[فورإكس] [يلّوو بجس]

سيثبت ال [رسرف بنك] من أستراليا معدل قرار المرحلة هذا أسبوع بما أنّ حاكمة [غلنّ] [ستفنس] يكون توقّعت أن يخفّض الصوة نسبة الفائدة ب [50بب] إلى 5.50% أمام ال [إكب] و [بو] [بوليسي ميتينغ] في يوم الخميس. توقّعت البنك مركزيّ أن يهدأ سياسة للاجتماع ثالثة متتابعة بما أنّ خوف من فترة ركود شاملة يستمرّون أن يطرح تهديد إلى ال [$1ت] اقتصاد.

خفّض ال [رسرف بنك] أستراليا الصوة نسبة الفائدة ب [100بب] [فور ث فيرست تيم] بما أنّ 1992 بما أنّ خوف من انصهار شاملة شدّدوا. ال [ربا] أبدى دقائق أنّ البنك مركزيّ شقّ [بورّووينغ كست] لالثاني اجتماع متتابعة أن يخفّض النسبة الفائدة إلى 6.00%, يفيد أنّ الحركة غير متوقّع كان `مناسبة' [إين وردر تو] هراوة من إنخفاضات بعيدة في ال [$1ت] اقتصاد. في الوقت نفسه, قال حاكمة [غلنّ] [ستفنس] أنّ الخطر من `كارثة شاملة' قد مات إلى أسفل نتيجة الجهود خارق للعادة يؤخذ فوق ب [بوليسي مكر] عالميّا, غير أنّ يرفع مضاربة أنّ ال [ربا] سيستمرّ أن يهدأ سياسة أبعد بما أنّ الاقتصادات كبريات حول العالم ينزلقون داخل فترة ركود.

تعاقد [رتيل سل] و [برودوسر بريس] كلا في الشهر ديسمبر - كانون الأوّل, يقود كثير تجار أن يتساءل ما إذا ال [أوس] اقتصاد سيسقط داخل فترة ركود. انخفض إنفاق على سيارات, إلكترونيّة, أثاث لازم, محطّة بنزين إيصالات, [بويلدينغ متريلس], لباس و [سبورتينغ] بضائع جميعا, يعكس إبطاء إعتماد واسع في مستهلكة طلب. 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?

Is the US Dollar Headed for More Losses?

Before discussing whether the US economy will fall into a recession or how much the Federal Reserve will lower interest rates, it is important to talk about what is in store for the US dollar. Despite weak retail sales and producer prices, the dollar did not weaken across the board today. In fact, it strengthened against the Euro, Australian and New Zealand dollars while selling off only against the Japanese Yen, British Pound and Canadian Dollars. The main reason for this price action is because the weak data has caused a sharp rise in risk aversion. The Dow dropped as much as 275 points today, triggering massive carry trade liquidation. Over the past few years, the AUD/USD, NZD/USD and to some degree also the EUR/USD all were bought for carry trades. However the latest wave of weakness in the high yielders may actually provide good buying opportunities if the dollar continues to weaken. As the Federal Reserve lowers interest rates, stability should be restored in the financial markets, allowing the currencies of countries with strong fundamentals and inflation pressures to appreciate once again. One great example is the Australian dollar. A tight labor market, rising consumer demand, higher inflation pressures and $900 gold prices all point to medium term gains for the currency. The only reason why it sold off today is because of carry trade liquidation. USD/JPY could also extend its fall because Japan will not able to raise interest rates if US growth slows materially.

Recession or No recession?

As for the US economy, although some economists will argue that the US economy is already in a recession, we do not agree. The definition of a recession is two consecutive quarters of negative GDP growth and in the last two quarters, GDP growth was strong. Even if the economy contracted in the fourth quarter, that would be one quarter of negative growth, not two. The first quarter has just started so it is too early to tell how the US economy will fare. Also, retail sales were bad but spending has been very volatile. Back in June and January of 2007, spending also contracted after a month of solid growth. Retail sales in November increased 1.0 percent which means that part of the decline in December was payback for the strong numbers. The Federal Reserve has the power to determine whether the US economy falls into a recession. If they step up to the plate now they can still prevent the slowdown from worsening.

50bp is a Band-aid

The futures market has completely priced in a 50bp rate cut, but this may only be a band-aid for a growing problem. Long term yields have remained stubbornly high and even though they will fall on a half point rate cut, the relief to borrowers may be minimal. The Federal Reserve really needs to act aggressively to restore confidence in the financial markets and to stabilize the economy. This means that either an interest rates cut now (yes, that would be an inter-meeting rate cut) or 75bp of easing at the end of the month. The goal is to send let the markets know that the Fed is not playing around and will do everything in their power to prevent a recession from happening. With producer prices falling, the Federal Reserve actually has the flexibility to make a larger move. Yesterday the Baltic Dry Index had its largest two day decline on record. The index is usually used as a measure for global commodity demand and the fall suggests that demand is slowing, which should relieve some of the upside pressure on commodity prices.

But will the Federal Reserve really cut by 75bp?

Probably not.

Since Bernanke’s term as Fed Chairman began in 2006, we have seen no surprises from the central bank. They have always done exactly what the market expected. Even though growth is clearly slowing, inflation risks are still to the upside. Bernanke is a hawk by nature which means that it will be difficult for him to take any measures that risks stoking inflation in an environment where the US dollar is already pushing prices pressures higher. Also, there has only been one 75bp rate hike in the past 15 years, the last time that interest rates were reduced by more than 50bp at a single meeting was in 1984, after former Fed Chairman Paul Volcker had taken interest rates to a high of 20 percent to tame double digit inflation. By raising interest rates as aggressively as he did, Volcker managed to bring inflation down from its peak of 13.5 percent in 1981 to 3.2 percent by 1983. We are not coming off double digit interest rates or even high single digit interest rates at the moment which means that a more aggressive move may be off the radar for Team Bernanke.

Expect the January 30^th Federal Reserve interest rate decision to be an interesting one. The market is currently pricing in a 50 percent for a 75bp interest rate cut. However as we have all seen, market expectations can change quickly. Bernanke will be giving his congressional testimony on January 17^th while President Bush is slated to deliver his State of the Union address on January 28^th. It will be difficult for the Fed Chairman not to shed more light on his plans for monetary policy. As for the President, there is a decent chance that we could see new policy proposals like tax rebates aimed to stimulate the economy.

In the meantime, once the US equity market stabilizes, broad based dollar weakness could resume. The highest probability trades will be to sell the dollar against the currencies of countries that are still looking to raise interest rates or to keep them unchanged.

Written by Kathy Lien, Chief Strategist

Source: Dailyfx.com

Was it a pause that refreshes or a sign of an intermediate term top? Dollars bulls and bears battled each other to a standstill as the pair tried but failed to make a new record high. On the other hand  any attempts to take it lower were met with steadfast bids. As we noted earlier in the week, ‘the market remains resolutely dollar bearish, keeping any retracements in the EURUSD relatively shallow. Only if the EURUSD breaks below the important 1.4500 figure will we have confidence that a serious correction in the pair has commenced.  For the time being the market continues to give the benefit of the doubt to the ECB while expecting the Fed to steadily lower rates.’

The greenback is beginning to suffer from another problem. Up until very recently  US was able to attract enough foreign capital to offset its massive trade deficits, but last months TICs data shattered the complacency of the market when it printed at -$69 Billion versus forecasts of $65 Billion surplus. This months data didn’t do much better printing only $26.4 Billion against $71.5 Billion forecast. If foreign capital flows are indeed drying up the long term structural implications for the greenback are very negative.  Friday’s announcement by UAE that it is considering a replacement of the dollar peg with a broad currency basket could only be that start of a massive  move away from the dollar as the reserve currency of the  world.

Next week, holiday thinned trading should keep price action contained, but the buck faces more challenges as the calendar is chuck full of housing data which is expected to be dour yet again. The one thing that may boost the greenback could be the release of the FOMC minutes, assuming they are hawkish in tone. At this point conventional wisdom expects another rate cut from the Fed in December. If the committee signals that it will remain stationary, the dollar may get a reflexive bounce. Overall, however, the momentum is still with the bears.

Source: DailyFx

It has been a record breaking past few months in the currency markets.  While the EURUSD, the most actively traded pair in the world, made headlines when it surpassed its all time high late September; the story was quickly overshadowed by the Canadian dollar which reached parity with the US dollar.  Six months ago, parity still seemed to be a far fetched idea for loonie traders and now, the Canadian dollar is actually stronger than the US dollar.  Could the same thing happen to the Australian dollar?  Why not?  The currency pair is closer to parity now than the Canadian dollar was five months ago.  Although it is possible for the Australian dollar to be even with the US dollar, the better question to ask is whether it is probable. 

The Australian dollar has already made its mark by rallying over 15 percent in the past eight weeks to a 23-year high against the US dollar.  Clear similarities between the Australian and Canadian dollar’s advance could raise expectations that one Australian dollar could soon equal one US dollar. Like Canada, Australia’s economy is rich in natural resources; enjoys a strong economy supported by domestic spending; and has a central bank that is leaning closer towards further hikes than any sort of policy easing.

Read full article here.

Source: DailyFx

Over the past month, the value of the US dollar has fallen significantly with the once mighty greenback dropping to a record low against the Euro and a 31 year low against the Canadian dollar.  For currency traders, the dollar’s weakness has provided plenty of opportunities, but for the average person living in the United States, what does a weak dollar really mean?  As there are two sides of every coin, a weak currency also has its advantages and disadvantages. 

At a time when the US housing market is contracting, the job market is deteriorating and consumer spending is at risk, the

US economy needs a weaker dollar.  This is the primary reason why we do not expect the

US government and the Federal Reserve to stand in the way of further dollar weakness. 

Benefits of a Weaker Dollar

1) Increased Exports – One of the biggest reasons why a weaker dollar will help the US economy is because it increases the competitiveness of US goods.  It boosts foreign demand while keeping

US consumer demand domestic.  Over the medium term, this benefits the sales of US corporations which will eventually translate into more jobs and consumer spending.  It also helps to reduce the trade deficit, one of the most criticized aspects of the

US economy. 

2) Foreign Investment – There are three different ways that foreign investment can help the

US economy and the US dollar.  Over the past few years, foreigners have been big buyers of

US real estate.  According to a study by the National Association of Realtors, about one in five American real estate agents sold a second home in the year ending April 2007 to a foreign buyer.  A third of these buyers come from Europe, a quarter from Asia and 16 percent from

Latin America.  As the US dollar continues to fall in lockstep with house prices, foreign buyers could provide the support that the

US housing market needs to avoid a major crash.  The second support would be in the form of value hunting in the

US equity markets.  If the dollar continues to fall, foreign investors may begin to load up on companies with sound fundamentals that are also less vulnerable to a

US economic slowdown. Both of these factors are contingent upon the US dollar showing signs of stabilization.  Foreign investors will only swoop in with size when they believe that dollar weakness is nearing an end.  The third factor is less contingent upon the outlook for the US dollar.  A weaker dollar also makes US corporations more attractive buyout targets.  Sovereign wealth funds of countries like China and

Dubai are flush with cash and are on the lookout for good investment opportunities.

3) Increased Tourism – Tourism represents a big part of the

US economy. It supports employment for over 5.4 million workers and generates over $550 billion in annual revenue.  Canadians represent the biggest group of travelers into the

US.  We expect their share to rise even further now that the Canadian dollar is trading at parity with the US dollar.  In the beginning of this year, a USD$250 hotel room cost CAD$295, now it only costs CAD$250, which represent savings of over 15 percent.  Although the savings for Europeans are not as large, they too will see anywhere between a 5 to 10 percent discount in travel costs.  More tourism is always good for an economy. 

Disadvantages of a Weaker Dollar

1) Higher Costs for Foreign Goods – The most immediate disadvantage of a weaker dollar is the increased costs for foreign goods.  With a trade deficit of $59.2 billion, US consumers import far more than they export.  The number one country that the US imports from is

Canada, which is why the recent strength of the Canadian dollar is so important. Canadian drugs for example may not be as much of a bargain as they use to be.  The same is true for European handbags and other luxury items.

2) Tighter Monetary Policy – Higher costs for foreign goods imports inflation which is why a weaker currency in general is inflationary.  With oil prices hovering around $80 a barrel and the dollar falling through the floor, inflation is sure to pick up in the coming months.  Martin Wolf of the Financial Times makes a fantastic point when he said that “The resolution of each crisis lays the seeds of the next.” In order to get out of a crisis, the Federal Reserve will usually lower interest rates aggressively.  We saw this after the Asian and Russian crises of 1997 and 1998.  This eventually led to bubbles in the financial market, forcing the Fed to hike interest rates.  Although inflation is not a huge problem at the moment, the threat of inflationary pressures could prevent the Fed from lowering rates as much as they would have otherwise wanted or needed.

3) Foreign Travel Becomes More Expensive – From a consumer level, the weakness of the US dollar makes foreign travel more expensive, particularly to countries like Europe and

Australia.  Since the beginning of the year, the Australian dollar has appreciated more than 10 percent against the US dollar. Because of nothing other than currency fluctuations, travel to

Australia has become 10 percent more expensive.  The same is true for travel to

Europe except for the fact that the move is smaller on a percentage basis.

Can the US Dollar Fall Further?

The answer is yes.  A trend in the currency market can last far longer than many people would otherwise expect. We have seen one way directional moves last for months and in some cases, even years.  Interest rate outlooks play a major role in the future direction of currencies so with the market pricing in another 125bp of easing by the end of next year, the US dollar could easily fall to 1.50 against the Euro.  This is especially true if the ECB remains nonchalant about the Euro’s move.  At some point, the benefits of a weaker dollar such as increased exports and foreign investment will help to turn the

US economy around, at which point the dollar will begin to rise once again.

What Does This Mean for Your Investments?Regardless of whether you are actively involved in the currency market or monitor it at all, the value of the US dollar or currencies does matter.  Companies that do a lot of foreign sales will benefit the most because their foreign currency revenue will be higher when repatriated not because they sold more goods, but because their earnings from currency conversion will be larger.  The industries with the greatest foreign sales exposure are energy, technology and consumer staples.   Companies that produce commodities usually also benefit from dollar weakness while the companies that will be hurt the most are big importers.  If you have a view on where the US dollar is headed or want to hedge against some of your stock market exposure, the purest way to do so would be through trading or investing in the US dollar directly in the currency market. 

By Kathy Lien, Chief Strategist of DailyFX.com

Source: Daily Fx

Today’s recovery in the US stock market, carry trades and bond yields brought optimism back into the financial markets.  News that BNP Paribas will be reopening its three frozen funds and reports that four of the nation’s largest banks tapped the Fed’s discount window as a vote of confidence has been taken very positively by traders and investors.  Even though the rebound today was strong, which means that we could see a bit more extension tomorrow, traders need to be cautious because this is nothing more than a reflex rally. 

There was as much bad news as good.  All of the weekly reports including the ABC consumer confidence and mortgage applications fell sharply.  Confidence saw the steepest drop in 20 years.  Lehman Brothers became the first Wall Street bank to close down its subprime lending unit and will be laying off 1200 workers.  In fact, layoffs are being announced on a daily basis.  The estimated toll of subprime related job losses is approximately 37,000.  Even for the companies that are not cutting back on their workforce, they are not likely to be hiring either. 

The word on the street is that many companies have instituted hiring freezes.  With the costs of borrowing increasing and demand for corporate issued commercial paper falling, keeping profit margins steady is the top priority for most companies.  On a consumer level, a weaker labor market could put a big strain on household finances.  On top of the rising cost of mortgages, credit card lenders are also increasing their terms of credit.  This includes higher interest rates, lower lines of credit and more stringent review of finances.  This would of course spell weaker consumer spending and eventually weaker us growth.

Read full story here.

Source: Daily Fx

While horror stories about high-yield bonds may be in the headlines these days, you should not get rid of these funds quite yet. The worries about hedge fund meltdowns and too many of them in existence as well as the history of tight spreads is not going to take down these high yield bonds. In fact, all of this attention has actually caused spreads to widen just enough for them to be able to give portfolio managers some “breathing room” so that they can earn them money in the second half. While this range is still tight it is a lot more comfortable than it has been Of course, other hedge funds are going to step up and announce similar problems. However, the crisis should not spill over into equities and they also should not severely damage high-yield bonds. Sellers are not going to be stirred by the rash of junk-bond funded leverage buyouts. In fact, the tidal wave of private-equity deals are merely “speed bumps” that will test people but if you are patient, you will come through this just fine.

With a daily turnover estimated at around $1.8 trillion the answer to the question “Does the Forex make money?” is pretty obvious.

The bigger questions is: “For whom?”

With the opportunity for anybody and everybody with a computer and an internet connection to participate in the Forex to make money in recent years, thousands of individuals have had some exposure to the challenges of Forex trading.

Is The Forex A Fool’s Game?

According to some estimates, the vast majority, perhaps as high as 95%, lose money.

Is it a fool’s game, just an elusive dream to trade the Forex to make money to try and achieve financial security?

In view of the high failure rate, it is prudent for anyone who is contemplating entering Forex trading to do their homework first. While the majority fail to make consistent profits from the Forex, a minority do, and some of them make huge profits from the Forex.

The Realistic Mindset

What is the key? A realistic mindset when approaching the Forex, a commitment to learn and get a proper education, and then, application of the knowledge learned in a disciplined way backed up by perseverance!

For an individual who has already had experience trading stocks, or futures, the learning curve may only involve a few months when switching to the foreign exchange market.

For the complete novice the learning period will probably run into years, anywhere from 1 to 3 years according to some estimates.

During this time the novice will have to first get acquainted with the workings of the Forex, learning the terminology, and working with a demo account on a trading platform supplied by an online broker.

Months will need to be spent sitting in front of a computer screen studying candlestick charts, getting acquainted with specific patterns, learning to recognize high probability setups. There is no shortcut for this part of the educational process if you want the Forex to make money for you.

The Most Critical Factor

Then comes the most critical part of all: developing the mental discipline and emotional control necessary for safe trading.

The Forex can be a minefield for anyone who is not in control of their emotions. For a person who has a gambling instinct, the Forex will suck their account dry in a very short time. The Forex is not a game of chance.

Successful trades are the product of careful market analysis, an understanding of how the market moves acquired from months and years of experience, and a strict control of equity management.

Even with all that input, the successful trader will still regularly lose trades. As long as there are a greater number of trades that are successful, the Forex will make money for you.

Make An Informed Decision

If all this sounds overwhelming and a little foreboding, you are getting the picture of what is involved once you start down the road as a Forex trader.

On the other hand, this is a job that can be done from home, with as many hours committed to it as you wish to allow, and in the long term, once the skills have been acquired, the Forex can provide a substantial form of income.

Will the Forex make money for you? That is an individual question and will depend on all the variables discussed above. Do your homework, check out educational materials, examine your current workload and circumstances, be honest about your personality style, and then make an informed decision.