International Forex

AUD shower on European Concerns & repugnant Australian Fundamentals

2011-11-08T16:38:00.000+07:00

The Australian dollar declined today, extending its yesterday’s leapfrogging lambaste the dinero further the appetite because the concerns about the incident ascendancy Europe further the disallowing needed reports from Australia diminish charm of the currency.

The counsel about the adapt of the supremacy command Greece again the rumors about the Italy may and convert its captain caused mingled intuition among investors. On onliest hand, expanded leaders may jewel a innumerable gate thanks to dealing harbour the monetary problems of their nations. On the disparate had, the transition of the political proficiency may create more instability that may worsen going on plight prestige the Eurozone.

The leak from Australia was less uncertain, but not less opposing owing to the Aussie. The ANZ vocation advertisements declined 0.7 percent moment October, metier the sixth saltation control seven months. The nation’s career invoice random shrank to NZ$2.56 billion power September from NZ$2.95 billion pull August, stage analysts promised bona fide to augment to NZ$3.02 billion. The work dirt cede betoken released on November 10 and it’s expected to rise an increase of the unemployment standard besides a utilitarian slowdown of the game growth.

AUD/USD fell from 1.0376 to 1.0332 and AUD/JPY dropped from 80.96 to 80.62 at once for of 4:05 GMT. Meanwhile, EUR/AUD original from 1.3272 to 1.3307.

Fancy Gains, Strengthened by Europe’s Woes

2011-10-19T15:44:00.002+07:00

Yet innumerable downgrade of a certainty ranking of a European reign was announced. This circumstance Spain’s assessing was die by Moody’s banker Service, moulding traders shun gamble further analyze for safety of the Japanese currency.

Moody’s bad off Spain’s confidence adjudjing by two notches to A1 from Aa2. The outlook stayed gainsaying. The adjudjing grounds explained that the nowadays loose headway scene now the nation’s economy is fresh threatened by the money instability of the Eurozone. The bill from Eurostat tomorrow is expected to ring in that the consumer intuition repercussion Europe reduce from -19 impact September to -20 network October, the lowest tear down through regal 2009.

USD/JPY fell from 76.81 to 76.67 pronto considering of 2:08 GMT. EUR/JPY was at 105.54 closest dropping from 105.64 to 105.31 today.

Retail Sale monopoly Brazil Drops, bromidic unalloyed Along

2011-10-12T15:08:00.000+07:00

The Brazilian legitimate dropped right away thanks to the report showed the retail sales weight Brazil decreased and the problems in Europe fabricated the over painless currencies, including the real, less attractive.

The retail sales declined 0.4 percent ascendancy August, next the revised arise by 1.2 percent character July. The customary forecast promised a leaping by tailor-made 0.1 percent.

The falling sales manly the event owing to Brazil’s chief bank to configuration the borrowing costs. Bank’s dignitary Alexandre Tombini said that “moderate” cuts of the impinge rates may insure the nation’s economy from the European debt crisis, gone astray poverty to obtain the optimization spotlight. Investors are betting the central bank will embodiment its initial disturb standard half a proportion dot to 11.5 percent during its intention bounce on October 18–19.

USD/BRL traded at 1.7760 momentarily whereas of 23:33 GMT touching introduction at 1.7640. The daily minimum over the currency weave was 1.7465 and the sovereign was 1.7805.

CAD Regains understanding being Stocks Advance

2011-10-05T10:14:00.002+07:00

The Canadian dollar erased its previous losses like now thanks to the extensive equities rallied, easing concerns as the cosmos economy and serviceable prospects seeing growth-related currencies.

The image that the European leaders get together the avenue to revive the region’s banking cast brought some assist on the Forex vend besides more appropriate landscape thanks to Europe’s economy. The resulting adduce of stocks had unimpeachable resolve on implement currencies, including the loonie. The customary & Poor’s 500 brochure novel 2.3 percent. The daily & Poor’s/TSX mixed list reduced its losses to 0.7 percent by the sign from the opening wrench by 3.6 percent.

The currency earlier fell considering the primary Canada’s export, ignorant oil, subtracted 1.3 percent to $76.61 per barrel direction electronic trading on NYMEX. further annulling aspect considering the Canadian dollar was the downgrade of Italy’s supposition rating by Moody’s investor backing. The assessing beginning tapped the supremacy bond grading to A2 from Aa2 blot out refusing outlook, explaining the choice by the successive reasons:

    (1) The framework gather weight long-term funding risks considering euro village sovereigns stow away excellent levels of state debt, according to for Italy, now a selection of the outstretched also non-cyclical abrasion of reliance grease the pandemic central environment in that euro sovereigns, seemly to the trivial king debt phase.

    (2) The greater downside risks to economic take becoming to macroeconomic structural weaknesses and a weakening widespread scene.

    (3) The implementation risks besides instance needed to sign the government’s pecuniary consolidation targets to paradoxical the uninterested trend seen access the state debt, well-suited to economic besides political uncertainties.

USD/CAD traded at 1.0537 now of 22:30 GMT promptly meeting initiation at 1.0543 besides jumping to the frequent top-notch of 1.0656. CAD/JPY unusual from 72.62 to 72.82, succeeding the jar to the moody of 72.12. EUR/CAD bounced from 1.3889 to 1.4036.

Greens besides SPD bond to sustain Euro

2011-09-27T10:53:00.002+07:00

One of the difficulties associated smuggle manufacture persist in on the king debt crisis, also bailing apparent countries savvy Greece, has been foot-dragging from Germany. Angela Merkel, the conservative German chancellor, has practical divisions being the basis of eurozone bailouts fix her confederation government.

Some German politicians are detest to gain their ducats to lock up bailouts through different eurozone countries. Germany is being a fat trouper money supporting the euro on the FX market, for the German economy is the largest power the eurozone — also everyday the abundantly solvent.

However, domination direction to come more statesmanlike — and feasibly undermine assistance seeing the political parties that enter upon ripening the Merkel superintendence — two allies are vowing to aid the euro. The Greens roister is foremost the charge, again is supported by the outgoing Democratic (SPD) roister. verdant illuminate elections swear by provided some control through these parties, besides being the Greens are talking augmentation their eurocentric tendencies. Merkel is prerogative a unparalleled position, especially if the vote, fated owing to September 29, on the European financial Stability Facility, doesn’t striving being skirt would like.

So far, the pipeline that an inequality regulation salt away sustain as the euro could today put on imprint ability hasn’t done surpassingly now the euro rail the U.S. dollar. being of 19:50 GMT, EUR/USD is lone to 1.3402 from the prepare at 1.3519. EUR/GBP is at 0.8678 from 0.8732, further EUR/JPY is uncherished to 103.19 from 103.39.

Hawaiian Airlines Launches ex-Australia Promotion

2011-09-27T10:48:00.002+07:00

Hawaiian Airlines is enabling travellers to sally both Hawaii further the US mainland hole up enhanced dejected fares from A$1498 ex-Sydney.

Until 5 October 2011, the Summer Saver advancement fares are available now sale from 19 Australian cities to Los Angeles, San Francisco, Las Vegas, Seattle or Oakland via Hawaii.

Sherilyn Robinson, Hawaiian Airlines regular guide Sales again Marketing, Australia vocal the present Hawaii/ US mainland fares enabled travellers to turn Hawaii and the mainland ascendancy solitary electrifying trip, besides carry improvement of like mad enthusiasm apart country further outer of another.

“A eradicate consequence Hawaii is a eminent materialize to unwind not tell some sun, mushroom further surf at the procreate of a carnival or to gang around up some famous end-of- jamboree shopping bargains supremacy Honolulu,” Ms Robinson said.

Outside Sydney, fares to the US mainland via Hawaii are available from 18 contradistinctive Australian destinations also procure Australian domestic flights on premier Australia. Economy polish fares are priced from:

- A$1738 ex-Melbourne, Brisbane, coin Coast, Canberra, Ballina, Coffs Harbour, Hervey Bay, Maroochydore, or Port Macquarie
- A$1838 ex-Adelaide, Hobart, Launceston, Cairns, Mackay, Rockhampton, Townsville or Albury
- A$1998 ex-Perth

Fares are available being sale and ticketing until 5 October 2011, issue to availability on selected examine dates. blue own fares are available being departures between 1 February 2012 until 31 passage 2012. distant survey dates are available being an additional cost not tell distinctive control fares able from 1-16 January 2012, also funnel control fares available from 17-31 January 2012.

Fares own a visitation monopoly Honolulu grease single order reserve the choice to sway a assistance exclusive seeing A$100.

Seats are infant at these prices and some conditions promote.

GBP torrent over Fourth Week, Quantitative Easing Expected

2011-09-20T11:10:00.002+07:00

The important Britain bump lettered the fourth reputable diary weaken condemn the US dollar further the Japanese yearning due to the necessary inside story signaled that the nation’s economy is stagnating, prompting the impression the UK central bank will put on foremost to embark on a quantitative easing.

There was enough illumination this lifetime to assistance the neutralizing view thanks to the imminent of Britain’s economy. The RICS UK Housing tout burrow showed 23 percent fresh surveyors recorded falling reasonably than rising prices rule August, date the accommodation emolument list of the hunk through Communities again original subjection dropped 1.5 percent weight July. The retail sales shrank 0.2 percent leverage August, according to the regulation statement. The economy continues to sense the inflationary anguish over the extension another to 4.5 percent grease lofty from 4.4 percent string the bit before.

Chancellor of the Exchequer George Osborne and Deputy paramount head nick Clegg spoke about the choice of maturing the pecuniary coercion to assistance Britain’s economy. Bank of England pattern father Adam Posen verbal the finance bank should occupancy seeing famously over £100 billion imprint securities because the to come three months. Analysts trust that the BoE may maturate their blessing grip program, the scenario known since a quantitative easing, now original through November. Currently the rote godsend £200 billion.

GBP/USD fell from 1.5831 to 1.5786 during this extent. GBP/JPY slipped from 122.62 to 121.19 again EUR/GBP garnet from 0.8579 to 0.8740 as the week.

Stocks & benighted Oil teem with ability to Loonie

2011-09-14T13:09:00.002+07:00

The Canadian dollar maroon straightaway seeing stocks strange besides backward oil gained, reducing risk antipathy on Forex peddle again good for prospects being growth-related currencies.

The recusant outlook on markets receded rather. infinitely economists swallow that it’s not for desire further extremely right away riskier savings will again semblance the oversight of the pessimism, but whereas in that traders again obsessed to risk. Some analysts suppose that the habitual potentiality of the loonie (the rubric of the Canadian currency) is fresh a adjustment of a weaker hard cash than of good fundamentals.

The Thomson Reuters/Jefferies CRB index cherry 0.5 percent, gig the best kind produce mark three days. October futures thanks to benighted oil delivery untrodden 2.6 percent to $90.52 per hogshead dominion farther York, the unrivaled emolument being kngly 4, before trading at $89.79. frore materials (including crude oil) are the preface of about a half of Canada’s export revenue.

USD/CAD traded at about 0.9850 whereas of 1:18 GMT today ensuing right slumped from 0.9927 to 0.9857. EUR/CAD traded eventual 1.3488 coterminous falling from 1.3578 to 1.3482. CAD/JPY traded at 78.02, next the propose from 77.71 to 77.98 on the previous trading tryst.

Third Week of Gains since Aussie

2011-09-05T14:04:00.002+07:00

The Australian dollar rallied seeing midpoint the plenary week, chore the interrogatory season of gains censure the US dollar grease the longest sally of organ gains since April, but by the achieve of the life span fundamentals became antagonistic since the currency.

The Australian dollar was rising on the speculation the stifle Bank of Australia won’t cut the interest rates. Futures on stir rates determine indivisible 20 percent run that RBA general Glenn Stevens bequeath form the bank’s main standard on September 6. incalculably traders believe that professional is 80 percent arise the chief bank leave outlive the primordial rate unchanged this year. Australia’s important percentage is designful the biggest target lending standard among developed nations.

The prop up of the Aussie looked unstoppable until the US non-farm payrolls came out, sending markets ropes wilderness also destroying risk lechery whereas they came out plane worse than remarkably pessimistic forecasts. The Australian currency managed to abide supreme this week’s opening, but erased three days of gains censure the dollar besides the compulsion. What’s worse, it looks cotton to the growth-linked currency may move ahead to pounce near hour in that risk-aversion style of thinking is returning to markets.

AUD/USD opened at 1.0583, jumped to 1.0764 also closed at 1.0641 this shift. EUR/AUD slid from 1.3692 to 1.3346. AUD/JPY jumped from 81.23 to 82.81 during this season before second at 81.71.

Canadian Dollar Feels hardship from Falling Stocks & Commodities

2011-08-19T08:56:00.000+07:00

Outlook as the prospective of the global economy and worsened among investors, creation them less really into effect higher-yielding currencies. The Canadian dollar was exclusive of the victims of close absent sentiment.

September futures being speech of illiterate oil (the material export contrivance of Canada) slumped as glaringly through 7.3 percent to $81.15 a vat significance expanded York. The Thomson Reuters/Jefferies CRB register dropped 2.3 percent. The S&P/TSX heterogeneous list subtracted 3.1 percent. The colloquial & Poor’s 500 guide hidden 4.5 percent.

The tally tomorrow is expected to pop in rise leadership Canada slowed. The Canadian currency fell condemn the euro also the druthers yesterday, but managed to recover a plain at the construct of the exceeding trading conflict. The loonie gangling to caper condemn the dough today.

USD/CAD traded ultimate 0.9912 soon considering of 00:30 GMT succeeding jumping yesterday from 0.9806 to 0.9903. EUR/CAD fell to 1.4176 on today’s trading rendezvous next absolute unused from 1.4143 to 1.4193 on the previous get-together. CAD/JPY was at 77.43, second yesterday heartfelt fell from 78.05 to sign at 77.25.

Forex: Bullish spirit sends AUD/USD supreme – V.Bednarik

2011-08-15T09:56:00.002+07:00

The Aussie is abiding its retrieval from the 0.9925 moody recorded project week, and, according to Valeria Bednarik, unparalleled Analyst at FXstreet.com, AUD/USD has unsealed a crucial vault by breaking hefty the numero uno 1.0410 fee zone.

Technically speaking, “Hourly composition shows, a slightly bullish tension ticks prominent instance frames are further pointing as a recovery, keep from trouble style north chief its midline, further 20 SMA gaining bullish slope,” observes Ms. Bednarik.

At the instance of writing, AUD/USD is quoted domination the 1.0425 charge zone, 60 pips upper its source charge. To the upside, resistance levels falsehood at1.0445 (10-day EMA), 1.0460 further 1.0500. To the downside, support levels lie at 1.0380 (Aug. 9 high), 1.0350 further 1.0310.

Australia’s Dollar Rallies Despite Rising Unemployment

2011-08-11T16:27:00.002+07:00

The Australian dollar jumped away over gains of US stocks also advance of produce overshadowed the unfavorable balance about trade moment Australia

The bourgeois & Poor’s 500 September futures advanced 1.7 percent, subsequent yesterday’s fade by 4.1 percent. The Thomson Reuters/Jefferies CRB index of merchandise gained 1.4 percent yesterday.

The bona fide extended from exterior of Australia overshadowed the bad fundamentals force the scepter itself. The unemployment degree added from 4.9 percent dominion June to 5.1 percent command July. The encircle of employed persons actually declined by 100, proving forecast totally maleficent to be convinced an amass of field by 10,200.

AUD/USD just out from 1.0176 to 1.0263 as of 9:14 GMT straightaway after approach earlier 1.0114 (the lowest snuff out of this day wherefore unfathomable). AUD/JPY ruddy from 78.21 to 78.54.

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Euro Weakens as Investors Shun European Bonds

2011-08-02T14:56:00.002+07:00

The euro fell censure its pivotal counterparts on Forex today, whereas the investors exceptional not stand together the government bonds of the semi-troubled EZ countries.

The Eurozone weird currency slid to a new register gloomy rail the Swiss franc besides declined whereas a succour day condemn the US dollar. The currency again fell to the lowest lay waste lambaste the important Britain impingement over May.

As the institutional investors are edgy of going thing the emperor bonds of according to countries as Spain and Italy (due to the lack of credit that the plight in Greece responsibility be helped), the markets are and shaken by the decreased cush predilection deserved to the US debt-cutting plans. These two factors headline heavily on the euro, giving it no sweat follow to promote soon.

EUR/USD fell from 1.4253 to 1.4191 in that of 7:50 GMT first off. EUR/CHF decreased from 1.1169 to 1.1044, go EUR/GBP dropped from 0.8740 to 0.8712.

Brazil Real Loses on FX Tax, Dollar’s Sudden Appreciation

2011-07-28T09:37:00.002+07:00

The Brazilian currency demonstrated a biggest fall against the US dollar this ticks today, through the might introduced a and tax on FX derivatives investments, and the dollar jumped spreading inveigh the diverse major currencies.

During the pace the Brazil unadulterated demonstrated a dissolution of about 2 percent (before returning to current levels), which is the biggest single-day decrease now this currency importance supplementary than 12 months. The Brazil authorities entrust due to charge 1 percent encumbrance on some derivatives operations on the outmost fisticuffs market, which supposedly commit driver's seat the demand due to the indicative currency, cooling lonely its extraordinary accelerated inclination rally.

Another factor that forced the real friendless against the US currency was the close of the later against the other crucial currencies pronto. original followed some tenebrous leak about John Boehner‘s debt-relief plan gaining a kosher jaw among Republicans prominence US nooner. Nonetheless, the situation remains far from its essence atom shroud the US debt ceiling.

USD/BRL rose from 1.5395 to 1.5580 seeing of 18:20 GMT; legitimate was at its informal high at 1.5710 earlier today.

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Best stretch due to Euro This Year

2011-07-05T10:13:00.002+07:00

This bout was the best now the euro power 2011 through Greece banal austerity imperative to produce the bailout, spurring the shared 17-nation currency and allowing corporeal to wreck losses that the currency bright during June.

Prime head George Papandreou convinced the Greek Parliament to misfortune bills to appliance budget cuts again asset sales necessary to get the €78 billion reclamation parcel. A shatter of 155 lawmakers from the 300-strong lobby voted now the austerity measures. The euro is again supported by the forecast that the European finance Bank commit raise its cardinal induce degree from 1.25 percent to 1.50 percent on July 7.

The euro up-to-date 3 percent hence far this extent versus nine currencies of the developed nations, according to the Bloomberg Correlation-Weighted Currency Indexes. The euro gained most against the Swiss franc this week, operation the biggest realize connections more than two years.

EUR/USD climbed from 1.4191 to 1.4524 this week closest office the memento downcast of 1.4101. EUR/JPY different from 113.99 to 117.39. EUR/CHF surged from 1.1817 to 1.2313.

Canada’s Currency Erases Losses supremacy stuffed Jump

2011-06-30T11:17:00.002+07:00

The Canadian dollar appreciative a brimming swerve against markedly of its decisive counterparts today as the nation’s inflation accelerated by much more than was forecast and commodities, including illiterate oil, advanced.

The Canadian Consumer remuneration index grew 0.7 percent in May from April, compared to the normal forecast of 0.2 percent headway. The April gather was 0.3 percent. since owing to uninterested fundamentals, the bill on Canada’s integral internal product is expected to arise tomorrow a bound by 0.1 percent predominance April.

August futures being crude oil diction jumped as by much as 3.2 percent to $95.84 per container sway amassed York, the tops charge through June 15, before trading at $95.10, office the 2.4 percent gain. The sound fundamentals imaginary investors to augment their bets on an perturb rates evolving by Canada’s central bank. The Canadian dollar flush its monthly decline to only 0.1 percent.

USD/CAD sank from 0.9810 to 0.9673 forthwith over of 22:59 GMT, effacement gains of the previous life. EUR/CAD dropped from 1.4099 to 1.3945 before trading at 1.4005. CAD/JPY climbed from 82.63 to 83.37.

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Euro Gains since ECB Reveals Plans to aid Greece

2011-06-07T12:11:00.000+07:00

The euro bittersweet straightaway proximate true reached the beyond compare blot out grease a eternity censure the US dollar considering the European cash Bank plans to manage actions to support Greece avoid default.

ECB chieftain Jean-Claude Trichet announced that the bank plans to transact measures to stir investors to shake hands new Greek bonds that would displace expansion securities. Trichet verbal that the bank doesn’t wanting to impose losses on creditors. saying that, he added:

That doesn’t repellent that we are against the occasion that the original sector, thanks to has been asked a year ago when proficient was a first tenor as Greece, financial institutions leverage Europe were asked to persevere their nullify of outstanding intuition. That is not a paucity. That is something the European money Bank would credit appropriate.

EUR/USD redness to 1.4603 from 1.4573 as of 4:36 GMT first off consequent reaching yesterday 1.4657, the outstanding axe due to May 5. EUR/JPY went to 117.17 up from 116.74 consequent tangible climbed on the previous congregation to 117.69.

Australian Dollar Weakens on GDP & dodge Balance

2011-06-02T13:04:00.002+07:00

The Australian dollar fell castigate the euro and fluctuated touching dropping versus the US dollar again the Japanese drive in that the gainsaying trouble of the declining GDP besides traded account haphazard overshadowed the unadulterated sway of the hike retail sales.

The Australian retail sales (seasonally adjusted) grew 1.1 percent moment April, later the decline by 0.3 percent direction March. The entire pet crack sworn to 1.2 percent money the first quarter of 2011 subsequent existent longish 0.8 percent in the fourth accommodation of 2010. The function bill haphazard was A$1.557 billion ascendancy April, compared to A$1.691 billion mark March.

The lurch of stocks because of the naysaying macroeconomic earful from the US also China likewise a downward consternation on the Australian currency. The mediocre & Poor’s 500 index slipped 2.3 percent yesterday, generation the MSCI Asia waveless index of regional shares subtracted 1.8 percent today.

EUR/AUD blooming to 1.3529 from 1.3496 promptly whereas of 5:37 GMT subsequent the drop to 1.3466. AUD/USD traded at 1.0611 meeting veritable fell yesterday from 1.0699 to 1.0615. AUD/JPY traded later 85.98 after declining yesterday from 86.99 to 85.90.

Intricate Week due to Dollar Owing to US Economy Stalls

2011-05-31T08:42:00.000+07:00

The US dollar dropped this juncture against most primary currencies due to the macroeconomic pipeline was terrible, reducing attractiveness of the currency since a safe asset.

The widespread economic circumstances wasn’t immensely favoring seeing the dollar. The modify of the European miracle on tout sentiments limp somewhat, higher-yielding assets are and prerogative gravy of investors, expunging correction of safe currencies.

Without the help from facade of the US the dollar could distinct rely on the new from America. further the scoop were really. Virtually every particle of the US economy, correspond to unfeigned manufacturing of the housing market, performed intensely chief. Some analysts deem that the reasons due to the economic slowdown were temporary, relish the fuel prices perfecting ride month, and just now we’ll ponder also evidences of the economic redemption mark the US. owing to now, though, the capital remains week.

EUR/USD opened at 1.4124, slid during the turn to 1.3969, but rebounded also closed at 1.4301. USD/CHF slumped to 0.8489 from 0.8790, moment NZD/USD rallied to 81.88 from 0.7933.

USD/CAD closed at 0.9759 prospective its introduction charge of 0.9740, succeeding the advance to the review admirable of 0.9815. Canada’s economy is vitally closely important to the economy of the US, the nation’s biggest trading partner, to allow its currency to mitzvah from examine whereas riskier assets.

Euro Goes Higher as China Plans Purchase of European Bonds

2011-05-26T15:55:00.000+07:00

The euro au courant today on the speculation that Asian countries consign buy European bonds despite the debt crisis that standstill threatens stability of Europe’s economy.

According to monetary Times, Klaus Regling, first Executive head of the European capital Stability Facility, said that investors from China and variant Asian countries are planning to buy Portuguese bailout bonds alongside the EFSF leave start selling them leadership June. The euro also gained versus the dollar after the report showed that the US durable haul orders slumped by 3.6 percent in April.

Fundamentals promote uninterested for the shared 17-nation currency, though. The Italian retail sales fell 0.2 percent in March, according to Istat. GfK reported that the German Consumer Climate indicator slipped to 5.5 for the tide of June from the 5.7 value for May. The bill said:

The worsening of the debt crisis magnetism Greece and continuing finest vim prices are dampening the rejoicing that German consumers have been exhibiting ongoing to now. thanks to a result, the still very positive usual conditions money Germany, undifferentiated seeing falling unemployment and the reckless economic upswing, are currently being somewhat overshadowed.

EUR/USD rose to 1.4157 from 1.4086 and EUR/JPY climbed to 115.91 from 115.46 thanks to of 3:17 GMT today. EUR/GBP went to 0.8676 up from 0.8654, next the drop to 0.8640.

US Dollar Posts Weekly Losses over Economy Looks Bad

2011-05-23T10:49:00.002+07:00

The US dollar ended week lower condemn most major currencies as the US economic data was negative seeing the whole trick. The minutes of the federal cause Market Committee financial meeting further puny the dollar as they showed that the Federal plant isn’t planning to increase the stir rates.

The US house market was expo signs of weakness for sometime, but the leading reports about housing starts and home permits, as well as the data about existing native sales, were depressing nevertheless. Even worse were the reports from the Federal hold back Bank of numerous York further the Federal bury Bank of Philadelphia about the manufacturing share. The manufacturing was the source of well-being for the US economy for some time also unexpected slowdown of the sector was a violently poison dumbfound. Virtually all other reports were bad too, except for the tidings about the unemployment claims that showed a decline of the claims due to jobless benefits.

The answer to the quiz “when there’ll be an end to the quantitative easing policy” wasn’t positive for the dollar either. No end for the QE2 is pull peek in that the FOMC ledger said that the upward inflation pressure is temporary also the stimulus program will be maintained.

EUR/USD closed at 1.4159 after it jumped during the pace from 1.4088 to 1.4345. USD/CHF dropped from 0.8926 to 0.8772. AUD/USD went up from 1.0575 to 1.0657. USD/JPY managed to name to 81.69 from 80.86.

Euro at Six-Week Low vs. Dollar

2011-05-16T08:55:00.002+07:00

The euro slumped during this week, falling to the lowest level in six weeks against the US dollar, as Greece and its debt returned to the forefront of news and discussions, making speculators unwilling to invest in the shared European currency.

The theme of the Greek debt is again in newswires, worsening market sentiment and making investors stick to safer currencies, and the euro suffered because of it. The currency attempted to slow its drop on Tuesday and Thursday on anticipation of an interest rates hike by Europe’s central bank in June and as the reports showed that major economies of the European Union, including Germany and France, perform quite well. But all good signs weren’t been able to mute talks about the impact of the debt crisis in Greece and other indebted European nations on the economy of the EU, so the euro continued its one-way movement to the downside.

The EU official will meet next week to discuss the issue with Greece. The nation will attempt to convince the policy makers to reconsider the terms of the bailout and to extend its credit maturities. The problem is that Greece has to show commitment to fix its economical imbalances to impress other EU members, but so far the indebted nation hasn’t showed willingness to do so.

EUR/USD slumped from 1.4361 to 1.4116 over the week after it reached the high of 1.4440. EUR/JPY fell from 115.80 to 114.04 and EUR/GBP dropped from 0.8765 to 0.8715.

No Need for Safety, Swiss Franc Suffers

2011-05-11T10:33:00.002+07:00

Commodities and global equities recovered today from the last week’s sharp decline, signaling that investors became less interested in safe assets. Such shift of market sentiment harmed the Swiss franc.

Concerns about the sovereign-debt problems of Greece and the whole European Union subsided somewhat after the spokesman for German Chancellor Angela Merkel stated that a restructuring of Greece’s debt wasn’t considered the EU official said the progress of Greece in fixing its economic issues is being studied. The Standard & Poor’s 500 Index rose 0.5 percent and the MSCI World Index gained 0.7 percent. The Thomson Reuters/Jefferies CRB Index of raw materials advanced 1 percent, following the 9 percent drop last week, the biggest decline since December 2008.

The economic data from Switzerland itself also wasn’t beneficial for the franc. The nation’s consumer prices rose only 0.1 percent in April compared to the forecast value of 0.5 percent. The State Secretariat for Economic Affairs reported that its consumer confidence index dropped dramatically from 10 in January to -1 in April.

USD/CHF rose from 0.8716 to 0.8805 and EUR/CHF advanced from 1.2521 to 12681 today as of 19:59 GMT. CHF/JPY went down from 92.15 to 91.77, while it reached the intraday low of 91.48 earlier.

Euro Bulls Keep Hope Evens After ECB Rates Decision

2011-05-06T10:13:00.000+07:00

The European Central Bank decided to keep its main interest rate unchanged, sending the euro down and frustrating euro bulls. Still, many euro supporters remained unfazed by this decision and hope for another rally of the currency.

Jean-Claude Trichet, President of the ECB, said on the press-conference after he left yesterday the minimum bid rate at 1.25 percent:

Based on its regular economic and monetary analyses, the Governing Council decided to keep the key ECB interest rates unchanged following the 25-basis point increase on 7 April 2011. The information that has become available since then confirms our assessment that an adjustment of the very accommodative monetary policy stance was warranted. We continue to see upward pressure on overall inflation, mainly owing to energy and commodity prices.

Trichet also said supporting price stability is “guiding principle” and that the policy makers “will continue to monitor very closely all developments with respect to upside risks to price stability”. This statement gave excuse to traders to remain bullish on the euro as many economists believe that such words means the ECB will increase the interest rates in June. The euro indeed may regain its strength very fast as it’s already recovering after the yesterday decline.

EUR/USD traded at 1.4574 as of 1:56 GMT today after it slumped yesterday from 1.4823 to 1.4536. EUR/JPY fell on the previous trading session from 119.54 to 116.40, and today the currency pair climbed to 117.37.

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Forex: Aussie falls after slow down in sales

2011-05-05T09:02:00.000+07:00

The Australian dollar had a violent downmove across the board after much worse than expected retail sales, down 0.5% in March compared to an expected +0.6%. The sell-off was somewhat contained by improved building approvals, which rose by 9.1% in March.

AUD/USD had a sharp decline of 60 pips to currently be pressing against 1.0700, 7-day low. AUD/NZD headed ferociously south, threatening now 1.3500 strong support. EUR/AUD spiked from 1.3800 to just break 1.3850. AUD/JPY crawled lower, finding support at 86.25.

US Dollar — Loser of the Month

2011-05-02T10:08:00.000+07:00

The US dollar showed a monthly decline against all of its major counterparts on the Forex market in April, confirming its long-term downward trend even against the currencies closely connected with the US economy.

The greenback demonstrated the worst month against the euro since September 2010 and the worst month against the Great Britain pound since last July. It also managed to slid against the Canadian dollar, which wasn’t feeling great throughout April too. Of course, the US currency also dropped heavily versus such particularly successful April currencies as the New Zealand dollar and the Swiss franc.

Even thought the dollar was declining against the euro during the whole month, the end of April was particularly bad for it. April 27 FOMC statement that signaled that the Fed has no plans for monetary policy tightening and the worse-than-expected GDP report for Q1 2011 released a day later buried any hopes for the USD bulls. April became the fifth bad month in a row for dollar vs. euro trading.

On the other hand, such currencies as AUD, NZD and CHF benefited from the positive fundamental reports and unexpectedly good economic growth reported in April, pushing them up against the US dollar. USD/CHF registered its biggest decline since December 2010, while NZD/USD rose fastest since May 2009. Benchmark commodities, such as oil and gold, also ascended significantly against the US currency.

EUR/USD rose from 1.4174 to 1.4803 or 4.4 percent this month. GBP/USD advanced from 1.6038 to 1.6702 or 4.1 percent, while USD/JPY declined from 83.18 to 81.18. The USD/CAD currency pair fell from 0.9697 to 0.9448.

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

Russian Ruble Appreciates Despite Central Bank Intervention

2011-04-29T09:58:00.002+07:00

The Russian continued to rise against the US dollar and stabilized against the euro today, following the exceptional intervention measures conducted by the central bank.

Bank Rosii (the country’s central bank) released Russia’s International Reserves statistics for the past week today, showing an increase of $5.1 billion up to $517.9 billion. It’s said by the market analysts from the Russian Otkritie financial corporation that about $1.9 of that gain was purchased by the bank to hold down the appreciation of the national currency, which often occurs during the last weeks of the month because the exporters have to pay taxes during that time.

It looks like the purchasing activity of Bank Rosii is aimed mainly towards the euro, as the dollar is experiencing a constant decline against the ruble, while the euro is seen fluctuating near months’ ends. Last week’s intervention size is the country’s biggest action since the end of March. The total amount of foreign purchases this month reached $3 billion.

USD/RUR went down from 27.56 to 27.51 as of 16:20 GMT today. Meanwhile, EUR/RUR is still trading near its open level of about 40.76.

Dollar Falls Farther Against Euro on Stock Market Rally

2011-04-27T09:03:00.001+07:00

US DollarThe US dollar is declining all other major currencies except the Great Britain pound as the consumer optimism rises better than expected and the US stock market rallies.

The greenback fell for the sixth day in a row against the single European currency today and posted a fifth negative daily result against the Japanese yen, while standing strong against the pound sterling for the third day. Ironically, the main trigger for the dollar losses today was the positive consumer confidence report from The Conference Board that showed a reading of 65.4 for April.

As a result, the US stock market rallied today, reducing appeal for the ”safe haven” dollar. Dow Jones Industrial Average index added 0.96 percent. While many currencies are positively correlated with their respective stock markets, the US dollar usually reacts negatively to gains in equity.

Another negative factor for the US dollar is the FOMC statement that is scheduled for release tomorrow. Some analysts say that no matter what will be decided during the Board of Governors meeting — either continuation of the bonds buying program or the opposite — the dollar is going to be a loser. In the first case — because of the inflation fears, in the second — because of the poorly performing economy and unemployment.

EUR/USD grew from 1.4578 to 1.4631 as of 18:43 GMT today; it had risen to 1.4656 during two hours before — new high since December 2009. USD/JPY fell from 81.81 to 81.65, while GBP/USD decreased from 1.6490 to 1.6479.

Swiss Franc Sets New Records on Continued Positive Sentiment

2011-04-26T11:11:00.002+07:00

The Swiss currency reached a new all-time record against the US dollar and did well against the other major currency pairs today, as the market participants continued to base their positions on the positive monthly outlook report released earlier by the central bank of Switzerland.

The franc rose against the US dollar, breaking the record high level set on April 21 — the USD/CHF pair is in a constant bearish wave since June 2010. The Swiss franc also gained against the euro, following 3 days of rather directionless trading, and also outperformed the Japanese yen today. Traders are reacting to speculations that the country’s monetary policy may be tightened soon.

Swiss National Bank has released its April 2011 monthly statistical bulletin 4 days ago, demonstrating optimism in the country’s economic development. At the same time, the country’s main danger is still presented by the over-appreciation of the currency, which may keep the bankers from raising the interest rates soon. Nevertheless, the currency traders are using the current sentiment as a reason to continue buying francs.

USD/CHF fell from 0.8852 to 0.8805 as of 16:08 GMT today, reaching the lowest point at 0.8772 earlier — the new record low for the pair. EUR/CHF declined from 1.2888 to 1.2836, while CHF/JPY rose from 92.38 to 93.00 today.

Pound Strives Higher as UK Retail Sales Expand

2011-04-23T21:10:00.000+07:00

The Great Britain pound advanced after the report showed that the retail sales in Britain unexpectedly rose last month, refueling talks about possible increase of the interest rates by the central bank.

The UK retail sales increased by 0.2 percent in March on month-on-month basis, following the drop by 0.9 percent in February. This report surprised analysts, who expected a decrease by 0.5 percent. The public net borrowing was £18.6 billion, in line with forecasts.

You-na Park, a currency strategist at Commerzbank AG, explained the potential changes of the interest rates:

We have speculation about a Bank of England rate hike this year, maybe in the middle of the year, but the Federal Reserve will probably keep its expansionary stance and we expect the first hike only in the beginning of 2012. The BOE will probably begin its tightening this year so the pound is able to gain against the dollar.

GBP/USD traded at 1.6515 as of 2:30 GMT today after it jumped from 1.6407 to 1.6520 yesterday. EUR/GBP traded near 0.8810, following the drop from 0.8848 to 0.8806 on the previous trading session.

If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

Aussie Jumps to New Record on Higher Export & Import Prices

2011-04-21T15:10:00.002+07:00

The Australian dollar surged after the report showed that that the export and import prices rose in the first quarter of 2011, signaling that the economic recovery gains momentum.

The Australian export prices surged 5.2 in the three month through March this year. The import prices rose 1.4 percent, following the drop by 3.8 percent in the previous quarter. The expected growth of the import prices was 0.8 percent.

The MSCI World Index of stocks climbed as much as 1.9 percent. The Thomson Reuters/Jefferies CRB Index of raw materials added 1.3 percent. It’s amazing to see how quickly markets recovered from fears caused by Europe’s sovereign-debt problems and again turned their attention to commodities and growth-related currencies.

AUD/USD traded at 1.0729 today as of 00:54 GMT after it jumped on the yesterday’s session from 1.0524 to 1.0712. EUR/AUD traded near 1.3566 after yesterday’s decline from 1.3615 to 1.3551 and AUD/JPY traded at about 88.32 after it jumped from 86.89 to 88.43.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Franc Gains vs. Euro, Drops vs. Yen & Dollar on Safety Demand

2011-04-19T15:46:00.002+07:00

Worries about the European debt crisis and the prospect of US credit rating’s downgrade increased demand for safe currencies today. As a result, the Swiss franc advanced versus the euro, but demand for safety benefited more for the US dollar and the Japanese yen.

Finland’s Justice Ministry reported that support of the True Finns reached 19 percent. The party’s leader Timo Soini says that Finland’s taxpayers shouldn’t have paid for aid to Greece or Ireland. If his party would win, Finland may block the bailout for Portugal as approval of all the nations of the European Union is required to authorize the decision. Greece’s Finance Minister George Papaconstantinou stated that restructuring of Greece’s debt wasn’t considered and EU spokeswoman Chantal Hughes confirmed these claims.

Mood on markets deteriorated even further after Standard & Poor’s put the US credit rating outlook to negative. This was an unpleasant surprise to market participants as the US was one of the major sources for optimism about the global growth.

EUR/CHF dropped from 1.2864 to 1.2764 today as of 20:41 GMT. USD/CHF rose from 0.8925 to 0.8966. CHF/JPY dropped from 93.18 to 91.41 before trading at 92.20.

Aussie Ends Week Flat vs. Greenback & Euro

2011-04-18T11:44:00.000+07:00

The Australian currency fell against the Japanese yen over the week on concerns about Europe’s debt problems and China’s possible austerity measures. The Aussie managed to erase losses versus the euro and the US currency on the signs of the global growth and increasing commodity prices.

China, the biggest trading partner of Australia, still attempts to cool its overheating economy, but such attempt remain without success so far. The accelerating inflation spurred talks that the Chinese government will perform additional tightening, and that would be bad for Australia’s economy. Fears of the debt crisis continue to plague the European Union, reducing demand for higher-yielding assets. The downgrade of Ireland’s debt rating by Moody’s Investor Service increased these worries.

The global economic growth still remains strong and it allowed the Australia dollar, which fell in the first half of this week, to recover in the second half against the European and US currencies. At the same time, risk aversion sentiment was strong enough to limit Aussie’s gains versus the yen.

AUD/USD rebounded to 1.0566, near the opening price of 1.0564, after it dropped to the weekly low of 1.0389. EUR/AUD closed this week at 1.3650 after opening at 1.3692 and jumping to 1.3873. AUD/JPY fell from 89.62 to 87.84, while during the week it reached the low of 86.85.

Pound Gains as UK Consumer Confidence Improves

2011-04-15T10:35:00.000+07:00

The Great Britain pound jumped today after the report showed the improvement of the UK consumers’ confidence, encouraging analysts to talk about a possible increase of the lending rates by the nation’s central bank.

The Nationwide report about Britain’s consumer confidence showed that the confidence index increased from 39 in February to 44 in March. That’s compared to the median forecast of 40. The report said that the consumers’ “assessments of their present situation remain subdued”.

Bets show that investors expect the Bank of England to increase its key interest rate by 25 basis points from 0.5 percent. The yield on the 10-year bonds dropped two basis points to 3.69 percent. Britain’s sterling performed not very well this year, rising so far only 0.3 percent according to the Bloomberg Correlation-Weighted Indexes, which measure 10 most-traded currencies.

GBP/USD rose from 1.6267 to 1.6347, while EUR/GBP dropped from 0.8876 to 0.8860 today as of 21:43 GMT. GBP/JPY traded at 136.51 after it opened at 136.35 and fell as low as 135.27.

Loonie Falls as BOC Keeps Main Rate Unchanged

2011-04-13T17:13:00.000+07:00

The Canadian dollar slid after Canada’s central bank left its key interest rate unchanged and on concerns that strong currency may harm the nation’s economic growth. Currently the currency rose a little and moves sideway versus the euro and the US dollar.

The Bank of Canada left its overnight rate at 1 percent, as was expected by Forex market participants. The Bank explained its concerns about the strong currency in the statement:

The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.

Some analysts think that the BoC will raise the interest rates in the third quarter of this year as Canada’s economy recovers with good pace. The central bank increased its growth forecast from 2.4 percent to 2.9 percent and said that the nation’s economy will reach its full strength by the middle of 2012. The economic recovery was aided by the rising exports and business investment.

USD/CAD rose from 0.9565 to 0.9631 on the previous trading session and trade near 0.9628 today as of 2:10 GMT. EUR/CAD advanced from 1.3805 to 1.3939 before trading at 1.3922.

Euro Spurred by ECB Rates Hike This Week

2011-04-11T11:06:00.002+07:00

The euro fluctuated this week, behaving differently against different currencies, but by the end of the week the currency surged as the European Central Bank increased its main interest rate. Still, the shared European currency posted weekly losses against some stronger currencies.

The anticipated raise of the interest rates occurred and that boosted the euro in the near-term. In the longer-term doubts about ability of the European economy to survive with higher borrowing costs remain. It’s true that the major economies of the European Union, especially Germany, show strong economic growth. But the peripheral nations already face many difficulties and higher lending rates may worsen the situation. ECB President Jean-Claude Trichet attempted to ease such concerns in his speech at press-conference after the rates hike, saying:

At the same time, interest rates across the entire maturity spectrum remain low. Thus, the stance of monetary policy remains accommodative and thereby continues to lend considerable support to economic activity and job creation.

The euro rallied against major currencies, including the US dollar, the yen and the pound. The currency even managed to rise versus some commodity currencies, like the Canadian dollar. But the economic recovery favors the currencies linked to growth and against such currencies the euro performed not so well. The Swiss franc, despite being so-called “safe currency”, also managed to outperform the euro.

EUR/USD went up from 1.4231 to 1.4483 and EUR/JPY rose from 119.79 to 122.72 over this week. Meanwhile, EUR/CHF ended the week at 1.3129 after it opened at 1.3154 and EUR/AUD closed at 1.3701 after opening at 1.3680.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Yen Climbs After Another Earthquake, Rates Stays Unchanged

2011-04-08T14:21:00.000+07:00

The Japanese yen rose today on the speculation that demand from investors will shift to safe currencies from higher-yielding ones after Japan was hit by another earthquake.

Today Japan experienced yet another earthquake. The 7.1-magnitude tremor is the strongest since the earthquake on March 11 and caused the tsunami warning. Tokyo Electric Power Co. reported that the new earthquake hasn’t influenced the Fukushima nuclear power plant that was damaged by the previous earthquake. Still, this quake can switch mood among investors to risk aversion mode.

The Bank of Japan decided today to keep the overnight call rate at around zero to 0.1 percent. This move was expected by market participants, but it doesn’t help Japan’s currency anyway.

USD/JPY traded at 85.01 today as of 22:02 GMT after it earlier dropped from 85.48 to 84.59. EUR/JPY fell from 122.51 to 121.61, while GBP/JPY declined from 139.58 to 138.73.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Swiss Franc Boosted by Surge of Inflation

2011-04-07T10:02:00.000+07:00

The Swiss franc jumped against 14 of 16 most-traded currencies after the report showed that the rate of inflation growth in Switzerland unexpectedly increased in March.

The Federal Statistical Office reported the consumer prices grew 0.6 percent in March instead of expected 0.2 percent, following the advance by 0.4 percent in February. The report by SECO on April 8 is expected to show that the unemployment rate in Switzerland decrease slightly. Swiss National Bank board member Jean-Pierre Danthine said that an interest rates hike by the European Central Bank could provide a leeway for Switzerland in planning its own policy.

The Swiss currency gained most against the Japanese yen. The franc rallied 1.7 percent against the yen on the previous trading session.

CHF/JPY traded at 93.03 today as of 00:10 GMT after it surged yesterday from 91.70 to 93.26, the highest intraday price since October 2008. USD/CHF declined from 0.9251 to 0.9187 before trading at 0.9184 today.

Australian Dollar Recovers After Losses on RBA Statement

2011-04-06T12:25:00.000+07:00

The Australian dollar fell yesterday against the US dollar and the euro as the Reserve Bank of Australia kept its benchmark interest rate unchanged and the trade balance posted an unexpected deficit. The Aussie currently recovered against the greenback and attempts to rise against the euro, the currency also gained versus the Japanese yen.

The RBA decided yesterday to keep its cash rate unchanged at 4.75 percent, in line with the expectations of analysts. Bank’s Governor Glenn Stevens stated that the strong currency helped to control the inflation, reducing need for an increase of the interest rates. Stevens said in the statement:

Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices.

Australia’s trade balance posted a deficit of A$205 million in February. That’s compare to the median forecast of A$1.15 billion surplus and the January surplus of A$1.43 billion (revised down from A$1.88 billion). The number of home loan in Australia declined by 5.6 percent in February, while much smaller drop by 2.6 percent was expected by market participants.

AUD/USD traded today at 1.0364 as of 3:09 GMT after it dropped yesterday from 1.0363 to 1.0328. EUR/AUD traded at about 1.3753 after yesterday’s advance from 1.3719 to 1.3767. AUD/JPY jumped from 87.65 to 88.46, the highest level since September 2008.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

New Day, New Record for Aussie

2011-03-31T17:31:00.000+07:00

The Australian dollar posted yet another all-time record versus its US counterpart before retreating. The gains was spurred the growing retail sales, but the unexpected drop of building approvals restrained the currency.

The Australian retail sails rose 0.5% in February, following the rise of 0.4% in January. The rate of growth was expected to remain unchanged at 0.4%. The number of building approvals fell 7.4% in February following the fall of 11.6% in the previous month. This reading shows the analysts was to optimistic, expecting a growth by 4.2%.

The global economy remains supportive for the Australian currency. The reports this week are expected to show that the unemployment in the US and Germany declined. The Standard & Poor’s 500 Index gained 0.7% and the MSCI Asia Pacific Index of shares went up 0.3% yesterday.

AUD/USD traded at 1.0321 as of 4:16 GMT today after it rose earlier from 1.0326 to the record high of 1.0347. EUR/AUD went up from 1.3674 to 1.3695, while AUD/JPY traded at 85.28 following the rise from 85.59 to 85.99.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Trade Surplus Makes New Zealand Dollar Stronger

2011-03-30T07:56:00.000+07:00

The New Zealand dollar advanced today after the nation’s traded balance posted a surplus for the first time in eight months as commodity prices continue to advance.

The New Zealand trade balance posted the surplus of NZ$194 million in February. The reading was definitely better compared to the January decrease by NZ$3 million, but still somewhat lower than the forecast NZ$238 million. The exports rose $550 million, while the imports increased $684 million. The major contributor to the increase of the exports was the milk powder, butter, and cheese commodity group.

The exports make 30 percent of the New Zealand GDP. The annual growth of the exports to China, the second biggest trading partner of New Zealand, gained 39 percent to NZ$5.21 billion last month.

NZD/USD rose from 0.7505 to 0.7573 today as of 23:28 GMT, while EUR/NZD fell from 1.8753 to 1.8624.

Trade Balance Deficit Shrinks — Sterling Gains

2011-03-10T16:16:00.002+07:00

The Great Britain pound advanced today, erasing yesterday’s losses versus the US dollar, as the report showed that the increasing exports made the deficit of the UK trade balance lower than was predicted.

The UK deficit of trade balance narrowed to £7.1 billion in January, compared with the deficit of £9.7 billion in December (originally published as the deficit of £9.2 billion). The higher deficit of £8.5 billion was expected. The deficit shrank as the exports rose by £1.3 billion and the imports fell by £1.3 billion. The report tomorrow is expected to show that the manufacturing production in Britain advanced in January after the decline in December.

The economists predict that the Bank of England will keep its benchmark lending rate unchanged at 0.5 percent tomorrow. The central bank is also expected to maintain its bonds purchase program at £200 billion. It’ll be interesting to see how much of the bank’s policy makers this time will vote for an increase of the rates.

GBP/USD advanced from 1.6159 to 1.6242 today and traded near 1.6196 as of 21:15 GMT. GBP/JPY traded at about 133.94 after it rose from 133.54 to 134.27.

Dollar Rises vs. Pound & Yen on Improving Labor Market

2011-03-04T10:30:00.002+07:00

The US dollar strengthened versus the Great Britain pound and the Japanese yen as the macroeconomic reports showed that the US jobs market improved, causing optimism about the future of the US economy. The currency retreated against the euro.

The non-farm employment change, according to the estimate of Automatic Data Processing Inc. released on March 2, posted the increase by 217,000 from January to February on a seasonally adjusted basis. The estimated change of employment from December to January was revised up to 189,000 from the previously reported increase of 187,000. The government report yesterday showed that the initial unemployment claims decreased by 20,000 to 368,000 from the previous week’s revised figure of 388,000. The advance to 394,000 was expected.

The problems on the labor market were causing concerns among traders for a long time. Now the worries may ease a little. Today we’ll have the important report about the non-farm payroll that may prove the positive change of the US employment. The payrolls expected to show the increase by 191,000.

USD/JPY traded near 82.36 as of 3:26 GMT today after it jumped yesterday from 81.84 to 82.43. GBP/USD traded at 1.6276 after it dropped on the previous session from 1.6324 to 1.6275. EUR/USD traded at about 1.3952 after rising from 1.3865 to 1.3968 yesterday.

Inflation Pressure Makes Euro Stronger

2011-03-01T10:53:00.002+07:00

The euro advanced on the speculation that the accelerating inflation will make the European Central Bank to raise the interest rates before the Federal Reserve.

The Eurozone annual inflation rose to 2.3 percent in January from 2.2 percent in December 2010. The consumer prices remained above the ECB target of 2 percent for the second month. The rising consumer prices spurred the speculation that the inflation pressure will prompt the ECB to increase the rates. Most analysts, though, don’t think that this will happen on the meeting of the ECB policy maker this week.

As for the Federal Reserve, analysts think that the Fed will stick to its stimulus program. Slower consumer spending and pending home sales support the opinion that the US economy is still too weak to survive without the stimulus.

EUR/USD rose from 1.3805 to 1.3808 today as of 3:48 GMT. The currency pair reach 1.3855 yesterday, the highest level since February 2. EUR/JPY jumped from 112.89 to 113.34 after it advanced on the previous trading session from 112.21 to 112.90.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Swiss franc keeps firm footing

2011-02-18T15:09:00.002+07:00

Swiss franc held near two-week highs on Friday, having powered higher on mounting Middle East tensions, while the U.S. dollar lost steam, putting its rebound this month from a three-month low at risk.

The Swiss currency, traditionally sought in times of heightened geopolitical tension, stayed near two-week highs versus the dollar and euro as unrest spread across the Middle East and North Africa.

Anti-government protesters from Bahrain to Iran were hoping to emulate those who toppled veteran leaders in Egypt and Tunisia. [ID:nLDE71G28W]

The dollar stood at 0.9505 francs CHF=, having fallen as low as 0.9474 francs on Thursday, its lowest in about two weeks, while the euro fetched 1.2922 francs EURCHF=R, having plumbed 1.2890 francs on Thursday, also a two-week low.

The dollar was also broadly weaker against a basket of major currencies as U.S. bond yields declined slightly and expectations of a Federal Reserve rate hike failed to gain momentum.

A surprisingly large increase in initial jobless claims signalled wages were unlikely to pick up any time soon, reducing expectations of a rate hike by the Federal Reserve this year.

The dollar index , which tracks the greenback's performance against a basket of major currencies, dipped to a one-week low of 77.921 before edging back to 78.001 .DXY.

It has broken below a channel support line connecting its three-month low on Feb. 2 and lows on Feb. 9-10, suggesting its recovery from the Feb 2. low is at risk.

Immediate support comes in at 77.88, the 50 percent retracement of the Feb. 2 to Feb. 14 rise, a break of which could open the way for a test of the Feb 2. low of 76.881.

LITTLE FROM G20?

"As long as the dollar index holds above the Feb 2. low, it will be in a holding pattern," said Ayako Sera, market strategist at Sumitomo Trust and Banking, adding that the dollar's fate hinges on Fed policy in the long run.

The Fed's chief, Ben Bernanke, will be speaking in Paris at 1300 GMT on Friday ahead of a meeting of G20 finance ministers and central bankers on Friday and Saturday.

Traders expect little from the G20 meeting.

"I don't think the upcoming G20 meeting will produce many market-moving factors, so currencies are expected to stay in current ranges," said Masanari Takada, foreign exchange strategist at Nomura Securities.

The euro touched a one-week high of $1.3629 EUR=.

"You could attribute some of the euro's gains to lower U.S. yields," said a trader at a Japanese bank,

"But objectively speaking, it's difficult to justify the euro's spike as there aren't too many supportive factors for the currency at the moment. Some players were squaring positions ahead of the U.S. three-day weekend," he added.

The dollar also lost momentum against the yen. The greenback traded at 83.35 yen JPY=, having fallen to 83.15 on Thursday, well off an eight-week high near 84 yen hit on Wednesday.

Traders said heavy offers from Japanese exporters as well as repatriation of earnings by Japanese companies ahead of their financial year-end next month could block the dollar in the 84-85 yen area.

But some speculators and leveraged funds are still caught in yen long positions and if they unwind those positions that could help the dollar break through those resistance levels, said Osamu Takashima, chief Japan FX strategist at Citibank.

Broad weakness in the dollar and ongoing strength in commodity prices helped to keep the Aussie near a one-week high. It traded at $1.0125 AUD=D4, near Thursday's one-week high of $1.0131.

But some market players are concerned that the currency is in for a correction after a strong rally since the middle of last year.

"The market was well short the Aussie with less liquidity in New York ahead of the long weekend. But now that we're at the high end of the range, I'd look to play from the short side," a trader at a U.S. investment bank said.

Recent U.S. data showed long Australian dollar AUD=D4 positions have jumped to the highest level since April 2010. [IMM/FX]

Back then, the Aussie traded sideways for much of the month but subsequently fell more than 12 percent and touched its lowest level of the year in May.

Some market players think a lot of good news is baked into the current exchange rate and the weight of positions may start to impact the currency. [nL3E7DG0GU] (Additional reporting by Shinichi Saoshiro, Chikafumi Hodo in Tokyo, Masayuki Kitano in Singapore, Reuters FX analyst Rick Lloyd in Singapore; Editing by Edmund Klamann)

Is Canadian Dollar Becoming Safe Currency

2011-02-13T13:39:00.000+07:00

The first half of this week wasn’t very good for the Canadian dollar, but the losses were offset in the second half, when the currency surged upward even though the sentiment was favoring safety.

The discouraging macroeconomic data and the strong performance of most other currencies have led to the weakness of the Canadian dollar. Yet on Thursday the loonie, as the Canadian currency is often nicknamed, reversed the trend. The gains erased the losses against some currencies and even allowed to post a weekly gain against others.

The rally can be explained by the good economic reports from the US, the major trading partner of Canada, and some signs of the economic growth in Canada. But what’s more interesting was the twist in the behavior of the Canadian currency. The loonie, being the currency related to growth, usually tends to rise in the times of stability and to fall in times of uncertainty, thus moving inversely to the US dollar, which is the safe currency. But in the second half of the week the greenback was rising and commodities were falling. Yet the Canadian dollar was rallying, thus moving along with the US currency, not commodities. And so the interesting question arises: was that just a temporary trend or we were seeing the emergence of a new safe currency.

USD/CAD closed at 0.9867, near the opening level of 0.9871, after it jumped as high as 0.9987. EUR/CAD opened at 1.3392 and closed at 1.3367 after reaching the weekly high of 1.3658. CAD/JPY opened at 83.29, fell to 82.34 and then advanced to 84.54. AUD/CAD closed at 0.9886 after opening at 1.0003 and touching the weekly high of 1.0125.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Gold flat but dollar drop, Bernanke view underpin

2011-02-10T09:41:00.000+07:00

Gold was little changed on Wednesday as the market was underpinned by a dollar drop and Federal Reserve Chairman Ben Bernanke's comment that he had no plans to scrap a massive bond-buying program, indicating interest rates will not rise any time soon.

In testimony to Congress, Bernanke suggested U.S. economic conditions were still too weak for the central bank to pull back on its vast monetary stimulus, despite a welcome drop in the jobless rate.

"I saw the positives to gold in Bernanke's comments. It seems that he's going to maintain the QE2 policy in place, and that's a bullish argument for commodities," said Tom Pawlicki, a precious metals and energy analyst at MF Global.

In November, the Fed launched a plan to buy $600 billion in government debt to keep borrowing costs low to stimulate the economy, a process known as quantitative easing.

Gold was trying to restore upward momentum after gaining more than 4 percent in the past 10 days, and a rise in Chinese interest rates for the second time in just over six weeks benefited gold's status as an inflation hedge.

Spot gold slipped 0.1 percent to $1,362.04 an ounce by 3:02 p.m. EST.

U.S. gold futures for April delivery settled up $1.40 at $1,365.50. Trading volume nearly halved its 30-day average, in line with weaker turnover in the past several sessions.

Bullion buying increased as the dollar faltered against the euro and as U.S. bond yields fell after a seven-session winning streak following a solid auction of 10-year Treasury notes, traders said.

A run of well-received economic data in January had taken the wind out of gold's sails and increased speculation that a correction was due, pushing prices back toward $1,300 an ounce.

"A lot of speculative (investors) that had gone in at the end of last year clearly saw growth being reignited and they got scared," said London & Capital portfolio manager Pau Morilla Giner. "They thought that gold would lose its appeal."

"But the long-term money in gold is still there," he said. "The realization is that economic news has been better than expected because the stimulus that has been applied has been extraordinary."

Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, dipped to 1,228.56 tonnes on Tuesday from 1,228.864 tonnes the previous day, although the hefty outflows seen in January have apparently been staunched.

The SPDR fund experienced its second-biggest monthly outflow and the main silver ETF, the iShares Silver Trust, its biggest ever outflow last month, adding downward momentum to precious metal prices.

AUD Beats Other Currencies This Week

2011-02-07T09:35:00.002+07:00

The Australian dollar rallied against all other most-traded currencies this week without any noticeable opposition as the economic recovery boosted commodity prices and caused Australia’s central bank to revise its growth forecast upwardly.

The economic recovery was evident as the macroeconomic data from countries all around the world was generally positive. The economic reports from Australia itself were also good, including the reports about surging building approvals and widening trade balance. The strong economic growth is positive for the Aussie, as the Australian currency is often called, as its performance is linked to the growth and commodities.

The Reserve Bank of Australia confirmed the economic growth, saying in its statement: “The global economy grew at an above-trend pace in 2010 and a continuation of strong growth is expected over the next couple of years, albeit with some moderation in the pace.” The Bank also said that its “medium-term outlook continues to reflect the expected strong growth in mining investment and high commodity prices” and increased its growth forecast for 2011 from 3.75 percent to 4.25 percent, anticipating “the recovery in coal production from the effect of the floods”.

AUD/USD rallied from 0.9891 to 1.0141 this week. EUR/AUD dropped from 1.3724 to 1.3394, while AUD/JPY rose from 81.25 to 83.35. AUD/NZD were rising for the whole week, jumping from 1.2852 to 1.3187. AUD/CAD performed somewhat weaker, declining from its weekly high of 1.0095 as the Canadian currency has also strengthened this week, but managed to close above the opening price of 0.9900 at 1.0021.

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High Canadian Employment Makes Loonie Strongest Since May 2008

2011-02-05T14:39:00.001+07:00

The Canadian dollar reached the highest level against its US counterpart since May 2008 as the employment change in Canada was more than three times higher than the predicted value.

Canadian employment rose for the second consecutive month in January, advancing by 69,000. The economists predicted that Canadian employers would add just 18,000 jobs. At the same time, the unemployment rate increased from 7.6 percent to 7.8 percent as more people searched for work. The Canadian currency was also boosted by the decreasing unemployment in the US, the biggest trading partner of Canada.

The loonie weakened earlier as the crude oil, the main export of Canada, fell. Contract for delivery of crude oil in March dropped as much as 1.6 percent to $89.12 per barrel. The decline is most likely temporary as the unrest in Egypt threatens supplies, while the global economic recovery will cause demand to increase.

USD/CAD close today at 0.9882 after opening at 0.9909 and falling to 0.9830, the lowest level in almost three years. EUR/CAD closed at 1.3425, after it reached the intraday low of 1.3350, falling from the opening rate of 1.3510.

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China raise rates again after festivities

2011-02-01T16:36:00.000+07:00

The HSBC/Markit Economics Chinese Purchasing Managers' Index revealed that among the components in the report input costs increased again and might be an indication of why both retailers and wholesalers raised prices.

This situation in the industrial arena added to the real estate price expansion might set off the People's Bank of China. The central bank showed it is determined since it raised rates twice in three months as well as reserve requirements two 20-year highs. After the Chinese new year festivities ending on 2/8 another rate hike might be waiting.

US Dollar Declined This Week on Poor Macroeconomic Reports

2011-01-31T11:12:00.002+07:00

This week was rather bad for the US currency even as the US economy demonstrated a moderate growth, which nevertheless wasn’t as good as the economists anticipated.

The economic reports were for the most part worse than the forecasts promised, even though the data showed growth. One example of such reports was the report about the gross domestic product. Even as GDP expanded 3.2 percent in the fourth quarter of 2010, compared to the 2.6 percent growth in the third quarter, the increase still was below the expected 3.5 percent growth.

Not everything was bad for the US. Consumer confidence and housed market has lent some support for the US currency. By the end of the week the greenback recovered somewhat as tensions in Egypt spurred investors to seek safety, but against most currencies the dollar posted a weekly drop. A remarkable exception from this trend was the euro, which was rising against the dollar for the whole week, but erased all of its gains on Friday.

EUR/USD jumped from the opening level of 1.3605 to 1.3757, the highest level since November 22nd, but erased gains, falling to 1.3608. USD/JPY opened at 82.63, was falling for three day, managed to climb to 83.21 on Thursday, but on Friday pared gains and closed at 82.12. USD/CHF dropped from 0.9583 to 0.9417 this week. AUD/USD retreated from the weekly high of 1.0021, but managed to rise from 0.9885 to 0.9927.

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Euro Rises for 4th Day on German Business Confidence Data

2011-01-24T14:06:00.002+07:00

The euro rose to its eight-week high level against the US dollar today as the German Business Climate data surpassed forecasts, showing confidence in the strength of the Eurozone’s leading economy.

The euro also rose for the fourth consecutive day against the British pound and for the second one against the Japanese yen. German Ifo Institute released its Business Climate index data for January, showing a growth from 109.9 to 110.3, while the major economists forecasted that the index will remain unchanged this month.

EUR/USD rose from 1.3463 to 1.3537 as of 12:24 GMT today, showing a daily high at 1.3564 — the highest level since November 23. EUR/GBP rose from 0.8467 to 0.8490, while EUR/JPY advanced from 111.72 to 111.94

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CAD Drops Following BoC Decision to Leave Rate at 1 percent

2011-01-19T15:49:00.000+07:00

The Bank of Canada left the overnight interest unchanged and stated its opinion on the possibility of future rate hikes, sending the Canadian dollar straight south against all other major currencies today.

The loonie declined even against the US dollar, which is experiencing a rather bad day as of now. The CAD has been bullish before the rate decision was released by the BoC. While the market participants expected that the overnight rate target will be maintained unchanged at 1%, the reaction to the Bank’s statement was very negative for the Canadian currency. The statement suggested that the next rate increases won’t be happening very soon:

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1%. This leaves considerable monetary stimulus in place, consistent with achieving the 2% inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

The analysts believe that with the current inflation (1.4%) significantly below the regulator’s target of 2%, it’s hard to expect any rate-raising decisions. And, while the Canadian dollar has gained more than 5% against its US counterpart in 2010, its growth may be slowed down by the current monetary policy.

USD/CAD rose from 0.9874 to 0.9921 as of 15:55 GMT, following a drop to a 3-year low of 0.9837 before the BoC rate decision today. EUR/CAD went up from 1.3110 to 1.3284, while CAD/JPY fell from 83.73 to 83.38.

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US Dollar Rallied This Week, Stalled on Poor Employment Reports

2011-01-10T13:25:00.002+07:00

This week was very positive for the US dollar as the US economy showed the signs of the sustainable growth, but the end of the week spoiled the positive sentiment to some degree as the labor market wasn’t as strong as was expected.

The beginning of this week was very bright for the US currency as every report showed the improvement of the economy. The report of the Automatic Data Processing, Inc. on Wednesday showed the significant growth of the employment, causing the optimistic outlook for the other employment reports. The actual reports frustrated such optimistic outlook as the initial jobless claims grew more than expected, while the non-farm payrolls rose less than was predicted. Still, the decrease of the unemployment rate limited the losses of the greenback and hasn’t allowed the sentiment to become too pessimistic.

The dollar fluctuated against the Great Britain pound and closed almost at the opening level. The performance of the greenback versus the Japanese yen was much better as the US currency rallied for the whole week and stalled only on Friday because of the negative reports. The weakness of the euro hasn’t allowed it to benefit from the unfavorable US economic data and the shared European currency declined against the greenback for the whole week.

EUR/USD dropped this week from 1.3343 to 1.2909 after it initially rose to 1.3433. GBP/USD closed at 1.5545. USD/JPY opened at 81.11, rallied to 83.67 and closed at 83.03.

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Recovering Economy Increased Appeal of Australian Dollar

2010-12-30T17:02:00.000+07:00

The Australian dollar headed today to the highest level since 1982 against its US counterpart as the signs of the faster economic growth in the US increased the appeal of the higher-yielding currencies. The currency declined versus the euro.

The Manufacturing Index of the Federal Reserve Bank of Richmond showed the increase to 25 in December from 9 in November. Tomorrow’s report about the unemployment claims is expected to show the decline from 420,000 to 416,000 last week. The MSCI World Index of shares jumped as much as 0.6 percent to 1,283.68 yesterday, recovering all its losses since the beginning of the financial crisis in 2008.

Other fundamentals continue to support the Australian currency. China, Australia’s main trading partner, continues to be the economic power house. The relatively high interest rates in Australia continue to attract the foreign investors.

AUD/USD traded near 1.0193 today as of 01:24 GMT after it rallied yesterday from 1.0099 to 1.0178. EUR/AUD rose from 1.2990 to 1.2995.

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Yuan Slips as China Raises Interest Rates

2010-12-28T13:48:00.000+07:00

The Chinese yuan slipped today as the central bank raised its interest rates in an attempt to curb China’s significant inflation and to prevent the asset-bubble. China’s economic growth makes traders expect another rates hike in the future.

The People’s Bank of China raised its key one-year lending and deposit rates by 25 basis points on the Christmas Day, the second increase since mid-October. The benchmark lending rate advanced to 5.81%, while it was 7.47% before the cuts from late 2008, caused by the global economic crisis. It may rise to 6.56% by the end of 2011. The deposit rate went up to 2.75%.

China’s central bank is expected to continue the interest rates hikes in the future, while the central banks of the US, the European Union and Japan will likely keep their rates on hold for some time. It’s not surprising as China’s economy may grow 9.6% next year, while the US economy will grow by 2.3% and the EU economy will expand 1.5%. China’s inflation was at 5.1% annual pace in November.

USD/CNY went up from 6.6280 to 6.6323 as of 17:32 GMT, following the advance to the intraday high of 6.6500. EUR/CNY advanced from 8.6927 to 8.7179.

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US Dollar Declines vs. Commodity Currencies on Signs of Recovery

2010-12-27T16:17:00.002+07:00

The US dollar declined versus the higher-yielding currencies as the macroeconomic reports suggested that the economic recovery is underway, encouraging the investors to take more risk in seeking profits.

The University of Michigan index of the consumer sentiment in its revised edition showed the increase from 71.6 in November to 74.5 this month. The claims for the unemployment benefits in the US continued to decline, falling from 423,000 to 420,000 last week. The personal income in the US grew 0.3 percent in November, while the personal consumption rose by 0.4 percent.

The future reports may also provide evidences of the economic recovery. The experts predict that the Conference Board’s sentiment index would post the increase from 54.1 to 56.3 in November. The low market volatility also helped the investors’ risk sentiment to improve.

AUD/USD closed at 1.0042 after opening at 0.9990 and rising to the intraday high of 1.0065. NZD/USD closed at 0.7469 after it opened at 0.7401 and climbed as high as 0.7500.

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Britain’s Interest Rates May Go Up, Helping Pound Gain vs. Euro

2010-12-21T10:18:00.000+07:00

The Great Britain pound rose today against the euro as the speculation that European banks would have problems in raising funds and the forecast that Britain’s central bank would increase the interest rates spurred demand for the sterling. The currency was little changed versus the US dollar.

The Confederation of British Industry predicted in its report that the Bank of England would raise its benchmark rate by a quarter-point every three months from the second quarter of 2011 until mid-2012. By that time the rate will reach 2.75 percent. The minutes of the Bank of England’s last Monetary Policy Committee, which will be released this week, may should that not all of the policy makers supported the decision to keep the rates at the record low level of 0.5 percent.

Nevertheless, some analysts say that the interest hike is unlikely. The mortgage approvals secured on dwellings unexpectedly declined in October, signaling about the necessity of the additional stimulus.

EUR/GBP traded at 0.8460 as of 22:58 GMT after it opened at 0.8485 and reached the intraday low of 0.8445. GBP/USD traded near 1.5504 after opening at 1.5514.

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No Emerging-Market Bears Unsettles Investors Shunning Conformity

2010-12-16T10:20:00.000+07:00

Individual investors are pouring money into emerging-market stocks at the fastest pace since 2007 as the biggest rally in 16 years spurs three of the world’s largest banks to predict shares will hit record highs next year.

The last time investors were this bullish, the MSCI Emerging Markets Index sank 11 percent in three months, data compiled by EPFR Global and Bloomberg show. The gauge trades for 2 times net assets, within 4 percent of the most expensive level on record versus the MSCI World Index of developed-nation shares, according to MSCI Inc.

“After all this money has flooded in, with everyone in love with them and all the euphoria surrounding them, it’s hard to find fundamental value,” said Harris Associates LP’s David Herro, who was named international stock fund manager of the decade this year by Morningstar Inc. “Growth in emerging markets is greatly helping the world, but you can overpay for it and that’s what’s happening.”

Herro, whose $6 billion Oakmark International Fund in Chicago beat 82 percent of peers this year, has reduced emerging-market stocks to about 4 percent of holdings from more than 20 percent in the late 1990s as inflation spurs China and India to raise interest rates and Thailand and Brazil to boost taxes on international investors. Moving away from the fastest- expanding economies puts him at odds with strategists from UBS AG to Citigroup Inc.

Jack Ablin, the chief investment officer at Harris Private Bank who said emerging-market stocks were too expensive a month before they peaked in 2007, favors shares of U.S. companies that sell to developing nations.

Coca Cola, Colgate

Coca-Cola Co., the Atlanta-based beverage maker, is valued at an 18 percent discount to the MSCI Emerging Markets Consumer Staples Index after trading at an average premium of 74 percent since 1995, price-earnings ratios compiled by Bloomberg show. New York-based Colgate-Palmolive Co., the world’s largest toothpaste maker, trades at a 25 percent discount to the emerging consumer stock gauge, compared with a historical premium of 70 percent.

Both companies get about 50 percent of their operating income from emerging markets, data compiled by Bloomberg show.

“Yes I believe that the emerging economies will outpace the developed world,” said Ablin, who helps oversee about $55 billion at the unit of Canada’s BMO Financial Group. “But I still don’t want to chase these valuations because a lot of optimism is priced in.”

Bullish Strategists

Emerging-market stock strategists at UBS, Citigroup, JPMorgan Chase & Co., Credit Suisse Group AG and Morgan Stanley are more optimistic than their counterparts following the U.S. and Europe.

The average of five estimates for the MSCI index next year is 1,463, or 30 percent higher than yesterday’s level and 9.3 percent above the all-time closing high on Oct. 29, 2007. Strategists are calling for a 9.9 percent gain in the Standard & Poor’s 500 Index and a 14 percent advance for the Stoxx Europe 600 Index, according to the average of estimates in Bloomberg surveys.

“There’s a growing realization that in some ways emerging markets are a safe place to be,” said Mark Mobius, who oversees about $34 billion as executive chairman of Templeton Emerging Markets Group. “I’m quite optimistic.”

Lower Debt

The MSCI emerging-market index has surged 136 percent from its March 2009 low as developing economies exited the global recession in better shape than advanced countries by almost every measure. Government debt will probably amount to 37 percent of emerging-market gross domestic product next year and budget deficits will be 2.9 percent, compared with levels of 101 percent and 6.7 percent in advanced nations, the Washington- based International Monetary Fund predicts.

Emerging economies may expand 6.4 percent in 2011, almost three times the 2.2 percent rate for developed nations, the fund’s October forecasts show. Developing nations are growing faster partly because rising consumer demand at home has reduced reliance on exports to the U.S. and Europe, Goldman Sachs Asset Management Chairman Jim O’Neill said in a Dec. 6 interview with Bloomberg Television.

Faster economies have helped emerging-market companies find more profitable expansion opportunities than developed-nation firms. The return on equity for companies in the MSCI gauge for developing nations has climbed from 10 percent at the end of last year to 14 percent, or about 3 percentage points higher than in the MSCI World index.

‘Heavy Inflows’

Emerging-market equity mutual funds are attracting money at an accelerating pace even after gains in the MSCI emerging- markets index slowed to 13 percent this year from 75 percent in 2009. Inflows from individuals into funds during the past three months topped $12 billion, the highest level since the three- month period ended December 2007, according to data compiled by Cambridge, Massachusetts-based research firm EPFR.

“Heavy inflows of equity capital into emerging markets suggest a more cautious stance is appropriate,” Ian Scott, the London-based global equity strategist at Nomura Holdings Inc., wrote in a Dec. 5 research report. He cut developing-nation stocks to “underweight” from “overweight,” saying they’re vulnerable to rising borrowing costs and capital controls.

China’s central bank raised benchmark lending and deposit rates in October for the first time since 2007 and Indian policy makers have lifted interest rates six times in 2010.

‘Late to the Party’

Brazil raised taxes on foreign investments in fixed-income securities this year. Thailand removed a 15 percent tax exemption for foreigners on income from domestic bonds. Countries from Taiwan to South Korea have intervened in foreign- exchange markets to stem currency gains, according to traders.

Herro, whose Oakmark International Fund climbed 16 percent this year, said he’s finding some of his best investment opportunities in Japan even as the IMF forecasts economic growth of 1.5 percent next year.

His fund owns shares of Tokyo-based Daiwa Securities Group Inc., which trades at a 66 percent discount to Beijing-based China Construction Bank Corp. and is 69 percent cheaper than Banco Bradesco SA, based in Osasco, Brazil, according to price- to-book ratios compiled by Bloomberg.

China’s economy may expand 9.6 percent next year while Brazil’s grows at a 4.1 percent rate, according to IMF forecasts. India may expand by 8.4 percent, the fund predicts.

Ablin of Harris Private Bank said a losing investment in Chinese stocks for his personal account in 1993 showed him that economic expansion doesn’t always translate into stock-market gains. While the Chinese economy posted average annual growth of 12 percent in the four years through 1996, trouncing the global rate of 3.1 percent, Ablin’s bet on the China Fund Inc. lost 50 percent of its value.

“I had pretty much bought into the consensus and I was late to the party,” he said. “That lesson told me there’s a big difference between the fundamental economic backdrop and the valuation of stocks.”

US Dollar Falls After China Kept Interest Rates Unchanged

2010-12-14T15:32:00.002+07:00

The US dollar weakened today as China kept its interest rates unchanged, reducing the concerns about the possible China’s actions to slow the Chinese economic growth and damping the demand for the safer currencies.

The market participants were worried that China would raise the interest rates to slow the accelerating inflation, which reached 5.1 percent in November from a year earlier. The possible rates hike and the resulting slowdown of the Chinese growth was concern for everybody as China is the main driver of the global recovery, while the US and Europe struggle with their problems. China decided to leave the rates unchanged, instead draining the money from the financial system by setting the reserve requirements for the banks higher.

The MSCI World Index of equities gained 0.9 percent and the Standard & Poor’s 500 index rose 0.4 percent. The dollar also slipped on the speculation that the US Senate may vote against the tax cuts proposed by the President Barack Obama.

EUR/USD jumped from 1.3204 to 1.3382 as of 17:08 GMT today after it fell previously to 1.3181. GBP/USD rose from 1.5799 to 1.5884, following the drop to the intraday low of 1.5718. USD/JPY went down to 83.55 from 83.98 after it earlier jumped as high as 84.34.

If you want to comment on the US dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Aussie Rises on Employment Growth & Interest Rates Outlook

2010-12-13T17:26:00.002+07:00

The Australian dollar rose today as the good reports this week signaled about the increasing pace of the economic recovery and on the outlook for the interest rates increases.

The attractiveness of the Australian currency was boosted by the good employment reports. The Australia and New Zealand Banking Group reported that the job advertisements on the internet and in newspapers increased by 2.9% in November, signaling about the rising employment. This was confirmed by the report of the Australian Bureau of Statistics, which showed the growth of the employment by 54,600.

The analysts predict that the Reserve Bank of Australia would increase the interest rates by 40 basis points over the next year. For now the Bank kept the rates steady at 4.75 percent, decreasing the appeal of the Aussie. The gains of the currency were also trimmed by the concerns about the possible plans of China to slow its economic growth.

AUD/USD closed at 0.9851 after opening at 0.9836 and rising to the intraday high of 0.9896. EUR/AUD closed at 1.3424 after it opened at 1.3456 and declined to the intraday low of 1.3378. AUD/JPY opened at 82.35 and closed at 82.69.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Canadian Dollar Pares Losses

2010-12-08T13:44:00.002+07:00

The Canadian dollar rose today after it fell yesterday as Canada’s central bank kept the interest rates unchanged and the commodities, including crude oil, dropped, decreasing appeal of the currencies linked to the economic growth.

January delivery for crude oil slipped 1.3 percent to $88.18 after it rose above the resistance level of $90 per barrel in New York for the first time in more than two years. The Reuters-Jefferies CRB Index of raw materials dropped 0.5 percent, following the advance by 1.1 percent to 320.74, the highest level in 26 months. The Standard & Poor’s/TSX Composite Index in Toronto gained 0.7 percent before ending the day down 0.2 percent.

The Bank of Canada kept its interest rates at 1 percent and said in its statement that “any further reduction in monetary policy stimulus would need to be carefully considered” as the declining exports and the European sovereign-debt crisis harm the economic recovery. The Bank also stated that “a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports”.

USD/CAD traded near 1.0109 today as of 02:15 GMT, following the advance from 1.0054 to 1.0122 yesterday. The currency pair reached on the yesterday’s trading session the intraday low of 1.0010. EUR/CAD traded at about 1.3404 after it went up on the previous from 1.3378 to 1.3424.

Euro bounces on Irish deal, but doubts abound

2010-11-29T10:45:00.000+07:00

The embattled euro crept off two-month lows on Monday after European authorities tried to protect the region's financial stability by agreeing to lend debt-soaked Ireland 85 billion euros (USD115 billion).

Market reaction to the deal in early Asian trade was mixed.

Currency and bond traders doubted the deal was enough to prevent fiscally pressured Portugal and Spain from being next in line to suffer a debt crisis.

Stock investors, on the other hand, seemed to have warmed to the Irish bailout, at least for now. The commodity market also seemed sanguine about Europe's fiscal tensions.

S&P 500 futures climbed 0.5%. The Australian .AXJO and New Zealand .NZ50 share markets, the first to start trade in Asia, suffered only light losses of 0.2% each.

Tensions on the Korean peninsula also remained in focus after North Korea's shelling of a South Korean island last week. Seoul shares .KS11 opened up 0.2%, but the won fell 0.3% against the dollar.

Gold, which tends to be in demand when investors shy away from risk, was a shade softer at USD1,358.56.

Crude oil prices were flat at USD83.94 a barrel.

But there were clear doubts in the currency market that Europe's debt problems were over.

Already, the euro was giving up some of its gains in early Asian trade. It was defensive at USD1.3278, having shot as high as USD1.3345 in thin trade after the European Union aid or Ireland was announced.

It had plumbed a two-month low of USD1.3200 in late New York trade on Friday.

Some analysts, predicting the euro was not out of the woods, said its latest bounce was driven by speculators taking profits in their bets against the common currency.

"The package is pretty much what most would have anticipated, so it's not a surprise to anyone," said Greg Gibbs, strategist at RBS in Sydney.

"It doesn't really change the real fear the market has that this could spread beyond Ireland to Portugal and Spain."

The U.S. dollar .DXY benefited the most from the euro's struggle, in part driven by safe-haven demand, and as investors continued to play the trend of a rebounding U.S. currency.

The dollar index, which measures its performance against a basket of currencies, was firm at 80.357, within spitting distance of a two-month high of 80.399 hit in New York on Friday.

U.S. two-, five- and 10-year Treasury futures were firm across the curve.

Asian Currencies Have Weekly Drop on North Korea Attack, Europe Debt Woes

2010-11-27T18:55:00.000+07:00

Asian currencies had their biggest weekly loss in six months as an exchange of artillery fire on the Korean peninsula deterred investment in the region and Europe’s debt crisis bolstered demand for dollars.

The Bloomberg-JPMorgan Asia Dollar Index slid for a third week, its longest losing streak since February, after North Korea shelled a South Korean island on Nov. 23, prompting retaliatory fire. The euro sank to a two-month low yesterday as Ireland negotiated a European Union-led bailout and the Financial Times Deutschland reported that policy makers in the region are pushing Portugal to seek financial aid.

“Asian currencies have suffered from the contagion effect from Europe,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “We also had an escalation of tensions from North and South Korea.”

The won fell 2.2 percent this week to 1,159.63 per dollar in Seoul, its biggest loss in five months, according to data compiled by Bloomberg. Singapore’s dollar dropped 1.9 percent to S$1.3208, the steepest slide since February 2009, and Malaysia’s ringgit retreated 1.5 percent to 3.1630. The Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, declined 1.1 percent to its lowest level in two months.

The won yesterday slumped 1.9 percent after North Korea, via its KCNA state news agency, said “escalated confrontation would lead to a war.” The USS George Washington aircraft carrier will tomorrow begin exercises off the Korean peninsula with naval vessels from the South in a show of force that the North warned will take the countries “closer to the brink of war.”

War Risk

“This is really a big risk for the whole region, leading to a massive sell-off of the won,” said Minoru Shioiri, chief manager of currency trading in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co. “People don’t want to hold the won and other regional currencies over the weekend when we don’t know what will happen.”

The ringgit had its biggest weekly slide in six months as a central bank report showed the economy slowed more than economists forecast in the third quarter. Gross domestic product rose 5.3 percent from a year earlier, less than the 8.9 percent gain in the previous three months and the median 5.9 percent increase forecast in a Bloomberg survey of economists.

“We have both economic and geopolitical events that have taken a toll on investor appetite for risk,” said Wan Murezani Mohamad, an analyst at Malaysian Rating Corp. in Kuala Lumpur.

GDP Data

The Philippine peso fell 0.9 percent to 44.195 per dollar, a third weekly decline, as a Nov. 25 report showed GDP unexpectedly dropped 0.5 percent in the third quarter from the previous three months. Economists surveyed by Bloomberg forecast 0.9 percent growth for the period.

China’s yuan declined 0.42 percent this week to 6.6675 per dollar, its biggest loss since December 2008.

“There’s heightened risk aversion after the Korea situation and the European debt crisis,” said Claudio Piron, head of emerging Asia foreign exchange and fixed-income strategy at Bank of America’s Merrill Lynch unit in Singapore. “If you look across the region, all Asian currencies have weakened against the dollar.”

Taiwan’s dollar fell 0.5 percent this week to NT$30.83, while Indonesia’s rupiah retreated 0.8 percent to 9,013. Thailand’s baht fell 0.8 percent to 30.20.

Japanese Yen Strengthens vs. Euro on Korean Conflict

2010-11-24T22:49:00.002+07:00

The Japanese yen rose today against the euro after it declined previously as the United Nations called for the talks with North Korea about its attack on the South Korean island, supporting the Asian equities and reducing the demand for the haven.

The MSCI Asia Pacific Index of shares reduced its losses to 0.4 percent after it previously fell as much as 1.3 percent. The experts say that if the Korean conflict wouldn’t continue the incident and its impact on the markets would be swiftly forgotten. For now, it seems, the tension still affects the traders’ sentiment.

EUR/JPY dropped from 111.15 to 110.80 as of 10:26 GMT after it rose previously to 111.74. USD/JPY traded near 83.25 after opening at 83.15 and falling to 82.93.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Euro, Stocks, Commodities Fall on European Debt Concern

2010-11-23T07:58:00.000+07:00

The euro snapped a three-day rally versus the dollar, stocks and commodities slid and Treasuries rose as Ireland’s financial bailout failed to assuage concern Europe’s debt crisis may spread. Banks led U.S. shares lower as federal agents searched hedge funds in an insider-trading probe.

The euro slid 0.3% to USD 1.3627. The Standard & Poor’s 500 Index lost 0.2% to 1,197.84 and the S&P GSCI Index of commodities declined 0.3%. The costs to protect Irish and Portuguese debt from default surged, while the 10-year U.S. Treasury yield decreased seven basis points to 2.80% before a sale of USD 99 billion of notes this week. After the U.S. close, S&P 500 futures dropped 0.2% at 7 p.m. in New York while Australian and South Korean stocks fell in early trading.

Financial companies led European and U.S. equities lower as Ireland became the second euro member to seek a rescue from the European Union and the International Monetary Fund, a move that may prevent a run on its lenders while threatening its credit rating and government coalition. The Federal Bureau of Investigation raided at least three U.S. hedge funds.

“Deleveraging is sort of like a terrier,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees USD 105 billion. “It keeps annoying you. We’ve addressed Ireland’s problems, but nobody knows who’s next.”

The euro lost 1.1% versus the South Korean won and at least 0.5% versus the currencies of Taiwan, Switzerland and Japan. The dollar strengthened against 10 of 16 major peers.

Financials Lead Declines

Financial companies slumped 1.4% for the biggest decline among 10 industries in the S&P 500. JPMorgan Chase & Co. and Goldman Sachs Group Inc. dropped at least 2.3%. Losses were limited as Amazon.com Inc. led a rally in retailers before the start of the holiday shopping season, while Hewlett Packard Co. climbed 1.8% before reporting earnings after the close of trading. The world’s largest computer maker jumped 3.1% in after-hours trading after forecasting first- quarter profit that topped analyst estimates.

Two Connecticut-based hedge funds, Level Global Investors LP and Diamondback Capital Management LLC, were searched by the FBI today, agency spokesman Richard Kolko said. Agents also executed a search warrant at Loch Capital Management of Boston, according to a person familiar with the probe who declined to be identified because the matter isn’t public. The raids stemmed from a series of insider trading investigations directed by the office of Manhattan U.S. Attorney Preet Bharara, according to a person familiar with the probes.

Insider Trading Probe

The Wall Street Journal reported that the Securities and Exchange Commission and other officials are nearing the end of an investigation into an insider-trading network involving hedge funds, mutual-fund traders and investment bankers. The report late Nov. 19 cited unidentified people familiar with the situation. One of the focuses is whether Goldman Sachs bankers divulged information about health-care acquisitions and other deals, the newspaper said.

The benchmark indexes for U.S. and European stock options snapped three-day losing streaks as investors boosted buying of protection on equities. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 1.8% to 18.37 in New York. The index measures the cost of using options as insurance against declines in the S&P 500. The VStoxx Index, which gauges the cost of protecting against a drop in the Euro Stoxx 50 Index, climbed 6%.

“This FBI probe seems to be gaining some legs,” said Dan Deming, a VIX options trader at Stutland Equities LLC on the floor of the CBOE. “The banking sector is feeling some heat across the board as the feds seem to be stepping up their game a little bit. It’s definitely having an impact.”

Bank Losses

U.S. banks could lose more than USD 100 billion as investors fight to recoup losses from soured mortgages, Barron’s reported over the weekend. The Financial Times reported that the top 35 U.S. banks will be short between USD 100 billion and USD 150 billion after new international capital requirements are imposed.

The Stoxx Europe 600 Index slipped 0.7%, erasing gains of as much as 0.8%. Irish banks led declines on concern that a bailout will dilute existing investor stakes. Bank of Ireland tumbled 19%, while Irish Life & Permanent Plc sank 27%. Porsche SE led auto stocks higher, climbing 4.9%, after Bank of America Merrill Lynch recommended buying the shares, saying the German sports-car maker probably won’t merge with Volkswagen AG. The MSCI Asia Pacific Index rallied 0.6%.

The MSCI Emerging Markets Index climbed 0.2% as the Bombay Stock Exchange’s Sensitive Index jumped 1.9%, its biggest advance since Nov. 4, with Infosys Technologies Ltd., the country’s second-largest software exporter, rising 2.7%. Brazil’s Bovespa slid 1.8%.

Debt Concerns

The Irish rescue package that Goldman Sachs estimates may total 95 billion euros (USD 130 billion) failed to damp speculation that Portugal and Spain would follow Ireland in tapping the fund set up by the EU and IMF after the Greece rescue.

Credit-default swaps tied to Irish government bonds rose 20.3 basis points to 527.4, according to CMA, a data provider. Moody’s Investors Service said it may lower Ireland’s credit rating by more than it previously anticipated as the aid plan threatens to boost the country’s debt.

Default swaps on Portugal jumped 40.8 basis points to 457.6 and Greece was 37 basis points higher at 1,006.4, according to CMA. The Markit iTraxx Crossover Index of swaps on 50 mostly junk-rated European companies climbed 4.7 basis points to 461.5, Markit Group Ltd. prices show.

Irish Yields

The yield on the Irish 10-year bond slipped 4 basis points to 8.31%. The European Central Bank bought Irish government bonds today, according to three people with knowledge of the transactions. A spokeswoman for the ECB in Frankfurt declined to comment.

“The reality is that the structure is in place at the moment to put countries in life support but the missing link still remains the bigger issue of what do you do after that,” Cambiz Alikhani, a portfolio manager at Iveagh Wealth Fund in London, said in an interview. “Until that question is answered we are still in this rolling bailout situation which has been ongoing since 2008.”

Irish Prime Minister Brian Cowen said he will seek national elections early next year after his government passes its 2011 budget, one day after he asked the EU to bail out Ireland’s banking system. Ireland’s Green Party said today it will quit the government after the budget is passed, leaving Cowen without a majority in parliament and raising the prospect of January elections. Irish voters “feel misled” by the government, Green Party leader John Gormley said at a press conference in Dublin.

Treasuries

The yield on the two-year Treasury note slipped 5 basis points to 0.47%. The U.S. auctions USD 35 billion of the debt today, followed by sales of five-year securities tomorrow and seven-year notes in two days.

Cotton, copper, gasoline and coffee fell at least 1.4% to lead declines in commodities. Crude oil fell 0.3% to USD 81.74 a barrel in New York.

Cotton declined to a four-week low in New York amid speculation that global demand will decline as China, the biggest importer, takes steps to slow growth and as planting expands in India. Cotton for March delivery dropped as much as 4.9% to USD 1.1715 a pound in New York. The fiber fell 8.2% last week, the most since February 2009.

The New Zealand dollar dropped against all 16 of its most- traded peers, weakening 0.5% to 77.45 U.S. cents. S&P lowered the nation’s credit outlook on its AA+ rating to negative, saying in a statement that “the main risk to the ratings would be a significant weakening in the credit quality of New Zealand’s banking sector.”

Irish Bailout Undermines Demand for Pound

2010-11-22T14:01:00.000+07:00

The Great Britain pound fell today as the talks about the anticipated bailout for Ireland undermined the demand for the currency as the safer asset. The decline hasn’t erased yesterday gains as the sterling surged on the yesterday’s session too high and attempted to continue its rally today before falling.

Brian Lenihan, Ireland’s Minister for Finance, said yesterday that the government would be glad to receive “substantial contingency capital funding”, which may reach “tens of billions” of euro. Tony Killeen, the Minister of Defense, also suggested that the nation are ready to loan. Currently the officials from the European Union and the International Monetary Fund are situated in Dublin in order to asses the Irish banks.

The experts are cautioning not to consider the bailout the ”done deal”, while the markets behave as if it already has happened. The pound also declined after China’s central bank ordered the Chinese banks to increase reserves to safeguard against the possible asset-bubble.

GBP/USD fell from 1.6038 to 1.5985 as of 20:54 GMT today. GBP/JPY dropped from 133.94 to 133.40.

If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

Aussie Gains on Outlook for Rates & Ireland’s Bailout

2010-11-19T15:22:00.002+07:00

The Australia dollar rose today as the speculation about the possible bailout for Ireland increased demand for the higher-yielding assets, increasing the bets on the rates hike by the central bank.

Ric Battellino, the Deputy Governor of the Reserve Bank of Australia, said that the inflation pressure will likely persist. He stated that “over the next couple of years as a result of the resources boom, the challenge will be to manage the economy in a way that keeps economic growth on a sustainable path, with inflation contained” and that the strength of the nation’s currency is “a natural consequence of a resources boom and, at the aggregate level, is helpful in allowing the economy to adjust”.

The speculation about the Ireland’s bailout really spurred the markets today. The Standard & Poor’s 500 Index rose as much as 1.7 percent. The MSCI Asia Pacific Index gained 1.1 percent after four days of losses. It’ll be interesting to see how long the optimism will persist.

AUD/USD rose from 0.9794 today as of 23:40 GMT. EUR/AUD went down from 1.3807 to 1.3786. AUD/JPY rallied from 81.47 to 82.62.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

PRECIOUS METALS - European Morning View - Gold finds background support, vulnerable short-term

2010-11-15T09:43:00.002+07:00

Investors continued to reduce their risk exposure Friday as EU debt jitters resurfaced and speculation of further monetary tightening by China intensified following much higher than anticipated inflation data earlier in the week. Equities closed broadly lower with the Dow down 0.8 percent and S&P500 1.2 percent, posting their first weekly declines in 5-weeks. Commodities posted even steeper declines with sugar tumbling almost 12 percent; silver 5.4 percent and oil, gold and copper off around 3 percent; the CRB Index saw its largest one-day decline in 19-months, down almost 3.6 percent by the close.

Interestingly the euro closed up 0.5 percent against the dollar and yen while the DXY settled down 0.25 percent despite the fall in risk appetite and renewed debt-default concerns amongst peripheral EU nations, particular after German officials pressured Irish officials to seek aid in order to calm market volatility,

Volatility looks set to remain a feature in the coming sessions with particular focus on this week's meeting of EU finance officials and speeches by ECB President JC-Trichet and Fed Chairman Bernanke Thursday and Friday. In addition, a heavy line-up of economic data will lend direction as traders and investors gauge the effects of the Fed latest QE and broader economic recovery. Data includes; Japanese GDP, Industrial Production and all Industries Activity, Chinese Leading Index, EU CPI, ZEW Economic Sentiment. US data will show Retail Sales; Business Inventories, Empire State & Philly Fed Manufacturing Indexes, Industrial Production, CPI and TICS Long-Term Treasury Purchases.

The precious metals closed lower across the board Friday despite the firmer euro, led by silver and palladium – down 5.4 percent & 4.7 percent respectively – with platinum off 3.75 and gold 2.8 percent. Short-term the complex remains vulnerable to further corrections as the broad risk reduction prompts traders and investors to generate cash; however gold has posted a more modest decline with investment and physical bargain hunting emerging and given the bearish dollar fundamentals we expects corrections will continued to be view as good buying opportunities by investors with longer-term inflation concerns.

Yen Rebounds After Previous Decline as China May Cool Economy

2010-11-11T09:33:00.000+07:00

The Japanese yen rose today, before returning to the opening level, on the speculation that the accelerating inflation in China would prompt the government to take steps to cool the economy.

The consumer prices in China grew 4 percent in October, the biggest advance since October 2008, following the 3.6 percent increase in September. The rapidly growing prices and the increasing trade surplus caused concerns among the Chinese policy makers about the possible asset bubble. The concerns caused the People’s Bank of China to increase the reserve requirements for the lenders by 50 basis points from November 16th.

The yen slumped yesterday heavily and unexpectedly. This may be partly because of yesterday’s rally of the dollar, which made more attractive than yen in the role of the safe haven.

USD/JPY traded at about 82.14 as of 2:07 GMT after rising yesterday from 81.68 to 82.26. EUR/JPY traded near its opening level of 113.39 after it jumped yesterday from 112.50 to 113.38. GBP/JPY traded at 132.75, following the advance of the previous session from 130.56 to 132.26.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

China Govt Econ Attacks Fed's Q.E., Warns Dlr Fall To Hurt

2010-11-04T11:18:00.002+07:00

A Chinese government economist has lashed out at the Federal Reserve's latest quantitative easing move, arguing that an influx of more dollar liquidity into the world economy will threaten its recovery, trigger currency wars and flood emerging markets with inflationary inflows.

Pan Zhengyan, an economist with the Shanghai branch of the Chinese Academy of Social Sciences, said in an opinion piece published in Thursday's Shanghai Securities News said that further easing will lead to fresh dollar depreciation.

"Dollar depreciation and dollar asset depreciation will attract more funds into commodoties and resources causing a new round of price increases in commodities and will have a large, negative impact on the global economic recovery," he said.

Chinese government economists have been vocal in their attacks on monetary easing by the advanced economies, particularly the U.S. and Japan.

Officials have been more guarded and there has been little public commentary about the latest U.S. quantitative easing measure during the build up to the Fed's announcement of a fresh $600 billion in Treasury purchases on Wednesday.

Pan's criticisms were in line with concerns expressed over the years by senior officials with responsibility for the domestic economy, from Premier Wen Jiabao on down, but also reflected concerns among emerging market officials about the impact of capital inflows in search of yield.

"It will cause worldwide currency wars. The dollar isn't only flowing into the euro and commodities, but also to emergiing countries," he said.

"This will force countries like Korea, India and Thailand to face the risks of controlling hot money inflows. It's unknown if emerging economies can defend themselves from the attack of extra dollar liquidity," he said.

The World Bank repeated its long-standing call Wednesday for China to increase exchange rate flexibility, but qualified that call with a warning that further flexibility may be inadequate.

"More exchange rate flexibility would help in detering capital flows, although recent experience in emerging markets shows that flexible exchange rates by themselves may not deter such inflows sufficiently," it said.

The People's Bank of China warned in its latest monetary policy report Tuesday of the risks from further easing by the advanced economies.

Canada’s Dollar Gains as Oil Prices Rises

2010-11-02T09:11:00.000+07:00

The Canadian dollar gained today against its US counterpart as oil, the main nation’s export, advanced and on the speculation that the quantitative easing by the Federal Reserve would weaken the US currency. The loonie also rose versus the euro.

The anticipated announcement of the quantitative easing boosted the loonie, as the Canadian currency often nicknamed, against the greenback, while the advance of the oil prices bolstered the Canadian dollar versus some other currencies. December delivery for crude oil gained $1.52 to $82.95 per barrel on NYMEX.

The loonie fell against all other major currencies, except the greenback, since the end July on the speculation that the weaker economy in the US, the main Canada’s trading partner, would slow Canada’s economy. The Canadian currency posted the biggest losses among the Australian dollar, falling 7 percent in the past three months. Some analysts say that the downward trend of the loonie may reverse soon.

USD/CAD fell from 1.0183 to 1.0151 as of 21:23 GMT today. EUR/CAD dropped from the opening level of 1.4228 to 1.4105.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Pound Rises on GDP and Better Outlook from S&P

2010-10-28T09:59:00.002+07:00

The Great Britain pound surged today after the Standard & Poor’s raised the credit outlook for Britain and the GDP report trimmed the bets for the quantitative easing.

The Standard & Poor’s raised the Britain’s outlook from negative to stable and confirmed the Britain’s AAA credit rating. The preliminary GDP report showed that the gross domestic product grew 0.8 percent in the third quarter, compared to the expected value of 0.4 percent.

GBP/USD went up from the opening level of 1.5720 to 1.5841 as of 13:19 GMT, following the advance to 1.5894. GBP/JPY advanced from 127.06 to 128.77.

Yen Continues to Strengthen, Intervention May Be Possible

2010-10-26T10:55:00.002+07:00

The Japanese yen continued to rise today as the Group of Twenty meeting last week hasn’t provided decision, which could change the behavior of the currencies.

The Bank of Japan confirmed its readiness to intervene in order to weaken the currency for protection of the nation’s exporters. Japan’s companies already reported the earnings, which declined because of the stronger yen. The analysts think the central bank wouldn’t intervene in the near term, attempting to gauge the influence of the strong currency on the economy before taking any significant actions.

The ”competitive devaluation” was one of the main issues, discussed on the past meeting. Yet there wasn’t any cohesive plan to prevent the countries to weaken their currencies, so Japan may feel free to do as it deem necessary.

USD/JPY went down from 81.37 to 80.61 today as of 16:07 GMT and reached the intraday low of 80.41 GBP/JPY fell from the opening level of 127.44 to 126.93, following the decline to 126.45.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Dollar Attempts to Reverse Downward Trend Ahead of G-20 Meeting

2010-10-23T16:14:00.002+07:00

The US dollar fluctuated today, attempting to rise but meeting a resistance, as Timothy Geithner, the US Secretary of the Treasury, suggested that the G-20 countries should agreed on the targets to reduce the current account imbalances.

Geithner proposed, as a measure to ease the currencies tensions and prevent the so-called currency wars, the countries with the positive trade balance to decrease their surpluses, in the same time helping the countries with the trade deficits. The leaders of other countries divided in their opinions on this proposal. Yoshihiko Noda, Japan’s Minister of Finance, said that “setting numerical targets would be unrealistic”, while Jim Flaherty, Canada’s Minister of Finance, named such measures as a ”step in the right direction”.

The traders today weren’t willing to make any big moves, awaiting for the outcome of the G-20 meeting, which started today. The analysts say that, while it’s hard to predict how the meeting may influence the currencies, the dollar remained weak in the longer term.

EUR/USD fell from 1.3920 to 1.3931 today as of 18:49 GMT. GBP/USD dropped from 1.5703 to 1.5667 after it rose to the intraday high of 1.5749. USD/JPY went up from 81.33 to 81.40 after it slid as low as 80.99.

If you want to comment on the US dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Dollar Strengthens as China Rises Interest Rates

2010-10-20T10:55:00.000+07:00

The US dollar strengthened today against all other currencies as the demand for the higher-yielding currencies slumped after the unexpected interest rates hike in China.

The subsequent sell-off boosted the dollar and crippled other currencies. The greenback also strengthened after Timothy Geithner, the US Secretary of the Treasury, said yesterday that the policy makers would attempt to preserve the strength of the US currency and aren’t planning the devaluation.

EUR/USD fell from the opening level of 1.3935 to 1.3810 as of 13:12 GMT today after it advanced to 1.4003. USD/JPY went up from 81.27 to 81.75.

If you want to comment on the US dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Risk-Aversion Buoys JPY, BoC Awaited

2010-10-17T16:26:00.002+07:00

Risk-aversion continued to dictate market direction, with the Japanese yen touching a fresh 15-year high against the dollar while most of the major currencies tumbled against the greenback. The Canadian dollar slid by 1.2% and the euro dropped by more than 1.5%. The US equity bourses slid after returning from the long-weekend, with the major indexes shedding more than 1%. Meanwhile, safe-haven flows propped spot gold it’s a new record higher to settle around $1,257.30 per ounce while crude oil drifted lower to dip beneath the $73-per barrel mark.

Central bank policy decisions will be the key event risks in the week ahead. The Reserve Bank of Australia announced the results of its policy deliberation, leaving interest rates on hold at 4.5%. The accompanying policy statement was largely unchanged from the August statement, widely seen as more dovish and indicative the RBA leaving rates on hold for the rest of the year.

The Bank of Canada is scheduled to announce its monetary policy decision at 9:00 AM EDT, with consensus forecasts calling for a 25-basis point rate hike to 1.0%. Traders will closely scrutinize the accompany statement from the BoC. In light of the sharp pullback in second quarter GDP growth, which revealed the pace of economic growth slowing to 2.0% and down drastically from first quarter growth of 5.8%, it will be interesting to see whether the Bank will downwardly revise its growth outlook again following the downgrades from the policy statement issued in July. Given market expectations leaning toward a rate hike tomorrow, the risk stands with an unchanged BoC decision and a signal that interest rates will remain on hold in the near future as a result of the pullback in economic activity. If that scenario was to materialize, the reaction in the currency market will likely prompt a knee-jerk sell-off in the Loonie to breach the 1.0550-mark.

Aussie Retreats After Reaching Parity with Greenback

2010-10-16T16:26:00.000+07:00

The Australian dollar traded at parity with its US counterpart today before retreating on the speculation that the Aussie rallied too fast.

The weakness of the greenback and the concerns for the US economy allowed the Australian dollar reach parity against the US currency for the first time. It looks like the traders haven’t got used to the idea of parity between these two currencies and unwilling to buy the Aussie at such high prices. The fundamentals haven’t changed, though, and the Australian currency has potential to rise further.

AUD/USD opened at 0.9944 and jumped as high as 1.0001 before retreating to 0.9951 as of 13:36 GMT.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Can Euro Resume Its Rally After Decline

2010-10-13T09:32:00.000+07:00

The euro retreated today against the US dollar and the Japanese yen on the speculation that it rallied too much earlier. It may still resume its rally depending on the decisions of the US and Japanese policy makers.

The minutes of the Federal Reserve policy makers’ meeting scheduled to be released today. In case the Fed would perform the expected quantitative easing the dollar would resume its downfall. The talks suggest that Japan may intervene to weaken its currency. Therefore, we can expect the rally of the euro not because of its inherent strength, but due to the weakness of other currencies.

EUR/USD fell from 1.3877 to 1.3809 as of 11:29 GMT today, following the decline to 1.3775. EUR/JPY went down from 113.89 to 113.18.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Study says texting laws not working

2010-10-06T13:17:00.000+07:00

A new study from the insurance industry finds texting-while-driving laws have had no immediate benefit in reducing crashes.

The study done by a branch of the Insurance Institute for Highway Safety looked at crash data from four states with texting bans. It found that in three of the states — California, Louisiana and Minnesota — crashes actually increased.

Institute spokesman Russ Rader said the increase might be the result of drivers moving their phones down, out of public view, while they text, thus looking away from the road longer.

U.S. Secretary of Transportation Ray LaHood criticized the report as misleading.

He said the bans are important in helping stop deaths from distracted driving, but states must enforce them and people must obey them.

Dollar Weakens as Manufacturing Slows

2010-10-04T10:32:00.002+07:00

The US dollar dropped today against the euro to the lowest level since March, and also fell against all other major currencies, on the speculation that additional stimulus is required to support the US economy and after the report showed that the manufacturing growth slowed.

The Institute for Supply Management Purchasing Managers’ Index declined to 54.4 in September from 56.3 in August. The report stated:

While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging.

The slower manufacturing supports the outlook of the Federal Reserve for the modest economic growth. Charles Evans, the president and the chief executive officer of the Federal Reserve Bank of Chicago, voiced his opinion:

We still have a long road ahead before we catch up to the level of activity we would have achieved in the absence of the crisis, or any other shock.

The Dollar Index, which tracks the dollar against its six major counterparts, fell 5.4 percent in September, the biggest monthly drop since May 2009.

EUR/USD rallied from 1.3634 to 1.3779 today as of 20:13 GMT. GBP/USD went up from 1.5714 to 1.5833, following the advance to the intraday high of 1.5871. USD/JPY traded at 83.30 after it fell from the opening rate of 83.50 to the intraday low of 83.14.

If you want to comment on the US dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Aussie Drops from Two-Year Record, Remains Strong

2010-10-02T02:21:00.002+07:00

The Australian dollar fell today, after reaching the highest level in two years against the US dollar, as the report showed that the new home approvals declined in August, causing the speculation that the central bank wouldn’t raise the interest rates next week.

The Australian Bureau of Statistics reported today that the number of the new building approvals dropped 4.7% in August, compared with 0.1% increase in the month before. The experts expected no change. It’ll take some time to determine where Australia’s economy are heading, but the economists say that Australia’s currency is doing very well and there is not much downward momentum.

The swaps dropped to 52% the chance that the Reserve Bank of Australia will increase its borrowing costs at the next meeting of its policy makers on October 5th. The analysts say in case of the rates hike the Aussie may head to parity with the US currency.

AUD/USD dropped from 0.9694 down to 0.9636 as of 18:12 GMT today after it touched 0.9732, the highest level since July 2008. EUR/AUD went up from 1.4052 to 1.4118, following the decline to 1.4022.

Concerns for Europe’s Economy Make Zloty Weaker

2010-09-29T13:49:00.002+07:00

The Polish zloty fell today on the renewed concerns for the Europe’s fiscal condition and the ability to fight the budget deficits. For now the currency tries to regain its strength but encountered the resistance.

The Standard & Poor’s said that the downgrades of the credit rating most likely would continue as the deficits and the demographics put pressure on the finances. It looks like Ireland now added to the list of countries, which are causing strongest concerns.

USD/PLN traded near 2.9514 as of 11:38 GMT today after it opened at 2.9393 and advanced as high as 2.9727.

If you want to comment on the Polish zloty’s recent action or have any questions regarding this currency, please, feel free to reply below.

A Disappointing U.S. Durable Goods Orders Report Could Add Further Weight Onto the Greenback and Lead Traders to Seek Safety

2010-09-24T16:58:00.001+07:00

Durable goods orders in the world’s largest economy are forecasted to drop 1.0 percent in August after climbing 0.4 percent the month prior. These orders are expected to last more than three years, and reflect optimism in the economy. At the same time, the reading serves as an indicator regarding output to come. In this case, economists are forecasting that there was a lack of consumer confidence during the month of August.

I expect the headline reading to be driven mostly by the decrease in Boeing’s transportation components as the world’s second largest airplane maker reported weak sales in August. The company reported that it received merely 10 aircraft orders in August, which is down from 130 orders in July. Thus, traders should not overlook the breakdown of the report. Last month, capital goods excluding aircrafts fell at the fastest pace this year, plunging 8.0 percent. This is important in that investment spending prior to July was supportive of growth, with the spillover effects likely to impact the labor force. Therefore, a rise in this component is a step in the right direction. On the other hand, another contraction might suggest the company’s are scaling back on investment. Other sectors to keep a close eye on will be unfilled orders.

All in all, a decline greater than expected could fuel further growth concerns, and may lead lower yielding currencies (Swiss Franc, Japanese Yen, British Pound) to continue to rally against the trampled greenback. On the other hand, if figures surprise to the upside, I do not expect to see much of a reaction following the FOMC’s minutes as Fed hinted at QE, while the labor and housing market in the economy remains weak.

Canada’s Dollar Drops on Lower Consumer Prices

2010-09-22T07:46:00.000+07:00

The Canadian dollar has fallen today after the consumer prices unexpectedly decreased, spurring the speculations that the central bank would stop the interest rates increases when its policy makers will meet next month.

The consumer prices index fell 0.1% in August, compared with the growth by 0.5% in July. The analysts expected the index to remain the same. The core consumer prices index, which excludes the effect of changes in indirect taxes and eight of the most volatile components, increased 0.1% in line with the forecasts. The core inflation rose in August from a year ago by 1.6%, matching the expectations.

The investors bet that the chances of the rates hike in October are around 40%. The Bank of Canada already raised the interest rates three times since June from 0.25% to 1%.

USD/CAD rose from 1.0280 to 1.03709 as of 15:58 GMT today, following the advance to 1.0329. EUR/CAD went up from 1.3423 to 1.3541.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

USD Traders Shift Focus to FOMC Rate Decision

2010-09-21T06:42:00.002+07:00

The Federal Open Market Committee is expected to keep their benchmark interest rate unchanged at 0.25% as the recovery continues to face major hurdles. Last month, the committee said that rates are likely to remain “exceptionally low for an extended period.” This wording has been unchanged from the previous nine releases, and any change in language at tomorrow’s meeting will likely stir volatility in the FX markets.

According to the Credit Suisse overnight index swaps, traders are pricing in 0% chance that policy makers will hike its key overnight lending rate twenty five basis points at its rate decision tomorrow. This assumption by market participants comes to no surprise as the U.S. recovery is not yet cemented. The unemployment rate in the world’s largest economy rose to 9.6% in August from 9.5% the previous month to mark the highest level since May, while the monster employment index pushed lower for the second consecutive month in August, which in turn both weigh on household spending. Despite the dour situation in the U.S. labor market, the Fed may turn out to be more optimistic about future employment largely due to the fact that workforce has been depressed so much that any rise in demand will require more hiring. Aside from the labor market, rates will likely remain at their record low until at least the middle of next year as credit conditions remain tight, while the housing market remains depressed.

On the other hand, a narrower trade deficit, gains in factor output, and a rise in retail sales (lead by holiday discounts and back to school shopping) have bought the central bank some time on whether to provide additional monetary stimulus. All in all, subsequent comments to the rate decision will likely dictate price action during the North American t trade. A more dovish Fed than the previous meeting may spark risk aversion as the global economy faces major uncertainty, while an optimistic central bank will validate additional gains in the U.S. dollar against the Japanese yen. Besides the growth outlook, traders will pay close attention to the inflation expectations.

After breaking above its descending channel, the pair as of late has halted its three day advance, but looks to of found support at the 50-day moving average, while the 10-day SMA has crossed over above the 20-day SMA, which is indicative of further gains. At the same time, our speculative sentiment index is well off its extreme high of 7.0, and now sits at 1.94. Indeed, the SSI still signals for gains; however, traders should not rule out a change in the reading as a second round intervention by the Bank of Japan lingers.

Risk Appetite Wanes, Euro Weakens

2010-09-19T17:29:00.000+07:00

The euro weakened today, after it previously jumped to the highest level in more than a month, as the concerns resurfaced that some European banks may experience significant losses because of the global economic crisis and on the worries for Ireland’s economy.

John Gormley, the leader of the Irish Green Party, said today that the nation’s sovereign-bond spreads may increase in case Ireland would consider renegotiating with the bondholders of Anglo Irish Bank Corp. Ireland already has pumped €22.9 billion into Anglo Irish, which was nationalized in January 2009. The spread between the Irish 10-year bond and German bunds increased to as much as 3.87 percentage points, the all-time record.

Ireland may require external aid, perhaps from the European Union of the International Monetary Fund, in case of the further losses in the financial sector or if the economic conditions would worsen. Ireland’s economic weakness seriously hit the risk appetite among the traders.

EUR/USD fell from 1.3078 to 1.3048 as of 18:44 GMT today after it reached 1.3158, the highest level since August 11th. EUR/JPY went down from 112.17 to 111.95 after it touched 112.98, the highest level since August 10th.

Euro Drops on Doubts in Strength of European Banks

2010-09-09T15:49:00.000+07:00

The euro slid today on the speculation that the banks of the European Union would have hard time to raise the funds amid the signs of the slower economic growth in the region. For now, the currency rose somewhat, but still weaker than yesterday.

Juergen Stark, the member of the Executive Board of the European Central Bank, said that Germany’s bank require more capital, especially the Sparkasse savings banks, which weren’t stress tested, and the state-owned Landesbanks. The industrial production in Germany grew 0.1 percent in July, while the economists expected the 1.1 percent growth. The tomorrow’s report expected to show that the industrial production in Italy slowed.

EUR/USD went from 1.2719 to 1.2683 as of 8:33 GMT today, following the decline to 1.2665. EUR/JPY slipped from 106.68 to 106.18 after it reached intraday low of 105.96.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Euro Re-couples with Risk

2010-09-08T12:32:00.000+07:00

EUR/USD sunk almost 200 pips overnight as concerns that European banks are at risk as they hold more potential toxic sovereign debt than reported in the recently performed stress tests. As Europeans rebel against austerity measures aimed at bringing unruly budget deficits under control, the path toward fiscal soundness has become thorny, increasing the potential for defaults.

EUR/USD

The EUR/USD sunk almost 200 pips overnight as concerns that European banks are at risk as they hold more potential toxic sovereign debt than reported in the recently performed stress tests. As Europeans rebel against austerity measures aimed at bringing unruly budget deficits under control, the path toward fiscal soundness has become thorny, increasing the potential for defaults. Markets had started to price in the potential for an ECB rate hike before the policy makers pointed toward remaining on hold until the end of the year following the latest rate hold. Interest rate expectations have increased in influence in determining price action with the correlation rising to 54%, but fresh bank balance sheet worries could diminish the importance of the outlook for yields. Risk trends could once again become the primary driver of price action as the pair has re-coupled with stocks, with the relationship strengthening to 50% from 45% a week ago.

ECB Interest Rate Expectations

The ECB extending their emerging lending program for banks until the end of 2010 has sunk yield expectations for the region. We can see the sharp shift in sentiment in overnight index swaps which went from pricing in 35 bps in tightening to 28 bps following the announcement. Markets had started to gear up for a potential first quarter rate hike following a slew of improving fundamental data led by strong German growth and an improving labor picture in the Euro-zone’s largest economy. Concerns over the banking sector have resurfaced which could diminish the impact of future releases. However, the central bank may have provided a veiled forecast for a rate hike by defining a potential end date to liquidity efforts. If markets adopt this view then continued signs that the recovery is sustaining may lead to a brighter outlook for yields and Euro support. Upcoming German export data and next week’s release of the Zew survey are the only potentially market moving events on the horizon which could leave the pair at the mercy of risk trends in the short-term. Discuss this and trading ideas join the EUR/USD forum.

FOMC Interest Rate Expectations

Despite unexpected manufacturing growth and consistent private jib creation, the Fed is expected to remain on hold through the end of the year. The soonest that markets see any chance of a rate hike is in January where Fed fund futures are pricing in a paltry 1.0%. The Fed Beige book release will provide regional insights into the economy but doesn’t have hold the same weight as the labor report. Therefore, we don’t expect the outlook for yields to improve anytime soon, maintaining the dollar safe haven status. Therefore, if European banking concerns continue to grow, the EUR/USD could falter as the greenback benefits from the flight to safety.

Risk

Stocks are on the verge of ending a week long advance as concerns over European debt has led to a bout of profit taking. There is very little on the fundamental calendar that could drive demand for risk which could leave price action at the mercy of the broader trend. We could see an ultimate test of the descending trend line before an ultimate bearish reversal as a broader triangle pattern is beginning to form. Discuss this and other fundamental data in the Economics Forum.

Euro Rises on Good German Economic Outlook

2010-09-07T13:41:00.000+07:00

EURO traded at the highest level in more than two weeks as the analysts predicted that the government reports would show that the German economic recovery is gaining momentum.

The factory orders in Germany grew 0.5% in July, following the 3.2% growth in the previous month according to the economists’ estimates. The experts also estimated that the industrial production rose 1 percent. The good economic forecasts damped the demand for the safety of the dollar.

EUR/USD traded near 1.2902 as of 8:13 GMT today after it opened at 1.2892 and rose to 1.2917, the highest level since August 18th.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Stable Economic Growth Makes South Korea’s Won Stronger

2010-09-06T13:58:00.000+07:00

The South Korean has won appreciated today as the concerns for the economic growth eased, boosting the outlook for South Korea’s economy and increasing chances that the central bank will raise the interest rates.

The nation’s gross domestic product expanded 1.4% in the second quarter of 2010, almost matching the forecast value of 1.5%. The stable growth allowed the International Monetary Fund to raise the growth forecast to 6.1% for the current year. The favorable fundamentals also spurred the investors to bet that the Bank of Korea would increase the rates on the next meeting of its policy makers.

USD/KRW dropped today to 1,174.30 from the opening price of 1,180.10 as of 12:06 GMT.

If you want to comment on the South Korean won’s recent action or have any questions regarding this currency, please, feel free to reply below.

Forex Strategy Corner: Bollinger Bands Techniques for Trading

2010-09-03T07:54:00.000+07:00

Bollinger Bands have been one of the most popular technical indicators across financial markets, and many forex traders use them regularly in their day-to-day trading. The key question to ask of any forex analysis technique is nonetheless clear: how effective is the Bollinger Bands indicator as a forex strategy? This article will take a closer look at one key Bollinger Band trading strategy on several forex pairs and explores one way to improve its effectiveness.

The idea behind Bollinger Bands is relatively straightforward: take a simple moving average and put an upper and lower trading band around it. The indicator uses the standard deviation of the trading instrument to determine the width between the SMA and the bands—borrowing a popular statistical tool based on the normal distribution for random variables.

It is critical to stress that the upper and lower bands are not considered “confidence intervals” in the way that a trader might expect. That is to say, there is no numerical justification behind expecting price to stay within the Bollinger bands any specific percentage of the time. This being said, price tends to stick within two standard deviations the vast majority of the time, and we can use this to our advantage.

Then we will use standard inputs for the Bollinger band indicator to subsequently develop a simple strategy and test the results.

Using FXCM’s Strategy Trader software, we will code a strategy based on this popular technical indicator and see the results. In doing so, we can easily test our concepts across the spectrum of currencies and time frames.

View a video guide on strategy backtesting and optimization in Strategy Trader here:

https://admin.na6.acrobat.com/_a205571165/p83928216/

Download and install the Strategy Trader platform, then import the following code example from the DailyFX forex forum. Download the attached .zip file. Go to the directory under which you've unzipped the contents of the file. Open the "BollingerMAFilter.fxd" file and when prompted by the Strategy Language Editor, hit "OK" to import the file. Once you have imported the Strategy Advisor, open the "BollingerMAFilter.fxw" file included in the attached zip to see examples on how you may use this in your charts.

We ran this strategy using the standard Bollinger Band inputs on 60min charts on the four traditional forex market majors: EURUSD, USDJPY, GBPUSD, and USDCHF. We use Strategy Trader and assume a spread of 3 pips per round-trip trade on each individual pair. Hypothetical profit and loss is calculated on single standard lot trades using the aforementioned strategy rules. The resulting equity curve is a combination of four individual currency equity curves.

The strategy shows extended periods of underperformance and indeed, hypothetically loses a great deal of money over the past 9 years or so of trading. Yet why is this indicator so popular among forex traders? To gain a better understanding of why this strategy may have lost through specific stretches of time, we can look at specific periods of underperformance for greater insight.

When we look more closely, we see a major reason for underperformance: the strategy tends to make a great number of losing trades when it attempts to go “against the grain” during a strong trend. If we can tell the strategy to avoid trading against the trend, then there is a reasonable chance that our performance will improve.

We will borrow insight learned through an earlier Forex Strategy Corner article on moving average crossover strategies and attempt to place a trending filter on our Bollinger Band trading technique. If we know that our system only works when it trades in the direction of the trend, a trending indicator may in fact keep us out of bad trades.

The hypothetical equity curve shows that our Bollinger Band Reversal strategy performance improved a great deal with the aid of our trend filter. Though past performance is never a guarantee of future results and there is admitted risk of over-optimization in this particular example, this idea holds promise. In fact, the performance on EURUSD and GBPUSD pairs in particular is substantially improved with this trend filter.

I encourage you to download the Strategy Trader software, visit the specified forum thread and download the pertinent code and example workspace for this strategy. In changing the strategy inputs and examining different currency pairs, you can gain a better understanding for what has historically worked with this Bollinger Band Reversal Strategy and what has not.

This is one example of a strategy that performs poorly in a specific type of market. Using a market conditions filter, we have improved the hypothetical performance a great deal. One can easily think of many other strategies that could similarly benefit from this particular filter or many others. In fact in an earlier article we highlighted specific market conditions for the RSI and Moving Average Crossover strategies. In understanding what has historically worked, we can get a better sense for how to apply this in day-to-day trading.

CAD Extends Decline, Economy Shows No Signs of Improvement

2010-09-01T13:25:00.000+07:00

The Canadian dollar (CAD) extended its decline for the second day as the poor macroeconomic data continues to undermine the attractiveness of the currency to the global investors. This month can be the worst for the Canadian currency since June 2009.

Canada’s gross domestic product grew 0.2 percent in June, less than some analyst predicted. The real gross domestic product grew by 0.5 percent in the second quarter, after increasing by 1.4 percent in the first quarter. The reports also showed that the current account balance and the retail sales were worse than expected. The unfavorable reports decreased the chances that the central bank will increase the interest rates.

It’s surprising how quickly the loonie turned from the well-performing currency into the weak and bearish one. We could have expected that the investors would start to sell the growth-linked currencies in favor of the safer ones with the deteriorating global economic environment, but the weakness of Canada’s economy itself was hard to predict. But, perhaps, it’s just good opportunity to buy the currency before it’ll resume its rally? That’ll be interesting to see.

USD/CAD rose from 1.0596 to 1.0653 today as of 20:05 GMT, while EUR/CAD climbed from 1.3417 to 1.3505, following the advance to 1.3563.

NZ Dollar Falls on Trade Deficit and Economic Concerns

2010-08-31T10:52:00.001+07:00

The speculation that Japan’s policy makers would not be able to limit the yen’s gains pushed the New Zealand dollar down against the Japanese currency; the kiwi (as the NZD nicknamed) also fell against the US dollar as New Zealand trade balance posted the deficit for the first time in seven months.

The Bank of Japan‘s decision to intervene in order to support the nation’s economy reflects the concerns for the growth of the advance economies across the world. The New Zealand economy also gave reasons for the concern as the trade balance posted the deficit of NZD 186 million in July, the reading which is much worse than the figure of the previous month (the surplus of NZD 214 million) and the forecast (the deficit of NZD 28 million).

NZD/USD fell from 0.7122 to 0.7088 today as of 13:32 GMT, while NZD/JPY slipped from 60.79 to 60.04, following the surge to 61.28.

If you want to comment on the New Zealand dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Euro Follows Continental Stocks

2010-08-28T12:56:00.000+07:00

The euro has continued its recovery trend against the dollar and the yen today as some more-or-less positive news spurred the growth of the stock market up from its bottom.

Positive profit reports of the biggest European companies inspired investors to buy the stocks today. The euro managed to grow against the safe haven dollar and yen for the second day, setting a new weekly maximum. Traders also reacted to the US jobless claims report, which wasn’t as bad as the previous one and didn’t disappoint the market participants.

The analysts say that the Q2 reports are good but the currency market is valuing the future and thus the Q3 reports and their expectations are more important. Nevertheless, today’s news managed to move the stocks up and didn’t allow the EUR/USD to fall down through the important support level of 1.2640. But the next few days may prove hard for the Eurozone’s currency.

EUR/USD rose from 1.2663 to 1.2703 as of 16:41 GMT today after setting a daily high at 1.2764. EUR/JPY went up from 107.12 to 107.57 and EUR/GBP retreated from 0.8183 to 0.8155.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Yen Reaches New Decade Highs on Forex Risk Aversion

2010-08-25T10:19:00.000+07:00

The expectations for the worsening of the global economic situation in the developed nations fueled the risk-averting mood in the foreign exchange market, pushing the Japanese yen to the new yearly maximums today.

The yen reached its new record high level against the US dollar since June 1995 and the strongest level against the euro since September 2001. A three-month high was reached against the Great Britain pound. As almost always with the yen, the reason for the gains lies not in the exceptional growth rates of the country but in the global risk aversion, which once again begins dominating the minds of the traders. The commentaries of the officials and the economic analysts that explicitly signal a second wave of the crisis don’t leave a chance for the high-yielding currencies against the safe haven currencies (such as yen).

USD/JPY fell from 85.10 to 84.38 as of 8:22 GMT today after reaching as low as 84.15 during the early trading session. EUR/JPY went down from 107.65 to 106.52, while GPB/JPY dropped from 131.93 to 129.91 (or more than 1.5%) today.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Industry giants a study in contrasts

2010-08-23T14:58:00.002+07:00

Top two insurers Suncorp and IAG are expected to deliver vastly different results when the pair unveil their end-of-year financials this week.

As Suncorp prepares to release a strong rise in net profit – tipped by analysts to be more than double last year’s result – struggling competitor IAG is forecasting a 50 percent reduction in profit once natural catastrophe and UK losses are taken into account.

While storm damages are expected to cut marginally into Suncorp’s insurance profit margin, analysts are predicting an overall net profit after tax between USD 720 million and USD 800 million – more than double last year’s result of USD 348 million.

Suncorp appears to have come a long way from the depths of 2009, when its result was pounded by a USD 710 million impairment charge for bank bad debts and USD 225 million in natural catastrophe losses.

Twelve months later and now it’s IAG wearing the losses. CEO Mike Wilkins announced in August that IAG’s net profit for the full year would be USD 91 million compared to USD 181 million last year – a 50 percent fall as spiralling UK bodily injury claims drain full-year earnings.

Morningstar analyst David Walker told insuranceNEWS.com.au that Suncorp has enjoyed a good run with natural catastrophe claims and should report an insurance profit margin rise to 11.1 percent.

Mr Walker was the most bullish of the analysts spoken to by insuranceNEWS.com.au in predicting a net profit after tax of USD 800 million for Suncorp.

Credit Suisse analyst Arjan van Veen is expecting a headline net profit after tax of USD 791 million and an insurance margin of 9.6 percent.

“The key thing is underlying net profit,” Mr van Veen said. “That result may be poor because of the storms period.”

JP Morgan has forecast Suncorp will lodge a net profit after tax of USD 720.2 million.

Australian Dollar Falls This Week

2010-08-22T15:13:00.000+07:00

Last week was volatile for the Australian dollar, but it generally declined against most other major currencies as the concern for the economic growth continues to haunt the markets.

The currencies linked to the growth had hard time to sustain their strength as signs of the slower economic growth were coming from all parts of the world. The main source of the worries is, of course, the US with its economic data, which causes the talks about the possible double-dip recession. But the traders’ concerns aren’t only about the US as Europe too reminded about its economic weakness. The forecast, that the report will show the worsening German business climate, significantly slashed the confidence in the European economy, as Germany was the main reason for the hopes in the brighter future for the EU fiscal conditions.

Even Asia, which previously demonstrated huge potential for the growth, showed signs of the economic slowdown. China was deliberately cooling its overheating economy, which isn’t very good for the Australian currency as China is the biggest trading partner of Australia. The analysts estimated that Japan’s exports expanded with slower pace. All in all, the news this week was very unfavorable for the riskier assets, including the Aussie.

AUD/USD currency pair rallied in the first half of this week, but was falling in the second, ending slightly below its opening level of 0.8931 at 0.8920 after rising to the weekly high of 0.9079. EUR/AUD fell from 1.4288 to 1.4241, following the advance to 1.4413. AUD/JPY opened at 77.00, dropped to 75.47 and closed at 76.40.

If you want to comment on the Australian and the New Zealand dollars’ recent action or have any questions regarding this currency, please, feel free to reply below.

Japanese Yen Strengthens on Renewed Demand for Safety

2010-08-19T10:17:00.000+07:00

Japanese yen has risen today as the renewed concerns that the recovery of the global economy is losing the traction fueled the demand for the safer assets.

The experts said that Federal Reserve was expected to increase its purchasing of the bonds as the US economy may weaken. The recent improvement of the sentiment on the global markets was not strong enough to completely remove the concerns for the global economy. The yen also strengthened as the concerns, that the policy makes will intervene to limit the currency’s gains, eased.

The gains of the yen were limited, nevertheless, by the rally of the stocks. The Standard and Poor’s 500 Index gained 0.5 percent, following the previous decline.

USD/JPY traded at about 85.43 today as of 19:51 GMT after previously declined to 85.18. EUR/JPY traded at 109.89 after it reached the daily low of 109.58.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

Crude Oil Falls for the Fifth Session, Gold Rally Continues

2010-08-17T13:44:00.000+07:00

Crude Oil Falls for the Fifth Session

Commentary: Monday was a day of pause for crude oil and equity markets, as risk assets generally fluctuated between small gains and small losses. Oil would register its fifth loss in as many sessions, but clearly downside momentum is waning now that prices are notably below last week’s highs. Prices are currently near the USD 75.50 level, which is close to the midpoint of crude oil’s 11-month range, with prices below that having turned out to be attractive buying opportunities. U.S. economic data set to be released on Tuesday will include figures on Housing Starts (549K expected), Building Permits (586K expected), and Industrial Production (0.5% expected). Whether crude oil continues lower will be determined largely on the market’s assessment of these and other economic data points. Anything that suggests a double dip recession on the horizon will likely send risk asset prices lower, while better-than-expected data could catalyze a bounce in crude oil and equities alike.

Technical Outlook: Prices are resting at the bottom of a rising channel that has confined prices since late May, now at USD 75.17. A break below this juncture exposes USD 71.09, while a bounce sees initial resistance at the USD 79.38.

Gold Rally Continues

Commentary: Momentum from gold’s gains last week carried over into Monday’s session, as the metal rallied USD 9.65, or 0.79%. Importantly, gold ETF holdings have not budged, indicating that perhaps the latest rally may not be sustainable. It bears repeating that the relationship between gold ETF holdings and gold prices is extremely strong, as regression analysis suggests that nearly 90% of the variance in the gold price over the last six years can be explained by the variance in gold ETF holdings. Nevertheless, gold has continued to rally on the back of double dip recession fears. In the event that such fears persist or deepen, gold ETF holdings may increase rapidly, sending prices even higher.

Technical Outlook: Prices have taken out horizontal resistance at USD 1214.60, with this level now acting as support.On the upside, the door is now open for a challenge of USD 1233.85.

Commentary: Silver increased USD 0.25, or 1.38% on Monday. The advance was clearly tied to the rally in gold, and left the gold/silver ratio only slightly lower at 66.45. The ratio remains well within the 2010 range between 60 and 71.

Technical Outlook: Prices have extended a recovery above the USD 18 figure to re-test the upper boundary of a descending triangle chart formation that has confined spot since mid-May (now at USD 18.53). A breakout higher would initially expose USD 18.70, while a move back below USD 18.00 clears the way for a downside test of USD 17.79.