User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday September 22, 2008 - 21:32:08 GMT
Global Forex Trading - www.gftforex.com

Share This Story:
| | Email

FX Blog - DOLLAR FALLS BY MOST SINCE 1999, PAULSON’S BAILOUT PLAN FAILS TO PLEASE THE MARKETS

DOLLAR FALLS BY MOST SINCE 1999, PAULSON’S BAILOUT PLAN FAILS TO PLEASE THE MARKETS Last Updated 9/22/2008 5:27:44 PM EST (GMT +5)

TODAY’S BIGGEST PERCENTAGE MOVERS

USD/CHF (  -310 pips or -2.80%)

EUR/USD (  +310 pips or +2.15%)

EUR/NZD(  +415 pips or +1.95%)

THE STORIES IN THE CURRENCY MARKET

  • USD: DOLLAR FALLS BY MOST SINCE 1999
  • EUR:500 PIP RALLY PUTS 1.50 WITHIN REACH
  • GBP:RALLIES AS BOE FAILS TO COMMIT TO CUTTING RATES
  • JPY: BE CAREFUL OF THE CARRY TRADE RALLY
  • CAD: OIL SEES BIGGEST ONE DAY MOVE SINCE 1984
  • AUD: GOLD RISES ABOVE $900
  • NZD:DOLLAR WEAKNESS AND COMMODITY PRICES DRIVE NZD HIGHER

EXPECTATIONS FOR UPCOMING FED MEETINGS (NEW FORMAT)

 

** PERCENTAGES MAY NOT ADD UP TO 100% BECAUSE OF THE PROBABILITY OF LARGER OR SMALLER MOVES BEYOND THOSE SHOWN ON THIS TABLE

DOLLAR FALLS BY MOST SINCE 1999, PAULSON’S BAILOUT PLAN FAILS TO PLEASE THE MARKETS

The last thing that US Treasury Secretary Paulson probably hoped for when announcing his $700 Billion bailout plan was the price action that we saw across the financial markets today. Rather than stabilizing or calming the markets, the destruction of the US balance sheet has triggered the largest drop in the US dollar against the Euro since its inception in 1999 and the largest single day rise in oil prices since 1984. The Dow Jones Industrial Average closed down 372 points, indicating that no one is satisfied with Paulson’s bailout plan. With the details of the plan yet to be hashed out, the one thing that is certain is that US taxpayers will have to foot the bill, which is ultimately negative for the US economy. The US is surrendering free-market capitalism which is very unattractive to foreign investors.

Flight to Quality into Commodities and Out of the US Dollar

As the US fiscal position deteriorates, the only trade that has been benefitting is long commodities. In addition to the sharp rise in oil prices, gold prices are now trading above $900 an ounce. Less than 2 weeks ago, they were trading below $750 an ounce. For central banks and sovereign wealth funds, the bargain basement prices of commodities have made oil and gold extremely attractive investments, especially at a time when investments anywhere else have become far less certain. For a country like China that is continuing to modernize, their energy needs are expected to grow. Therefore no time is better than now to stock up on commodities that have some real value. Although their pockets are deep, they have certainly taken a hit in their US financial sector investments. Three state owned banks invested as much as $350 million into Lehman Brothers over the past year and that investment is now worth zero. The only true haven for safety is in gold because there is no counterparty or credit risk.

US Dollar Could Fall Another 5 Percent

Unfortunately this is not the first time that the US government has paid “Cash for Trash” as Paul Krugman writes in today’s NY Times. A more recent example of a government buying up bad debt was Japan in 1996. They created the Resolution and Collection Corporation which is similar to a Resolution Trust Corp in that they would acquire and then dispose of troubled paper that belong to failed institutions in an orderly manner. Although the Japanese Yen rallied briefly after the announcement, it proceeded to fall 12 percent over the next 12 months. Against the euro, the dollar has fallen 6 percent over the two weeks while the dollar index has fallen 5.5 percent. This suggests that if the dollar were to follow in the Yen’s path, we could see another 5 percent decline before the currency hits a bottom.

Watch Out for Paulson, Bernanke and G7 Meeting

Even dollar bears have to be careful in the current market environment because the only thing that is assured is volatility. Paulson and Bernanke will be testifying on the credit turmoil at the Senate Panel tomorrow morning - they will try again to calm the markets which could lead to a relief rally in the US dollar and in US stocks. This morning, the G7 pledged to act if necessary. With the next meeting of finance ministers scheduled for October 10, the Group of Seven may be signaling some sort of coordinated action if all else fails. If the move is in currencies, they would want to talk up the dollar because it adds pressure on commodity prices, giving relief to consumers globally.

EUR/USD: 500 Pip Rally Puts 1.50 Within Reach

On Friday, when the EUR/USD was trading at 1.4350, we said that a rally to 1.45 was possible but 1.50 was unlikely.However with today’s 5 cent rally, 1.50 is now within reach.Given that today’s move was the largest since the launch of the Euro, it was unexpected and unprecedented.The rally was due to entirely to selling of US dollars as the EUR/USD trailed gold prices higher.ECB President Trichet added his two cents this afternoon when he said that they are alert on the financial crisis and that they have no responsibility for bank solvency.In other words, Trichet is telling us that he is not hesitant about taking further action to calm the markets but at the same time, he’s not looking to bailout any European banks.We still prefer to sell dollars against the Japanese Yen than the Euro, but we could still see further gains in the EUR/USD as long as Paulson and Bernanke do not say anything to stifle the rally.Service and manufacturing PMI numbers are due for release tomorrow.Given the drop in industrial production, factory orders and exports, we are anticipating weaker numbers, but whether that impacts the EUR/USD remains to be seen.

BRITISH POUND RALLIES AS BOE FAILS TO COMMIT TO CUTTING RATES

For the fourth trading day in a row, the British pound has strengthened against the US dollar.Since it bottomed out on September 11, 2008, the currency pair has rallied more than 1000 pips.The Bank of England continues to forecast tougher times for the UK and comments from Chancellor Darling suggest that they could deliver more liquidity injections if the financial markets do not stabilize.However despite slower growth, the BoE refuses to commit to cutting interest rates and they probably have become more stubborn with this stance after today’s sharp rise in commodity prices.According to BoE Deputy Governor Gieve, the central bank has only one goal, which is to keep inflation stable and because of that, they must stay vigilant on CPI expectations. Their reluctance to cut rates should help extend the rally in the British pound.

JPY:BE CAREFUL OF THE CARRY TRADE RALLY

In Friday’s edition of the Daily Currency Focus, we warned traders against reading too much into the carry trade rally.At the time, we cited 3 factors – risk aversion, global easing and high volatility.Although USD/JPY give back all of Friday’s gains, the correction in the other Yen crosses were not as severe.This of course is not due to the resilience of carry trades, but instead to the weakness of the US dollar.Therefore we keep our title of the Yen section the same, which is to be careful of the carry trade rally.We believe that of all of the Yen crosses, the one that will suffer the most or rally the least will be USD/JPY because of the damage that the rescue packages does to the US balance sheet.Attracting foreign investment should also become a big problem in the near future as investors start to consider diversifying their investments geographically.Meanwhile there were no surprises from Japanese economic data.Supermarket store sales were weaker than expected as consumer spending slows.

RALLY IN COMMODITY PRICES DRIVE CAD, AUD AND NZD HIGHER

The rally in commodity prices and the weakness of the US dollar drove the Canadian, Australian and New Zealand dollars sharply higher.Economic data was weaker than expected with retail sales in Canada slowing and new motor vehicle sales in Australia slipping.However that did not stop the three commodity currencies from tracking oil and gold prices higher.The high yielders are completely at the whim of the market’s risk appetite as well as their tolerance for US Dollars.The Canadian, Australian and New Zealand economies are not out of the woods, but the concerns about the US economy have overshadowed other drivers in the currency market.The rally in oil and gold prices has been sharp and whether they continue will be completely dependent upon the sentiment towards the US dollar because the speed and degree of the move in oil reflects a short squeeze.New Zealand is releasing consumer confidence this evening while Canadian will be releasing consumer prices.Given the drop in the price component of IVEY PMI and the price of raw materials, we expect CPI growth to slow.

EUR/USD:CURRENCY PAIR IN PLAY OVER THE NEXT 24 HOURS

The EUR/USD will the currency in play over the next 24 hours because of the Eurozone service and manufacturing PMI reports due for release between 3:30am ET to 4:00am ET, which is 7:30 GMT to 8:00 GMT.On the US front, US Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke are scheduled to testify before the Senate at 9:30am ET or 13:30 GMT.

After today’s sharp rally, the EUR/USD has now entered our “buy zone,” which is established by Bollinger Bands.As long as it does not close below 1.46, the currency pair should rally towards 1.4950, which is the 50-day SMA and the 50% Fibonacci retracement of the July to September sell-off in the EUR/USD.If it does close below 1.46, we could see a move back towards Monday’s low 1.4438.

 


By Kathy Lien, Director of Currency Research at GFT

About The Author

Lien has extensive knowledge within the interbank market, particularly in trading spot FX and options. She has written for numerous publications, is frequently quoted on financial media outlets, and is the author of several books, including Millionaire Traders. Read more

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Kathy will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Kathy do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 18 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Wed 18 Oct
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales

Forex Trading Outlook


Trading Opportunities


  • POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.

  • POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.



  • POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.

  • POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.



  • POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.


  • POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105