RSS (c) The Financial Times Ltd 2010

  • Positive employment data lift US stocks February 3, 2012
    US stocks hit six-month high on news that unemployment fell to a three-year low in January with banks among the main beneficiaries […]
  • Stocks surge on strong US jobs data February 3, 2012
    Equities and commodities benefit from robust US employment data with the FTSE All-World index at its best levels since start of August […]
  • Volatile banks push Europe higher February 3, 2012
    Rapid gains for Société Générale and Crédit Agricole helped the FTSE Eurofirst rise for the fourth consecutive session on Friday […]

RSS (c) The Financial Times Ltd 2010

  • Stocks surge on strong US jobs data February 3, 2012
    Equities and commodities benefit from robust US employment data with the FTSE All-World index at its best levels since start of August […]
  • Dollar rises as jobs boost dents QE3 speculation February 3, 2012
    The dollar strengthens after US data show a larger than expected rise in employment with investors taking this as a positive signal on the economy […]
  • Riot halts Egypt bourse rally February 3, 2012
    Stock exchange index drops 2.2 per cent following deadly riots, following 28 per cent rise on January. […]

RSS (c) The Financial Times Ltd 2010

Archive for dollar

USD now aligned with euro and yen ?

By anna · Comments (0)
Thursday, October 21st, 2010
In his latest interview US Treasury Secretary Geithner suggests that the euro and the yen are now aligned with the dollar, and sees no reason for further dollar weakness. In addition he also restates his assertion of earlier in the week, that the US FED policy is not to win the race to the bottom in the currency wars using QE2. Whether anyone believes him or not is debatable, but at the end of the day it will be the currency markets that decide, and at the moment the technical picture looks bleak for the US currency.

US Treasury Secretary Timothy Geithner suggested that he sees no reason for the dollar to sink further against the euro and the yen, saying these major currencies are “roughly in alignment”, the Wall Street Journal reported on Thursday.

You can read the full article by clicking on the link below.
If you would like to read more of my forex trading analysis, then simply follow the link here where you can find more detailed technical analysis of the various currency pairs and the dollar index.
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Chinese Whispers

By anna · Comments (0)
Thursday, February 7th, 2008

Chinese New Year has coincided with China’s attempts to secure supplies of iron ore by trying to derail one of the world’s biggest-ever takeovers – BHP Billiton’s £76bn bid for Rio Tinto. In addition Chinese backed companies are trying to buy a significant stake in Australia’s third major player in iron ore, Fortescue Metals Group.

Rumours of other strategic Sino deals include China Development Bank’s partnership with Anglo American, who have strategic interests in Africa. The bank is also apparently in talks with Swiss commodities trader Glencore about its 35% stake in mining giant Xstrata. Talks are also in progress with Russia’s mining business Rusal who are the world biggest aluminium producer.

Should we be concerned? Of course, as the strangle hold that China is attempting on the world’s natural resources will impact on all of us and no doubt become a future source of geopolitical tension. This action by China has only been possible because Western banks, financial institutions and governments have been too busy trying to prevent the entire capitalist system from imploding.

Aside from the political ramifications should any of these mega deals to through there will be a massive effect in the currency market and we can expect to see huge moves in the currencies most affected, ie the dollar, aussie dollar, swiss franc and british pound. Of course the Chinese may just decide to pay with the mountains of cash they already have in their own  banks!

This is the Year of the Rat which is highly appropriate given what is currently going on: apparently the Rat likes to know who is on its side and will treat its most loyal friends with an extra measure of protection and generosity. Behind that sweet smile, though, Rats are keen and unapologetic promoters of their own agendas. It could be the sign for China itself!

 

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Categories : Currency Trading News
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The Dollar and The President

By anna · Comments (0)
Tuesday, February 5th, 2008

Dollar Index Chart Today is, of course, super Tuesday, the result of which may indicate who will be the front runners for the US presidency later this year and which in turn may give us a clue as to the fate of the dollar. Why? Because the fate of the dollar has historically been bound up with whoever eventually ends up in the White House.

In 1985 the US dollar was at a multi decade high. So much so that Time magazine had a cover that year entitled “The Super Dollar” when the dollar index registered a level over 160. That, of course, was its death knell as since that highpoint the dollar could be said to have been in permanent decline.

In 1985 Ronald Reagan and the Republicans were in power and their idea was to promote US goods and services overseas by making them more competitive. This policy was taken further by George Bush Sr and his Treasury Secretary, James Baker, who were quite open about actively promoting a weaker dollar. And it worked.

It wasn’t until the Clinton Presidency that the dollar managed to regain 50% of its value, peaking again in late 2000 through mid 2001, just as Bush Jr came into power, reaching a level of 120 – as shown in the chart above. January 2002 was the last time the index posted a level above 120 since when it has been in a steep decline – with the exception of 2005 when there was a small rally.

If this recent history repeats itself and another Clinton makes it to the White House we may see a dollar revival. If a Republican were to win the odds shift even further to a continuation of the dollar’s decline.  However, as the decline has been so strong this correlation may be irrelevant.

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Further Dollar Weakness

By anna · Comments (0)
Friday, February 1st, 2008

With ADP employment figures on Wednesday coming in at over 3 times higher than expected and the Fed cutting a further .50% on interest rates on the same day we will not be able to gauge dollar direction until release of both the nfp and ISM numbers later today.

However, weekly and monthly charts for both the euro dollar and pound dollar all point to further dollar weakness. The euro is once again eying 1.50 while the pound is looking again at 2.0 as the market waits for the aforementioned nfp and ism numbers. Even if stellar numbers are reported today I still expect both the euro and pound to mount a serious challenge to these levels and beyond. We will not know if it will be a sustained move until the middle of February.

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Market Fundamentals To Determine Dollar Direction

By anna · Comments (0)
Monday, January 28th, 2008

Following the emergency interest rate cut by the Fed last week the question being asked was whether the embarrassment at SocGen had anything do with the decision? Whilst the massive loss facing the French bank would be enough to temporarily spook any market is the bank merely using this event to cover up problems in other areas. Indeed the “rogue trader” at the centre of this storm, Jerome Kerviel, has insisted through his lawyers that he “did not commit any dishonest act”. They said SocGen wanted to “raise a smokescreen” to distract attention from losses it had made, “notably in the unbelievable sub-prime affair”.  We can only wait and see.
Meanwhile the market moves on and this week is likely to be just as dramatic and possibly define the direction of the US dollar as well as equity and commodity market through to the spring.  Not only do we have non farm payroll on Friday but on Wednesday we also have the ADP numbers and the Fed’s interest rate decision. If the employment figures are positive and the Fed cuts a further .50% thereby taking rates to 3% this will benefit both the equity market and the carry trade as the appetite for risk returns. The addition of personal consumption data, ISM and durable goods figures should also give traders the best possible picture of what is actually happening in the US economy and likely to happen in the short term.

Against this background it is not surprising that forex movements in all the pairs can appear somewhat random as the market waits to decide on the future direction of the major currencies.

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Gold at $1000?

By anna · Comments (2)
Monday, January 14th, 2008

The flight from paper money continues as gold (and other precious metals) reach ever higher prices. The question is now when gold will gold reach the magic $1000 not if. The more the dollar is punished in the markets the faster this will happen and a look at the dollar index tells us that once again the dollar is in a downtrend. A look too at last Friday’s COT report also shows the dominance of long futures contract for gold.

The first quarter of 2008 was always going to be a difficult time for the dollar and the US stock market – bad employment figures and falling retail sales all contributing to a drop in corporate earnings, thereby making a half percent cut in interest rates more likely by the Fed. All in an effort to avoid a recession, which according to Goldman Sachs  is already underway. In addition there is talk of an inter meeting interest rate cut.

A raft of U.S. data this week will show how the economy is faring, including retail sales, industrial production, housing and consumer prices. This will keep the dollar under pressure as the outlook on the U.S. economy continues to be in doubt and fears of a global slowdown. Among the most anticipated quarterly results will be those to be released by Merrill and Citigroup, among the hardest hit by the U.S. subprime mortgage defaults and the resulting crisis.

These latter numbers are very important because if the losses are not as bad as predicted market sentiment will change and out of the ashes of this market will come a fresh bull run.

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Yen Trades

By anna · Comments (0)
Monday, January 14th, 2008

Although the dollar is on the slide against almost every currency there is one anomaly, namely the British Pound which, if you will forgive the pun, is taking a “pounding” of its own against the euro, yen and swiss franc. From the charts it doesn’t look like this scenario is likely to change in the short term so consider further sell against the yen and euro.

With regard to the other yen crosses or carry trade pairs most, except the pound yen and canadian yen, appear to be forming a flag on the weekly chart in readiness for a breakout either way.  However, my own view is that this is the year of the yen. Part of the reason is the flight from risk which will only return once stability returns to both the markets and banking industry.

Lastly the dollar yen which despite last week’s spike high is now fast approaching 107, last touched back in November 2007.  If breached the next level to watch is 105 and then onto 102.

More on the yen later.

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ISM Reprieve for the Dollar

By anna · Comments (0)
Monday, January 7th, 2008

Despite dire employment figures on Friday the dollar did not quite die and in fact was buoyed up on good ISM numbers which, as i explained in my last post, as a leading indicator (as opposed to nfp which is lagging) it is a better guauge of what is happening in the US economy.

I accept that it may only be a short term reprieve for the dollar as this week we await interest rate decisions from both the ECB and BOE.  However, i do not think we will see significant moves in the majors until the market has a clearer idea of where these rates are heading.  In addition Paulson is due to speak later today and it will be interesting if he mentions anything from his meeting with Bush and Bernanke last Friday.

As a result the market today can be said to be in “neutral” and not very responsive so trading opportunities will be more difficult.   I always try to use these quieter moments to catch up with any background reading and as it is January to write down some trading resolutions for 2008.    One particular resolution this year is to study some of the more exotic currencies and in particular the Brazilian Real, which is being touted by Goldman Sachs, as the one to watch this year.  Regular readers of my blogs will know my feelings about Goldman Sachs so i will be watching this currency very carefully!

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Non Farm Payroll

By anna · Comments (1)
Friday, January 4th, 2008

The first NFP numbers for 2008 are due for release today with a figure of 70k being forecast. As always any number above will be good for the dollar and any figure below bad. This first set of data is important when taken with yesterday’s ADP numbers which showed that 40k new jobs were created in December. I believe that it is the employment figures which will set the tone for the dollar in this election year.

Healthy employment figures are good for the economy and for the ruling party. Apparently this is the view taken by President Bush who is due to meet with Ben Bernanke and Henry Paulson as they discuss measures to stimulate the economy amid slowing growth.

However, once the market’s knee jerk reaction to the nfp numbers has subsided it is the ISM data released 90 mins later which often determines the medium term direction of the dollar. As a leading indicator The Institute of Supply Management (ISM) Non-Manufacturing Index measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance and can therefore give the most up to date indication of overall economic performance.

Although many traders avoid nfp because of excessive volatility in the major pairs trading opportunities can also be found in the carry trade pairs. For example should the headline numbers disappoint the yen crosses will go down with the pound yen being the most volatile as the markets become risk averse.  As the euro yen tends to move with the S&P 500 it is this index which lead the way with this pair.

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