Chuch E Cash's Forex Blog
US Fed Cuts Rates 0.25%, Dollar Gains
Apr 29, 2008
On Wednesday, the US Fed cut the target rate 0.25%, bringing it to 2%. This is the 7th cut since August 2007, when the rate stood at 5.25%. In additon, the Fed signaled they are likely done cutting rates.
The Dollar gained overnight against the Yen and Euro. Many investors now believe the worse of the 'credit crunch' is over, a view supported by the 0.6% GDP growth for Q1 2008
Read more at CNN
interest rates, Fed
As Volaitility Eases, Carry Trades Increase
Apr 28, 2008
The DailyFX.com Carry Trade Index rose $296 (0.01%) to end the week at $28,414. Forex traders are taking note of the calmer markets, as carry trades have been increasing while volatility decreases.
However, many traders are concerend that high yielding currencies such as those in Australia and New Zealand will soon have to follow suit with rate cuts. As a result, the narrower trades (such as USD/JPY and GBP/JPY) have been increasing while the upper end of the curve has been falling.
Read more at Yahoo
JPY, Carry Trade, USD
US Numbers Good 2 Days in a Row - Dollar Up
Apr 15, 2008
US economic data surprised analysts Tuesday, as the PPI and Manufacturing Index beat expectations.
The NY Fed Reserve's Empire State Manufacturing Index jumped an unexpected 23 points to 0.63 in April. Many traders were expecting a more modest improvement of 6 points.
Additionally, the PPI (Producer Price Index) was up 1.1% in March, 0.7% below analysts expectations of 1.8%.
The data sent the US Dollar to $1.9616 against the British Pound, and $1.5778 against the Euro.
Read more at CNBC
PPI, USD
Analysts Wrong - ZEW Survey Weak
Apr 15, 2008
The ZEW Indicator for German confidence fell an unexpected 8.7 points to -40.7 today. Market analysts had been expecting a minor improvement in the ZEW indicator. The historical average is 30.0. Overall confidence across the Eurozone declined 9.8 points to -44.8.
Despite this negative news, Germany is still expected to see GDP growth of 1.7% this year. And, analysts still do not expect the the European Central Bank to cut rates in the near future.
Read more at ZEW
Euro, ZEW Survey, GDP
China and Pakistan Seek to Expand 2006 Free Trade Deal
Apr 14, 2008
In new reports, China and Pakistan report making major0 progress in expanding their 2006 free trade agreement.
Talks were held between Chinese President HPresident Pervez Musharraf Hu Jintao, Prime Minister Wen Jiabao, and Pakistani President Pervez Musharraf.
The two countries agreed on a 5 year trade pact.
Read more at Dawn
German Confidence = High Euro, Weak Dollar
Apr 14, 2008
Investors expect a new German report will that faith in the economy remains strong. The Euro went as high as $1.5824, less than 1 cent below the all time high of $1.5913 reached April 10. Continued strength in the Eurozone has made ECB rate cuts less likely.
Read more at Bloomberg
ECB, Euro, European Central Bank, USD
G7 / IMF Roundup - Regulatory Reform, Forex Monitoring, IMF Reform, Private Bank Push
Apr 12, 2008
In the first day of G7 meetings - the group passed reforms recommended by the Financial Stability Forum, Monitoring of forex markets, and US + Canada pushed for more innovation from private bankers.
The G7 meeting was kicked off by the group agreeing to a plan from the Financial Stability Forum. The FSF, composed of central bankers and regulators, had finished an 8 month study into the internal failings of credit markets.
The FSF's recommendations included calls for improvements to credit rating agencies, greater oversight, improved transparency, and improvements to tools available when credit problems do arise.
Meanwhile, US Treasury Secretary Henry Paulson called on the IMF to increase surveillance of the challenges in the forex market. Paulson stressed that "currencies... not set by market forces in deep, liquid markets" need precise analytics.
Mr. Paulson also continued his regular push for IMF reform. Paulson has long pushed for shrinking the board by 4 seats, from 24 to 20.
On another front, the US Treasury Department hosted a dinner Friday for private banks, urging them to match the recent vigor of the central banks.
Read more at CNBC, 2nd CNBC Story, and the BBC
IMF, G7
Weekend Meeting - G7, IMF, World Bank
Apr 11, 2008
Hello everyone. While today's GE numbers and news of Lehman tapping into their new cash may lead the market lower next week, I think the big news is happening in Washington DC. Officials from the G7, IMF, and World Bank will be meeting to discuss the global credit crunch, rising commodities, and forex. Stay tuned for updates!
Chuck E Cash
IMF, G7, World Bank
India Inflation Hits 3 Year High of 7.41%
Apr 11, 2008
Rising food prices in fruits and vegetables, spices, wheat, and fish sent India's inflation to a 3 year high of 7.41%. The number was well above expectations, as the market expected a reading of 7.05%.
The Reserve Bank of India (RBI) is scheduled to meet April 29. The new inflation numbers has raised expectations that bank will act to curb inflation.
Read more at Times of India
Rupee, inflation
Peru Central Bank Raises Rates, Reserve Requirements
Apr 11, 2008
In a largely unexpected move, the Peruvian central bank raised rates 0.25% to 5.50% last night. In addition, the Peruvian central bank also tripled foreign reserve requirements from 40% to 120%. These moves were taken to curb growing domestic consumer demand AND term deposits taken out by foreign banks. The news sent the sol down 0.9% to 2.739. The sol is up 21% over the last 2 years.
Read more at Bloomberg
PIMCO Chief: End of FED Rate Cutting Near
Apr 10, 2008
PIMCO CEO Mohamed El-Erian suggested the Fed may stop cutting rates at around 2%. Appearing on CNBC's Squawk Box, El-Erian said "If the Fed can do what it wants to do it will stop at around 2 (percent) and the (yield) curve will stabilize and two-year (bond) rates will reflect it...But the big question is, can the Fed get what it wants? And what it wants is the financial contraction to stay in the financial sector."
El-Arian also indicated that he believes the dollar will continue to weaken against Asian currencies.
Read more at CNBC
Fed
Bank of England Cuts Rates 0.25%
Apr 10, 2008
The Bank of England cut rates 0.25% to 5% on Thursday, as was largely expected. This is the 3rd rate cut since December 07,and is a full 0.75% lower than the peak rate of 5.75%.
In response, many of the UK's mortgage lenders announced their intention to cut mortgage rates by a full 0.25%. On Tuesday the Halifax reported that house prices had fallen 2.5% in March, making it the largest month-to-month decline since September 1992.
Read more at the BBC
Bank of England, BOE
ECB Holds rates Steady, Euro Hits Record $1.5912
Apr 10, 2008
As expected, the European Central Bank held rates steady at 4% Thursday. Prior to the announcement, the Euro hit an all time high of $1.5912. The previous high of $1.5904 was set just 3 weeks ago on March 17th.
In late trading, the 15 nation Euro currency gave back some pf the gains, trading at $1.5828.
Read more at Yahoo
ECB, Euro, European Central Bank
Meet the new Boss, same as the Old Boss
Apr 9, 2008
Masaaki Shirakawa, acting governor for the Bank of Japan, was confirmed by the upper house of Japanese parliament Wednesday. This came after the previous 2 nominees had been rejected. The upper house, lead by the Democratic Party, is opposed to appointing retired bureaucrats, as the 2 previous nominees were. to the central bank. Two seats remain open on the Bank of Japan's board, and will likely stir more trouble between the ruling party and opposition Democratic Party.
The Bank of Japan held rates steady at 0.5%, as expected.
Read more at CNBC
Bank of Japan
IMF Cuts Global Growth Forecasts
Apr 9, 2008
The IMF reduced its' global growth forecast to 3.7% in 2008 and 2009. That is 1.25% lower than gobal 2007 growth.
The IMF forecasts UK growth at 1.6% for 2008 and 2009, that is below the Treasury forecast of 2% and 2.5%.
The IMF is forecasting a "mild recession" in the US in first half of 2008. and a slow rebound from the second half of 2008 through at least 2009.
Additionally, the IMF forecasts continued credit problems resulting from over valued housing in the US, UK, Spain, and Ireland.
IMF 2008 Global Forecasts
United Kingdom: 1.6%
Eurozone: 1.4%
United States: 0.5%
Read more at BBC
IMF
Real Rises on Rate Speculation
Apr 8, 2008
Brazil's Real posted gains for a 6th day on market speculation the central bank will raise rates next week. In the past year, the Real has gained 20% on the greenback.
Economists also raised forecasts for end of the year lending rates from 12% to 12.5%.
Read more at Bloomberg
Real
Pound Slips on Data, Expectations
Apr 8, 2008
The British Pound dropped against several major currencies on Tuesday. The Sterling moved down -1.3% against the USD to a 6 week low of 1.9670. Selling was triggered by a drastic increase in the Halifax house prices. The bad economic data raised the chances the Bank of England will cut rates to 5% when they meet on April 10. The ECB is still expected to hold their currency at 4% on April 10.
Read More at Bloomberg
Bank of England, GBP, Pound
British Pound Bull Run - Buh Bye?
Apr 4, 2008
The British Pound (GBP), has been the winning horse in the USD trade for several years now. In 2001, the Sterling was 1.40, 36% below the high of November 2007.
The US housing sector looks bleak (like the Cubs, *sigh*), commodities are shooting through the roof, the Dems + media are talking down the economy daily, and the USD just had the worst quarter in 4 years. So the Pound will soldier on, right?
Not so fast! In this video, Adam Hewison examines the future prospects of the GBPUSD trade Using MarketClub's triangle trading system and Fibonacci retracements, he shows technical analysis suggesting the GBP is about to give up some of its' strength. Specifically, the GBPUSD market has already crossed the 32% fibonacci retracement from the high of 2.1161. After a short rebound from the 32% line, the market appears headed to the 50% retracement of 1.9109.
If that all sounds confusing, dont worry! Adam keeps it simple. and the charts do a great job of telling the story. Watch GBP/USD Technical Analysis
fibonacci, GBP, Pound, USD
Bernanke Warns of Contraction
Apr 2, 2008
US Fed Chief Ben Bernanke warned the economy 'could even contract slightly' on Wed April 2. During congressional testimony, the Chairman also stated that recent moves - interest rate cuts and liquidity measures such as opening the discount window to investment banks - appear to have 'helped stablize the situation'.
Bernanke's comments did not offer much clarity on the chances for further rate cuts.
Read more at the Financial Times
Bernanke, Fed
Mexican Peso at 2 Year High
Apr 1, 2008
The Mexican Peso hit a 2 year high of 10.60 on April 1st. The currency has been lifted by a couple factors - the central bank is expected to keep rates steady, and the new rules allow pension fund managers to increase equity exposure. increased economic growth in January, and relatively low volatility.
Read more at Yahoo
Peso
There is a substantial risk of loss in forex trading.
You should only trade with risk capital that you can afford to lose without impacting your lifestyle or retirement plans.
The views expressed on this site represent the current good faith views of the authors at the time of publication. Please be advised that these views are subject to change at any time and without notice.
