Forex Futures Forum Archive for 12/11/2006

hk ab 23:26 GMT December 11, 2006 Reply   
It's good to wake up with gold above 630 again!

syd 21:13 GMT December 11, 2006 Reply   
Economists universally expect Federal Reserve policy makers will keep interest rates steady at the conclusion of their meeting Tuesday, while signaling a continued level of concern over inflation that will keep alive the prospect of further interest rate hikes.

In doing so, the likely outcome of the meeting will keep central bankers somewhat at odds with bond market expectations that they will be cutting rates at some point over coming months.

Economists reckon the trajectory of recent economic data, coupled with voluminous comments from central bankers, means the Fed will maintain its overnight target rate at 5.25%. That rate has been in place since Aug. 8, and if the Fed meets expectations, it would be the fourth straight gathering at which monetary policy has been left unchanged.

The utter lack of controversy surrounding what the rate setting Federal Open Market Committee will do with monetary policy drives any possible drama to the wording of the Fed's policy statement. Central bankers use that document to briefly sketch out the reasons for their rate actions.

Tuesday's meeting is widely expected to see officials remaining concerned by the level of inflation currently prevailing in the U.S. economy. "They are going to stick to their previous statement" and signal "inflation is more of a concern" than a slowing economy, which signals "a risk" of future rate hikes, said Charles Lieberman, chief economist with Advisors Financial Center in Paramus, N.J.

His expectation of a hawkish inflation line rests on still tight labor markets and ongoing pressure on prices throughout the economy. "I don't see anything that's moderated inflation pressures" since the last Fed meeting, Lieberman said.

Indeed, central bank concern over inflation pressures seems a sure thing. In a speech given at the end of November, Fed Chairman Ben Bernanke called price pressures "uncomfortably high," and added "whether further policy action against inflation will be required depends on the incoming data." Other central bankers have said similar things, thus exposing the depth of the Fed's anxiety.

Many analysts believe the central bank will state its inflation concerns in a fashion similar to recent meetings. That means a replay of the Oct. 25 FOMC statement is highly likely. Then, officials said "readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures." Expect to see something similarly worded on Tuesday.

The Fed will also offer its assessment of economic growth, and there economists find less to agree on. To be sure, most concur recent months have shown only modest advances. But forecasters' individual levels of alarm are tempered by views on whether the current troubles are temporary, or more enduring. Given the uncertainty over the outlook, the Fed may tackle this subject with even more brevity than usual.

"I don't think the economic outlook today is much clearer than it was last month," said Victor Li, associate professor of economics at Villanova School of Business in Villanova, Penn. "There is still some evidence of a slowing economy," but it remains to be seen what will happen through the holiday spending season, Li said.

Because the Fed's rhetoric will almost certainly point to the threat of higher rates, even as it falls short of ensuring that reality, the statement may cause some friction with Wall Street's various camps.

The bond market has long expected a fairly extensive series of rate cuts, although those odds were pared back somewhat when the government said Friday hiring in November remained relatively robust. Meanwhile, most economists also believe the Fed will trim rates, according to a survey by Dow Jones Newswires. But they see the easing coming later than bond investors, with the funds rate settling to 5% by the end of 2007. That forecast jibes with that of the elite monthly Blue Chip Economic Indicators poll, which sees the same path for rates.

Merrill Lynch economists are more downbeat than the rest of the forecasting community. They told clients "we believe this expansion is getting long in the tooth" and continued housing sector troubles will add enough drag to the economy to drive the Fed cut to 4% by the close of 2007.

On the other side, Advisors Financial Center's Lieberman is part of a small camp that expects the Fed will be forced by inflation to push interest rates up sometime next year. While not many forecasters agree the Fed will move higher, they at least agree that the environment could support such an action. The Blue Chip forecast for the Fed's preferred inflation gauge will leave price pressures above the central bank's understood comfort zone through the coming year.

syd 20:31 GMT December 11, 2006 Reply   
Tax Break On Mortgage Insurance Could Spur Home Buying


Home buyers are getting a new tax break in 2007. Congress passed legislation over the weekend that will allow American home buyers to write off the cost of mortgage insurance premiums on their federal income-tax returns. The move could spur a small surge in home buying in the deteriorating housing market.

"We see this as a great boon for potential home buyers, especially first-time buyers, who can't afford 20% for a down payment," said Jeff Lubar, director of communications for the Mortgage Insurance Companies of America.

"It's designed to help those that need it most - low- to moderate-income Americans," said Kevin Schneider, president and chief executive of Genworth Mortgage Insurance.

Up until now, home buyers who took out mortgages with less than a 20% down payment had to pay a mortgage insurance premium that wasn't tax deductible. Lubar believes the tax break could trigger a surge in home buying, especially among first-time buyers.

"Absolutely. We think this is going to help people who are on the cusp" of buying a home, especially in conjunction with government insurance programs, such as FHA, VA and USDA Rural Housing, Lubar said. "We think as many as two million families may benefit from this."

Under the program, borrowers, whose household incomes are $100,000 or less, will be able to deduct the full cost of their mortgage insurance premiums on their federal returns.

Lubar said his firm, along with a coalition of others, including the National Association of Mortgage Brokers, the Manufactured Housing Institute, the National Association of Real Estate Brokers, and Americans For Tax Reform, had been pushing to get the tax break approved for three years. "It had actually passed the Senate three previous times," but never made it through Congress, he said. "It was always part of larger legislative packages" that died along the way, he said.

Kevin Schneider said the entire mortgage-insurance industry had been lobbying hard for the change. He said the tax break could prompt more home buyers to opt for low-down-payment mortgages rather than taking out second mortgages, or piggy-back loans, to avoid paying the insurance premium.

"The interest expense on that second mortgage was tax deductible, but our product wasn't," he said. "So, I see this as putting us on level footing."

"In today's environment with the uncertainty in the housing market, this is just a safer, affordable and now tax deductible alternative to some of the more exotic products that are out in the marketplace," Schneider said.

Home-building experts believe the tax break will help first-time buyers, but they aren't convinced it will create a surge in home buying in the current environment.

"Yes, on the margin, it should help some people, who couldn't afford a home otherwise, to buy one," said JMP analyst Alex Barron. However, he said home buyers need to sees definitive signs that the housing industry has bottomed before home buying surges back.

"They need some sense of confidence that home prices are not going to continue to erode," said Barron. "That's what's keeping buyers on the sidelines."

Barron said many buyers either can't afford the high prices, are having trouble selling their existing homes in order to purchase a new one, or are just "afraid to buy" because they continue to see builders slashing home prices and offering incentives.

"They realize that if they buy today, they might be under water or losing their equity a month from now," said Barron.

Barron is predicting home prices will fall 15% to 30% from their peak in the Summer of 2005 before they bottom. As a result, he believes prices will drop another 10% to 15% before they stabilize in late 2007 or early 2008.

Michael Carliner, an economist with the National Association of Home Builders, doesn't see the mortgage insurance tax break triggering a rebound in home buying.

"I don't think it will create a surge, but it may mean there's more use of independent private mortgage insurance, which is probably better for the financial system," he said. The tax break may "change the way things are financed, but not how much things are financed."

hong kong seek 15:56 GMT December 11, 2006 Reply   
good night

hk ab 15:50 GMT December 11, 2006 Reply   
seek, with your info and gold now above 628, I can say gd night now. see you tomorrow.

hong kong seek 15:47 GMT December 11, 2006 Reply   
AB--big c9 still holding short around 600~610

hk ab 15:40 GMT December 11, 2006 Reply   
seek, do you still have prisoners c9 in your bucket shop?

hong kong seek 15:35 GMT December 11, 2006 Reply   
wide range i think..

hk ab 15:28 GMT December 11, 2006 Reply   
look at the strong silver.

hk ab 15:27 GMT December 11, 2006 Reply   
seek//that means?

hong kong seek 15:26 GMT December 11, 2006 Reply   
AB-- wide spread on gold future market...

hk ab 15:19 GMT December 11, 2006 Reply   
wonderful silver support.

hk ab 14:44 GMT December 11, 2006 Reply   
this 13.71 is very very strong.

hk ab 14:19 GMT December 11, 2006 Reply   
I prefer not to disturb him. He did teach us how to trade in s/t adverse situation. but I am afraid that archive is deleted already.
anyway, i trust the 800 mark but maybe Feb 2007

hk ab 14:18 GMT December 11, 2006 Reply   
so far, so well defended 13.7

hong kong seek 14:17 GMT December 11, 2006 Reply   
AB-- long time no c BC ..he is now on political forum...

hk ab 14:16 GMT December 11, 2006 Reply   
silver and gold, go......

hk ab 14:10 GMT December 11, 2006 Reply   
silver strong support 13.7

hk ab 14:06 GMT December 11, 2006 Reply   
not much momentum left on gold and silver, just long silver and gold short term with tight stop today low is fine. For longer term, just scale in every $5 dlrs down.

hk ab 13:57 GMT December 11, 2006 Reply   
seek, liquidity is quite low now.

hk ab 13:55 GMT December 11, 2006 Reply   
GD, are you around?

hong kong seek 13:38 GMT December 11, 2006 Reply   
AB--patience shud be the most important now...i will not scale in more until confirming signals on gold rising..

hk ab 13:37 GMT December 11, 2006 Reply   
gold and silver sellers' momentum are dissipated here.
buy time.

hk ab 08:53 GMT December 11, 2006 Reply   
add more and more gold longs 628.

hk ab 08:41 GMT December 11, 2006 Reply   
seek, no 1.12

hong kong seek 08:38 GMT December 11, 2006 Reply   
NT--ths , on the way to 1.14

syd 08:28 GMT December 11, 2006 Reply   
Forex Focus: Kiwi's Rally May Not Last Much Longer


Reserve Bank of New Zealand Governor Alan Bollard threatened late last week to halt the kiwi's rise with intervention if he has to.

But, given the current trends in the global economy, his resolve is unlikely to be tested. If anything, the markets will do Bollard's work for him - turning the currency back down as global growth slows and carry trades gradually lose their attraction.

Sure, like other commodity currencies, the New Zealand dollar is riding high at the moment - buoyed by price rallies in energy, gold and other raw materials.

The fact their economies also remain robust with high employment rates and forecasts for further interest rate hikes, it isn't surprising that the kiwi has been able to recover 13% from its lows seen this summer and push back up to levels last seen in January this year.

It is just this that has triggered Bollard's concern as the country battles with a growing trade deficit and fears for the future of its export industry.

"If we (the RBNZ) think (the New Zealand dollar) is exceptionally and unjustifiably high and we think that intervention is an option for us then we've got the tools to do that," Bollard warned.

However, David Forrester, a currency strategist with Barclays Capital in Singapore, isn't looking for any early action from Bollard.

Apart from the fact that the kiwi already looks overvalued, he feels that a decline in the currency probably doesn't fit with immediate policy aims.

"The higher exchange rate is one of the factors helping bring inflation back down into the 1-3% targeting band," he said.

"It is also allowing the dovish Bollard to hold off on hiking (interest) rates," Forrester added.

Tony Pearson, head of Australian economics at ANZ in Melbourne, is equally skeptical that Bollard would actually launch an intervention exercise.

"We shouldn't read much into this as the New Zealand dollar cannot be described as ("exceptionally and unjustifiably high"), while any attempt to take on the market would be a huge challenge," he said.

If anything, he reckons that the kiwi has more upside potential in the near term. "$0.7000 remains the target over the coming week and potentially higher pre-Christmas," Pearson predicted.

The uptrend is certainly supported by the continued firm performance of crude oil prices and rally in commodity prices in general.

However, this all belies continued concern about the state of the global recovery. Since late November, evidence that the U.S. economy isn't quite as robust the market anticipated has been stacking up.

Now, instead of contemplating another possible rise in U.S. interest rates that would keep the dollar supported, the market is starting to debate when a cut in U.S. interest rates can be expected.

The impression that this slower growth in the U.S. is being reflected elsewhere in the world came on Friday with the latest gross domestic product data from Japan.

These showed that the economy expanded by only 0.2% in the third quarter instead of the 0.5% increase that had been initially estimated. Year-on-year growth was cut back to 0.8% from 2.0%.

For the kiwi, and its Australian counterpart, this slowdown could also bring the double whammy of a slide in commodity prices as well as a decline in carry trades as global investors lose their appetite for risk.

As seen in the past, a rise in risk aversion generally prompts a withdrawal from high-yielding more risky markets, a move that would certainly undermine the flows that have been helping to support the kiwi in recent months.

With New Zealand interest rates up at 7.25%, the currency has been the beneficiary of investment flows borrowing in lower yielding currencies such as the yen, where interest rates remain down at 0.25%.

hong kong nt 08:27 GMT December 11, 2006 Reply   
AB/SEEK -- worth a read.. http://www.aimykhui.com.hk/images/upload/7acabe34614aed5d68e73f1e4660f4f0.pdf

SEEK -- check yearly range of last few years and you may have a rough idea of the downside target of USD/CHF...

hong kong seek 08:17 GMT December 11, 2006 Reply   
NT-- how about CHF?.short some at 1.2050 1.2060 1.2080..what's yr target??

hk ab 08:15 GMT December 11, 2006 Reply   
nt, very very true. agree with 620-680 pic.

hong kong nt 08:14 GMT December 11, 2006 Reply   
SEEK -- looks 620-680 monthly range looks more promising now...

hong kong seek 07:45 GMT December 11, 2006 Reply   
hk ab 06:16 GMT December 11, 2006
the Chinese buying restart again.

maybe bc is now buying ...

hong kong seek 07:44 GMT December 11, 2006 Reply   
crying for my expensive options... =.=''

hong kong nt 07:33 GMT December 11, 2006 Reply   
AB -- lack of follow through usually implies underlying strength...

KL KL 07:33 GMT December 11, 2006 Reply   
so after buying the gold where is the Pain for SL??...LOL

hk ab 06:49 GMT December 11, 2006 Reply   
nt, u don't look for a $45 correction?

hong kong nt 06:40 GMT December 11, 2006 Reply   
AB -- hope good size accumulation after $25/30 correction may work...

hk ab 06:16 GMT December 11, 2006 Reply   
the Chinese buying restart again.

hk ab 05:41 GMT December 11, 2006 Reply   
keep faith in gold.

hk ab 05:12 GMT December 11, 2006 Reply   
nt, the japs might want to create a game before Xmas for their holiday tour money.

Personally, I see e/j might be the leader. Unfortunately, someone doesn't want to give up the carry that early.

hk ab 05:02 GMT December 11, 2006 Reply   
nt, bought some 625 this morning next order for every down 5 dlrs. Hopefully, the larger entry @605 hit. Your advice?

hong kong nt 04:24 GMT December 11, 2006 Reply   
AB -- start to buy gold and gbp now. God, please give strength...

hk ab 04:19 GMT December 11, 2006 Reply   
the gold is bottoming. nt, any interest to long here?