automobiles sank 0.2% in February where the previous month recorded a rise of 0.3% as well.

Retail sales makes up about one-third of the gross domestic product and at this point, it seems that growth slowed down dramatically. But again this isn't much of a surprise since Mr. Donald Kohn previously testified that growth might be as much as zero this quarter. With words like that, confidence was definitely shaken and spending in the economy has slacked due to many reasons such as inclining food and energy prices and weaker income growth.

Further analyzing the components of the retail sales; the sales of durable goods were particularly weak in February while the sales of nondurable goods held up despite the drop in gasoline sales. Automobile sales plunged 1.9% marking the biggest drop since June but were down 4.2% compared with a year earlier.

Another report by the Labor Department concerning Import prices indicated that process of goods imported into the U.S. inclined at a slower pace of 0.2% in February. On an annual basis, import prices also rose 13.6%.

Prices for goods were on the rise as the dollar fell to new record lows against the Yen and the Euro as fears concerning the U.S. entering a state of recession and a possible stagflation piled up.

Imported petroleum prices dropped 1.5% where ironically, these same prices are up 60.9% over the year. Prices for imported natural gas soared 8.7% in February while non-petroleum prices inclined 0.6%. Imported capital goods climbed slightly by 0.1% in February.

On the exports side, the U.S. export prices climbed by 0.9% in February led by the jump in agricultural exports by 4.4%. Over the past year, the have increased 30.8%.

The only cheerful piece of information out today which is not quite that significant was the U.S. weekly initial jobless claims where it showed that the amount of people filing for first time aids in the week ending March 8 was the same at 353,000 from the previous revised reading. The four week average fell last week to 358,500 and continuing claims for benefits remained at its highest level since September 2005.

As for the inventories, U.S. businesses were able to get rid of their inventories in January as sales were faster than their stocks piled up. In relation to sales, inventory levels were at a record low at 1.25 times the monthly sales on a boost from high prices and gains made by wholesalers. Inventories rose 0.8% in January marking the largest rise since mid 2006.

Everyone is favoring a strong dollar... well why would you favor anything else??! A strong dollar is what is needed for the U.S. to ease inflationary pressures and hence bring down energy prices. So unless there's any other way to do that, don't pray for anything but a strong dollar!

But waiting for the dollar to strengthen might take some time especially that the effects of a 50-75 basis point cut next week has been locked into the markets ... dear reader, it's still going to be a while!

Crown Forex

U.S. Retail Sales Falter in February

2008-03-13T16:24:00.002-03:00

- Retail sales slipped 0.6% M/M in February which was significantly worse than expected
- Excluding autos, retail sales fell 0.2% M/M and was also well below expectations
- Excluding autos and gas, retail sales fell 0.1%

Retail sales were much worse than expected in February, posting a 0.6% M/M drop. Excluding autos, retail sales were down 0.2% on the month. On a year ago basis, total retail sales are now up only 2.6%, while retail sales excluding autos posted a 4.4% Y/Y gain. Even more concerning is the fact that the three month trend in total retail sales is now down 3.3%, while excluding autos, the three month trend is down 0.8%. Both are well off their recent peaks. These soft numbers are telling in that they indicate momentum in retailing activity and suggest that consumer activity is becoming increasingly fatigued.

It is clear that the housing market continues to exert a big drag on consumer activity. Building materials were down 0.7% on the month, while furniture and electronics fell 0.5% and 0.4%, respectively. The deterioration in these categories comes as little surprise and should continue as the housing market continues to correct.

Other sectors that posted declines aside from the 0.2% decline in autos were food and beverage sales which were down 0.2%. A number of commodities are posting new highs or at least continue to see price gains. As such, food prices continue to rise across the globe and this could be acting as a drag.

There were, however, a small handful of categories to post gains. They included health and personal care (+0.5%), clothing and accessories (+0.2%), and general merchandise (+0.4%). But in light of the confluence of categories that posted large declines, these modest increases do little to offset the deterioration in overall retailing activity in February.

On balance, this report is troubling. It suggests that the consumer is feeling the pinch of a softening job market, higher prices for key goods, and the other macro economic headwinds that currently weigh on the U.S. economy. The fact that the consumer can no longer depend on the housing wealth effect and job growth is slowing is a bad combination for retailing activity and suggests that consumption, which is the largest component of GDP is increasingly at risk.

TD Bank Financial Group

U.S. Retail Sales Surprise on the Downside in February

2008-03-13T16:23:00.001-03:00

In February, U.S. retail sales dropped 0.6%, contrary to market expectations calling for a 0.2% rise. This followed an upwardly revised 0.4% gain in January (previous: 0.3%). Excluding autos, retail sales dropped by 0.2%, which was contrary to market forecasts for a 0.2% gain.

In February, the weakness in retail sales was fairly broad based with only health/personal care stores, clothing and accessories stores, sporting goods stores and general merchandise stores posting gains. Housing related sales were all down. Sales at furniture/home furnishing stores dropped 0.5%, sales at electronics/appliances stores fell 0.4% while sales at building material and garden supply stores declined 0.7%. A decline in gasoline prices contributed to a 1.0% drop in sales at gasoline stations. On a year-over-year basis, retail sales were up 2.6%, the weakest pace of growth since January 2007. The component that feeds into the GDP addup, retail sales excluding automotive and building material and garden supply stores, dropped 0.2% though this was after an upwardly revised 0.6% gain in January. Relative to its Q4 average, sales excluding autos/building materials/garden supply stores were up an annualized 3.1%

With an increase in consumer prices in February probable, today's drop in retail sales implies that they were sharply negative on a real basis. Combined with the weak real consumer spending figures in January, today's data points to markedly slower consumer spending in Q1, consistent with our forecast for spending to basically stall over the January/March period. In fact, over the first six months half of the year, consumer spending is likely to be subdued. The arrival of the fiscal stimulus package will probably boost spending, though likely more so in the second half of 2008.

In a separate report, initial jobless claims for the week ending March 8th were released. They were unchanged at 353,000. The week prior, they were slightly upwardly revised to 353,000 from 351,000. The less volatile four-week moving average dropped to 358,500 from an upwardly revised 359,750 (previous: 359,500).

Tomorrow in Canada

Q4 Productivity figures will be released tomorrow. A deceleration in GDP growth coupled with an increase in hours worked points to declining productivity in Q4 after four straight quarterly increases. For all of 2007, productivity was likely up a paltry 0.8%, the weakest pace of growth since 2004. The further weakness in GDP growth will likely see productivity remain subdued over the first half of the year.

RBC Financial Group

U.S. Consumers Curb Spending, Due To Record Oil Prices

2008-03-13T16:22:00.001-03:00

U.S. retail sales unexpectedly fell 0.6% in February, recording only the second drop in eight months supporting fears that the U.S is already in a contraction. Looking deeper into the breakdown, we see that six out of the ten major components declined, led by a 1.9% reduction in automobile sales. Additionally, despite record prices, gasoline and food sales were lower, suggesting that consumers are starting to cut back in those areas. Also, a decline in building materials suggests that the housing industry will continue to negatively affect the economy. Overall, discretionary spending was lower as recession concerns are starting to weigh on the American consumer. The weakening job market, tight credit markets and declining consumer confidence are increasing the downside risk to the economy and weighing on future growth.

DailyFX

Euro Breaks 1.55, Where Is it Headed Next?

2008-03-13T16:13:00.002-03:00

- Will Consumer Spending Crush the US Dollar?
- Australian and New Zealand Dollars in Play

Euro Breaks 1.55, Where Is it Headed Next?

What makes today's record breaking day in the EUR/USD particularly unique is the fact that the currency pair is now trading above the psychologically important 1.55 level. Data wise, its been a quiet day in the currency market, but comments from European officials, the continual rise in oil prices, a drop in US credit spending and widening credit spreads have all contributed to the Euro's rise. At the ECB's meeting with the Gulf Cooperation Council today, Trichet was asked whether the Euro's move was brutal. He repeated that he was concerned about excessive moves on the exchange rate, but at the same time, he warned that it is 'very important' for the ECB to continue to 'inspire confidence by solidly anchoring inflation expectations.' Once again, inflation is the central bank's top focus and they will not be willing to compromise their priority. In other words, do not expect the ECB to stop the Euro's rise anytime soon and for this reason, we could easily see a move above 1.56, which is the wave 5 objective of our technical analyst Jamie Saettele. From a fundamental perspective, Eurozone economic data continues to surprise to the upside. This morning, we learned that Eurozone industrial production rose 0.9 percent in the month of January. French current account, non-farm payrolls and Italian consumer prices are due for release tomorrow along with the ECB monthly report. These numbers are generally not market moving but the US retail sales report will have a big impact on the EUR/USD. If consumer spending is weak, like we expect, 1.57 could be an achievable target. Meanwhile the Swiss National Bank has an interest rate announcement scheduled for tomorrow. The earliest that they are expected to cut interest rates is in the fourth quarter.

Will Consumer Spending Crush the US Dollar?

The US dollar fell to a record low against the Euro today and is within pips of closing in on its 8 year low against the Japanese Yen. The latest move in the currency and bond markets suggest that traders are suspicious of whether the Fed's action yesterday will have a lasting impact on the financial markets. Rate cut expectations have also rebounded with the market now pricing in a 74 percent chance of a 75bp rate cut next week, up from a 62 percent chance yesterday. How much the Fed actually eases will be largely dependent upon tomorrow's retail sales report. With US corporations cutting jobs two months in a row and foreclosures rising, consumer spending will certainly suffer. According to MasterCard's data, spending In the month of February dropped 1.1 percent, their largest decline in 5 years, when they first started tracking the data. However, the absolute value of retail sales could increase because gasoline and food prices are on the rise. It is therefore important that traders watch not only the headline numbers, but also the details of the consumer spending report. Don't forget that import prices will be released at the same time as retail sales. Prices are expected to rise but it should only have a limited impact on the US dollar. The bigger market mover is undoubtedly the retail sales report. Meanwhile, at the Gulf Cooperation Council, Qatar confirmed that they will be keeping their US dollar peg while the Saudi Monetary Authority called the US dollar a good buy. An article in the Wall Street Journal today talks about the degree of Middle Eastern investment into the US real estate market. With the dollar continuing to fall, these investments could pick up pace, providing support for the ailing housing market.

Australian and New Zealand Dollars in Play

The Australian and New Zealand dollars will be in play tonight with the Australian employment report and New Zealand retail sales due for release. After two strong months of job growth, we expect the labor market to slow materially especially after Westpac reported that consumer confidence fell to the lowest level in 15 years. As for New Zealand, stronger credit card spending points to stronger retail sales. Meanwhile the Canadian dollar has also gained strength against the greenback thanks to surprisingly good economic data earlier this week and the continual rise in oil prices. We are closing in on $110 a barrel and as long as the US dollar continues to fall, oil prices will continue to rise. Canadian capacity utilization is due for release tomorrow, but that should not have any meaningful impact on the CAD

British Pound Hits 2 Month High

The British pound rallied 230 pips to a 2 month high against the US dollar today. As we expected, the trade deficit narrowed in the month of January as the weakness of the sterling against the British pound drove up the volume of good sold to EU countries. The pound weakened against the Euro which tells us that the move in the GBP/USD may be due just as much to the strength of the British pound as the weakness of the US dollar. EUR/GBP on the other hand continues to gain strength as the monetary policy and economic data of the Eurozone come in stark contrast to the US and UK

Japanese Yen Recovers on Stronger GDP

The Japanese Yen is trading within pips of its 8 year high against the US dollar. GDP growth in the fourth quarter was revised up from 0.6 to 0.8 percent, due largely to an upward revision to inventory investment. The Corporate Goods Price Index was also stronger than expected. In fact, the pace of growth was the fastest since 1981. However the current account surplus and confidence fell short of expectations as the strength of the Yen and weakness of the US dollar weighs on exports. This mixed bag of Japanese economic data gives us little indication on the impact that the US slowdown is having on the Japanese economy to date.

DailyFX

Foreign Exchange Market Daily Update

2008-03-12T17:40:00.001-03:00

The US dollar fell across the board and reached a new all-time low against the euro on speculation the Federal Reserve's plan to provide funds to banks won't be enough to ease a global credit crunch. Traders bet the Fed will cut rates by as much as 75 basis points on March 18th at the next FOMC meeting, while the European Central Bank keeps borrowing costs unchanged.

The euro soared to a record high against the US dollar as strong euro zone economic data renewed focus on European and US interest rates. The euro extended gains following a European Union report showing industrial production in the region increased for the first time in three months in January, rising 0.9 percent from the prior month. Euro zone finance ministers remain extremely vigilant on foreign exchange rates and Luxembourg Finance Minister Jean-Claude Juncker said the ECB has no reason to follow the US in slashing interest rates.

Sterling steadied overnight as UK growth remains resilient, even though England's economy is facing particular difficulties. The UK should be better positioned than the US to deal with the economy's turmoil and chances of a recession in England seem unlikely in the near term.

The Japanese yen rose overnight after Japan's economy grew faster than expected in the fourth quarter. A revised Japanese government report showed gross domestic product expanded an annualized 3.5%. Asian stocks also rose the most in two weeks, extending a global rally, after the US Federal Reserve said yesterday that it will pump as much as $200 billion into the financial system.

The Canadian dollar gained against the greenback supported by record oil prices once again. Stock markets have played an important role in the loonie's performance this year as they are used as a gauge for the health of the US economy, which takes the bulk of Canada's exports.

The Australian and New Zealand dollars remain buoyant, reinforced by rising commodity prices and improved appetite for riskier assets and higher-yielding currencies.

Union Bank of California
The Bank of Tokyo-Mitsubishi Group

U.S. Market Update

2008-03-12T17:39:00.002-03:00

Dow +120 S&P +10.4 NASDAQ +23.4

Equity markets are following through to the upside as the momentum continues from yesterday's 3%+ rally for the major indices. Futures are making new highs late in the New York morning. Financial stocks have found some real traction at least temporarily from yesterday's Fed announcement, and look to post solid gains again led by the investment bank/broker dealers. BSC is up 6% after the CEO appeared on CNBC before the open reassuring investors that there is no truth to the rumors that have been circulating the past few sessions. GS +3% LEH +3% XLF +2.5% Humana -12% slashed guidance keeping the pressure on the stock. The energy complex is the notable laggard as sellers have stepped after weekly crude inventories rose by more than 6M barrels. April crude is lower by 1% but the bullish sentiment is tough to break as it still trades near all-time highs. Gasoline and Heating oil are off 1% as well. Treasury prices are marginally higher but the action there is fairly subdued. Prices did firm ahead of the open of floor trade on renewed rumors around the globe of multiple hedgefunds being in trouble. Metals futures are hovering close to the unchanged market as most of the action appears to be in the equity markets.

Fixed-income markets continued to focus on the stress generated from global liquidity concerns. Dealers noted that the hedge fund community remained under considerable strain as banks continue to demand higher levels of collateral, while customer redemption requests continue to stream in despite recent central bank operations to improve liquidity conditions. The WSJ confirmed earlier market rumors that NY based Drake Capital, a $10B fund, received withdrawal notices from half of its investors. Also problems at Dutch fund GO Capital resurfaced as rumors circulated that the Co. has halted redemptions. Thus, the euphoria the USD managed to generate from the central bank led liquidity operation on Tuesday seemed to be slowly evaporating. The USD is also weighed down by continued elevated commodity prices. Front month NYMEX crude continues to probe the 109 area throughout the US morning, while spot gold remains in striking distance of breaking the $1,000 level. Global inflationary fears are hampering any follow through USD buying. UAE Economic Min noted that changing USD peg may ease the country's inflation and stresses that the USD's fate remains in foreign hands. The EUR/USD briefly tested the 1.5500 level before option-related selling stalled the Euros upside momentum. Dealers note that Mid-East demand for Euros has been 'aggressive' over the last 48 hours. The June GILT contract aggressively sold off after the DMO announced its planned FY 2008-09 Gilts sales at £80B v £59Be. Gilts are off 57 ticks at 110.68, June Bunds are firmer by 5 ticks at 117.51 European Equities are in the middle of their session trading range. Euro Stoxx 50 +1.35 at 3,654, FTSE 100 +1.45 at 5,772, CAC 40 +1.5% at 4,700 and DAX +1.3% at 6,609

Trade The News Staff
Trade The News, Inc.

Inflation Threats...

2008-03-12T17:39:00.001-03:00

Yesterday's action that was announced by the Feds to provide funds up to $200 billion in Term Securities Lending Facility (TSLF) to primary dealers had its immediate effect on the financial markets.

Investors increased their carry trades bets, while providing the U.S Dollar at the same time with the strength to incline against major currencies…

A disappointing fact though an expected reaction, after the surprise effect did the desired effects on the financial markets, investors and economists both were skeptical over the worthy of such action, as they were still betting the Feds will lower their interest rates by at least 1/2 percentage point next week…

The Dollar dropped back again against majors, the Euro inclined even further against the USD today after the upbeat news from the EU industrial sector, the industrial production rose 0.9 percent in January from a revised flat reading in December, while compared with a year earlier production rose in the 15-nation economy to 3.8%, both readings were better than median estimates, this rise marked the first in three months supported mainly by increased output from Germany the EU largest economy…

The U.K on the other hand released their trade balance for the month of January, the visible trade deficit which measures the trade of goods only was unchanged from December's deficit of ?7.50 billion, while the trade deficit with Non-EU widened to ?4.29 billion. Total exports rose 6.3% to ?19.9 billion, while total imports rose 4.4% to ?27.5 billion; both rises were due to rising food and energy prices, highlighting the BOE concerns over rising inflation as the contribution of the Pound's low value to exports was offset by rising imports' costs.

The economical outlook for both the EU and the U.K economies remain relatively strong when compared to their American counterparts, yet rising inflation remains a major threat to both, the ECB established their stance to be Hawkish, while the BOE are yet to find out the extent of slowing in economical activity.

Both the ECB and the BOE maintained their interest rates steady at 4.00% and 5.25% respectively, but both are experiencing increased uncertainties to their economical outlook, should both find their way through this mess, we can all put our eyes to sleep since they along with China can take the burden of global growth from the United States till the Feds are able to march their economy into safe shores…

Crown Forex

Fed Looks To Prevent Meltdown

2008-03-12T17:38:00.002-03:00

The Fed moves will alleviate immediate downward pressure on the dollar, but underlying fears will continue.

The yen weakened sharply in US trading on Tuesday following the Fed's move to boost liquidity. Risk aversion has eased, at least temporarily, which triggered a recovery in high-yield currencies and triggered stop-loss yen selling. The Japanese currency weakened to 103.40 which eased immediate speculation over a dollar decline to the 100 level.

Domestically, the fourth-quarter GDP growth estimate was confirmed at 0.9%, which provided some relief, but the forward-looking data was less supportive. Consumer confidence was at a 5-year low while the Bank of Japan warned over downside risks to the economy. The government's Bank of Japan Governor nominee Muto has been vetoed by the Upper House of parliament which will unsettle the yen to some extent, especially with current governor Fukui due to leave office next week.

The increase in global stock markets lessened immediate yen demand, but there was evidence of increased exporter selling and the US currency was testing the 103.0 level in early Europe on Wednesday. Underlying risk aversion is also likely to remain at elevated levels which will curb yen selling pressure.

Investica

UK Trade Gap Narrows Further

2008-03-12T17:38:00.001-03:00

The UK's trade deficit narrowed for the second consecutive month in January, printing at -4.1 billion pounds versus the expected -4.6 billion. The gap reached as wide as -4.7 billion pounds in the third quarter of last year. Since then, the sterling has lost 12% of its value against the Euro and 4% against the US dollar. This has served as a catalyst of the British export sector - volumes of goods sent to EU countries rose 5% while those sent to non-EU countries rose 7.1% in January.

From a long term perspective, the trade deficit is bearish for the pound, creating a net outflow of money out of the UK and cheapening the sterling by making it more abundant in the global marketplace. This serves to boost exports by raising the purchasing power of foreigners all the while cutting imports by reducing the purchasing power of domestic consumers. The BOE hopes for just such a re-balancing - a slowdown would allow the central bank to avoid raising interest rates further and potentially crushing the economy to meet their inflation target in the face of rising input costs worldwide.

DailyFX

Consumer Sentiment Collapses

2008-03-12T17:33:00.002-03:00

The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 9.1% in March from 97.4 in February to 88.6 in March.

This is an extraordinarily large fall. Even though the 9.1% fall is around the 3 year average (9.4%) fall in the Index following a rate hike by the Reserve Bank, this fall has come from a lower base and pushes the Index to its lowest level since September 1993.

The decline over the last three months (23.9 points or 21.2%) is the sharpest three month decline since the Index was first measured in January 1975. There were many other periods during that time when the Reserve Bank did consecutive rate hikes so this result cannot just be attributed to the shock effect of consecutive moves.

The current credit crisis, which is pushing mortgage and other retail lending rates even higher than the rises associated with the Reserve Bank, has also precipitated the biggest (23.3%) fall in the share market since the recession in 1990-91.

In any rate hike cycle there will be one move (usually the last) when the effect is substantially greater than the effect of any previous move. We saw that in both December 1994 and August 2000 when the previous tightening cycles came to an end. This result points to a similar effect for the March move and probably signals that the Reserve Bank has tightened for the last time in this long cycle which began in May 2002.

Predictably, the confidence of the respondents who hold a mortgage fell by a spectacular 12.1%, to be 31.5% down over the year compared to the overall index which is down by 23.3%.

Gloom over the increases in interest rates has probably been compounded by additional mortgage rate increases by lenders and speculation that there is more to come. Confidence on issues such as employment; inflation; international conditions and overall economic conditions has collapsed relative to a year ago.

All components of the Index were down sharply. The assessment of family finances compared to a year ago fell by 15.6%, while opinions on whether now is a good time to buy a major household item fell by 10.9%. Expectations for family finances over the next 12 months fell by 8%. The outlook for economic conditions over the next 12 months was down by 5.6% and the 5 year outlook also fell by 5.6%.

Households have dramatically changed their attitudes about where to save. The proportion of respondents choosing shares fell by 6.7 percentage points to 7.9% from 14.6% in December. This reading is well below levels seen in the aftermath of the dot-com bubble burst in 2001, and clearly the lowest on record for this series which commenced in 1995. Real estate was also unpopular. The proportion choosing real estate as the wisest place for savings fell by 3.7 percentage points from 21.1% to 17.5%. Households now clearly favour banks (up 2.4 percentage points to 24.7%) and paying down debt (up 8.4 percentage points from 12.9% to 21.3%).

Spending plans have also become much more conservative. The Index on whether now is a good time to buy a dwelling fell by 11.4% since December, to 71.8 the lowest since the housing boom faltered in late 2003 and the second lowest since the question was first included in 1995. Intentions towards motor vehicles have soured. The Index of whether it is a good time to buy a car fell by 22.5% since December to the lowest level since the question was first included in 1995, and 28.3% below the average level over the last 10 years.

The results from this Survey are very important. They indicate that the Reserve Bank's last rate hike, combined with further independent moves from the mortgage lenders may have finally slowed demand such that inflationary pressures will ease. As discussed, the last rate hike in a cycle will generally have a much bigger effect than the moves that preceded it. The rate hike in March 2008 appears to fit that profile. The Governor of the Reserve Bank opined in his last Statement that the March move may have been enough to sufficiently slow demand in the economy. The evidence from the Consumer Sentiment Index is that he is probably correct.

Recent further adverse developments in credit markets indicate that retail interest rates including mortgage rates could well rise further without any further action from the Reserve Bank. This development takes even more pressure off the Bank to raise its rates.

As such, we do not expect that the Bank will raise rates again in the cycle. However, inflation will remain uncomfortably high and generous tax cuts later this year are likely to significantly boost households. Interest rates are now likely to stay around these relatively high levels until the Bank feels confident that inflation pressures have eased significantly.

That is not expected to occur before the second half of 2009 at the earliest.

Westpac Institutional Bank

Japanese GDP Surprises to the Upside

2008-03-12T17:31:00.000-03:00

Japan's economy expanded at an annualized rate of 3.5% in the final quarter of 2007, surpassing economists' expectations of 2.3%. Yen appreciation notwithstanding, export growth proved to be an important catalyst for growth. The result validated a report released by the Bank of Japan last week that argued the economy was supported in spite of US slowdown and rising input prices, suggesting demand from emerging markets (notably China) will continue to offer substantial stimulus.

Today's result will moderate calls for the BOJ to lower interest rates, which is for the better considering the bank lacks clear leadership at present. As we reported last week, Governor Toshihiko Fukui is set to step down on March 19th. The candidacy of his would-be replacement and current deputy Toshiro Muto has been blocked by the Democratic Party of Japan (DPJ) that controls the upper house of the Diet (Japan's parliament). Critics alleged that Muto's 37 years with the Ministry of Finance far outweigh his 5 years with the BOJ, questioning whether the central bank can truly retail its independence under his leadership.

DailyFX

U.S. Market Update

2008-03-11T15:50:00.000-03:00

Dow +217 S&P +22.5 NASDAQ +43.8

Equity markets around the world surged after the Fed announced various new lending tools that would allow them to lend up to $200B to primary dealers. Financials were the major beneficiary led by names related the mortgage market, but most stocks are well off of opening levels. FNM +5% FRE +6% C +5.8% WFC +5.5% WM +8% MS +7% GS +4% Bear Stearns has slide into negative territory as the stock seems unable to shake the recent worries surrounding it. Home builders are seeing a decent relief rally as well. XHB +2.5% Managed Care stocks need an IV after WLP hacked Q1 guidance following yesterday's close. WLP -26% UNH -10% AET -11% CI -12% HUM -20% Texas Instruments is losing ground after lowering Q1 guidance as well. U.S. yields have pushed dramatically higher following the Fed announcement with intense selling in the 2-year flattening the yield curve noticeably. The 2-year yield has climbed some 25 basis points in 24 hours to 1.70% while the 10-year hovers around 3.60%. Some of the most aggressive Fed expectations in terms of future rate cuts have lost steam. The April fed fund future projects roughly 70% odds of a 75 basis point cut where that had been fully priced in ahead of the announcement. The August contract now sees less than 50% odds of a 1.75% fed funds rate this summer where it had seen better than 90% odds yesterday. Crude made new all-time highs again overnight above the $109 handle but has since backed off back below $108 as the Greenback has firmed on the Fed announcement and higher U.S. yields. Metals markets are off of overnight highs as well but still generally posting small gains.

The USD staged a rally against the major currency pairs following the FED's announcement of new lending tools to boost liquidity and help the markets to 'function'.

The actions announced today supplement the measures announced by the FED last Friday to increase the size of the Term Auction Facility to $100B and to undertake a series of term repurchase transactions that will cumulate to $10B. EUR/USD tested a fresh all-time high of 1.5496 helped by rhetoric from the ECB's ultra-hawkish member Weber, before chatter of a 1.55 option barrier contained the upside momentum. The USD was also aided by a slight improvement in its Jan trade balance from consensus expectations to a -$58.2B reading. The USD was able to eek out its best level since the US payroll report from last Friday as stops were elected below the 1.5300 level. For the most part, the USD remains locked within its 7-day trading range, despite the recent central bank liquidity operations. Dealers note that the risk of a coordinated currency intervention is more likely on USD strength rather than weakness. The 1.4970 level would be a level to keep in mind in the EUR/USD pair and 153.30 in EUR/JPY. JPY was weaker on speculation that the Fed was forced to consider more innovative response as continued strains in credit markets threatening to deepen and prolong an incipient US recession. Thus the liquidity measures announced help to reverse the scenario of risk aversion for the time being. USD/JPY trades up180 pips at 103.25; EUR/JPY has added 250 pips at 158.20. Commodity currencies are holding steady despite oil and gold are off of pre-US opening highs. European equity markets are up 2% across the board. June Bunds are down -65 ticks at 117.40 and June Gilts at 111.23 are off 63 ticks.

Trade The News Staff
Trade The News, Inc.

Foreign Exchange Market Daily Update

2008-03-11T15:49:00.001-03:00

The US dollar rose sharply to three month highs against the yen and rebounded from a record low versus the euro after the Federal Reserve announced it will inject liquidity into the financial system, easing the market’s anxiety over a deepening credit crisis and US recession. The Fed said it will hold auctions to lend as much as $200 billion in Treasuries and increase swap lines with the European Central Bank and the Swiss National Bank. Central banks coordinating actions to address the liquidity issue in the market is helping to stabilize the markets and aiding the US dollar recovery. As a result, the Dow Jones gained over 2.0% this morning and traders trimmed bets the Fed will slash its benchmark rate as much as 75 basis points this month.

The euro weakened against the US dollar after hitting record highs overnight, as traders speculated the steps will help ease a credit crisis that is threatening to tip the U.S. economy into a recession. The euro rose to a record against the dollar earlier after an industry report showed investor confidence in Germany unexpectedly improved this month, adding to evidence Europe's largest economy may weather a U.S. slowdown.

Sterling fell from three-month highs after a UK house price measure fell to its lowest since the market crashed in 1990, supporting the case for further interest rate cuts. In other news this morning, separate data from the British Retail Consortium showed retail sales growing at a modest pace last month, as consumer spending tightened, adding more pressure to the British pound.

The Japanese yen fell over 1.4% versus the US dollar as central banks synchronized efforts to assist global liquidity issues. However, the yen will continue to remain firm and the Nikkei 225 index rose 1.0% overnight.

The Canadian dollar gained against the greenback supported by record oil prices, strong domestic data, and a coordinated move by central banks to help ease credit strains. The Bank of Canada said it was ready to pump CAD $4 billion into the market and domestic data showed Canada’s trade surplus widened in January on a surge in exports.

The Australian and New Zealand dollars remain buoyant, reinforced by rising commodity prices and improved appetite for riskier assets and higher-yielding currencies.

Union Bank of California
The Bank of Tokyo-Mitsubishi Group

Forces REUNITE!

2008-03-11T15:48:00.000-03:00

A surprise intervention by the Fed's to help pull the economy out of a recession and a narrowed trade balance all in the same day?! Wow this seems like a bright day for the Americans but will they be able to enjoy it while it lasts... or will it fail like previous plans?

Teeing off with the trade balance, it seems that the gap for the month of January actually widened as oil prices rose to set new records. The deficit increased by 0.6% to $58.20 billion after December's reading was revised downwards to $57.86 billion according to the Commerce Department.

Of course the positive effect of the weak dollar was the boost in exports by 1.6 percent to $148.23 billion from $145.86 billion marking the largest climb in six months. The poor dollar performance wasn't the sole contributor to this rise, but the expansion and growth of trading partners also played a major role.

Sales of Consumer goods abroad, such as pharmaceutical preparations, increased by $489 million while industrial supplies; such as chemicals and steel mill products, also climbed $804 million. Food, feed, and beverages also went up by $601 million.

The funny thing is that imports also continued to increase despite the slowdown in the U.S. economy which is slowly turning into a recession. The purchase of foreign goods and services rose by 1.3% to $206.43 billion from $203.72 billion.

Oil imports in January were up to $27.09 billion from $24.90 billion and the reason is crystal clear. With oil reaching the $109.00 per barrel level, we might see more spending in the U.S. bill for crude oil imports. As for all other energy related imports, the U.S. paid $35.84 billion up from $32.39 billion. Food and feed imports also rose $324 million.

But now to the moment that you all have been waiting for... the JOINT INTERVENTION! We have seen a similar act in December 2007 as the G-10 central banks pumped money into the financial system to ease the liquidity and ease the credit crunch.

However this time it was different... today the Bank of Canada, The bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank all joined hands to take desperate measures to help the world's largest economy from sinking further.

It went as follows... the Feds announced today a new Term Securities Lending Facility (TSLF) where they will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days opposing the previous overnight term. The primary dealers are a group of 20 banks and securities firms that trade Treasuries directly with the Federal Reserve Bank of New York. These securities are backed by federal agency residential-mortgage-backed securities and non-agency private label residential mortgage backed securities. The TSLF's primary intent is to promote liquidity in the financial markets and ease any credit market turmoil. Similar to the current securities lending program, securities will be available through auctions which will be held on a weekly basis beginning March 27, 2008.

But wait, it doesn't just end here dear reader! In addition, the Feds also authorized an increase in its existing swap lines with the ECB up to $30 billion and the Swiss National Bank up to $6 billion. These swap lines have been extended through September 30, 2008.

The ECB said it will lend banks in Europe up to $15 billion for 28 days as the SNB announced up to $6 billion. The Bank of Canada plans to purchase $4 billion of securities while the BoE will offer $20 billion of three-month loans on March 18 and hold a further auction on April 15.

After this quick act by the Feds, bets placed on a 1 percentage point cut in interest rates by the Feds have been removed and they were back down to only a cut by 75 basis points.

Speculations that the Feds were to act upon the turbulence in the markets and in an attempt to save the U.S. economy from a recession was reflected in the Asian stock markets as most of the indices climbed. The Dollar gathered momentum to gain against all the majors after the announcement of the TSLF.

Desperate measures are taken and honestly... I salute you! The Feds are not giving up on the economy and they're trying many things simultaneously. The Feds meeting is a week from today where expectations of a rate cut is awaited. With all the efforts combined and the joining of hands will the forces of the world be strong enough to put a floor under the sinking dollar?

Dear reader, the upcoming period is going to be one bumpy ride so strap your seat belts and hold on tight...

Crown Forex

Central Banks in Panic Mode, Dollar Sells Off, Fed to Auction up to $200 Billion

2008-03-11T15:45:00.000-03:00

The US dollar skyrocketed this morning after the Federal Reserve announced auctions to lend as much as $200 billion in US Treasuries. This is a coordinated operation in conjunction with the European Central Bank, the Swiss National Bank and the Bank of England. According to the statement published on the website of all 4 central banks,

"Since the co-ordinated actions taken in December, the G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in the funding markets,"

"We all continue to work together and will take appropriate steps to address these liquidity pressures."

The Fed has increased its swap lines with the ECB and SNB. The Bank of England also announced that it is extending its 3 month loan program. The Fed is now willing to accept a wider range of collateral including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. These loans will be available for 28-days which make them more generous than the overnight loans offered under the current program.

Today's announcement comes minutes after the trade balance report indicates that the Fed is in panic mode. Their prior actions have only lasted for a few days at best and with each announcement, they are stepping up the ante. Unfortunately as much as they try, banks are still reluctant to lend money, which will hinder their efforts.

Expect the dollar to continue to benefit from this announcement, but the rebound may not last long because this action allows Bernanke to replace a 75bp rate cut with a 50bp cut.

Stocks are up, risk aversion is subsiding, carry trades should rally.

DailyFX

US Dollar Rallies as Fed Announces Measures to Address Liquidity Pressures

2008-03-11T15:44:00.000-03:00

US Trade Deficit Widens Less Than Expected

The US trade deficit widened less than expected in January to -$58.2 billion, a 0.6 percent increase from December, as exports grew 1.6 percent while the US dollar plunged towards record lows. Meanwhile, imports gained 1.3 percent from the month prior, led primarily by a 10.4 percent surge in crude oil. However, imports of consumer goods declined 4.3 percent, indicating that households are tightening their purse strings.

The US dollar and carry trades are rallying significantly, but it is primarily the result of an announcement by the Federal Reserve that said they will expand their securities lending program. Furthermore, the FOMC authorized increases in its swap lines with the European Central Bank and the Swiss National Bank of up to $30 billion and $6 billion, respectively. The news bodes well for US equities today, as well as the greenback. For the full text of the Federal Reserve's announcement, click here.

DailyFX

EU on FIRE!!!

2008-03-11T15:43:00.000-03:00

In times of turbulence and high volatility businesses and consumers' sentiment account for much, as their perception to the extent of imbalance let's say or deterioration, if seen as worse than current conditions, lead to an actual state of further damage in the future as they tend to now foreshadow their collaborative efforts to lead any economy to its doom.

The extent of downside effect the financial turbulence, US recession, and global growth slowdown is still to be measured upon the European Union; and as ECB's Trichet expressed is still within unusual high uncertainties. After steady rates in the euro zone the ECB remained hawkish and did not much project further slowing in economic growth, despite downgrading initial projection. Nevertheless since Germany withholds the highest portion in the 15 nations' GDP news are rather pleasant from there and form the entire euro boarders.

Euro Zone's single currency responded rather very well to today's ZEW sentiment indicators as they all came well above median estimates and improved in March, providing some sort of salvation to worried investors that the euro is now still on its upside journey as the sentiment is providing further resilience despite aching fears of this current rapid appreciation to the single currency that might be considered as an impediment for growth, yet seems that wont stop the Europeans at the time.

The euro managed to surge against the dollar at the time of the release as the euro set a fresh record at 1.5494 approaching $1.55, since the start of the European session the euro resisted its Asian trading range that was consolidating at low levels with downside bias, yet as the pair failed to progress below 1.5330s the downside correction for the day was canceled as the pair reclaimed the upside wave to set new targets after consolidating since yesterday to gather momentum.

Meanwhile on the British front, the CML housing loans data didn't do much to stop the pound from gaining yesterday's losses against the dollar, the data was rather discarded as it carried what markets saw overdue January figures which were already were canceled among the current strong sterling bullish sentiment. After the pound reached to as low as 2.0030s yesterday which resides near 100 days MA acquiring the pound with upside volume to reclaim the upside wave today to test the resistance level were the pound set it European high near 2.0210s and currently trades near 2.0180s.

The Japanese yen has lost its spark today as the equity markets revival works as always inversely with the yen. Japans currency weakened against majors today as the risk appetite has strengthened providing majors like the Euro and the Pound with more upside momentum as their gains were not just against the dollar, while the reclaim their losses against the yen and rise with strong volume. Against the dollar the yen has been falling taking the pair to the upside from the low opening levels at 101.40s to reach strong resistance levels as the pair could progress above 102.26. While against the Euro and Sterling the yens losses were more massive as the pairs rose to set their highs at the hour of this report of 155.57 and 203.58 respectively and are still on the rise.

In the US session we are waiting for January's trade balance data as the deficit is expected to widen despite the depreciation dollar, which of no surprise will be the result of surging oil prices. Imports have definitely slowed in the US as consumption and expenditure are slowing, while China's trade balance already gave us some hints, while as for exports that have been gaining on the back of a weak greenback seemingly didn't contribute as much as policy makers hoped in order to add to the final GDP, for we saw breadline slowing in the manufacturing sector and we noticed falling export orders. The previous assumed likelihood of strong export sector to salvage some growth in the US is not the case this first quarter. This still is adding to the ongoing sentiment which is definite more rate cuts in by the feds meaning further dollar selling!!!

Crown Forex

Weak UK Housing Data

2008-03-11T15:42:00.001-03:00

The weak UK housing data will reinforce fears over consumer spending trends and limit the scope for Sterling gains in the short term.

Sterling temporarily strengthened through the 0.76 level against the Euro on Monday before retreating to 0.7635. The UK currency also failed to hold levels above 2.02 against the dollar with a correction back to 2.01.

The data overnight on Tuesday was weaker than expected with the RICS index of house price trends weakening to an 18-year low of -64.1% in February from -54.7% the previous month. The British Retail Consortium (BRC) reported that like-for-like retail sales growth dipped to 1.5% for February from 2.6% the previous month. Activity in the housing sector was low which will lessen the immediate impact, but the weak data will reinforce economic fears and limit Sterling buying support.

Sterling was below 2.01 against the dollar in early Europe on Tuesday before rallying strongly again as the US currency came under selling pressure. The UK currency was slightly weaker against the Euro.

The Wednesday annual government budget should not have a major impact, but a sharp downward revision to growth forecasts would tend to undermine confidence.

Investica

Trichet Shows Unease With Euro Strength But Gets No Official G10 Support

2008-03-11T15:28:00.004-03:00

Sunrise Market Commentary

- US Treasuries surge higher on rumour mill
Treasuries got a further boost on rumours about liquidity problems at Bear Stearn that was denied later on and lower equities. However, overnight large chunk of the gains were erased, as Asian equities moved higher. Equities and credit market events key factor for trading today. New high on June Note future needs confirmation.
- Rising tensions on the European money markets
Yesterday, the Schatz, Bobl and Bund futures all set new contract highs. For now, we remain bullish on the outlook for European bonds and would use dips towards the 117.24 level to add to long positions, as the reluctance of the ECB to cut rates will fuel the idea the ECB is falling behind the curve and will have to do more afterwards.
- Trichet shows unease with euro strength but gets no official G10 support
Yesterday, Mr. Trichet said to be concerned about excessive exchange rate moves. However, the G10 apparently didn't join his concerns and the markets weren't impressed either. The US data and events probably will continue to set the tone for USD trading and for now the US news flow remains dollar negative

The Sunrise Headlines

- US equities continue their slide after rumours on problems at Bear Stearn drag the financials to new cycle lows. S&P now at the cycle lows, NASDAQ dropping further below lows confirming break.
- Asian equities higher despite Wall Street's decline and soaring Chinese inflation
- Bear Stearn denies rumours that it has liquidity problems but stock tumbles 11%.
- Lehman is laying off 5% of its workforce according to sources, while Blackstone reported very weak quarterly results, but stock ends up.
- Chinese inflation surges higher to 11-year high (8.7% Y/Y), stoking fears of a tighter monetary policy
- ECB Trichet sounds alarm on euro's rise, FT reports
- Crude seems unstoppable as it sets new high above 108 $/barrel, before easing marginally. There is no fresh news behind the move. Dollar weakness and hedge fund buying continue to be the talk in the market. Other commodities traded calmer.
- Very weak UK housing prices (RICS) and retail sales (BRC) might affect UK markets at opening
- German ZEW index and IEA oil report highlights for trading today

Currencies: Trichet Shows Unease With Euro Strength But Gets No Official G10 Support

On Monday, the eco calendar was thin, but global investor sentiment was still haunted by a new wave of negative credit headlines and rumours. However, the impact of these credit-related stories on EUR/USD was rather limited. EUR/USD traded in the 1.5360/80 area waiting for the declarations from Mr. Trichet after the G10 central bankers meeting. The G10 sees downside risks to the global economy, but also continues to warn about inflation risks. On currencies, the G10 apparently didn't feel the need (or didn't reach a consensus) to make any comments on the decline of the dollar or the strength of the euro. So, on this Trichet could only make some comments in its function of ECB president, and not as chairman of the G10. As ECB president, Mr. Trichet said to be concerned about excessive exchange rate moves and repeated that he noted with extreme attention that the US supports a strong dollar. Of course, the fact that he could only make these remarks as ECB president and not as G10 chairman suggests that there is no big support for the European point of view. On top of that, it remains difficult for the ECB to advocate a strong anti-inflation policy while at the same time trying to cap the strength of the euro which is perfectly in line with its anti-inflation policy. So, the EUR/USD reaction on Trichet's remarkets was rather limited. EUR/USD briefly dropped to the 1.5320 area upon the Trichet headlines but returned to the 1.5350 area soon and closed the day at 1.5340, marginally lower from Friday's closed at 1.5356.

Today, the eco calendar contains the US trade balance and the ZEW economic sentiment in Europe/Germany. Both series recently only had a rather limited impact on trading.

Regarding trading, we have a dollar negative bias and recent developments support that view. At least for now, we are not really impressed by Mr. Trichet's attempts to slow the ascent of the euro. In case of more bad news from the US, the ECB warnings will be forgotten soon. Last Friday's post-payrolls correction suggests the market needs some consolidation after the recent steep dollar losses. This may continue today and tomorrow as the US calendar is back-loaded this week with the US retail sales scheduled for Thursday and the CPI on Friday. However, room for any sustained dollar rebound remains limited.

Looking at the graphs, the EUR/USD picture was already euro constructive and the break above the 1.4968/1.50 only opened the way for further euro gains. We continue to feel confirmed in our long-standing buy-on-dips approach. The short-term picture remains positive as long as the pair holds above the MTMA (1.5174). A correction below could signal that the euro rally shifts into a lower gear.

Short-term the pair remains in overbought territory.

Support is seen at 1.531202 (Reaction low/Break-up hourly + daily envelop), at 1.5289/85 (Reactrion low hourly/Broken weekly Boll Top), at 1.5266 (Weekly envelope) and at 1.5174 (MTMA).

Resistance is seen at 1.5404 (ST high), at 1.5427 (daily envelope), at 1.5465 (reaction high), at 1.5482 (2nd target triple bottom) and at 1.5536 (Last target triple bottom).

USD/JPY

Yesterday, USD/JPY resumed its gradual downtrend and drifted lower throughout the session. A series of negative credit headlines during the US trading hours only reinforced the gains of the Japanese currency. USD/JPY dropped to the101.60 area yesterday and USD/JPY even came close to the 101.4 area (post-payrolls low) this morning. However, the test was rejected and USD/JPY currently trades again in the 102 area. The G10 meeting hardly left any traces on
USD/JPY trading.

This morning, Japanese Finance Minister Nukaga said he will keep carefully watching the FX markets. However, the rebound in USD/JPY this morning in Asia probably has more to do with the (slight) improvement in stock market sentiment in Asia rather than with the Fin Min comments.

Over the previous two weeks, USD/JPY fully joined the global dollar decline. Overall dollar weakness and a flaring up of global risk aversion hammered the pair to new cycle lows. Key technical levels are coming with striking distance (101.22 is 1999 low). Japanese officials will probably try to prevent an uncontrolled USD/JPY sell-off. However, we don't have the feeling that they are already at the point to take decisive action yet. This remains a sell USD/JPY into up-ticks market and if global market/credit uncertainty persists, a test of the 100 level is on the cards.

EUR/GBP

On Monday, EUR/GBP started the week on a weak footing, extending last week's correction. The pair event tested the0.7600 area around noon. The PPI and production data painted a mixed picture and only had a limited impact on trading. However, later in the session, the negative headlines from the financial sector and the credit markets again weighed on sterling sentiment and EUR/GBP started a gradual rebound bringing the pair to the 0.7637 at the close, even slightly higher compared to Friday's close.

This morning, the BRC retails sales and even more the RICS house price balance again painted a break picture on the health of the UK economy and sterling is again feeling some headwinds this morning, with EUR/GBP trading above the 0.7650 area at the moment of writing.

Except for the correction on Friday, EUR/GBP recently held close to the recent highs suggesting ongoing upward pressures in this pair. After the recent steep gains in EUR/GBP, some temporary consolidation shouldn't come as a big surprise. However, we hold on to our view that any sterling up-ticks should be considered a temporary in nature.

On the graphs, EUR/GBP set a corrective bottom at the end of January which was confirmed mid February. The break above the sideways trading range late February was an additional sign that sterling remains very vulnerable both to negative financial sector headlines and to fears of a pronounced slowing in UK growth. Short-term corrections on overbought conditions are always possible, but the trend is obvious and there is no reason at all to row against sterling negative tide. Any downward corrections in EUR/GBP, if they were to, occur, are seen opportunities to sell the sterling. The previous highs in the 0.7550/80 area should already give decent support in this pair.

The pair is in neutral territory

Support is seen at 0.7632 (reaction low), at 0.7620 (MTMA), at 0.7605/96 (ST low/Daily envelop), at 0.7580/77 (MT break-up + Weekly envelop/38 % retracement) and at 0.7553 (Break-up daily).

Resistance comes in at 0.7679 (Break-down), at 0.7693/97/99 (Reaction high/Second target double bottom/ irr B) and at 0.7706(Target triangle break).

News

Other: Input PPI rise to record high, while industrial production stalls

In the UK, the PPI showed little sign of abating price pressures, as the input PPI reached a fresh record high at 19.4% Y/Y and the output PPI stabilized at a 17-year high of 5.7% Y/Y in February. Core output PPI eased slightly from 3.2% Y/Y in January to 3.0% Y/Y in February. The persistence of strong increases in PPI is expected to keep an upward pressure on consumer price inflation in the coming months, which was already expected to rise towards the 3% level by mid-year.

At the same time, industrial and manufacturing production growth stagnated in January. In the three months to January, output remained unchanged compared to the three months to October, while the increase in energy supply was offset by the decrease in mining and quarrying.

The combination of upside inflationary pressures and slowing economic growth still puts the MPC between a rock and a hard place.

Download entire Sunrise Market Commentary

KBC Banking & Insurance

Why the US Dollar Could Rebound this Week

2008-03-11T15:22:00.003-03:00

- ECB Trichet: Concern is Not the Same as Brutal
- USD/JPY: At Risk for Intervention?

Why the US Dollar Could Rebound this Week

Since the beginning of the year, one of the best trades in the currency market has been to short US dollars. Although we think that the dollar will continue to fall over the next few months, there is a good chance that it could rally this coming week. We have two pieces of data that could trigger the rally, Tuesday's trade balance report and Friday's consumer price release. With oil futures closing above $107 a barrel, inflation is a big problem. The Boston Globe has some great graphics on rising food costs. According to their report, egg prices have increased 50 percent over the past 2 years, while the prices of a red delicious apple and a gallon of whole milk have increased 20 percent. For the time being, retailers appear to be absorbing the costs. This weekend's Financial Papers have extensive coverage on how restaurants are substituting ingredients or altering their menu offerings in order to reduce costs without raising prices. None of these changes would need to be made if increasing food prices are not hitting the bottom line. It can be argued that headline inflation may rise sharply but the growth of core prices will remain muted. However with gasoline prices in many states hitting record highs, prices of goods excluding food and energy should begin to rise as well. As for the trade balance, which is more immediate, the weakness of the US dollar should have helped to increase exports and reduced imports. The risk of course is the retail sales report in the middle of the week. Consumer spending is expected to be weak, but rising prices could also boost the value of the goods sold. Wholesale inventories have increased nonetheless which suggests that even though hiring has slowed and the US economy has weakened, this has not stopped business leaders from restocking their shelves. Meanwhile intervention is the big buzz word in the currency market today but do not expect the Federal Reserve to participate. Whether they admit it or not, they like the fact the US dollar is falling because it is currently supporting growth by boosting exports

ECB Trichet: Concern is not the same as Brutal

This morning, ECB President Jean-Claude Trichet said that he is 'concerned about excessive exchange-rate moves.' This is the first time since November 8, 2007 that Trichet has specifically expressed concern about the move in the Euro. Back then, he called the rally above 1.46 'brutal.' That led to a 200 point drop in the EUR/USD that lasted for no longer than 24 hours. This was the same phrase that Trichet used back in November 2004, which eventually led to a top in the EUR/USD, but not until 2 months later. 'Concerned' is definitely a step down from 'brutal' but it is important to understand what Trichet is trying to tell us - which is that he cares about what is going in the currency. However for the time being his concern is still limited. The last time the ECB intervened was in 2000 and that was to strengthen the Euro shortly after its launch. If the 13 percent rally in 2004 triggered nothing but verbal intervention, don't expect the 6 percent rally year to date to stress Trichet out either. Meanwhile the German ZEW survey is due for release tomorrow. Recent economic data from the Eurozone has been good which should help to reduce overall pessimism.

USD/JPY: At Risk for Intervention?

As USD/JPY nears 100, intervention risk grows but will the Bank of Japan really take action after sitting on their hands for the past 4 years? Probably not. This is not the first time that USD/JPY has traded on the 101 handle without BoJ intervention. Back in late 2004, early 2005, USD/JPY hit a low of 101.70 and the BoJ did nothing, The main reason why the BoJ has not intervened over the past few years is because they want to lead by example and encourage China to make their exchange rate more flexible. If they intervene, it would set back all of their efforts. However intervention from Japan is still more likely than intervention from the Eurozone because Japanese corporations are beginning to suffer. The most recent Tankan survey showed that most Japanese corporations forecast the value of USDJPY in 2008 to be around 113.00. With the pair now rapidly approaching the 100 level, those hedges are deep in the red. However if they were to intervene, now would be a good time because positioning in the Japanese Yen is at an extreme, giving them the most bang for their buck. Yen long positions are at the highest levels since Feb 2004, right before the last BoJ intervention. USD/JPY short traders need to be particularly wary about intervention risk at this time.

Australian, New Zealand and Canadian Dollars Continue to Plummet

The Australian and New Zealand dollars continued to plummet as the Dow dropped another 150 points to a 6 week low. There was no data released from either country and gold prices continued to fall which means that risk aversion is the primary driver. The same can be said of the Canadian dollar because it also fell significantly despite stronger housing starts and another record high in oil futures. The Canadian trade balance and the new housing price index are due for release tomorrow. We expect both of these numbers to be CAD positive but it remains to be seen whether that will have a lasting impact on the Canadian dollar.

British Pound Weakens Against Euro and US Dollar

The British pound gave back its earlier gains against both the Euro and US dollar. Economic data was mixed with the annualized pace of output prices increasing less than expected but input prices increasing more than expected. Industrial production fell short of expectations as well, but manufacturing production rose in the month of January.

DailyFX

Forex Technical Update

2008-03-11T15:18:00.001-03:00

Euro: Euro was range bound on Monday due to lack of any significant data as it traded within 90 pips and closed slightly weaker at 1.5343 compared to its opening levels of 1.5363 after Trichet's comment on currency market moves. Its daily chart shows an overbought position, while the 4-hrly and hourly charts show strong buying pressure. Strong support is seen at the levels of 1.5335 (21 4-hourly EMA). Longs can be initiated at those levels for intraday gain of 40 pips. (Eur/Usd-1.5363).

Pound: The Cable touched a 3-month high against the dollar at 2.0219 on the back of strong PPI data before finally closing at 2.0092. The daily chart is in overbought position while the 4-hrly and Hourly are close to oversold region. UK House price index is to be released today and it will dictate the further movement in Pound and 1.9955 levels (55 4-Hrly & 200 Daily EMA) could be seen. (Gbp/Usd- 2.0057).

Yen: Increased risk aversion and continuous declines in global equity markets boosted the yen as the pair touched an 8 year low of 101.38 which is the lowest level since 2000. The pair will continue to remain under pressure as the equity markets globally have not yet recovered. All of its major stochastics are giving bearish signals, while the daily and 4-hrly is still in the oversold territory. The immediate resistance is at 101.83 (21 hrly EMA) and break of this level will push the pair up to 102.21 ( 55 hrly EMA). (Usd/Jpy- 101.72).

Rupee : The spot rupee opened at 40.55 and fell to 40.71 due to weak equity markets and aggressive buying of dollars by oil companies to book forward dollars but recovered towards the end of the day along with the equity to close higher at 40.48/49 to a dollar. Medium Term Traget - 40.90. (USD/INR - 40.59)

Swiss Franc: USD/CHF pair traded in a range of 85 pips and dipped to a level of 1.0171 and later retraced to close stronger at 1.0192. All daily and 4-Hrly charts are highly oversold. Immediate resistance is seen at the levels of 1.0197 (21 hourly EMA) breaking of which could push it higher to the levels of 1.0224 (55 hourly EMA). (Usd/Chf- 1.0191) .

Australian Dollar: The Australian dollar continued to dip on the back of risk aversion as it fell by 150 pips from the days high and touched an intraday low of 0.9159. It touched the levels of 0.9047 in the early morning session which brought the 4-Hourly & daily stochastics close to oversold territory. Strong support comes in at 0.9142 levels (200 4-Hrly EMA). Look for opportunities to long at those levels for an intraday profit of 40 pips. (aud/usd - 0.9184).

Gold: Gold was very volatile yesterday, it lost $12 from its opening levels of $972.90 and touched an intraday low of $960.90. The daily charts are giving bearish signals while the 4-hrly still shows some buying pressure. The immediate support is at $968.00 (55 4-hrly EMA) and a correction upto that level is expected. (Gold - $971.75).

Dollar index: Dollar index has increased for the first time in few trading sessions to a level of 73.030. The immediate resistance is seen at 73.40. (8-Hrly moving average).

RCPL FOREX

Fed Under Pressure

2008-03-10T21:09:00.001-03:00

The Fed will be under pressure to provide more support to US credit markets. Global risk will provide some dollar protection.

US non-farm employment fell by a further 63,000 in February after a downwardly-revised 22,000 decline for January. This was the weakest figure for close to five years and there were further falls in manufacturing and construction employment. Most sectors were weak which suggests a wider downturn and this will maintain weak sentiment towards the currency. There was a decline in the unemployment rate to 4.8% from 5.0%. The drop, however, reflected a sharp drop in the workforce as discouraged workers gave up looking for jobs while recorded employment fell which reinforced the weak data.

The data will reinforce recession fears in the US economy and maintain pressure for further Fed support measures. Governor Fisher warned the markets not to expect Fed action before the next scheduled meeting and he also stated that recent policy would not continue. The Fed did, however, announce that the auctions to boost market liquidity would be increased and widened in scope to help ease money-market tensions. This may curb immediate pressure for lower interest rates, but markets continued to price in a 0.75% Fed Funds rate cut in March with some speculation over a full 1.00% rate cut.

The dollar found some support weaker than 1.54 against the dollar in choppy trading, but conditions will remain very nervous in the short term

Investica

Finding The Retail Management Position For You

2008-03-10T16:08:00.002-03:00

For millions of retail professionals throughout the world, the goals and desires that they hold within their professional lives vary greatly. Many young people and students work retail jobs in order to pay the rent or save up for tuition. Other young people take on retail jobs in order to gain general work experience in between graduation and their first permanent job. There are many, however, that work retail because they enjoy the interaction with customers and selling a product they believe in. For these workers, each day is a build up towards a position in retail management.

Retail managers range from branch managers to department heads within a corporate office. Retail management, therefore, covers all aspects of a retailer’s management and can lead to great possibilities for the right worker. These professionals need to have a strong set of skills before embarking on management tasks. Organization, strong business acumen, and an ability to deal with fast paced work are all keys to a successful retail management career.

However, the most important skill is dealing with diverse groups of employees who all have different backgrounds and goals. The problem in finding retail management jobs is the high expectations that retailers have from professionals in these positions. Managers are at the front line of a corporation’s enforcement of policy and creation of revenue. The high standards for these positions, coupled with the large number of retail employees aiming for management jobs, means that there is high competition for each position.

The retail professional that is looking outside of their current company for management jobs can turn to a variety of resources. Job sites offer a general listing of retail jobs, including the latest in management openings. Connections through friends and family can lead to interesting job opportunities, though this is hardly a reliable method of finding a job. Retail professionals looking for management positions should work with a recruiting agency.

Recruiting agencies can help retail workers find their ideal job in the industry. Younger workers who have the experience will find that an agency’s exclusive job listings are only one aspect of their service to their recruits. Many agencies offer an evaluation of interview skills and CVs in order to polish up those rough corners and loose ends in a candidate’s profile. As well, many agencies provide simulations and one-on-one sessions to help the aspiring manager find their inspiration. In all, recruiting agencies are a vital resource for potential retail managers.

Economics Weekly: Focus on UK 2008 Budget and Inflation Data

2008-03-10T15:03:00.003-03:00

The 2008 UK Budget is presented by Chancellor of the Exchequer, Alistair Darling at 12:30 on Wednesday. His speech is likely to emphasise the view that public finances will deteriorate as the economy slows. We look for a downward revision to the Treasury's GDP growth forecast to 1.75% - 2.25% for this year and to 2.25% - 2.75% in 2009. The CPI inflation forecast will almost certainly be revised up from 2% in the November pre-budget report.

Inflation-related data will underpin the view that global supply-side pressures are mounting, see charts 1 and 2. US import prices may rise to 14% pa in February, due to higher commodity prices and the weaker dollar. In the UK, producer input prices for February could show firms' input costs rising close to 20% on an annual basis. With prices of major commodities breaking new highs again last week and as inflation expectations rise, there is some evidence that this is pushing up retail price inflation.

US and UK trade data for January may show some stability. But the current account deficits remain large as a share of GDP, at 5.4% and 5%, respectively contributing to currency weakness.

ECB President Trichet last week raised the eurozone's 2008 CPI inflation forecast to 2.9% from 2.5% three months ago; February CPI growth should be confirmed at 3.2% on Friday. But slower growth is also a worrying problem, and explains the ECB's reluctance to raise interest rates, despite CPI inflation currently well above the 2% ceiling. The German ZEW survey for March could fall below January's low of minus 41.6.

Events last week highlighted growing economic weakness in the US but rather stronger growth elsewhere. This is reflected in aggressive monetary easing by the US Fed - cuts in official funding rates and extentions to Term Auction Facilities (TAFs). By contrast, the ECB and the UK are treading more cautiously, fearful of CPI inflation escalating via wage pressures and, this month, voting to keep official interest rates on hold. Many fast growing economies such as Australia, New Zealand, Norway, India and China have been tightening policy because of inflation worries. Uncertainty about whether the US will have a recession and a credit crisis is contributing to a high level of financial market volatility. Arguably, a weak dollar is just what the US needs to slash its trade deficit. But soaring energy and raw-materials prices are hindering the speed of correction and leading to a build-up in underlying inflation pressures. This places the US Fed in a very difficult position going forward and offers little assurance to financial markets.

Other key economic data includes UK and EU-15 industrial output, which may have increased in January. In the US, despite the sharp deterioration in the NFP jobs market, February advance retail sales may rise to 4% pa, 5% excluding autos. Also, the first release of the University of Michigan index will give an indication of the level of US consumer confidence in March. The BRC retail sales monitor will provide useful information on the health of UK consumer spending in February.

Chart 1: US, UK & EU CPI inflation is trending upwards.

Chart 2: Supply side inflation pressure is building. This is raising consumer price expectations.

Full report here

Lloyds TSB Bank

The Federal Reserve to Act Aggressively Again?

2008-03-10T14:56:00.004-03:00

The economy in the United States is fighting to stay above water and the Federal Reserve might again cut rates aggressively during next week meeting. For the first time in more than five years, the February Beige book reports that economic growth has slowed overall and the decline is well distributed among labor market, construction, consumer spending and manufacturing.

Worst not over yet in the U.S.

Much time is required to bring the economy back on track. Equity markets are still looking for a point of equilibrium and mortgage rates have risen, despite the aggressive rate cut of 225 basis points since last year. The Federal Reserve might cut rates by at least 50 basis points to 2.50% during March 18th meeting and another rate cut is expected before mid year. Housing remains the weakest spot of the U.S economy. Last week, the monthly S&P/Case-Shiller Home Price data showed that seventeen out of twenty cities fell year over year. In addition, both the ISM manufacturing and the non-manufacturing index, which covers almost 90% of the economy, stayed below the benchmark of 50 in February signaling that the slowdown is accentuating.

The Institute for Supply Managers' manufacturing activity survey printed 48.3 after increasing to 50.7 in January. Employment and new orders were among the weakest components. The non-manufacturing index increased instead to 49.3 in February from January's 44.6, but was below the important level of 50 for the second straight month. Growth is expected to moderate further in the coming months. In fact, payrolls declined 63,000 units (+23,000 expected) in February on the top of January's fall of 22,000. Job contraction covered most of the sectors from manufacturing (-52,000) to the construction business (-39,000). With less people active in the labor force, the unemployment rate eased slightly to 4.8% from January's 4.9%.

Euro's strength not a priority for ECB yet

As expected, the European Central Bank left rates unchanged at 4.00% during last week meeting. President Trichet confirmed inflation as the main target, although he acknowledged that growth might moderate further in the coming months. The strong euro was not even mentioned, as it helps to calm down inflation, which is now above 3%. In reality, the long wave of the financial crisis has not yet fully reached the European mainland. In February, the German Purchasing Manager's Index (PMI ) for the manufacturing sector printed 54.3, practically unchanged from January, while the PMI services increased to 52.2 from 49.2. Euro zone results remained above the benchmark as well. The manufacturing PMI eased slightly to 52.3 from 52.8 and the PMI measuring business activity increased to 52.3 in February from January's 50.6.

German industrial production rose 1.8% (0.3% expected) in January from December's gain of 1.5%. Construction business moved up 12%, the largest move of the past two years, supported by the mild winter, while production of investment goods jumped 6.2%. Economic growth is still dynamic in Europe with some exceptions. German manufacturing orders, as an example, fell 1.5% (-0.4% expected) month over month in January from December's -1.1%. In addition, in the fourth quarter, Euro zone growth was 0.4%, below the increase of 0.8% registered in the third quarter. Annually, the Gross Domestic Product (GDP) rose 2.2% in the fourth quarter from 2.7% in the previous period.

USD/JPY challenging support level

EUR/USD has reached the important resistance at 1.5450/1.55. The long/medium/short term trends are bullish, but a move above 1.5570 is necessary for 1.5640, eventually 1.5760.

GBP/USD has quickly reached the important resistance at 2.0150/2.02 where the 100 MA and the 200 MA meet. If this level hold, the next target could be 2.03.

USD/JPY is dancing on the important support line at 102.50/103.00. A rebound from this level could take the market to 104.50, 106.0. A follow though could target 101, 100.

Angelo Airaghi
MG Financial Group

Market Directions: The Credit & Dollar Crisis

2008-03-10T14:54:00.003-03:00

Confirmation was at hand this week for the ailing United States economy. Though the official notification for the beginning of a recession, if there is one, is still seven weeks away with the release of the advanced GDP report for the 1st quarter on April 30th, one of the last positive American statistics has crumbled to recessionary levels.

Non Farm Payrolls registered its worst result since mid 1993 as the economy shed 63,000 jobs in February far more than anticipated. In fact the details of the report were worse than the headline. Private payrolls, the jobs created in the private sector of the economy fell for the third month in a row, contracting by 101,000. Government jobs had added 38,000 to payrolls. The job rolls for January and December were also smaller than initially thought, losing 46,000 after revisions. Even the unemployment rate which fell by 0.1% to 4.8% was the result of a decrease in the labor market participation rate. That is, fewer people were looking for work, entering the ‘discouraged worker’ category of the survey. The euro set another record high against the dollar at 1.5465 immediately after the release then consolidated a figure lower in the afternoon.

It has been a storm of anti dollar news and developments for the past several weeks. Statistics in the US are either skirting recessionary levels or have tipped into contraction. The Institute for Supply Management Indices, manufacturing and service are below 50. Consumer sentiment surveys are at levels not seen since the beginning of the Iraq war in 2003. Retail sales are slipping and the housing market remains moribund. Job expansion had been the last reason for confidence that the US might avoid a serious slowdown. With GDP barely positive in the fourth quarter, kept afloat by exports—and the lower dollar, the remaining weeks of the 1st quarter are likely to bring further bad news.

When the news is unremittingly negative is just the time to begin looking for a market reversal. There should be a reasonable expectation that the US economy will respond to the 225 basis points worth of Fed rate reductions already in place. In normal markets this anticipation would already be tempering the dollar’s fall. After all the real question for equity and currency traders is where will the economy be in the fall, six months from now? There is however, one complicating factor that may diminish and retard the full effect of the decrease in the Fed Funds target rate-- the credit crisis.

Eight months after its first explosion the combined banking, financial and credit crisis in the United States is still with us. With major financial institutions seemingly unable to clear their books or avoid continuing write downs and with the credit markets operating at much diminished levels for fear of what the future may hold, even excellent credit risk is not being funded by the banks. The Fed announcement that it will add $20 billion in available liquidity to future TAF auctions only underlined the unsolved nature of the banking and credit problems. Credit is the lifeblood of a modern economy. It will be difficult for equity and currency traders to assume the natural forward risk of betting on a turn in dollar when to do so they must also undertake the additional and unknown risk of a credit market meltdown.

The US housing market has been in slow motion decline for more than two years. Until very recently it has had little effect on consumer spending and only marginal impact on consumer sentiment. In fact I would argue it is the contraction in the financial markets and lending since last August that has had a far greater effect on business and job growth in the US than the collapse in housing. Nevertheless, with housing in extreme disarray and job losses now beginning, consumers are not likely to recover their animal spirits sufficiently to push the economy to recovery until the housing decline begins to reverse.

Worldwide commodity price inflation which has been fueled largely by demand forces shows no sign of abating. With the Fed taking a solely economic growth focus in the United States and a quasi-mercantilist position internationally, inflation in the States will get short shrift. It will also get worse. With headline CPI, which is after all what consumers must pay, having more than doubled since last July, consumers are worried about expenditures and not in the mood to increase spending.

Inflation is a known commodity in the financial and currency markets. Eventually, or sooner the central bank begins raising rates, when it becomes apparent that a tightening cycle is starting the currency rises. Recessions also have a known trajectory. Economies respond to lower interest rates and six months to a year after the reductions have begun GDP growth renews itself and the currency rises. The Fed has already supplied a substantial amount of stimulus to the US economy, and the US economy is six months into this rate reduction cycle. GDP growth and inflation will follow.

The US credit crisis has introduced a new and unknown factor into currency market calculations. Traders cannot be certain that the usual course of rate reduction by the central bank will prompt the usual delayed growth from the economy. At least they cannot be sure enough to stake speculative positions on the result. In this situation anticipation based on historical models, on the idea that the economy always recovers when the Fed applies stimulus, is not sufficient. Nor is the progression of rising inflation chased by higher central bank interest rates secure. The Fed is severely constrained by the health and liquidity of the banking system. Inflation is rising fast but Fed spokesman barely seem to have noticed. Rising inflation or a return to prospective economic growth should signal a recovery for the dollar. But until the credit problems in the United States subside any recovery for the dollar will be problematical at best.

Joseph Trevisani
Chief Market Analyst
FX Solutions

U.S. Market Update

2008-03-10T14:48:00.001-03:00

Dow -51 S&P -7.25 NASDAQ -13.9

U.S. equity markets hold close to unchanged but remain heading lower to start the week. Equity futures moved higher ahead of the open when a Goldman Sachs analyst noted he could not rule out the possibility the Fed could cut rates as early as today. Similar to Friday''s premarket session the notion the Fed would move just a week before their scheduled FOMC meeting failed to gain any traction. 2-year year notes are under-performing the longer end of the curve contracting the benchmark Treasury spread below 200 basis points. The April fed fund future still sees nearly 100% odds of cuts of 75 basis points and August projects a similar probability of 1.75% fed funds rate. The Dow is getting a supersized boost from MCD+2% after the Co. reported strong Feb comparable sales figures. Nationwide Financial has surged 25% after getting a takeover offer from its parent company. Financials showed some decent early momentum but the tone has turned decidedly negative again after CNBC reported Lehman would be cutting their global workforce by 5%. Commodity futures began the week with some more profit taking but oil has rebounded and surged to a new all-time high. April crude is up around $107. Metals remain noticeably lower but have bounced from their worst levels as crude pushed back into positive territory.

In currencies, the USD firmed during the NY morning following comments from ECB''s Trichet noting he is concerned about excessive exchange rate moves, but reiterated the view that he pays extreme attention to that the US favors a strong USD. However, Trichet did reaffirm the standard hawkish line that Central banks must anchor inflationary expectations. Lastly, Trichet noted that today''s meeting had no technical discussions on new central bank coordination, but existing cooperation continues. EUR/USD retested Friday''s post-payroll lows of 1.5313 before consolidating. Later, EU''s Regling reiterated that the EU remains permanently vigilant on Euro but does not desire excessive volatility. USD is also receiving help from softer metal prices following China''s lower Feb trade balance released in Pre-European trading, which suggested a cooling of the global economy. Gold continues to struggle to break the $1,000 barrier. USD paid little initial attention to comments out of the UAE highlighting the possibility of setting up a USD peg task force in response to the growing expectation that the Fed may cut rates by as much as 75bps by the end of March. CAD and AUD weakened on the lower metal prices. USD/CAD traded at 0.9935 while AUD/USD ticked at 0.9120.

European equities were mixed and off their best levels of the session. Stocks tested pre-US highs following a Goldman Sachs analyst note that they saw a possibility of an emergency Fed rate cut during the NY morning on Monday. However, equity markets drifted lower as the usual Fed action time came and went. Euro-Stoxx 50 +0.1% at 3,578; FTSE 100 -0.2% at 5,688; CAC 40 -0.1% at 4,613 and DAX +0.1% at 6,522. June Bunds +39 ticks at 117.80; June Gilts -12 ticks at 111.56

Trade The News Staff
Trade The News, Inc.

Retail Selling Strategies

2008-03-10T14:17:00.002-03:00

Retailers face an intense competitive environment. With the growing availability of retail space there are more stores joining the marketplace. At the same time there is also a great deal of money to be made at the retail level.

Consumers have more disposable income to spend, and have become accustomed to experience shopping as a form of recreation.

Here are some strong selling strategies that can be used by retailers to produce more sales.

Retail Selling Strategy #1

Display the original retail price, or manufacturers suggested retail price, next to your price. Make the two prices very clear so that shoppers will realize what a great bargain they are receiving.

Retail Selling Strategy #2

Offer free promotional items. If you want to increase your retail sales you should strongly consider using promotional items. Promotional items should have a high perceived value, such as a free DVD or CD. Give them away with every purchase over a certain amount. You can offer a higher priced value giveaway for larger purchases.

A clever retail idea is to figure out what your average retail sale is, then offer a give away for sales higher than that average. This strategy should increase your average sale since people will want the giveaway.

Retail Selling Strategy #3

Offer a loss leader. A loss leader is a product which you sell to bring attention to your store. If customers are used to paying $1 for a pair of socks, but you sell them for .05 each, you will have customers lining up to buy them from you.

You will be losing money on the socks, but think of how many other items your customers will buy once they are in your store.

Making Money Online - Five Sure Methods

2008-03-09T19:25:00.003-03:00

Making money online is a huge business and it's getting bigger every day. Hundreds of you search online everyday for a great opportunity that will make you a fortune from the Internet. You spend your hard earned money on 'get rich quick schemes' but in the end, the only person getting rich is the schemer. It's makes you lose faith in humankind, doesn't it? But believe me, there really are some great opportunities that can earn you a lucrative income online. To make some serious money online, you need to change your way of thinking.

Try to look at making money online as creating your own painting starting with a fresh, clean canvas. Find your niche and brainstorm. People are always looking for fresh ideas and true content and will be more than happy to pay for them. Get out the 'paints' and start to dabble in different 'colors' or ideas and keep painting until the picture is done. The key to successful online marketing is to keep throwing out your ideas. And believe me, the opportunities are endless. Here are a few tried and true ways of making money online. And if you don't know how to use these specific avenues, learn. Hey, I didn't say it isn't hard work, but the end justifies the means.

There are numerous resources available to you on the Internet and I suggest you use them to your advantage. Learn how to use these moneymaking methods effectively and you'll soon be on your way to making more money than you ever dreamed possible. The sky is the limit!

Method 1. Affiliate Marketing
An affiliate marketer is essentially an effective sales person who directs traffic to a particular site with the actual selling being done by the merchant. The merchant has already invested his good hard-earned money in his product and service and your job is to deliver the traffic to his site and the merchant takes care of the rest. Two effective ways of delivering traffic are by sending traffic directly to the merchant's site from it's source or indirectly, by engaging the visitor to your own site before sending them to the merchant.

Method 2. Google AdSense
Google AdSense has a great money making potential by allowing website owners to post advertisements on their site. When people visit your site they can see the advertisements and your earnings are based on how many ads are displayed on your site and the number of times visitors click on one of these Ads.

Method 3. Pay per click
Google AdWords is probably one of the best pay per click methods out there where you bid on keywords for placement. If you don't have a website, the best place to start is a Google AdWords campaign. Find your niche and open a Google account. They have a wonderful tutorial explaining all the details. But before you use Google AdWords, learn the process. Google AdWords can be a bit tricky if you don't know exactly what you're doing. So take the time and learn.

Method 4. Info Products A really great to make loads of money online is to create and market your own info product. Choose your niche topic by finding hot markets and create your own info product in the form of an eBook, audio file, online video, online courses, etc. Choose how to sell your product using resources such as clickbank and then drive traffic to your site using pay per click programs, article marketing, forum participation, social bookmarking etc. The opportunities are endless. The key is research, research, and research.

Method 5. Blogging Again, find your niche topic. There are many free blog providers, so do some research. After you have posted some good content to your blog, submit it to available niche directories, which will give your blog some good traffic. Or a great way to increase traffic to your main website where you are promoting or selling a product is to link your blog to that site.

Free Internet Stuff

2008-03-09T19:17:00.002-03:00

The Internet is a huge place that has literally shrunk the world. You can get online, type in what you are looking for into your favorite search engine and viola, you have thousands of sources to find what you want within seconds. This goes especially for finding FREE Internet Stuff. Twenty years ago that would have taken months and then you would only get a fraction of the sources you can get online.

The Internet is clogged with free offers. Some good and some very suspect. With the growing issue of Identity Theft and online scams you want to know that the free offer you are applying for is legitimate. You also want to make sure you are getting a "high value product" and not some thing worthless. Finding Free Internet Stuff is an art and once you know the right things to look for you will be swimming in free products!

In most cases all that is required is a valid e-mail address. They may request you take a free trial by giving your credit card number but this is normal and should not be alarming. This is how many companies can give away free internet stuff by letting you try their main product for free for a limited time. If you like the free product and the free trial is legit give it try. I've done it and got some great stuff. I got a drum set for my boys in one deal. I had to sign up for a few free trials. A few I kept and the others I canceled. I got a free drum set!

How can you tell if a FREE trial is legit? Here are three tips to finding "Free Internet Stuff" and not getting ripped off:

1) Do not respond to free offers that are sent to you unsolicited via e-mail or "spam". If you didn't ask for the information you should be very suspect of the company or individual sending you the information. Avoid these offers.

2) Do a search from a reputable search engine like Google or Yahoo and the sites that get naturally high listings that are actual websites like freestuffonline or bestfreestuffonline will be reputable sites. There are many others. If they get natural search engine rankings they have been online for a long time are reputatble. Make sure before you submit any personal information or credit card information they are a secure site. You can tell this by the little "Pad Lock" on the lower right corner of the form you are filling out.

3) Make sure when you fill out the information you read the terms and conditions and write down or save all the information required to cancel your trial membership if one is requested to get your Free product. Many have an 800# you have to call and some are online. Save all the information!

Remember finding free Internet Stuff can be fun and rewarding if you are careful and only work with reputable services. You can find just about anything for free or very low-cost so have fun and be careful. It is very possible to take these free products and sell them on e-bay for cash. So this can also be a fun home based business.

What Brownser Are You Using Right Now?

2008-03-09T19:03:00.004-03:00

Check these cool commercials of Firefox and Internet Explorer.

IE7

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See you! ;)

Tips on Online Marketing For Real Estate

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Online presence is a must for any business today and Real Estate is no exception. With umpteen number of people browsing the web each day, what better place to market your services? Real Estate agents who have already taken the plunge into Online Marketing will validate the point. For others, here is what online marketing does to your business.

Online Marketing For Real Estate costs a great deal less than the regular marketing ways like the direct mailers and advertisements. These traditional media need special time and effort from the client to respond to. However, with online marketing, communication is just a matter of a few clicks. Emails have made communication quick, easy and almost effortless. Also, the responding time of online media is much faster than the traditional marketing media. Online marketing expands marketing in a larger area and at the same time, keeps it targeted to the desired group. Its has a all time web presence and can be increased with the addition of simple Internet marketing practices like banner ads, blogging, etc.

Internet Marketing For Real Estate is fast becoming poplar. Real Estate agents with online presence are definitely at a benefit as compared to those who do not have one. However, having a website is not the end to successful marketing. It is imperative to increase the website traffic. In other words, it is necessary to get more and more visitors to visit the site. Here are some tips on increasing website traffic:-

Use a key word rich title. Using the name of the business as the title can be effective only if your business happens to be quite popular. Do not cram up information of different topics on one page. Instead, stick to one topic per page and make sure the matter is rich in keyword content. Use text links on you web page. These are easy for search engines to find. Submit your site for listing on major search engines. You can also get people with complementary sites to link to your website. This will increase the number of clicks to your website, which in turn will increase its search engine ranking. Make sure the layout of your web page is easy to understand and navigate.

The next important step is to communicate effectively with the clients. Very few agents call back open house leads, however, these should not be ignored. It is a good way of giving a personal touch to your services. You can also plan a virtual tour for your prospect clients. All you have to do is post some of the homes for sale, in your website. These can be clicked by professional photographers to give the clients a feel of the house. It will give them an idea about the architecture, size and layout of the property. Also, it builds the trust of the client on the Real Estate agent and portrays absolute professionalism on the part of the agent. Assistance can be taken on initiating Internet Marketing For Real Estate from various Internet solutions service providers.