Forex Yellow Pages

The US dollar traded modestly higher through end-of-week currency trading, as sizeable declines in the Dow Jones Industrial Average encouraged traders to close dollar-short positions. Indeed, the dollar has kept a strongly negative with the Dow Jones and other risky asset classes—effectively trading lock-step with the now-infamous forex carry trade. The dollar now carries the third-lowest overnight interest rate of all G-10 currencies, and traders have taken advantage of that fact to sell it against high-yielding counterparts. Yet signs of market duress will easily shake increasingly risk-averse speculators out of their low volatility forex strategies, and the dollar will likely gain on any continued drops in the Dow and S&P 500.

Read more…

Last week has been a tough week for the US dollar. On Wednesday the greenback fell to a record low against the Swiss franc and now it ends the week not far from its 2.5 year low against the Japanese Yen. Negative retail sales, signs of a recession in the US manufacturing and housing sectors as well as bearish comments from Federal Reserve Chairman Ben Bernanke all provide strong reasons for the dollar’s weakness. Although we do not believe that the greenback has hit a bottom, we would not be surprised to see a bounce in the dollar this coming week. The US economic calendar is light with the only potentially market moving report being Thursday’s existing home sales data. Don’t forget that today (Monday) is President’s Day which means that US markets are closed. This gives traders the opportunity to seriously think about whether the Federal Reserve will really deliver a 75bp rate cut. Fed fund futures are now pricing in a 72 percent chance that the move will happen. The possibility of an inter-meeting rate cut is also being floated around, contributing to the dollar’s weakness. If the Federal Reserve fails to deliver, those who have short the dollar on this expectation will have to adjust their positions accordingly. We continue to stress that a 75bp rate cut is a severe move. The last time the Federal Reserve lowered interest rates by three quarters of a point was during Volcker’s term when he raised interest to as high as 20 percent to curb double digit inflation growth. Over the last 30 years, there has been 4 recessions in the US economy. An interesting question to ask is if the Federal Reserve has cut interest rates by more than 75bp to fight a recession? Yes. In the past 3 decades, there have been times when the Fed cut rates by 200bp in a single meeting, but interest rates at the time was 18 percent. Since US interest rates are now at 4.25 percent, a 75bp rate cut on a percentage basis would be far more significant than a 200bp cut when rates were at 18 percent.

Read more…

Retail sales and producer prices both contracted in the month of December, leading many traders to wonder whether the US economy will fall into recession. Spending on cars, electronics, furniture, gas station receipts, building materials, clothing and sporting goods all declined, reflecting a broad based slowdown in consumer demand. According to Bloomberg News, this is the worst year for US retailers since 2002. With the growth in the labor market already slowing, will the drop in consumer spending push the US economy into a recession and if so, what does this mean for the US dollar?

Read more…

You can be super motivated to trade, filled with deep optimism, have millions of trading capital available, and a solid trading strategy, but if you don’t devote your full concentration to the trade that you have on at the moment, you will lose money.

Read more…

First of all, we at ForexYellowPages.com would like to wish you all a Happy New Year!

Read more…