Forex Research - FX Briefing - US bailout: good or bad for the dollar?
FX Briefing 26
Â·US government continues to work on rescue plan
costs are burdening European banks
about how EMU would tackle possible escalation of crisis
US bailout: good or bad for the
the last fortnight, the dollar has lost a lot of ground. Against the euro, the US
currency fell about 5% from 1.39 to around 1.46. However, considering that from
March to August the exchange rate was usually over 1.55, and given the extent
of the US
financial market crisis, the setback seems remarkably small. One wonders whether
a more marked drop is still to come, or whether the dollarâ€™s relative strength
is fundamentally justified.
first glance, everything seems to be against the dollar at the moment: the
banking system is in a structural crisis, which is hampering all financing operations
in the US
significantly. The problems in the financial markets and the housing market
crisis are now exacerbating each other; the credit crunch is slowing down
activities in other economic sectors too. Furthermore, the high energy and
commodity costs are weighing down the economy. In summer, it had looked as
though the tax cheques would avert a recession, but in autumn, the economy
seems to be losing steam again. The labour market situation in particular is
deteriorating rapidly. In August, the unemployment rate rose to 6.1%, and
initial jobless claims are increasing (they are currently at
490k), which suggests that the situation could get even worse.
forced by the pressure of events, the US
government is now trying to find a comprehensive solution to the credit crisis,
and this could support the US
currency. The policy of bailing out banks â€śrelevant to the systemâ€ť from case to
case is no longer sufficient. If further erosion of confidence in and among
banks and an increase in macroeconomic damage are to be avoided, there is no
alternative to the US
governmentâ€™s proposal to buy up the troubled assets. This poses enormous fiscal
risks, but doing nothing would do so too.
possibly with the exception of the UK,
the situation does not look quite so dramatic at the
moment: firstly, because the negative feedback loop between the housing market
system is less pronounced, and secondly because the banks are not as highly
leveraged and less dependent on money markets than the (former) US investment
factors, however, are hitting Europe
just as hard as the US.
Excessively high financing costs are affecting banksâ€™ earnings. The ECB is
offering liquidity at 4.25%, but in fact it only has control over the overnight
rate. It has lost control over banksâ€™ financing costs: the 3-month money market
rate is now almost 100 basis points higher than the ECBâ€™s refi rate, and the
spread is around 125 basis points for 12-month money. And while rates for
3-month repos and Eonia swaps are increasingly pricing in interest rate cut
expectations, the Euribor is going up. But financing costs of well over 5% are
way too high for an economy whose financial system is having to cope with heavy
burdens as it is, and which at the same time is heading for a recession.
power to act is seen as limited in the eurozone, and this could have a negative
impact on the euro. Having raised interest rates in July, it is now more
difficult for the ECB to react
and decisively to the deterioration in the economic situation. Moreover, market
participants also fear that, if the financial market crisis escalates, the
European Unionâ€™s ability to make
decisions could be hampered by national clashes of interests, the large number
of authorities responsible and the limited involvement of the European Central
times such as these, exchange rate predictions are even more difficult than
usual. There is less liquidity on the forex market, which can go hand in hand
with stronger exchange rate movements. At the moment the focus is on the risks
in the US.
But the problems in the eurozone (and elsewhere) are increasing, and
governments are doing nothing to counterbalance them. Thus we do not see the
dollar being at a particular disadvantage at present.
Rieke +49 69 718-4114
Grabbe / Klaus NĂ¤fken
report has been prepared by BHF-BANK Aktiengesellschaft on behalf of itself and
its affiliated companies (together "BHF-BANK Group") solely for the
information of its clients. The information and opinions in this document are
based on sources believed to be reliable and acting in good faith, but no
representation or warranty, express or implied, is made by any member of the
BHF-BANK Group as to their accuracy, completeness or correctness. Opinions and
recommendations are given in good faith but without legal responsibility and
are subject to change without notice. The information does not constitute
advice or personal recommendation, for which the duty of suitability would be
owed, but may facilitate your own investment decision. Moreover, you should
seek your own advice as to the suitability of an investment matter mentioned
herein. Investors are reminded that the price of securities and the income from
them can go down as well as up and that the past performance of an investment
or a market is not necessarily indicative for future results. This document is
for information purposes only. Descriptions of any company or companies or
their securities mentioned herein are not intended to be complete, and this
document is not, and should not be construed as, an offer to sell or solicitation
of any offer to buy the securities mentioned in it. BHF-BANK Group and its
officers and employees may have a long or short position or engage in
transactions in any of the securities mentioned in this document, or in any
related securities. This publication must not be distributed in the United
rights reserved. Please mention source when quoting from it.
Forex Trading News
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
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."
Actionable trading levels delivered to YOUR charts in real-time.
Tue 19 June 2018 A 12:30 US- House Permits/Starts Wed 20 June 2018 A 14:00 US- Existing Homes Sales A 14:30 US- EIA Crude Thu 21 June 2018 AA 11:00 GB- Bank of England Decision A 12:30 US- Weekly Jobless Fri 22 June 2018 AFlash PMIs
John M. Bland, MBA co-founding Partner, Global-View.com
Global-View Affiliate Program
We are starting an affiliate program to market some of our products.
Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.
Put the word "affiliate" in the email subject line.
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
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.
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.
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 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.
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 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.
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.
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.