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Tuesday, November 24, 2009

World stock markets slide amid valuation concerns

In Europe, the FTSE 100 index of leading British shares was down 60.09 points, or 1.1 percent, to 5,282.04 while Germany's DAX fell 65.34 points, or 1.1 percent, to 5,722.27. The CAC-40 in France was 34.10 points, or 0.9 percent, lower at 3,794.08.Losses in Europe more than doubled after Wall Street opened sharply lower. The Dow Jones industrial average was down 121.15 points, or 1.2 percent, at 10,305.16 while the broader Standard & Poor's 500 index fell 16.03 points, or 1.4 percent, at 1,093.77.Stock markets have rallied strongly since March's lows as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound, but recent disappointing U.S. housing figures and mixed earnings from some of the country's leading retailers have dented the optimism. Many investors think stock valuations are now pricing in too rapid an economic recovery."Negative outlooks from the U.S. software sector and unexpectedly disappointing home stats brought worries about the pace of recovery back to the table," said Richard Griffiths, senior equity trader at Spreadex.The state of household spending in the U.S. is key for recovery _ it accounts for around 70 percent of the nation's economy. A second consecutive quarterly loss from Sears Holdings Inc. did little to ease concerns that the upcoming Christmas trading period may not be as strong as many in the markets have been predicting.Further insights will be looked for in results later from Gap Inc.The markets brushed aside the latest more rosy economic forecasts from the Paris-based Organization for Economic Cooperation and Development, even though it more than doubled its estimate for 2010 growth in its 30 member countries _ which include the U.S., Japan and Germany _ to 1.9 percent and raised its 2011 forecast to 2.5 percent."Neither of these figures is exceptional which underpins the delicate nature of the present economic recovery," said Jane Foley, research director at Forex.com.
Earlier, Japan's Nikkei 225 stock average lost 127.33 points, or 1.3 percent, to 9,549.47 _ its seventh straight day of decline as investors succumbed to jitters about a possible glut of new bank shares after Mitsubishi UFJ announced plans to raise capital. The bank's shares fell 3.7 percent.Elsewhere, Hong Kong's Hang Seng fell 197.17 points, or 0.9 percent, to 22,643.16, while Taiwan's benchmark shed 0.1 percent and Indonesia's market was 0.6 percent lower.
Other markets fared better: South Korea's Kospi added 1 percent to lead the region and China's Shanghai index rose 0.5 percent. In Singapore, shares were up 0.6 percent after the city-state reported a second straight quarter of growth as manufacturing and service sectors helped it surface from a deep recession. The economy was seen expanding between 3 percent and 5 percent next year, the government said.Oil prices hovered above $79 a barrel, with benchmark crude for December delivery down 11 cents to $79.47 a barrel.Gold prices eased after a strong run saw it top $1,150 per ounce for the first time ever _ they were down 90 cents an ounce, or 0.1 percent, to $1,140.30.Meanwhile, the dollar fell 0.7 percent to 88.70 but was up against the euro, which was trading 0.7 percent lower at $1.4859.

Euro choppy after middling US retail sales data


The euro traded in choppy waters early in New York Monday, after a slight improvement in U.S. retail sales failed to spark an extension of its overnight gains.The retail sales report came on the heels of data that showed an expansion in Japanese economic activity, which set the stage for the euro and other higher-yielding currencies to rise against the low-yielding dollar.But until more convincing data supporting the global economic recovery are released, the euro and its higher-yielding counterparts are likely to remain in their recent ranges, analysts said.
With the morning's U.S. economic reports out of the way, attention will shift to the 12:15 p.m. EST speech of Federal Reserve Chairman Ben Bernanke in New York for clues as to any changes in monetary policy or the state of the U.S. economy.In early New York trading, the euro was at $1.4967 from $1.4920 late Friday, according to EBS via CQG. The dollar was at Y89.44 from Y89.65, while the euro was at Y133.87 from Y133.79. The U.K. pound was at $1.6731 from $1.6690. The dollar was at CHF1.0084 from CHF1.0119.The Dollar Index, which tracks the greenback against a trade-weighted basket of six currencies, was at 74.996 from 75.229.
The U.S. retail sales data were "decent, but not enough to really get excited about and provoke a new leg higher in risk assets," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, N.J.Also limiting the euro's gains was the Monday morning release of the Federal Reserve Bank of New York's Empire Manufacturing Survey, showing its general business conditions index fell by 11 points to 23.51 from 34.57 in October, but remained in positive territory. The index for new orders and shipments also slipped, showing a slower rate of improvement.The euro sputtered last week, failing to make a sustained break over the psychologically key $1.50 mark. This week's full calendar of economic data could give the common currency and other risk-positive assets fodder to rally, as long as the data continue to flow positively, but currency analysts will be looking for the euro to close above $1.5064, its yearly high, to cement its upward trend."We need to close above that to see the rally extend," Dolan said.Also limiting the euro's gains was the Monday morning release of the Federal Reserve Bank of New York's Empire Manufacturing Survey, showing its general business conditions index fell by 11 points to 23.51 from 34.57 in October. The index for new orders and shipments also slipped. However, the figures remained in positive territory, indicating a slower rate of improvement.U.S. retail sales increased 1.4%, above the 0.9% increase projected by Wall Street. But September sales were revised down, to a 2.3% decrease from a previously estimated 1.5% tumble.Aside from automobiles in October, other sales rose just 0.2%. It was the third increase in a row, yet smaller than the 0.4% climb predicted.The U.S. stock market is expected to follow other global bourses and open higher. If stocks rally, the euro and other higher-yielding currencies could track higher, continuing their recent trading patterns.
Overnight, Japan's government said the nation's gross domestic product grew a price-adjusted 1.2% in July-September from the prior quarter, or a 4.8% increase on an annualized basis. The result beat the 0.6% on-quarter growth and 2.2% annualized rise expected by economists polled by Dow Jones Meanwhile, the heads of the 21 Asia-Pacific Economic Cooperation forum governments wrapped up their weekend meeting Sunday--failing to agree on currency movements, a major headache for Asian Asia's export-dependent economies are suffering from the decline of the dollar and of the Chinese currency, which Beijing informally links to the greenback.A draft of the APEC leaders' statement said they would move toward "market-oriented exchange rates," mirroring the phrase that the APEC finance ministers used in their statement Thursday, said a person in the leaders' meeting. But the final communique dropped any reference to currencies."They wanted at least a small reference in the communique, but they were cut off by the Chinese, who didn't want to discuss it," a top adviser to an APEC head of government told Dow Jones Newswires. "This summit was a disappointment."Separately, International Monetary Fund Managing Director Dominique Strauss-Kahn reiterated Monday that the U.S. dollar will remain the most important global currency, even though other currencies--such as the euro, the Japanese yen and perhaps the yuan--may challenge it.The dollar's role won't change much, given that the U.S. will still be the biggest economy, Strauss-Kahn said, speaking at a forum at Tsinghua University in Beijing.
The Canadian dollar was higher Monday morning after the U.S. dollar retreated broadly in currency markets in response to a more favorable attitude towards risk among investors.
The U.S. dollar is at C$1.0446 from C$1.0515 late Friday. It dipped to a low at C$1.0440 in earlier trading before rebounding modestly.Statistics Canada reported Monday morning that manufacturing shipments rose 1.4% in September, slightly below the 1.6% forecast by economists but substantially stronger than the 1.8% decline in the previous month.
A report from TD Securities said it remains bullish on the Canadian currency and expects the currency to benefit from better relative economic fundamentals, rising commodity prices and general disenchantment with the U.S. dollar.

Dollar slides, sending gold to record high

The US dollar slid against the euro on Monday on concerns that the Federal Reserve may keep emergency stimulus measures in place for a while longer, helping push gold prices to a record high level. In late morning trading here, the euro climbed to 1.4977 US dollars from 1.4860 late in New York on Friday. Against the Japanese currency, the US dollar fell to 88.88 yen from 88.92 yen late on Friday. The price of gold reached an all-time peak of 1,167.88 US dollars an ounce. Comments by a US Federal Reserve official that he would prefer to keep the central bank's asset-buying programme active beyond its current cut-off date pushed the dollar lower, analysts said. Federal Reserve Bank of St. Louis President James Bullard said an extension of the programme, widely considered a negative factor for the US currency, would give more flexibility to US policymakers. "Central bank rhetoric provided fresh incentive" to drive up the euro, said Jane Foley, analyst at online trading firm Forex.com. "Gold prices printed another fresh high on the back of dollar weakness with Bullard's comments promoting the discussion of medium-term inflation potential, though economic data continues to indicate a absence of price pressures," Foley added. Gold is seen as a safe-haven investment amid the threat of rising prices. The dollar's fall meanwhile comes after it succeeded in rising last week as investors shunned assets viewed as risky, such as the euro, following falls on world stock markets triggered by fresh worries about the economic outlook. However, global stock markets rose sharply on Monday as the dollar weakened. Over the weekend meanwhile, Indian Prime Minister Manmohan Singh poured cold water on talk of dropping the US dollar as the key global currency and voiced confidence that the US economy would make a strong recovery.
In an interview ahead of his arrival Sunday on a state visit to the United States, the 77-year-old trained economist dismissed talk in some emerging economies about replacing the US dollar as the key international reserve currency. "As far as I can see, right now there is no substitute for the dollar," Singh said. China's central bank has proposed a shift away from the US dollar to a basket of currencies that also includes the euro and yen, calling excessive reliance on the greenback a destabilising factor for the global economy. But Singh said: "I think even the Chinese are hesitant." "The fact that they hold 2.5 trillion dollars in reserve assets (and) they have not disposed of even a fraction of that -- that's a measure of the confidence that the world has in the dollar." In London on Monday, the euro was changing hands at 1.4977 US dollars against 1.4860 US dollars late on Friday, at 133.12 yen (132.16), 0.9011 pounds (0.9002) and 1.5109 Swiss francs (1.5119). The dollar stood at 88.88 yen (88.92) and 1.0088 Swiss francs (1.0174).
The pound was at 1.6619 dollars (1.6503).

US Dollar to Face Lower Volumes

The National Association of Realtors’ index of existing home sales is expected to have risen 2.3 percent in the month of October to an annual rate of 5.7 million, the highest in just over two years. Other factors to keep in mind are supply levels and median prices, both of which have fallen steadily to 7.8 months and $174,900, respectively. Disappointing US housing starts from last week don’t bode well for the index, but since the Federal government’s homebuyer tax credit program was extended to April 30, 2010 and the income ceiling for single taxpayers was raised to $125,000 from $75,000, housing conditions should improve further until the start of Q2 2010.At 8:30 ET, the second round of third quarter GDP results for the US are anticipated to be disappointing as the index may be revised down to an annualized 2.9 percent from 3.5 percent. That said, such a result would still mark the first expansion in the economy in five quarters and the best reading in two years. As a result, the impact of the news on FX market price action may be limited, unless of course the data is significantly weaker than expected or if there are no revisions at all.Then, at 10:00 ET, the November reading of the Conference Board’s measure of US consumer confidence is expected to slip to a six-month low of 47.0 from 47.7, but overall, there are some downside risks for this report. Indeed, the preliminary reading of the University of Michigan’s consumer confidence index showed that sentiment surprisingly deteriorated in November, with the index falling to 66.0 from 70.6. Overall, disappointing numbers could have especially negative repercussions for risk appetite, but if the index rises in line with expectations or proves to be surprisingly strong, FX carry trades could gain and weigh on the US dollar.The main event risk for the US dollar on Wednesday will be the release of the minutes from the Federal Reserve’s last meeting on November 3 and 4. Following that meeting, the US dollar fell as they announced that they had left the fed funds rate unchanged at 0.25 percent, as expected, and stated that rates were like to remain “exceptionally low” for an “extended period.” At the same time, the FOMC said that they had reduced their planned purchases of agency debt to $175 billion from $200 billion, but repeated that they would be completed by the end ofQ1 2010. If the minutes reflect a perceived focus on exit strategies, there is potential for the greenback to rally, but if the FOMC members prove to be uneasy about the outlook for growth or the need to expand quantitative easing down the road, the currency is likely to tumble.The second reading of UK GDP for the third quarter is anticipated to be revised slightly higher to a quarterly rate of -0.3 percent from -0.4 percent, and an annual rate of -5.1 percent from -5.2 percent. This will continue to reflect the sixth straight quarter of contraction, and the only way the British pound is likely to respond in a positive way is if GDP surprisingly rises on a quarterly basis. Indeed, a disappointing number would have the biggest impact on the British pound, especially now that we know from the minutes from the Bank of England’s last policy meeting that the Monetary Policy Committee may be open to expanding their quantitative easing program once again.The upcoming release of US durable goods orders is projected to show a 0.5 percent increase in October following a 1.4 percent increase in September (revised from 1.0 percent), and excluding transportation the index is forecasted to rise by 0.7 percent. There may be some downside risks, though, for the non-defense aircraft orders component as Boeing orders fell further during October. While the headline result will have the most impact on forex trading, the markets should keep an eye on non-defense capital goods orders excluding aircraft, as this number serves as a leading indicator for business investment. This component rose in September for the first time in three months, and a continuation of this dynamic would bode well for growth in coming months.Event risk in the coming week will be contained mostly to the US dollar, as NAR US existing home sales, revised US Q3 GDP, US consumer confidence, the FOMC meeting minutes, and US durable goods orders will all be released. Meanwhile, the British pound will encounter potential revisions to UK Q3 GDP, but the overarching theme for the week may lie more in price action as US markets will be closed on Thursday for the Thanksgiving holiday and will close early on Friday. As a result, volumes will be lower than usual and this may contribute to either flat price movements or extremely choppy trade.

Gold hits record high $1,174

Gold prices soared to a record 1,174 dollars an ounce here on Monday as a sliding US currency and worries about a possible spike to inflation increased demand for the “safe-haven” metal, traders said.Gold hit exactly 1,174 dollars an ounce in late trading on the London Bullion Market. It later pulled back slightly to stand at 1,170.32 dollars.“Gold reached new highs as the dollar continued its decline,” said ODL Markets analysts in a note to clients.The dollar slid against the euro Monday on concerns that the Federal Reserve may keep emergency stimulus measures in place for a while longer, traders said. Comments by a US Federal Reserve official that he would prefer to keep the central bank’s asset-buying programme active beyond its current cut-off date pushed the dollar lower, analysts said.Federal Reserve Bank of St. Louis President James Bullard said an extension of the programme, widely considered a negative factor for the US currency, would give more flexibility to US policymakers.“Central bank rhetoric provided fresh incentive” to push the dollar lower, said Jane Foley, analyst at online trading firm Forex.com.
“Gold prices printed another fresh high on the back of dollar weakness with Bullard’s comments promoting the discussion of medium-term inflation potential, though economic data continues to indicate a absence of price pressures,” Foley added.

UPDATE:Asian Shares Mixed; Resource Cos Provide Some Support

Asian stock markets were mixed Tuesday despite solid gains on Wall Street Monday, with concerns about the economic outlook taking shares down in Tokyo. Australia's S&P/ASX 200 was down 0.2% with Japan's Nikkei 225 off 0.5% (after that market was shut for a holiday Monday) and South Korea's Kospi Composite down 0.9%, though China's Shanghai Composite Index rose 0.3%. Dow Jones Industrial Average futures were 24 points lower in screen trade. ANZ bank analysts said markets were still volatile as investors tried to gauge the outlook for the global economy. "In this type of trading environment, it is hard to imagine any reduction in volatility," they said. In Japan, the market "seems to be left behind. Worries over deflation and uncertainty in economic policies will continue to put off investors (for the time being)," said Mizuho Securities market analyst Yukio Takahashi. Data due later in the week from Japan was forecast in a Dow Jones Newswires poll of economists to show the core consumer price index fell 2.2% on the year in October, after a 2.3% decline the previous month, with Tokyo core CPI for November expected to have fallen 2.0%. Insurers and nonbank financial stocks were weak with Takefuji down 4.3% and Aiful off 2.9%, while Japan Airlines dropped 6.3% to a new all-time low. Resource shares were mostly higher in the region on the recent rise in commodity prices, with Sumitomo Metal Mining up 0.6% and Mitsubishi Materials up 2.4% in Tokyo. Mining shares were also up in Sydney, with Woodside Petroleum advancing 2.9%. Woodside was boosted by a report in the Australian Financial Review which flagged a potential joint bid from Shell and BHP Billiton. BHP was down 0.5% and Rio Tinto fell 0.8%, possibly on profit-taking. In the Philippines, gold miner Philex was up 2.7% and Century Peak Metals rose 8.6% while in Hong Kong, Chalco gained 0.5% and Jiangxi Copper was up 0.7%. Hong Kong's Hang Seng Index slipped into the red after opening up and was trading 0.4% lower on concerns over possible tightening measures after the China Banking Regulatory Commission issued a stern warning to banks to strictly comply with capital requirements or face sanctions. The regulator said banks that fail to comply with capital adequacy requirements by the end of this year could be punished with limits on market access, overseas investments and new branches. "Tightening concerns won't go away and China banks are likely to" continue underperforming in the near-term, said Mark To at Prudential. China Construction Bank was down 1.5% while Bank of China fell 2.1%. In the rest of the region, Taiwan shares were up 0.3%, New Zealand's NZX-50 was up 0.1%, Singapore's Straits Times Index was 0.2% lower and Malaysia's Kuala Lumpur Composite Index gained 0.2%. In Indonesia, shares were down 0.1%, while Philippine shares were up 0.7%. In Thailand, shares were down 0.1%. The Korean market was held back by concerns about a possible over-run. Lee Jae-mahn at Tong Yang Securities said "investors continue to stay on the sidelines amid a tug of war between ample liquidity and sharply reduced systemic risk, and concerns local firms' earnings and the Kospi might have peaked in the third quarter." Samsung Electronics slipped 2.0% and LG Electronics was down 1.9% amid uncertainty over the U.S. year-end shopping season, Lee said. Woori Finance fell 1.9% after Korea Deposit Insurance Corp sold a 7.0% stake in Woori before the market opened. The shares were priced at KRW15,350 per share, a 4.4% discount to Woori's Monday closing price of KRW16,050. In foreign exchange markets, the euro was slipping as gold prices came off their highs. The single currency was at $1.4942 from $1.4964 in New York Monday and at Y132.78 from Y133.22. TheU.S. dollar was at Y88.88 from Y89.02. Traders however said the U.S. dollar's outlook remained bearish. "The fundamental picture for the U.S. dollar is still not strong; the Fed is unlikely to move on rates anytime soon and U.S government yields remain near record lows," said Danica Hampton, a strategist at the Bank of New Zealand. She said ahead of the U.S. Thanksgiving holiday on Thursday currency markets would be focused on the raft of coming U.S. data, including third quarter gross domestic product, consumer confidence reports and the Federal Open Market Committee minutes. Japanese government bonds were likely to remain in a tight range for the next two weeks until the end of November on a lack of fresh cues. Lead December JGB futures were last up 0.13 point at 139.38. Mizuho Securities senior market analyst Makoto Noji said: "The market shouldn't rule out the possibility that long-term yields may jump, despite the (government's) declaration of deflation, as key government officials have changed comments about JGB issuance increases again and again." The London Mercantile Exchange 3-month copper contract was down $27 at $6,918 per ton from the PM kerb. Spot gold was at $1,163.85 per troy ounce, down 25 cents from the New York close after rising to new highs above $1,170 Monday. But HSBC analyst James Steel said expectations the Fed would keep U.S. monetary policy loose for some time would support gold. Nymex crude oil for January delivery was at $77.51 per barrel on Globex, down 5 cents from New York.


WORLD FOREX: Euro Falls Vs Yen, Dollar On Weak Asian Shares

The euro fell against the yen and dollar in Asia Tuesday as anemic Asian share markets encouraged short-term players to sell the risk-sensitive common currency.The euro may retreat further later in the global day if European equities are similarly sluggish, dealers said. A weaker than expected result in the German Ifo business survey may also weigh on the unit, they said.In early afternoon trade in Tokyo, Japan’s benchmark Nikkei 225 Stock Average was down 0.9%, while share prices in Hong Kong, Singapore and Korea were also lower.A fall in the price of gold further encouraged short-term players to trim euro holdings, dealers said. The common currency has recently tracked movements in gold prices, and gained overnight as gold hit a fresh record high. But by midday in Tokyo, the precious metal was down 60 cents from its New York close.At 0450 GMT, the euro was down at Y132.88 from Y133.22 late Monday in New York. Against the dollar, the common currency stood at $1.4950 compared with $1.4964.“The fall in Asian share prices today has given an excuse to investors who were looking to take profit on the euro’s rise overnight,” said Hiroshi Maeba, executive director of foreign exchange trading at Nomura Securities.If the German Ifo business climate indicator for November, due at 0900 GMT, falls short of the expected rise to 97.3, from 96.8 in October, the euro may fall further, dealers said.The common currency could drop to Y132.40 and $1.4900 in that case, said Nomura Securities’ Maeba.The dollar was also down against the yen, trading hands at Y88.90 compared with Y89.02 late Monday. Selling by Japanese exporters in the morning session in Tokyo weighed on the U.S. unit, traders said.For the rest of the week, a major driver of the greenback’s moves against its Japanese rival will be U.S. interest rates, said Shuichi Kanehira, a senior vice president of the foreign exchange division at Mizuho Corporate Bank. If demand is strong at a 5-year Treasury auction later in the global day, pushing yields down, the dollar could fall to Y88.00, he said.The Dollar Index, which measures the currency's value against six major units including the euro, was at 75.196 compared to 75.130.

Monday, November 23, 2009

Dollar eases in thin trade in Asia

The dollar eased slightly in light Asian trade Tuesday as investors largely stayed on the sidelines ahead of the US Thanksgiving holiday later in the week, dealers said.The dollar eased to 88.88 yen from 88.97 late Monday in New York. The euro edged down to $1.4950 from $1.4963 and to 132.81 yen from 133.14 yen."The market is quite dormant," said Masatsugu Miyata, forex dealer at Hachijuni Bank."We don't see much incentive in the Tokyo market. Investors more or less have been watching market sentiment overseas," Miyata said.The dollar came under fresh pressure Monday in New York after comments suggesting US authorities may extend emergency stimulus measures, encouraging traders to move into riskier assets including gold.Federal Reserve Bank of St. Louis president James Bullard said he would prefer to keep the central bank's asset-buying program active beyond its current cut-off date."We are watching whether the greenback will gain ground this week, but investors will likely stay quiet," Miyata said, adding that only two trading days remain before the US Thanksgiving holiday on Thursday.The dollar's fall came after rising last week as investors shunned assets viewed as risky, such as the euro, following declines on world stock markets triggered by fresh worries about the economic outlook.

European Economics Preview

A slew of statistical reports are due from Europe on Tuesday. Among them, revised GDP figures and business confidence survey results from Germany, and French business sentiment are expected to dominate the scene.At 2:00 am ET, Germany's Federal Statistical Office is set to issue final GDP data for the third quarter. According to preliminary estimates, the largest Eurozone economy contracted by working day adjusted 4.8% year-on-year in the third quarter. The seasonally adjusted quarterly growth rate was 0.7%. The statistical office is expected to confirm the preliminary estimate released on November 13.Elsewhere, the UBS Bank is scheduled to release Switzerland's private consumption data for October. The consumption indicator stood at 0.632 in September.Unemployment data is due from Statistics Finland at 2:00 am ET. Economists expect the unemployment rate to rise to 8.1% in October from 7.3% in September.At 2:45 am ET, business confidence data is due from the French statistical office INSEE. The business confidence index is forecast to rise to 91 in November from 89 in October. The production outlook index is seen at minus 9, compared to minus 11 in the preceding month.Consumer spending data is due from the French statistical office at 2:50 am ET. Month-on-month, consumer spending is expected to grow 0.4%, slower than the 2.3% increase in the previous month.At 3:00 am ET, Spain's National Statistics Institute is slated to release producer price figures for October. After falling 5.4% on a yearly basis in September, producer prices are forecast to drop 3.1% in October.Half an hour later, the Statistics Sweden is expected to issue producer price figures for October. The producer price index is expected to fall 1.6% on a yearly basis and by 0.1% on a monthly basis.Simultaneously, producer confidence data is due from the Netherlands' Central Bureau of Statistics. The producer confidence index is seen at minus 7 in November, up from minus 7.8 in the preceding month.Industrial production statistics for September are due from Statistics Austria at 3:30 am ET. Industrial output had risen 2% month-on-month in August.At 4:00 am ET, Germany's Ifo Institute for Economic Research is scheduled to release business confidence data for November. The index is expected to rise to 92.5 in November from 91.9 in the previous month. Further, the current conditions index is seen at 88, up from 87.4, while the expectations index is tipped to climb to 97.2 from 96.8.In the meantime, the Statistics Norway is expected to issue GDP data for the third quarter. The total GDP had declined a seasonally adjusted 1.3% quarter-on-quarter in the second quarter. The Mainland GDP had increased a seasonally adjusted 0.3% in the second quarter from the preceding quarter.At 4:30 am ET, mortgage approvals data for October is due from the British Banker's Association. UK's total mortgage approvals stood at 42,088 in September.Business investment data is due from the U.K.'s Office for National Statistics at 4:30 am ET. Economists expect total business investment to shrink 22.9% year-on-year in the third quarter, faster than the 21.8% drop in the previous quarter. On a quarterly basis, business investments are tipped to fall 5%, after the 10.2% decrease in the second quarter.At 5:00 am ET, the Eurostat is set to release industrial new orders data for September. Eurozone new orders are expected to decline 17.3% year-on-year compared to the 23.1% fall in the prior month. On a monthly basis, new orders are forecast to rise 0.8%.

European Central Bank

European Central Bank will decide as soon as next month to stop some of its emergency stimulus measures. The ECB last week tightened the rules for the collateral it accepts against loans as it tries to restore the "proper functioning" of markets and prepares the ground to unwind unconventional liquidity programs. "Thoughts of the ECB heading down the quantitative easing exit may be viewed positively for the euro, although the implications may be mixed if it tends to work against risk appetite," said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. The ECB "will require at least two ratings from an accepted external credit assessment institution for all" asset- backed securities issued from March 1, 2010, the central bank said in an e-mailed statement on Nov. 20. In January, the ECB said it required a rating from one credit assessor. Losses in the dollar were tempered on speculation investors will reduce bets the greenback will weaken before the Thanksgiving holiday on Nov. 26.
"Amidst a holiday-shortened Thanksgiving week, markets may continue to take risk off the table in the absence of strong positive cues from equities, leaving the majors vulnerable to further retracements,"
Emmanuel Ng, an economist in Singapore at Oversea-Chinese Banking Corp., wrote in a research note today. Futures traders decreased bets the euro will strengthen against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed on Nov. 20. The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 11,956 on Nov. 17, compared with net longs of 25,173 a week earlier.

Sunday, November 22, 2009

Canada Afternoon: C$ Ends Lower Amid Subdued Risk Sentiment

The Canadian dollar ended lower for a fourth consecutive session Friday, capping off a losing week for the currency in which mounting investor aversion to risk dampened enthusiasm for higher-yielding currencies such as the Canadian unit. The U.S. dollar was trading at C$1.0704 at 4:08 p.m. EST (2108 GMT), from C$1.0712 at 8:00 a.m. EST (1300 GMT), and from C$1.0633 late Thursday. Although Friday's North American dealings remained fairly light and confined to relatively tight ranges, the Canadian dollar continued a recent downward drift toward the weaker extremes of its recent trading range just past the C$1.0800 figure. Further losses toward C$1.0800 were limited by some Canadian dollar technical support around its intraday low at C$1.0730, but otherwise, Canadian dollar support continued to erode as the global investment climate stayed mired in risk-averse mode. "The weaker currencies in the G-10 bloc this week with risk aversion climbing a bit have been the commodity currencies like Australia, New Zealand, and Canada," said currency strategist Shane Enright of CIBC World Markets in Toronto. "If the market presses on with theme we've had in the last two days of U.S. dollar strength, my guess is it will stop stalling around those mid-C$1.0700 levels."Chief foreign exchange technical analyst George Davis of RBC Capital Markets in Toronto suggested that mounting concerns about an increasingly illiquid year-end trading environment are also contributing to a reluctance to take positions in less widely traded currencies like the Canadian dollar. Davis said that the U.S. dollar's penetration and close beyond key technical resistance in the C$1.0685 area could in coming days promote a move by the U.S. dollar-Canada pair into the mid- to high-C$1.0800s, which would mark the Canadian dollar's weakest levels since early October. Currency trading will likely become increasingly illiquid and subject to exaggerated volatility next week, given Thursday's U.S. market close for Thanksgiving, and also holidays in Japan and other Asian countries throughout the week. These are the exchange rates at 4:08 p.m. EST (2108 GMT), 8:00 a.m. EST (1300 GMT), and late Thursday.

USD/CAD 1.0700 1.0712 1.0633
EUR/CAD 1.5910 1.5864 1.5865
CAD/JPY 83.16 83.08 83.78

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Your trading capital can be as low as $100. Forex Apocalypse works with all FX brokers as long they are using metatrader platform. The system doesn’t hedge and thus the NFA regulations do not affect this forex robot.Forex Apocalypse comes with future free upgrades so as to deal with the constant changes in the currency exchange market.Here are some of the trading results taken from the homepage: Winning trades of $4,000, $6,000, $8,000, 100% on autopilot. Went 14 months without making a single losing trade. Over at the homepage, you will see how an account of $3,000 was transformed to over $170,000.ever have I seen such a level of performance If you've got even a vague interest in Forex trading and somehow you haven't heard about Forex Apocalypse yet, prepare to be shocked. In all my years of reviewing Forex trading robots, I have simply NEVER seen such an incredible level of performance. Forex Apocalypse is making a name for itself In a nutshell, Forex Apocalypse is the most powerful, most reliably profitable Forex trading robot (more formally, expert advisor) on the market today. And it's now proving it in the hands of real people who had never even traded Forex before. People are snapping up the copies up. Forex Apocalypse has hit the market now I told you I’d let you know when Forex Apocalypse hit the market...and today’s the day! Michael Wright and his team of traders at FX Trading Bots are finally releasing their software to the world! The waiting list is long But you need to jump on this quickly. There’s already a huge waiting list so this opportunity is going to disappear FAST. Forex Daily Volume surpasses all The Forex market is so large that it's bigger than all the world's stock, bond, future and options markets combined with a daily volume surpassing 3.2 trillion dollars every single day. Here's what most people don't know... In such a gargantuan market, it's easy to get lost. But coming soon is a tool that's going to guide you through the maze that is Forex and find the fortune that you've been searching for. This is no ordinary tool - in fact it's taken YEARS to perfect. Video on Forex Apocalypse

Rates in Australia will keep rising,but slower

Since March 2008 continuing bets the Reserve Bank of Australia will tight monetary policy way before other G7 countries fueled a spectacular 47% gain of the Aussie against the Dollar rising from 0.63$ and topping around 0.93$ last week. Indeed bets were accurate, the RBA raised rates for the second time with key rates now higher by 0.5% from their lows at 3.5%. However in the latest RBA meeting governor Glenn Stevens has somewhat eased the rhetoric on its intention to raise rates. The Governor has stated that the high Aussie rate now closer to parity with the Dollar has placed pressure on Australian exporters and kept inflation rather subdued. The message for the market was clear the RBA will continue to raise rates but very slowly and not at every meeting to avoid disrupting the recovery. In other words the RBA still sees the economy as rather fragile for a constant rate hike to the RBA “comfort” zone of 5%.Economic indicators are supportive of the RBA carful outlook with CPI (inflation) at 1.3% far lower than the RBA lower inflation target of 2% and retail sales trend an important indicator for consumer sentiment fell surprisingly by -0.2% versus an expected gain of 0.5%.Unemployment although surprised for the better declining to 5.7% it is still considered high for Aussie land. In a conference later in the week Stevens expressed more upbeat views on the Aussie economy and updated the RBA forecast of growth for 2010 upwards but this was largely expected. Indeed raising rates too rapidly could push the Aussie fast to test parity with the green back. But as it is still will unclear how successful will the Australian economy be at dealing with an Aussie close to 1$, market seem to expect rates to be raise slowly.CPI and unemployment are expected to lead with any negative surprises hampering bullish bets on the Aussie or at least putting the Aussie push to parity to a halt.

Forex Trading-Understanding Forex Charts

Understanding technical analysis and, in particular, being able to read price charts is essential for any Forex trader. This article serves as an introduction to the often complex world of Forex charting.For the majority of Forex traders their trading strategy will be based very largely on technical analysis. This means, amongst other things, that the Forex trader must have a sound knowledge of technical analysis and, in particular, an ability to read charts.Price charts are used to convey information about Forex prices at specific time intervals, which can range from as little as one minute up to several years. Prices can either be plotted as simple line charts or price variations can be plotted for each time interval to produce a bar or candlestick pattern.

Line charts are particularly suitable for giving a broad overview of price movements. They are normally plotted to show the closing price at each chosen time interval and they are easy to read and clearly define patterns in price movements.Although not quite as easy to read, bar charts provide far more information. The length of each bar is used to indicate the price spread for a given period, with long bars indicating a large variation between high and low prices. Opening prices will be shown on the left tab of a bar and closing prices on the right tab so that you can see at a glance whether the price has risen or fallen and just what the variation in price was. When printed out bar charts can be difficult to read but most software charts will have a zoom function which makes reading closely spaced bars much easier.
Candlestick charts, which were invented by the Japanese to analyze rice contracts, are similar to bar charts but are easier to read as they are color-coded. Green candlesticks are used to show rising prices and red candlesticks to show falling prices.When reading candlestick charts the candlestick shapes viewed in relation to one another form various patterns according to the price spread and the proximity are opening to closing prices. Many of these patterns have been given names such as ‘Morning Star’ and ‘Dark Cloud Cover’ and once you become familiar with these patterns it is easy to pick them out on a chart and to identify trends in the market.To supplement the information provided by charts a number of technical indicators are also used. These include trend indicators, strength indicators, volatility indicators and cycle indicators and all of these are used to anticipate movements in the market and market volume.The most commonly used Forex technical indicators include:Average Directional Movement (ADX). ADX is used to determine whether or not a market is entering an upward or downward trend and just how strong the trend is.
Moving Average Convergence/Divergence (MACD). MACD shows the momentum of a market and the relationship between two moving averages. When, for example, the MACD line crossings of the signal line it indicates a strong market.Stochastic Oscillator. The stochastic oscillator indicates the strength or weakness of a market by comparing a closing price to a price range over a period of time. A high stochastic indicates a currency that is overbought while a low stochastic points to a currency which is oversold.Relative Strength Indicator (RSI). RSI is a scale from 0 to 100 which indicates the highest and lowest prices over a given time. When prices rise above 70 the currency is considered to be overbought while a price below 30 would indicate a currency which is oversold.Moving Average. Moving average is the average price for a given time when compared to other prices during similar time periods. For example, the closing prices over a 7 day time period would have a moving average equal to the sum of the 7 closing prices divided by 7.
Bollinger Bands. Bollinger bands are bands that contain the majority of a currency’s price. Each band consists of three lines - the upper and lower lines indicate the price movement with the middle line showing the average price. In conditions of high volatility the gap between the upper and lower bands will widen. If a bar or candlestick touches one of the bands then it will indicate either an overbought or an oversold condition.

Saturday, November 21, 2009

The Bearish pressure on the Swissie continues

The Swiss Franc latest failure to break the 1.1 resistance against the dollar has proven once again that whenever the Swissie faces critical levels against the Dollar the market is willing to pay less and less for the Swiss currency. Since bottoming at the 0.97 level in March 2008 the Dollar Swiss trade has been gaining strong momentum. The USD/CHF pair has found support in the levels 1.00, 1.04, 1.115 and has formed a steady bullish trend.

It is somewhat clear that only deterioration in the fundamental outlook for the Swiss economy could generate such depreciation in the Swiss Franc. The Swiss economy is strongly exposed to the Euro zone as the EU posses the largest export market for the Swiss economy. As the EU economy shrinks the demand for Swiss goods and services declines and evidently brings the Swiss trade balance under pressure. In addition the Swiss banking sector which is one of the most important service export and source of cash inflows for the Swiss economy has been hit painfully by the crisis. The Swiss banking system still relies on government support and its relative advantage stands in jeopardy.

The conclusion that the intelligent investor must draw from this is that until the looming problems in the Euro zone and the banking sector will not be solved the smart money will not be flowing to the Swiss Franc. The USD/CHF is in a prolonged bullish momentum with 1.2 as its first target.

Forex News Trader

Forex News Trader was developed to give traders the edge they need to learn how to trade based on economic news events from around the world. The same edge the institutions use to make hundreds of millions and even billions of dollars in profit each year.Forex News Trading will provide you with the information you need to give you a true insider’s understanding of the Forex markets. You will feel confident in your trading, and never doubt your trades again.Does this mean you will win every trade? No, of course not, but armed with the knowledge Forex News Trader will provide you, you will never be afraid to take that next trade – as the odds will now be tipped in your favor.Each and every month there are a tremendous number of news releases for the Off Exchange Retail Foreign Currency Market (FOREX). Many of these events and announcements move the markets considerably. But how do you properly capitalize on these moves? Get it wrong and you could be wiped out. Get it right and you can be in a small group of trading elite, consistently pulling pips out of the market each and every week.Forex News Trader was developed to give traders the edge they need to learn how to trade based on economic news events from around the world. The same edge the institutions use to make hundreds of millions and even billions of dollars in profit each year.Forex News Trading will provide you with the information you need to give you a true insider’s understanding of the Forex markets. You will feel confident in your trading, and never doubt your trades again.Does this mean you will win every trade? No, of course not, but armed with the knowledge Forex News Trader will provide you, you will never be afraid to take that next trade – as the odds will now be tipped in your favor.Each and every month there are a tremendous number of news releases for the Off Exchange Retail Foreign Currency Market (FOREX). Many of these events and announcements move the markets considerably. But how do you properly capitalize on these moves? Get it wrong and you could be wiped out. Get it right and you can be in a small group of trading elite, consistently pulling pips out of the market each and every week.Whether you are a beginner or a seasoned trader, we have a service to fit your needs. Do you have a hard time understanding when to get in the market, or is your exit points that need help? There are hundreds of forex signals services on the market, but most are not worth a dime. We only work with the best. We screen them with the strictest parameters – ensuring their performance is real.These signal providers may send signals by e-mail, voice, cell phone, or a live trading room. We will provide you with a list of the best Forex services available to best suit your trading needs.Some traders prefer an auto trade type of system which does the trading for you, like FX-System Center, an excellent way to go. We work with a number of providers of auto-trade services which include state of the art software that will execute trades in the Forex market for you. You can learn to trade many different styles throughout the trading day. You can join live chat sessions with live calls in voice chat rooms with professional traders and learn how to trade the Forex market yourself. The options are all available, and now you know where to look.
Finding the right Forex Broker may be the difference in coming out ahead in the long run. FX brokers are your sole connection in this huge market and you have to put a lot of faith in them. We provide you with the top
forex brokers and broker reviews to help you decide during this selection process. A new broker we want you to consider is eToro.com, which puts a whole new feel on the Forex Broker business.What are Forex Rebates? FX Rebates are a payout for the volume of trading you run through your Forex Broker. These rebates can add up to a significant amount capital if you are trading in the Forex Market. If you are going to trade, you might as well get paid to trade. You are going to pay a spread or commission either way you look at it, so it only makes sense to earn Forex Rebates as you continue your trading.Using the videos created by FXDD, we will try to provide you with weekly videos of future events as well as provide you with the daily events when necessary. This will give you, the trader more information to help you. Each video will represent a week or day depending on which is available. At least this way you can come back to one spot for all your Forex video needs.

Wednesday, November 18, 2009

Pakistan's post-9/11 economic boom

Many wealthy Pakistanis in America have responded to increased monitoring of wealth and assets, particularly owned by Muslims, by sending a substantial part of their savings back home.And areas like the up-market Defence Housing Authority in Lahore have benefited enormously.A recent ballot to allocate 300 residential plots in this area received nearly 70,000 applications. The huge interest of investors in this and other well-to-do areas is typical of the unprecedented surge in real estate businesses in big cities like Lahore and Karachi following the attack on the World Trade Centre.Since then, the value of one plot in the Defence Housing Authority has shot up from about $65,000 before 11 September to in excess of $1.5m after it.In the town of Johar, another affluent middle class locality, average prices have risen on an equally spectacular basis - from about $35,000 to more than $132,000.The boom has led to a mushrooming of Pakistan's middle class housing suburbs, often at an unprecedented speed.The growth of Lahore's Defence Housing Authority is so phenomenal that it has announced five new building phases since 2002."The property boom in Lahore would not have been possible had 9/11 not occurred," says Sahir Chaudhary, a real-estate developer in Lahore, "The price of the real estate went up by as much as 1,000% in the city in the last five years."The rocketing real estate prices in Lahore have resulted in hundreds of rags-to-riches stories.Poor farmers with small pieces of land in the villages close to the municipal limits could hardly make ends meet. But with the fast expansion of the city's frontiers, they sold off their property, pocketing millions of rupees overnight.The city's roads are now clogged with brand new four-by-fours - the names of BMW and Lexus are becoming increasingly common on the streets.The cars are just one sign of the ostentatious new rich, showing off money which was unheard of a few years back.More than 30m cellular phone subscribers is another signpost of the upturn.Pakistan's electricity company chief Tariq Hameed says there have also been record sales of refrigerators, washing machines and split air conditioners which have caused a sudden surge in electricity demand. Not surprising then that this summer there were many power cuts in peak hours.All this is all the more amazing when one considers that just five years ago, Pakistan was on the verge of bankruptcy, with only a little more than $1bn in foreign exchange reserves and its stock market teetering at 1,000 points.Two months after 9/11, the forex reserves went up to $4bn as Pakistan joined the US coalition against the "war on terror". The forex reserves now stand at more than $12bn.And there is little doubt that the catalyst for this growth has been the massive amount of remittances sent back by non-resident Pakistanis in the US and later from Europe.In 2001, the remittances totalled a little more than $1bn.But since 2002, Pakistan has received nearly $4bn in remittances every year.That means an additional inflow of $14-15bn has been returned to the country since the 2001 attacks.No wonder, then, that the once ever-declining rupee has been stable at around 60-61 to a dollar since then.The wealth flowing in to Pakistan now is second only to the boom created by money sent back to the country by its blue-collar workers in the Middle East in the 1980s.The difference is that the 1980s money created a lower middle class, whereas today the principal beneficiaries are upper middle class people in big cities.They brandish credit cards and drive Mitsubishis. Their children go to grammar schools, eat burgers and pizzas and celebrate Halloween and Valentine's Day.Strange then that the vast majority still have few kind words for the US - even though it is arguably the source of their new-found prosperity.

New forex controls By Argentina

New exchange controls slapped on the peso by Argentina's central bank have failed to stem a slide in the currency's value to record lows.Startled by the accelerating slump, the bank threw its reserves at the peso.But with nearly one tenth of the reserves - totalling $1.2bn - spent to little avail, the Central Bank has now banned foreign exchange traders and banks from buying dollars from it at the market rate.The new controls also limit the sale of dollars to $1,000 for each individual or $10,000 per company, while bureaux de change have had their opening hours slashed by half to just 3-1/2 hours a day.Still, so far there has been little effect.Before devaluation in January, the peso was pegged at parity with the US dollar.The decision to let it float saw a starting rate of 1.40 pesos to the greenback.By 1800 GMT, a single dollar was buying 3.75 pesos - a fall of 75%."In the absence of having some credible fiscal policy and economic management, spending reserves was just throwing money away," IDEAglobal head of Latin American research Doug Smith told the Reuters news agency.The sharp fall is raising fears that inflation could shoot up, since the shifting currency means the price of any goods sourced from outside Argentina is shooting up.Argentines, half of whom are below the poverty line amid unemployment above 20%, fear that the moves could be the harbinger of a return to the bad old days.The dollar-peso peg was introduced in the early 1990s to stem rampant inflation and turn around an economy hampered by deep-seated corruption.But the country's heavy debt burden - brought on by years of excessive government spending - combined with a four-year recession and ill-timed austerity measures demanded by lenders to force the country into decline, default and finally devaluation.Now the government - the fifth since early December - of President Eduardo Duhalde is struggling to keep the country going, desperate for new loans from a very reluctant International Monetary Fund.Aldo Avram, director of economic consultancy Exante, told the BBC's World Business Report he believes Argentina should consider dollarisation although there would be political problems, he said.it must be an ordered dollarisation, he added."Hyperinflation is a way in which you go to a dollarisation but in a disordered and chaotic way."

Argentina peso hits new low

In Argentina, the peso has slipped to a record low amid gloomy predictions that the country's worst ever economic crisis will deepen further this year.Until devaluation in January, the peso was tied to the US dollar at one-to-one for a decade. It has now slipped to 2.5 to the dollar.President Eduardo Duhalde, who is Argentina's fifth leader since December, is desperately trying to negotiate a restoration of IMF aid to reverse a four-year recession.President Duhalde says that without IMF help in the next month, Argentina faces a return to the rioting and unrest which left 27 people dead and toppled former President de la Rua in December. The statistics paint a frightening picture of Argentina's continued decline. Nearly half the population now live below the poverty line, unable to pay for basics like food, rent and essential services.More than 20% are officially unemployed, and unofficial estimates are higher.The IMF is now predicting the economy will shrink by another 8% this year, which means more companies closing and more job cuts.IMF officials, while welcoming some changes in Argentina, have also warned the government to stop printing money.The government, which is still running a deficit, is printing billions of pesos to try to pay its workers.So are provincial governments - there are now 14 different local bonds or currencies in circulation.An annexe of Congress has had to be boarded up with metal sheets to protect those inside from angry protestors, some threatening to kill politicians.Many banks have done the same.Politicians on the street have also been attacked and abused.But the IMF, under criticism in the United States that it bailed out Argentina for too long, shows no signs of restoring aid until there is evidence that the government's policies can lead to a sustained recovery.


Allied Irish Bank's lost more than £500m

Allied Irish Bank's admission that it has lost more than £500m on the foreign exchange markets thanks to a trader who has since absconded sounds impossible to believe.Except, of course, that it happened in 1995, when Nick Leeson brought down Barings Bank, after losing at least £800m in the derivatives market. No-one is suggesting that AIB is going under. AIB is a retail bank with deep pockets, while Barings was badly undercapitalised.But still the implications are serious.The complexity of the trading - and the memory of how Nick Leeson broke Barings - means that oversight systems should have been much more robust, market watchers say."This isn't going to hurt AIB as badly as Barings in financial terms," one London trader told BBC News Online."But after Leeson people are expected to have much tighter systems in place. Their internal controls, the auditors, even the regulators are looking very, very bad over this. And there could be others like this. The big investment banks have really tight procedures, but the more staid mid-tier outfits have never been looked at as closely."There could well be other skeletons in the cupboard."Still, to the layman the idea of a bank "discovering" that it has lost half a billion pounds in buying and selling foreign currency sounds like lunacy.But the hole Allied Irish Banks has discovered in its accounts pales beside the sheer magnitude of foreign exchange trading worldwide.Trillions of dollars pass daily through the forex markets, as they are known - the same money, churning from one currency to another minute by minute.Traders look for fluctuations in exchange rates, and take advantages of situations where a rate looks promising compared with where they think it is likely to move in the future.On the face of it, that is not too complicated a proposition.But bets can go wrong, so traders cover their backs by hedging: using options, bets with another institution that will pay out if a currency falls or rises a certain amount by a certain date.The theory is that the options will offset losses should a guess go wrong. If it goes right, then the option does not have to be cashed in, and the only cost is the commission for taking out what amounts to insurance in the first place.It is this part of the forex business which is hurting AIB.Early indications are that its trader ran up huge losses by backing - metaphorically speaking - the wrong horse with what AIB chief executive Michael Buckley has called "a very, very large number of trades".Traders are meant to follow strict rules on allowable risk, given the huge sums that can be lost.But this man did not get authorisation for his bets, and so he tried to cover his tracks. He created imaginary options deals in the firm's books, deals which never took place.A cursory glance would have made it seem that the books balanced, that the losses were being matched by profits on options elsewhere which were the mirror image of the failed trades.Somehow, the "back office" - the part of a trading operation which checks what the front-line traders are doing and looks after the book-keeping - overlooked it.AIB believes that could well be the result of an internal conspiracy.As any unlucky gambler knows, once you fall deep into the red the bets needed to get back out again soon spiral out of control.And before long, $750m had simply evaporated.

Average turnover on the world's forex

Average turnover on the world's foreign exchange (forex) markets reached almost $1,500bn a day in April this year, according to the Bank for International Settlements (BIS).The volume of forex trading is far greater than the size of foreign currency reserves held by any country.The size of forex trade has played its part in the currency crises of emerging nations over the past year.The exact figure, $1,490bn, or $1.49 trillion, is 26% higher than when the BIS, which represents central banks, last measured flows in 43 different countries three years ago.Almost a third of all forex trading occurs in London, by far the world's largest centre, with New York and Tokyo second and third.At current values, transactions involving US dollars on side of the trade accounted for 87% of forex business. The Japanese Yen was the second-most traded currency.However, less than half the transactions were simple 'spot' deals, the immediate purchase of currency for commercial transactions.Most forex trading is on the futures market where currency buyers undertake to buy at a set price at a specified date in the future.Foreign exchange futures allow companies to plan their import, export and foreign investment operations with the certainty of knowing what will be the value of the currencies they trade in.However, increasingly the forex futures market is home to rich individuals and 'hedge funds' who speculate against currency movements attempting reap windfall gains.George Soros is the most high-profile example of such currency speculators.The advent of the euro next year is expected start to stem the sharp increases in forex dealings as eleven European currencies consolidate into one over the next three years.The figures shed some light on how financial crises began in emerging economies over the last year.The ability for massive daily foreign currency flows to take place made possible the almost overnight collapses of the currencies of countries like Thailand, Indonesia and Russia.As confidence in the economies of these countries fell away, demand for their currencies fell as investors took their capital out or stopped bringing it in.Governments had tried to buy their own currencies to underpin their value but couldn't keep up with the sellers.When they stopped their own forex activity, the forces of demand and supply saw the baht, rupiah and rouble in turn crash in value deepening the crisis of confidence and economic slowdown.Speculators constantly watching for these market developments hastened the process.
















Tuesday, November 17, 2009

UK inflation rate rises


The Consumer Prices Index (CPI) climbed to 1.5% in October, up from 1.1% in September.Meanwhile the Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments and housing costs, rose to -0.8% from -1.4%.Inflation accelerated mainly because fuel prices fell by a lot less than they did in the same period a year ago.The Office for National Statistics (ONS) said fuel costs fell by just 0.7% between September and October, compared with a record 6.1% fall last year.That fall was caused by a dramatic slide in the price of oil.
Prices of second-hand cars, which rose at the fastest rate on record, also contributed to the inflation rise in October, the ONS said.It also said rising prices of recording devices, games and toys helped to push inflation up.Cuts in the cost of banking services, particularly overdraft charges and mortgage arrangement fees, helped to offset some of the price rises.The rise in the RPI - the biggest monthly rise since 1990 - was due in part to the fact that house prices are currently rising, but were falling last year.Analysts had expected the rate of inflation to rise, so the figures came as no surprise to the City."I don't think this is anything that will worry the Monetary Policy Committee [of the Bank of England] too much," said Amit Kara at UBS."The MPC has highlighted that inflation is going to be very volatile in the near term."The committee sets interest rates which are the main policy tool available to control inflation.The Bank of England has also said inflation will probably go up after the temporary reduction in VAT expires in January, although inflation is then expected to fall back again.However, October's rise in inflation did lead some analysts to question whether the Bank would pump more money into the economy beyond the £200bn it has already announced under its quantitative easing (QE) programme."While such a spike [in inflation] is expected to prove a temporary affair, it is hard to reconcile the Bank rolling out QE yet further in February hot on the heels of CPI potentially returning to letter-writing territory," said Richard McGuire at RBC.The government target for the CPI measure is 2%. The governor of the Bank of England has to write to the chancellor if the annual rate of CPI inflation is more than 3% or less than 1%.But while some questioned the wisdom of expanding QE, others urged the Bank to continue pumping money into the economy."Given the serious risks facing the UK economy and the dangers of a double-dip recession in 2010, it is important for the MPC to persevere with an aggressive QE programme, and to consider special measures aimed at boosting bank lending to businesses," said David Kern, chief economist at the British Chambers of Commerce.

Monday, November 16, 2009

Billionaire Strikes Back

Billionaire Henry T. Nicholas III fired damning accusations Friday night at a former contractor, accusing him of evading taxes and creditors. In a complaint filed in U.S Bankruptcy Court, Nicholas demanded Roman James, an Orange Country contractor who is likely a key witnesses for the U.S. government in a drug-related case against the co-founder, pay him $858,156 in attorney fees.The lawyer fees, incurred during a 2008 breach of contract dispute in which James accused Nicholas of breaking a confidentiality agreement, are likely inconsequential to Nicholas, who ranked 236th on the Forbes list of the 400 richest Americans with a net worth of $1.5 billion in October."I think it's just a smear campaign, they're just posturing," James says. "I'm just a humble contractor with a little baby, this is way out of my league. I'm not a legal expert. I'm getting schooled by a billionaire's defense team." Nicholas' complaint alleges that "for most of his adult life, James has engaged in a pattern and practice of evading creditors--including the Internal Revenue Service and the State Franchise Tax Board."It goes on to list James' two former girlfriends, an ex-wife, his current wife and a personal friend who have allegedly provided James with a "veil of secrecy" and served as conduits for him to conduct his business affairs while concealing his assets.The complaint also suggests James has not had a bank account in his own name for decades and has used "highly irregular transactions designed to conceal income and assets and misdirect creditors." James was the lead builder on a massive expansion of Nicholas' Laguna Hills mansion earlier this decade. As part of that renovation, James helped build what he and others claim was a series of secret rooms, one of which was used as what the media has dubbed a "sex lair." In 2002 James and several other contractors working on the Nicholas home drafted a lawsuit alleging they had not been compensated for their work. The lawsuit suggested Nicholas held wild parties complete with drugs and prostitutes in the sex lair underneath Nicholas' house. The suit was never filed. Instead, James and the other contractors had settled for an undisclosed sum.The information James claims to have about what went on at the Nicholas residence--and at a warehouse a five-minute drive from the mansion, where a replica of the secret rooms were built--makes him a key witness to the U.S. government, which has charged Nicholas in two separate indictments.The first of those indictments, which accuses Nicholas of 21 federal charges of options backdating, is scheduled to go to trial in February.The second trial, slated to begin next October, is on four drug-related charges. It is this trial where James is expected to testify. If convicted on all counts, Nicholas could face as much as 360 years in prison. As part of their settlement, neither James nor Nicholas could talk about one another. When James felt that confidentiality was breached, he filed a lawsuit against Nicholas. The suit was sent to arbitration, where Nicholas won in 2008. James was ordered to pay Nicholas $858,156.18 in attorney fees for the matter. Following the arbitration ruling, James filed for bankruptcy on May 27, 2009, one day before he was to sit for his Judgment Debtor's Examination, according to Nicholas' complaint. "All of this is inaccurate, this is a total joke," James says. "My attorney fees were 10 grand, his were $800,000. As far as having a business in my wife's name, who doesn't? She paid taxes on it."

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