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FOREX-Dollar rallies broadly, euro down as inflation weighs

2009-01-07T00:05:00.000-08:00

* Euro hits 3-week lows vs dollar, sterling

* Dollar hits 1-month high vs yen

* Euro zone inflation softer in December (Recasts, changes byline, dateline; previous LONDON, adds comment, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 6 (Reuters) - The U.S. dollar rallied for a third straight session on Tuesday, boosted by more signs of economic weakness in the euro zone that could prompt its central bank to slash interest rates further.

The dollar also continued to benefit from a planned U.S. stimulus package, with investors betting that this would help the world's largest economy emerge from its recession more quickly than most countries.

The euro fell broadly, hitting a three-week low versus the greenback after a fall in euro zone inflation added fuel to expectations the European Central Bank will continue cutting rates. See [ID:nL6532861]. That should diminish the allure of the single euro zone currency against the dollar.

"It's more of a euro sell-off than a dollar rally and has something to do with the fact that markets do not believe the ECB can maintain interest rates above 2 percent for much longer," said Boris Schlossberg, director of currency research at GFT Forex in New York.

"On the other hand, the Obama stimulus package has also helped the dollar. The hope is that the stimulus plan would enable a quick U.S. economic rebound."

Losses in the euro prompted broad dollar gains, with the U.S. currency climbing above 94 yen against the Japanese unit, its highest in more than a month, while the dollar index hit its highest in three weeks.

In early New York trading, the euro was down 1.5 percent at $1.3397, having fallen as low as $1.3311, its weakest level since Dec. 12, according to Reuters data.

Against sterling, the single currency fell to 91.00 pence EURGBP, its lowest since Dec. 17. The pair has tumbled dramatically after hitting a record high of 98.05 pence last week. It last traded at 91.91 pence, down 0.8 percent on the day.

WEAK YEN OUTLOOK

The dollar climbed as high as 94.42 yen , its highest since Dec. 1. It was last at 94.27 yen, up 1 percent.

Analysts cited speculation that Japanese investors are renewing their foreign investments this year, which should hurt the yen.

The ICE Futures' dollar index, a gauge of the greenback's value against a basket of currencies .DXY, rose as high as 84.023, its strongest in more than three weeks. The index last traded at 83.633, up 1.3 percent.

Analysts, however, said given the dollar's sharp gains over the last few days, the currency may be due for a short-term pullback.

"Short-term momentum studies are over-extended, suggesting operators may find it difficult to substantially extend the dollar's gains scored in Asia and Europe," said Brown Brothers Harriman in a research note. But the bank expected dollar buying to resume once the currency gets back to lower levels.

In the euro zone, inflation fell to a 26-month low of 1.6 percent year-on-year from 2.1 percent in November.

The ECB targets inflation at just under 2 percent, and many in the market think a fall below that level keeps the door open to more aggressive rate cuts from the current 2.5 percent to deal with a deteriorating economy.

"(The data) will further free the ECB to cut interest rates at next week's meeting," said Adam Cole, global head of currency strategy at RBC in London.

"The balance of news from Europe is so poor that the market is perceiving that the ECB is behind the curve (on rates)," which was driving recent weakness in the euro, he said.

The ECB is expected to cut its key lending rate by 50 basis points or more at its policy meeting next week. In the run-up to the gathering, ECB officials have been suggested that rates could come down more in the future. (Additional reporting by Naomi Tajitsu in London; Editing by Chizu Nomiyama)

Forex Scalping - Day Trading Your Way to Huge Profits

2009-01-07T00:03:00.000-08:00

There is a huge industry in forex scalping systems and vendors promote them heavily on the net with track records that are quite simply mind boggling. The problem however is - they don't work and you will lose.

These guys are NOT traders in most instances, their simply marketing organisations.

As a trader for 25 years I simply laugh when I see headlines such as "make 700 pips a week" etc but many naive and greedy traders get taken in by forex scalping marketing copy and its no laughing matter when they lose their money!

So why doesn't forex scalping or day trading work?

Well if you think about it it's obvious:

You have millions of traders, trading trillions of dollars and to say that you can predict what this huge mass of people will do in just a few hours - is quite frankly ridiculous.

Volatility can and does take prices anywhere in a day and support and resistance levels are meaningless - so you cant get the odds on your side and you cant win.

Anyone who thinks they can win has not tried forex scalping!

So you can't win longer term?

No you can't -

Many vendors claim that you can predict with scientific accuracy what will happen in forex -Really?

If they could, they wouldn't be selling forex scalping systems - they would be to busy making money.

Another point of course is if you could predict what markets do in advance then there would be no market as we would all know the answer in advance, markets move on uncertainty and opinions and thats an investment fact.

The vendors however do produce track records but their meaningless and not worth the paper their written on.

Why?

Check the disclaimer and you will see the words "simulated" and in "hindsight" - so there done KNOWING the closing prices - how hard is that?

You, me or anyone else could do that. There is a problem though!

In the real world, you have to trade without knowing the closing prices and that makes things a little bit harder.

The rewards of forex trading are huge and its not easy to make money - but if you try a methodology based upon forex scalping, you are simply going to get a lesson in how hard it is.

THE GOOD NEWS!

Of course, with the rewards on offer you wouldn't expect it to be easy either and that really is good news.

Leave the forex scalping systems to the dreamers and lazy traders and do your homework and get the right forex education and that means trading longer term and getting the odds on your side.

You can trend follow longer term or do short term swing trading and both can make you money you just need to get a simple system to trade the odds and in these time frames you can get the odds on your side.

Forex trading can give you gains that can be life changing and everything about forex trading can be learned by anyone, with the desire to succeed and the right education.

‘Spice development can raise Nigeria’s forex earnings’

2009-01-05T03:07:00.000-08:00

Hopes of higher foreign exchange earnings from horticulture and spice production have been raised, with plans by experts to increase yields and brighten foreign market opportunities.
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Our Correspondent

Forex trading

The Executive Director of the National Institute of Horticultural Research, Dr. Ademola Idowu, who gave the hint in Ibadan on Wednesday, said Nigeria would earn good foreign exchange when the pact between the research institute and the Bells University of Technology, Ota, on spice research and development begins to yield results.

Idowu, who stated this in an interview with our correspondent, said NIHORT signed a Memorandum of Understanding with Bellstech in November 2008 to collaborate on research findings.

He said NIHORT had earlier invited an expert in horticulture from the University of Agricultural Science in Bangalore, India, Prof. Mariappa Vasundhara, for a lecture, where it was revealed that Nigeria could make fortunes from spice development.

Idowu said that findings by a group of researchers from the institute, which was also confirmed by Vasundhara, showed that Nigeria was blessed with more fertile land than India, earns foreign exchange estimated at $2.5bn annually from spice export to over 150 countries.

He added that India was currently growing and processing about 50 different varieties of spices both for domestic consumption and export. He noted that Nigeria could surpass the record.

Idowu said research findings by experts in Nigeria had also established the fact that the country has enough fertile land that could accommodate more than 50 species of the spices.

He said his agency and Bellstech have enough human resources and facilities at their disposal to carry out scientific findings that would lead to commercial production, processing and utilisation of spices in the country.

Idowu described spices as an important group of agricultural commodities which, since antiquity, have been considered indispensable in the culinary arts for flavouring foods.

He said, ”Some are used in the pharmaceuticals, perfumery, cosmetics as colourant, preservatives, antioxidant, antiseptic and antibiotics. They play a significant role in the national economy of countries like India, Indonesia, Germany and Netherlands”

He lamented that despite the importance of spices and their potentials in the development of the nation‘s economy, the crops have remained untapped in Nigeria.

He said, ”Different agro-ecological zones in the country are rich repositories of different species of spice plants.”

He said the two institutions had pledged to work together as a team and devise a strategy that would make the research findings open to investors.

He also said they had promised to assemble a team, apart from the researchers, that will discuss with the industrialists.

He said that the college of biological sciences, chemical sciences, biotechnology and food technology, will serve as platform for the linkage.

The Vice chancellor of Bellstech, Prof. Isaac Adeyemi, had, while signing the MOU, noted that the team in his university‘s College of Food Sciences had both academic background and industrial experience to handle processing and utilization of spices together with seasoned researchers at NIHORT.

”It is my belief that jointly we can blaze the trail in this unexplored area with full economic potentials not only for individuals but also for the nation,” he stated.

Vasundhara had in her paper, stated that despite the limited land space in India for the cultivation of spice crops, the country is still supplying over 70 percent of the global demand annually to Europe, America, Asian and many African Countries.

She said the world was currently looking forward to Nigeria to take its lead from leading producers of the product because the global market for the organic food hit about $31bn in 2005.

She urged the nation‘s leadership to encourage researchers at NIHORT to adopt best practices that would make massive production of various species of spices possible in the country.

Forex Charts – 6 Common Mistakes That Cause Equity Wipe Out

2009-01-05T02:48:00.000-08:00

If you don’t want to join them, avoid these common forex chart mistakes!

1. Using Useless Indicators

These are indicators based upon flawed logic and are mostly loved by the far out investment community and in the hall of fame we are going to place:

Fibonacci numbers, Elliot wave theory and cycles.

They all come from the markets move to scientific theory brigade.

Really?

Well if markets were scientific there would be no market as we would all know the price in advance. Of course uncertainty is what causes prices to move.

Ignore the above Fibonacci numbers were devised to solve a problem to do with the copulation of rabbits and are nothing to do with forex.

Elliot never made any money trading (despite what his fans say) and cycles well – look at a chart and see if you can spot repetitive ones I cant

2. Using Indicators with NO valid data

Day trading! If you want to use forex charts to make money you need reliable data and in a day or a few hours it’s not – volatility can and does take prices anywhere, so its impossible to win no matter how good your indicators are.

3. Using lagging indictors to lead

Main error here is buying dips to moving averages. Lesson never use a lagging indicator to enter trades you are relying on hope you need to use momentum indicators!

4. Not Using Momentum Indicators

If you don’t know what a momentum indicator is you will never enter with the odds on your side.

If you are using forex charts you need to enter with price momentum on your side and this is why they’re so important.

Two great ones for timing entry on your forex charts are stocastics and Relative strength index – learn about them and use them.

5. Using Too Many Indicators or Rules

In forex trading this causes disaster for any forex trading system.

Less is more when trading, as your forex system will be more robust in the face of brutal market conditions.

Use too many indicators and there are to many elements to break and believe me they will – simple systems work best and always have.

6. The Dangers Of Curve Fitting

Why is it so many back tested systems fail in real time currency trading?
The answer is curve fitting - where the system is bent to fit the data.

One trader I know likened this to shooting at a barn door and then drawing a bulls-eye around everyone one AFTERWARDS!

Many traders cannot get their currency trading system to work so bend the rules a bit to make it- this is curve fitting and its more common than many people think.

Of course no two periods of trading history are exactly the same and that’s why the system fails in real time going forward.

Forex hedging rewards banks

2009-01-04T20:43:00.000-08:00

They report profits from the segment for past two quarters

MALAYSIAN banks dealing in hedging instruments, particularly that involving foreign exchange (forex), are reporting profits in this area over the past two quarters.

Analysts agree that the business has been growing steadily since early 2007.

While quarterly results do not break down specific earnings from any particular product, the gains in fee income and forex holdings imply that this is the trend going on in most banks, said an analyst.

CIMB Group head of group treasury Lee Kok Kwan told StarBiz: “CIMB has taken the opportunity to accelerate the increase in its forex market share in the current environment and has certainly benefited.”

As to how much the business has grown, he said CIMB’s increase in income from this business was in line with its growth in sales volume and market share.

“However, we would not be in a position to benefit if we had not, since 2005, poured resources and effort into the forex business. Among others, it enabled us to provide a much expanded range of products to better suit the risk management requirements of our customers,” he said.

However, not all major banks are seeing higher fee income from forex hedging services.

A spokesman for RHB Capital Bhd said: “We do not agree with the analysts’ observation. Our forex income is mainly from the traditional forex spot and forward hedging. There was no significant increase in the forex fee income in the last two (reported) quarters compared to the previous year.”

Spot and forward contracts are the traditional hedging tools for forex risk. The newer instruments include options contracts, interest rate options and interest rate swaps.
Lee Kok Kwan

“We do not think the income from the hedging instruments is sustainable,” the spokesman added.

Banking analysts, too, are not certain if the growing income stream is sustainable.

One analyst said: “It is a bit difficult to tell if the earnings will be sustainable, but then again, the forex outlook is volatile so hedging could become popular with clients.”

While earnings from this particular segment could go up, the overall fee income is expected to come down this year in line with the weaker capital markets.

Whether or not a bank would see growth in forex hedging would depend on the strategy and outlook of a particular bank’s treasury department, he said.

The RHB Capital spokesperson said: “We think the forex market will continue to be volatile at the moment. The traditional spot and forward hedging is still the best way to mitigate the forex risk.”

CIMB’s Lee said: “The forex revenue stream is relatively stable and depends on volume, market share and level of volatility. It is sustainable because every single export and import transaction has a forex component and Malaysia is the 16th largest trading nation in the world, with the value of its annual exports and imports exceeding its gross domestic product.”

He said CIMB planned to expand its operations in Indonesia and Thailand, taking advantage of economies of scale by leveraging on one set of hedging and market-making capabilities, risk infrastructure and systems.

“As CIMB moves towards becoming a South-East Asian universal bank, its forex operations will expand.”

Citic Pacific shares plunge after forex-hedging loss

2008-10-21T07:29:00.000-07:00

Citic shares closed 55% lower at HK$6.52 in Hong Kong Tuesday. The firm, the Hong Kong branch of China's biggest state-owned investment company, said Monday that it faced a loss of HK$14.7 billion ($1.9 billion) after its positions in the foreign exchange market soured. Trading in Citic shares was suspended Monday.

The firm said it had ousted Finance Director Leslie Chang Li Hsien and group Financial Controller Chau Chi Yin.

Citi slashed its price target on Citic to HK$6.66 from HK$28 and recommended investors sell the shares, noting losses could widen to HK$26 billion if the Australian dollar were to fall to 50 U.S. cents. Goldman Sachs cut its recommendation on the share to "sell" from "neutral, lowering its target price to HK$12.50 from HK$31.50

"A cowboy hedging policy see Citic sitting on a unlimited potential losses," wrote Citi analysts headed by Anil Daswani. "We have lost confidence in the group's ability to execute."

Citic estimated at current exchange rates the firm stands to mark a 20% write down on its book value.

Citic's gearing will rise above 100% if it draws upon the $1.5 billion standby loan facility agreed by major shareholder Citic Group, which hold a 29% stake, arranged in the wake of the scandal to help shore up the firm's liquidity.

Citic Pacific Chairman Larry Yung reportedly told a news conference in Hong Kong Monday the firm's financial director failed to obtain approval before entering into some of the positions.

"The contracts were done without proper authorization, not evaluated correctly, nor reported correctly," Daswani said.

The positions were related to the company's currency exposure to an iron ore mining project in Western Australia, for which supplies were obtained using Australian dollars and euros. The positions were taken "with a view to minimizing the currency exposure," the company said.

But the leveraged foreign exchange contracts do not qualify for hedge accounting, the company said, and must be marked to market at the end of each financial period.

According to the leveraged contracts, Citic Pacific is obligated to buy Australian dollars at a weighted average strike price of 87 U.S. cents. Citic Pacific must buy euros at a weighted average strike price of $1.4400.

On Tuesday, the Australian dollar was buying 69.8 U.S. cents, and the euro was buying $1.3330. The euro is down about 7.8% against the dollar this year, while the Australian dollar has fallen about 20%.

The contracts put a ceiling on profits that could be delivered to the group if the dollar were to continue falling. However, the company said the contracts did not include a similar knock-out feature for losses.

Forex Signal

2008-10-09T18:03:00.000-07:00

D20P SELL B GBP/USD 1.7143

take profit 1.7123

stoploss 1.7173

British Pound/US Dollar Trading In Critical Support Region

2008-10-09T18:02:00.000-07:00

GBP/USD has plunged in recent days, but the area of 1.70 - 1.71 could hold as formidable support. Indeed, looking at the monthly charts, the region has historically served as critical support or resistance which suggests we could see a bit of a bounce in the near-term. However, if GBP/USD manages to break even lower, this would serve as a remarkably bearish signal for the pair.

GBP/USD (Monthly Chart, August 1995 - Present)

USDCHF-Forex Trading Signals Buy the USDCHF on SSI-based Forecasts

2008-10-02T11:09:00.000-07:00

USD/CHF Ratio: -1.64
Trading Forecast: Bullish

Forex Positioning in the USDCHF

USDCHF – Our contrarian positioning indicator accurately forecast that the US Dollar would rally against the Swiss franc through recent trade, and our SSI-based forex trading signals on DailyFX+ actually bought the USDCHF at 1.0887, 1.1016, and 1.1038. We see that the SSI continues to forecast USDCHF rallies, as the ratio of long to short positions in the pair currently stands at -1.64; 62 percent of traders are currently short the pair. We likewise see that forex trading crowds scaled back long positions, as USDCHF-buy orders fell 10.5 percent overnight. The SSI is a contrarian indicator and signals more USDCHF gains.

Forex Signal

2008-09-23T07:06:00.000-07:00

BUY B GBP/USD 1.8523

take profit 1.8543

stoploss 1.8493

Forex Signal

2008-09-22T08:03:00.000-07:00

Monday trade setup for eur/usd

sell at current price 1.4560 to 1.4610 stop loss 1.4650

tp1=1.4500 tp2=1.4475 tp3=1.4400

Monday trade setup for gbp/usd

sell at current price 1.8400 to 1.8420 stop loss 1.8510

tp1=1.8340 tp2=1.8285 tp3=1.8205

Monday trade setup for usd/jpy

buy at current price 106.30 to 106.60 stop loss 105.60

tp1=107.10 tp2=107.60 tp3=108.50

Monday trade setup for usd/chf

buy at current price 1.0935 to 1.0960 stop loss 1.0870

tp1=1.1020 tp2=1.1070 tp3=1.1100

Forex reserves rise by $650 m

2008-09-20T10:20:00.000-07:00

Mumbai: Forex reserves rose by a modest $650 million to touch $289.461 billion, for the week ended September 12, due to changes in the value of foreign currencies.

More India business stories

In the earlier week, forex reserves had declined by a whopping $6.498 billion to touch $288.811 billion.

According to the Reserve Bank of India’s Weekly Statistical Supplement, for the week under review, foreign currency assets increased by $676 million to touch $280.302 billion. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, sterling and yen held in reserves.

Rupee trims losses as stocks rebound

The euro was weak against the dollar in the period under consideration.

Forex reserves at $295.309 b on Aug. 29

Gold reserves and SDRs were unchanged at $8.692 billion and $4 million respectively.

More India business stories

The reserve position in the IMF fell by $26 million to touch $463 million in the week under review.

Weekly GBP/USD 22 - 26 Sept 2008

2008-09-20T10:10:00.000-07:00

Weekly Signal :

This is our predictions for next week 22 - 26 Sept 2008 with technical methods.

Range GBP/USD : 1.7922 ~ 1.8710
Range EUR/USD : 1.4258 ~ 1.4699

StopLoss GBP/USD : 1.7800
StopLoss EUR/USD : 1.4167

FOREX-Dollar extends gains versus yen on Fed announcement

2008-09-19T17:40:00.000-07:00

(Recasts with Fed announcement, update prices)

NEW YORK, Sept 19 (Reuters) - The U.S. dollar extended gains versus the yen on Friday, rising more than 2 percent, after the Federal Reserve announced a series of measures to provide liquidity to markets.

The dollar last traded up 2.2 percent at 107.87 yen , after rising to 107.97 yen, a one week high according to Reuters data.

The euro climbed 1.8 percent to 154.04 yen , helping the European single currency to trim losses against the greenback, to last trade down 0.4 percent at $1.4278

"We're seeing relief rally in U.S. short-term yields and the U.S. dollar is responding to that especially against the yen," said Vassili Serebriakov, a currency strategist at Wells Fargo in New York. "It's all about risk aversion coming off."

The Fed said it woould provide loans to banks and institutions for purchases of high-quality asset-backed commercial paper (ABCP) from money market funds, a step it said was aimed at helping money market funds meet demand for investor redemptions and foster liquidity. (Reporting by Lucia Mutikani and Gertrude Chavez-Dreyfuss; Editing by Theodore d'Afflisio).

Source: Reuters.Com

FOREX-US dollar rallies against yen, off low vs euro

2008-09-19T17:37:00.000-07:00

* Dollar rallies vs yen on reports Paulson proposes RTC

* Dollar recoups some losses vs euro in broad surge

* Central banks move to ease money market tensions (Recasts, updates prices, changes byline)

By Nick Olivari

NEW YORK, Sept 18 (Reuters) - The U.S. dollar rose against the yen and recouped most losses against the euro on Thursday in a broad surge with U.S. stocks on reports Treasury Secretary Henry Paulson is talking about a Resolution Trust Corp-type solution to the current financial crisis.

Paulson has been shopping around a proposal to congressional lawmakers that would create an entity to deal with the bad debt, similar to what was done in the savings and loan crisis in the 1980s, a congressional aide said on Thursday. For more details, click [nN18475247].

"If the government can come up with a comprehensive plan that is viewed by the market as a plan that would help in containing the problems in the financial sector in the U.S., that would be seen as a very positive development," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.

The dollar had traded to session lows against the yen as U.S. stocks fell in volatile trading, before share prices recovered on news of Paulson's plan.

The dollar was last up 1 percent against the yen at 105.36 yen , while the euro rose 1.2 percent to 151.22 yen .

"It's a modernized version of the Resolution Trust Corporation, which was used after the S&L crisis," said the aide, declining to be further identified.

The euro rose 0.3 percent against the dollar at $1.4345 , after touching a two-week high of $1.4541. The Dow Jones industrial average closed up 3.9 percent .DJI.

The dollar index on the ICE Futures Exchange .DXY, which tracks the greenback's performance against six major currencies, was down 0.2 percent at 78.081 after falling to its lowest since late August at 77.260.

Still, analysts warned that financial markets remain shaky even after the Federal Reserve and the world's other top central banks offered to pump billions of dollars into global markets to ease funding pressures. [ID:nSP129521].

Heightened jitters about the banking sector this week after the collapse of Lehman Brothers and the bailout of troubled insurer AIG (AIG.N: Quote, Profile, Research, Stock Buzz) exacerbated tension in financial markets, with banks reluctant to lend to one another.

Investors had sought refuge in the dollar in the past month amid turmoil in the financial sector. U.S. investors bailed out of overseas markets and sent money back home while foreign investors clung to the safety of U.S. Treasuries.

Yen buying had been fueled by the unwinding of carry trades that took advantage of the Japanese currency's low interest rates to purchase higher-yielding but riskier assets.

"We had the central bank action, which sent a wave of improved risk sentiment and that weighed on the dollar," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

High-yielding currencies such as the Australian and New Zealand dollars also benefited, gaining against the U.S. unit. The Aussie dollar climbed 2.1 percent to US$0.8029 . The New Zealand dollar gained 2.7 percent to US$0.6753 .

Investors were also monitoring developments at Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), as investors wondered whether it and rival Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) could continue as independent entities.

Morgan Stanley has held merger talks with U.S. regional banking powerhouse Wachovia Corp. (WB.N: Quote, Profile, Research, Stock Buzz). [ID:nN18450044]. (Additional reporting by Wanfeng Zhou and Gertrude Chavez-Dreyfuss; Editing by James Dalgleish)

Source: Reuters.Com

FOREX-Yen in retreat post-AIG and Fed; jitters remain

2008-09-18T14:15:00.000-07:00

* Euro up 1.2 pct vs yen at 150.20

* Yen under broad pressure on tamed risk aversion

* Fed to give AIG $85 bln loan, take 80 pct stake

* Markets still choppy; underlying banking worries persist

(Changes byline, adds quotes, updates prices)

By Veronica Brown

LONDON, Sept 17 (Reuters) - The yen fell against the euro and moved well away from recent four-month highs versus the dollar on Wednesday, with risk aversion alleviated after U.S. authorities extended a lifeline to insurer AIG (AIG.N: Quote, Profile, Research, Stock Buzz).

Investors were still on tenterhooks, however, as volatile equity markets reflected a strong sense of unease about financial sector health.

The U.S. Federal Reserve elected to leave interest rates on hold on Tuesday at 2 percent. But it later said it would lend up to $85 billion to AIG -- once the world's largest insurer -- for two years in exchange for a 79.9 percent equity stake [ID:nHKG15677].

Analysts said steps taken by the Fed had been well received for now.

"The action from the Fed was quite positive. They didn't cut rates as they seem to acknowledge clear separation between the needs of the economy and financial sector, Danske Bank currency strategist Kapser Kirkegaard said.

"AIG was simply too big to fail and the implications for most markets would have been overwhelming," he added.

News that British Bank Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) would buy several parts of Lehman, whose collapse on Monday sent global equity markets into a tailspin, also helped paper over deep-seated worries.

European stocks followed their U.S. and Asian counterparts higher, with banks in the vanguard on relief at the AIG plan, which was reflected in currency markets via the yen's retreat.

By 1102 GMT, the euro was up 1.2 percent at 150.20 yen , while the dollar was flat at 105.74 -- but well away from four-month lows seen on Tuesday at 103.51 yen . The single European currency also gained 0.6 percent to $1.4203 .

The Australian dollar was trading at 84.11 yen , well off a 3-1/2 year low of 81.40 yen set in the previous session.

JITTERS REMAIN

While European stock markets rose, shares in UK lender HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) moved violently, falling more than 50 percent at one point, after taking a battering earlier this week. It later recovered after a person familiar with the matter said it was in merger talks with Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz). The two banks declined to comment.

Meanwhile interbank money markets remained stressed.

Overnight dollar funds were borrowed at rates as high as 8 percent earlier in the European session, according to prices indicated on Reuters screens, before easing back later in the session.

Analysts said there was no room for complacency.

"It would be a brave investor who believes the marginal improvement in risk appetite overnight is the beginning of a longer trend, especially with the money markets still gummed up," said Daragh Maher, deputy head of global FX strategy at Calyon.

Britain's economic backdrop continued to show deterioration with data released earlier showing that the numbers of jobless in Britain leapt by 32,500 in August, its biggest rise since December 1992 [nONS003793].

The euro was up 0.3 percent at 79.44 pence .

Minutes of the Bank of England's latest policy meeting showed 8 of 9 policymakers voted to leave borrowing costs on hold at 5 percent, with one policymaker calling for a 50 basis point cut while a hike was also discussed.

Daily Forex Signal 18 SEPT 2008 released 22.21 GMT

2008-09-17T18:15:00.001-07:00

D20P BUY B GBP/USD 1.8108

take profit 1.8128

stoploss 1.8078

Yen Crosses: Additional Weakness Likely

2008-09-17T18:15:00.000-07:00

The Yen crosses are falling, with some making multi-year lows in the process. Weakness is likely to continue. Levels where the bearish outlook is no longer valid are cited.

It is possible that a wave 2 high is in place at 153.83 (wave 2 within a 5 wave drop from near 170). IF this is correct, then the pair will accelerate lower with 153.83 remaining intact and 133.45 would be the initial bearish target (100% extension). A push above 153.83 would indicate that the EURJPY is probably on its way to 157.

Remaining below 193.72 keeps the trend down for a test of 181.30…this is the confluence of the 61.8% of 148.19-251.23 / potential trendline support drawn off of the 1995 and 2000 lows. A rally through 193.72 would signal that a larger correction is underway that would end above 195.64.

This weekly chart shows the rally from the 2000 low as an A-B-C advance. Wave C is a diagonal, which should be fully retraced. Therefore, the bearish target is 78.88. It is unclear if the decline extends from current price or if a correction is needed before the larger decline resumes. Remaining above 93.12 keeps the larger corrective scenario favored. In this case, 97.60 should be strong resistance (38.2% Fibonacci and former resistance). The best strategy is to get bearish on a rally to this level or play a break below 93.

The CADJPY is approaching the low from March. A break below there shifts focus to a potential support line drawn off of the 1995 and 2002 lows near below 90. Momentum is down, signaling that a bearish break is likely. Price should remain below 101.87.

The long term AUDJPY target is not until 74.15. This is the June 2004 low. I have designated this as a target because the rally from there can be treated as an ending diagonal (similar to CHFJPY). Diagonals are usually rapidly retraced. Price should remain below 88.97 if the trend is still down.

The drop below 67.77 satisfies minimum expectations for the end of the decline from 97.86 (which is wave C of an expanded flat). However, the decline has more to go as C waves subdivide into 5 waves and the decline is in wave 3 right now. The trend remains bearish below 72.17. A push above there would indicate that a larger correction is underway, with 74.50 as initial resistance.

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published 6-7 pm EST), Daily Technicals every weekday morning (9-10 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.

Daily Forex Signal 17 SEPT 2008 released 23.13 GMT

2008-09-17T05:55:00.000-07:00

D20P SELL A GBP/USD 1.7839

take profit 1.7819

stoploss 1.7869

Forex

2008-09-16T15:54:00.000-07:00

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GBP/USD Sep 2008

2008-09-16T15:40:00.000-07:00

FOREX SIGNAL GBP/USD :

SELL STOP/LIMIT at 1.8077
TP1 : 1.8156 ~ TP2 : 1.8262 SL : 1.7985

"This service is recommended only for the experienced traders who follow a low risk money management strategy and also mentally prepared to hold trades during the large drawdowns . You must use these trade signals only as a SECONDARY confirmation tool to your own existing strategy/trades"

Forex reserves down $6.5 b

2008-09-13T20:26:00.000-07:00

Mumbai, Sept. 12 Forex reserves declined by $6.498 billion in the week ended September 5, three times as much as it did a week ago, chiefly because the dollar appreciated against other global currencies.

Forex reserves fell to $288.8 billion. In the previous week, forex reserves had fallen by $1.97 billion to $295.309 billion.

In the week under review, foreign currency assets declined by $6.491 billion to $279.626 billion.

Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, sterling and yen held in reserves.

The week saw the euro touching a 11-month low of $1.4235, and the sterling touching a two-year low of $11.7850.

The dollar sharply appreciated because crude oil dipped to $105 a barrel.

The change in the currency values also impacts the RBI’s profit, as is seen from the latest annual report for 2007-2008. The balance in the Currency and Gold Revaluation Account (CGRA) as on June 30, 2008, had increased to Rs 1,63,211.83 crore, (Rs 21,723.52 crore). The increase was on account of depreciation of the dollar against other currencies and increase in the price of gold, said the RBI.

Source: bussinessline.com

Oil drops heavily as Gustav fears fade

2008-09-02T14:34:00.000-07:00

U.S. Dollar Trading (USD) Public Holiday, big moves on Oil as Hurricane Gustav fails to make impact helped the dollar to make gains. Looking Ahead, Aug ISM expected to fall slightly to 49.7 vs. 50.0 previously. UPDATE OIL breaks below $110 a barrel

The Euro (EUR) tracked Oil movements closely, weakening as Oil softened. German July retail Sales were confirmed as a weak -1.5% m/m. Eurozone PMI was confirmed at Overall the EUR/USD traded with a low of 1.4583 and a high of 1.4717 before closing the day at 1.4605 in the New York session. Looking ahead, July Eurozone PPI is expected to gain 1.3% in July.

The Japanese Yen (JPY) continued to make gains against most currencies as the USD/JPY broke the key level of 108. Weak Japanese stocks weighed. Overall the USDJPY traded with a low of 107.63 and a high of 108.67 before closing the day around 108.20 in the New York session.

The Sterling (GBP) broke through 180 as downside momentum accelerated. Overall the GDP/USD traded with a low of 1.7985 and a high of 1.8128 before closing the day at 1.8020 in the New York session. Looking ahead, Government Stimulus package is expected to be released.

The Australian Dollar (AUD) weighed down by commodity sales and lack of support from the AUD/JPY. Overall the AUD/USD traded with a low of 0.8485 and a high of 0.8580 before closing the US session at 0.8485. UPDATE RBA cuts rates by .25%

Gold (XAU) fell heavily as Oil continued to slide. Overall trading with a low of USD$817.20 and high of USD$835.30 before ending the New York session at USD$818 an ounce.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4366	1.4440	1.4575	1.4728	1.4811
USD/JPY	107.29	107.63	108.10	108.80	110.29
GBP/USD	1.7754	1.7821	1.7915	1.8211	1.8344
AUD/USD	0.8173	0.8276	0.8495	0.8586	0.8694
XAU/USD	801.00	807.40	815.00	935.50	844.00

Euro – 1.4575

Initial support at 1.4440 (Feb 7 low) followed by 1.4366 (Jan 22 low). Initial resistance is now located at 1.4728 (Sept 1 high) at followed by 1.4811 (Aug 26 high).

Yen – 108.10

Initial support is located at 107.63 (Aug 29 low) followed by 107.29 (Aug 1 low). Initial resistance is now at 108.8 (Sep 1 high) followed by 110.29 (Aug 25 high).

Pound – 1.7915

Initial support at 1.7821 (Apr 27 2006 low) followed by 1.7754 (Apr 21 2006). Initial resistance is now at 1.8211 (Sep 1 high) followed by 1.8344 (Aug 29 high).

Australian Dollar – 0.8495

Initial support at 0.8276 (Sept 18 2007 low) followed by 0.8173 (Sep 10 2007 low). Initial resistance is now at 0.8586 (Sep 1 High) followed by 0.8694 (Aug 28 high).

Gold – 815

Initial support at 807.40 (Aug 22 low) followed by 801 (Aug 20 low). Initial resistance is now at 835.5 (Sep 1 high) followed by 844 (Aug 28 high).

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Forex Technical Analysis - RCPL Forex

2008-09-02T14:29:00.000-07:00

Euro: Euro further declined yesterday by 147 pips to touch the low at 1.4555 in the late US session. The 4-hourly and the daily chart are showing selling pressure with next immediate support at 1.4376 (100 weekly EMA & 38.2% of the rise in monthly charts) where opportunities to long can be considered. (Eur/Usd: 1.4582).

Pound: Cable yet again broke past the important psychological support of 1.80 in the US session yesterday as it plunged to a low of 1.7848. The charts have flattened in the oversold region. Next support is witnessed at 1.75 levels. Shorts can be initiated around 1.7960 levels targeting 50 pips. However, a reversal could be witnessed anytime basis the interest rate decision due to release tomorrow. (Gbp/Usd: 1.7905).

Yen: USD/JPY pair weakened almost 100 pips touching 107.60 levels before regaining some strength to close at 108.14 levels. The major stochastic continues to show selling pressure with support coming in at 107.30 levels (100 daily & 21 weekly EMA). Initiate longs there for 50-60 pips. (Usd/Jpy: 108.24).

Rupee: The domestic currency further weakened to touch the intraday low at 44.25 before closing at 44.18 level as compared to the previous close at 43.93. The primary reason could be attributed to global strength in dollar and heavy dollar demand by importers and foreign banks. In the forward market, the premiums fell and the 6-mth forward dollar

ended at 2.84 per cent (3.36) and the 12-mth closed at 2.58 per cent (2.86). (Usd/Inr: 44.18).

Swiss Franc: USD/CHF pair traded within 100 pips yesterday taking resistance at 1.1045 levels (50% Retracement of the fall in weekly charts). The charts are indicating slight buying pressure as they are heading towards the overbought region. Only if 1.1085 (recent high) is decisively broken, an upmove upto 1.13 levels can be witnessed else further consolidation between 1.0880 – 1.1080 will be seen. (Usd/Chf-1.1033)

Australian Dollar: Aussie weakened almost 112 pips yesterday to touch the low of 0.8466 pricing in the 25 bps rate cut expected today. The hourly and 4-hourly stochastic are showing are showing buying pressure with immediate resistance at 0.8555 (21 4-hourly EMA) breaking which Aussie can move upto 0.86 levels. Initiate shorts at higher levels. (Aud/Usd-0.8496).

Gold: Gold faced resistance at $835.55 yesterday and was pushed almost $20 lower. Gold has strong support at $809.36 (50% retracement of rise from $775 to rise of $ 843.90). The 4-hourly and hourly stochastic is oversold whereas the daily is moving towards the oversold region. On the downside $800 should hold and initiating longs there could be considered. (Gold: $816.50).

Dollar index: Dollar index retains strength trading at 77.81 levels currently with the stochastic highly overbought at 92.53%.

Brent Oil: Oil plummeted almost $6.60 yesterday as Hurricane Gustav weakened as it approached the US. The 4-hourly and daily stochastic are highly oversold where the immediate support is seen at $108.75 (100 weekly EMA) whereas on the upside $113.79 can be taken as resistance. (55 Weekly EMA) (Oil: $110.91)

Market Update from Trade The News

2008-09-01T22:51:00.000-07:00

Asian Market Update: Asian central banks intervene after Thailand declares State of Emergency

- Asian currencies came under the spotlight today, with traders saying that central banks in Thailand, Malaysia, and Indonesia all intervened to defend their currencies. Mounting fears that foreign investors may repatriate investments continue to weigh on Asian currencies, complicating monetary policy in a region struggling with inflation. The size of the intervention wasn't large, with central bankers merely trying to buy time as the market reassesses the fundamentals of the greenback rally that started in August. In Thailand, a State of Emergency was declared in Bangkok after long-running anti-government protests and violent clashes overnight, forcing authorities to support the local currency. In South Korea, authorities continue to try and talk up the sliding KRW, with traders estimating that South Korean authorities sold $7.0B to support the KRW during August. Moody's said that Korea isn't at risk of another currency crisis, but added that short-term debt poses 'some vulnerability'. Korean authorities remain concerned over a possible liquidity problem in September when 8.6 trillion won (about $7.9B) in bonds held by foreigners mature, and repatriation flows might knock down the KRW.
- Forex: The greenback continued to strengthen in Asia, with the USD index trading at a new 2008 high around 77.80. The U.S. currency might be in for some stiff resistance over the coming 24hrs, with the USD index about to test the December 2007 trend high at 77.85. Geopolitical tensions between the E.U. and Russia weighed on European currencies, with U.S. Vice President Dick Cheney announcing that he will travel to Georgia and Ukraine this week. Pundits say Cheney's trip could help lay the groundwork for stiffer Western responses to last month's Russian incursion of Georgia. EUR/USD hovered close to last week's low at 1.4565/70, a key support level, with stops seen below 1.4560. A break below these levels will target the March 2006 trend low around 1.4555. USD/JPY had a choppy session, managing to break above the London high at 108.39 and triggering some light stops. The pair failed to test yesterday's Asian high at 108.70, with more offers seen ahead of 108.75. NZD/USD traded lower for most of the session, finding support around 0.6920. The New Zealand Institute of Economic Research said the economy will emerge from recession in Q4, but faces strong inflation pressures and only a gradual easing in central bank interest rates over the next year.

- AUD/USD under pressure ahead the Reserve Bank of Australia rate decision at 0:30 EDT: An interest rate cut of 25bps is fully priced by the market, and has been confirmed by several RBA sources in the Australian press. The AUD is looking heavy ahead of the announcement, but some analysts argue that the RBA's accompanying statement may be less dovish than the market currently expects. The market currently expects about three cuts this year, but recent data highlighting profit growth and business investment intentions have questioned the market's outlook. From a technical perspective, the AUD/USD close below 0.8500 is a bearish development, and the pair has since dipped below 0.8475, a 12mnth low. Chartists add that there isn't any technical support until weekly low around 0.8275.

- Traders continue to dump the GBP, with GBP/USD trading as low as 1.7860 in Asia. Chartists suggest that GBP/USD is in for more pain, pointing out that there isn't any decent support until the 50% retracement of the 1.3682/2.1162 move at 1.7420. According to reports, British Prime Minister Gordon Brown will unveil plans on Tuesday to support the U.K.'s slumping housing market, but the news failed to halt the currency's downturn.

- Japanese investors were surprised by news of Prime Minister Fukuda's resignation, but the impact of the announcement appears limited for now. Japanese bond markets struggled to make sense of it all, with choppy trading seen across the curve. Ruling Liberal Democratic Party Secretary-General Taro Aso is expected to fill the vacant position at an upcoming election, but it is quite likely that it will only be an interim government with few implications for investors. The big question remains what foreign investors will think of the latest developments, especially when considering that Aso is the type of politician who tends to boost government spending.

- Equities: At 23:45 EDT Japan's Nikkei is +0.46%, the S&P/ASX200 is +0.85%, South Korea's KOSPI is +0.03%, Hong Kong's Hang Seng index is flat, and the Shanghai composite index is -0.71%. The S&P500 futures contract is currently trading at 1,284.30. Tokyo shares rebounded after Fukuda's surprise resignation, with bargain hunters doing their best to put a positive spin on Japan's political instability. But trading volume remained light in Tokyo, with investors waiting for reaction from foreign investors. Aussie stocks traded higher ahead of the RBA rate decision at 0:30 EDT, with rate-sensitive stocks leading most of the upside. Upside was capped by resource stocks, with oil failing to rebound from earlier selling. In South Korea, an early rally quickly fizzled, as investors continue to worry about the KRW weakness.

- Commodities: With Gustav downgraded to a tropical storm, Nymex crude oil is trading lower at $111.19/bbl. Spot gold was dragged down by continued USD strength and falling oil prices, last trading at $820.30/oz. Chartists say a break below $815/oz would go on to test $800/oz.

Trade The News Market Update System. To manage your alert preferences click on Portfolio button at the top of the News Station module.

USD/JPY - 108.30 Daily Market Outlook - Sep 1

2008-09-01T21:02:00.000-07:00

Despite yesterday's selloff to 107.62, dollar's subsequent rebound from there on cross unwinding suggests the correction from last month's high at 110.67 has possibly ended and consolidation with upside bias is seen for gain towards 108.97 but reckon resistance at 109.20/25 would hold from here.

European stocks ease, oil makes up ground

2008-08-28T01:24:00.000-07:00

European stock markets eased on Monday after sharp Friday gains while oil prices, which had tumbled before the weekend, made up a little of their lost ground.

With trade thin because London markets were closed, sterling hit a two-year low against the dollar in the aftermath of data showing a stagnant British economy in the second quarter.

Euro zone government bond yields fell sharply after a G20 finance official told Reuters the International Monetary Fund had trimmed some of its forecasts for economic growth, with the euro zone figure for 2008 cut to 1.4 percent from 1.7. percent.

Futures trading indicated Wall Street would open slightly lower, ahead of U.S. July existing homes sales data due at 10:00 a.m. EDT.

Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) was down about 10 percent in European trade after a South Korean regulator voiced concern about state-run Korea Development Bank's KDB.UL interest in buying a global bank, possibly Lehman.

In Europe, the FTSEurofirst 300 index was down 0.34 percent after a 1.8 percent gain on Friday, but analysts continued to believe that the gloom hanging over stockmarkets had lifted a little.

"The clearly positive sign is that the raw material, oil and food prices are on the decline and the inflation outlook is more favorable," said Tuomas Komulainen, Helsinki-based strategist at Danske Market Securities.

"On the negative side is the euro zone economy slowing more than expected, but overall things are slightly more positive for equities," he added.

Rand slightly weaker

2008-08-28T00:52:00.000-07:00

The rand was slightly weaker on Monday morning, mainly reflecting the firmer dollar, which rose against the euro and pound in Asian trade amid concerns about the European economies.

By 09.00am the rand was bid at 7.6956 to the dollar from a previous close of 7.6533. It was bid at 11.3376 to the euro from a previous 11.3347 and at 14.1845 against sterling from 14.1838 before.

The euro was bid at $1.4735 from $1.4786 overnight, while gold was quoted at $820.90 a troy ounce from $823.77/oz overnight.

A local trader said that the dollar rose against the pound and euro on Friday night.

"It's a holiday in London today, so we are expecting volumes to be fairly thin," said a local trader. He added that he expects support for the rand at 7.65 and resistance at 7.74.

RMB analysts said in their morning report that despite substantial volatility in commodity markets and the EUR/USD, the rand managed to hold a range of 7.65 - 7.86 last week.

"After what was almost a week-long rally, the price of Brent crude oil slumped on Friday falling by $4 to $114/bl, the gold price slipped from $839 to $818/oz and the USD gained against most major currencies."

RMB expects the rand to see weakness today as it plays catch-up with the EUR/USD it has been tracking for much of the month. They expect resistance at 7.76, with support still at 7.65.

Slowly, the Dollar Is Winning Converts

2008-08-03T01:30:00.000-07:00

This isn’t to say that the greenback is on the verge of a charge that will enhance its value against the euro, yen and other major currencies. However, the activity in the foreign exchange markets of late suggests that the knee-jerk interpretation of any and all data as dollar-negative — a view that held sway for months — is no longer operative.

The euro reached a high of $1.6038 on July 15. Since then, it has fallen back, dropping to $1.5591. It’s not exactly a massive move, and doesn’t even push the euro/dollar out of its recent trading range. But it is at the lower end of this trading range, and the reaction in the foreign exchange market to Thursday’s economic data shows that investors are predisposed to think more positively about the dollar.

“You are starting to get a more forgiving attitude to the dollar,” says Joseph Trevisani, chief market strategist at FX Solutions, who says investors are more likely to look at positive developments, “rather than ignoring it and only focusing on the bad news.”

Thursday’s report on U.S. economic growth was worse than expected, with an overall growth rate of 1.9%, and downward revisions to previous quarters. However, inventory reduction played a significant part in this sluggish figure, and “when that’s the case it implies there will be an inventory build in the future which will add to GDP,” says Robert Lynch, head of currency strategy for HSBC Americas.

The dollar fell after the 8:30 a.m. ET release of the figure, which was coupled with a worse-than-expected report on weekly jobless claims. However, a better-than-expected report on Chicago-area manufacturing conditions brought buyers back into the market. In previous months, sellers may have continued to hold sway, but the emerging thinking is that the U.S. economy may have seen its worst, while European economies continue to struggle. Still, the jury is out.

“When markets change they find statistical proof they need to justify their ideas,” says Mr. Trevisani. “I think you’re seeing some of that but nobody is truly convinced yet. No doubt, the European economies are slowing vis-à-vis the U.S. economy, and there’s no doubt the U.S. economy hasn’t collapsed. But neither view has changed the overall scenario yet.”

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FX Correlations (July): How Do Currencies Move In Relation To Each Other?

2008-08-02T08:48:00.000-07:00

The following is our monthly correlations update for July. As we have stated time and again, correlations between different currency pairs will inevitably shift over time. Therefore, it is of utmost importance to keep abreast of these fluctuating relationships to fully understand your trades and portfolio. Below are the one-, three-, six- and twelve-month correlations for the seven major currency pairs. Additionally, we have included the six-month trailing correlation versus the EURUSD as further confirmation of the correlation.

In order to be an effective trader, it is important to understand how different currency pairs move in relation to each other. There are a few reasons why this is significant, but most importantly, it allows traders to understand their exposure. For example, having a portfolio that consists of the USDCHF and EURUSD is different than having a portfolio comprised of USDCHF and USDJPY. As indicated in the tables below, through the Monday of July, the Swiss economy’s depence on the EZ lead to a boost in the long negative correlation (-0.93) with EURUSD. On the other, the overbearing influence of risk appetite and the popularity of the carry trade evened out to lead the USDCHF and USDJPY positive correlation (+0.78) to falter. This means that having long exposure in both USDCHF and long EURUSD would generally negate profit or loss because when EURUSD rallies, USDCHF will sell off the majority of the time. Of course, these two currencies may have different pip values and the correlation is not perfect, so the P/L will not be exactly zero. On the other hand, holding long USDCHF and USDJPY positions would be similar to nearly doubling up in one of the pairs since the correlation is so strong. Furthermore, we can tell from our tables that correlations shift with time. For the past year, the carry trade has been a proiminent market driver; but we can seen in the correlation between USDJPY and NZDUSD that the impact isn’t as clear cut as it used to be. Over the past year, the level of US interest rates and the volatlity in interest rates led the pair to a positive correltion (0.33). However, through the past month alone, the sharp drop in the kiwi has completedly flipped the link (-0.59). Shifts such as these can be partially explained by changes in the severity of monetary policy or changes in unique domestic conditions. Overall, having this knowledge will allow traders to effectively diversify and manage their portfolios.

Regardless of your trading strategy and whether you are looking to diversify your positions or find alternate pairs to leverage your view, it is very important to keep in mind the correlation between various currency pairs and their shifting trends.

FX Correlations (data as of 08/01/08)

Source: Daily FX

Marketiva

2008-08-02T08:11:00.000-07:00

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