NEW YORK – Stocks rocketed higher and interest rates fell Monday after investors were reassured by a nearly $1 trillion plan to avoid a European debt crisis.
The Dow Jones industrial average rose about 390 points. The Dow and broader stock indexes rose more than 3 percent. Markets also barreled higher in Europe.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55 percent from 3.43 percent late Friday. Read more…
You don’t have to be a daily trader to take advantage of the forex market – every time you travel overseas and exchange your money into a foreign currency, you are participating in the foreign exchange (forex) market. According to the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivative Market Activity conducted by the Bank for International Settlements, the forex market generated $3.2 trillion dollars worth of transactions each day. This makes the forex market the quiet giant of finance, dwarfing over all other capital markets in its world.
Despite this market’s overwhelming size, when it comes to trading currencies, the concepts are simple. Let’s take a look at some of the basic concepts that all forex investors need to understand. Read more…
Talking Points
•   Japanese Yen: BoJ to Maintain Accommodative Policy
•   Pound: U.K. Home Prices Increase for Fourth Month
•   Euro: ECB Concludes Swap with SNB
•   US Dollar: Risk Trends to Drive Market Volatility
British Pound Continues to Retrace the Decline From December, Euro Remains Supported by 200-Day SMA
The British Pound crossed back above the 50-Day SMA (1.6338) during the overnight trade to reach a high of 1.6381, and the GBP/USD may continue to retrace the decline from December as market participants raise their appetite for risk. Meanwhile, Ernst & Young’s Item Club held a cautious outlook for the U.K. and said that the region faces a “challengingâ€? year as households face a weakening labor market paired with tightening credit conditions, and forecasts the growth rate to increase at an annual pace of 1.0% in 2010 as the expansion in monetary and fiscal policy continues to feed through the real economy. Read more…
The dollar has fallen for much of this decade, and lately the decline is picking up speed. Already down more than 15% against the euro since March, the buck is expected to sink another 10% by the first quarter. Usually, when a once-strong asset falls this far out of favor, the correct long-term strategy is clear: Be a contrarian and buy.
But the dollar isn’t an asset — it’s a vehicle through which investments are made. And the fact that investors around the world are buying more and more non-U.S. assets suggests that the dollar will keep falling. Read more…
The declining value of the U.S. dollar has been making financial headlines lately. After hitting an all-time low in April 2008, the dollar rallied strongly in last fall’s financial crisis as investors sought safe havens, but it has once again fallen as the world economy has recovered. As of Oct. 19, 2009, the IntercontinentalExchange Dollar Index has fallen about 15% from the high it reached in early March.
he causes behind the weak dollar are many and complex, but essentially this means that investors around the world have become less confident in the future stability of the dollar and more confident in other currencies. The effects of the weakening dollar can also be complicated, but the upshot is that it’s cheaper for people in other countries to buy American-made goods and services and more expensive for Americans to buy things sold in other currencies. Read more…
One of the great advantages of trading currencies is that the forex market is open 24 hours a day (from 5pm EST on Sunday until 4pm EST Friday). Economic data tends to be one of the most important catalysts for short-term movements in any market, but this is particularly true in the currency market, which responds not only to U.S. economic news, but also to news from around the world. With at least eight major currencies available for trading at most currency brokers and more than 17 derivatives of them, there is always some piece of economic data slated for release that traders can use to inform the positions they take. Generally, no less than seven pieces of data are released daily from the eight major currencies or countries that are most closely followed. So for those who choose to trade news, there are plenty of opportunities. Here we look at which economic news releases are released when, which are most relevant to forex (FX) traders, and how traders can act on this market-moving data. Read more…
It was a tenuous week; but the dollar was able to ultimately hold its own through the close. However, just because momentum behind the earnings-driven rally in risk appetite has stalled does not mean that the world’s most liquid currency has avoided a collapse all together.
Fundamental Outlook for US Dollar: Bearish
-Â Fundamentals support a recovery in US and global growth, but how does risk appetite factor in?
-Â Bernanke sees signs of stabilization, calls focus on the deficit
-Â Do technicals call for a dollar collapse or recovery.
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