User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Tuesday January 13, 2009 - 22:18:31 GMT
Global Forex Trading -

Share This Story:
| | Email

Forex Research - Dollar Rallies on Bernanke's Action Plan and Trade Numbers

Dollar Rallies on Bernanke's Action Plan and Trade Numbers

Last Updated 1/13/2009 5:07:42 PM EST (GMT +5)


CURRENT US INTEREST RATE: 0.25% Odds for January Rate Cut Rising!
  01/28 Meeting 03/17 Meeting
NO CHANGE 62.0% 58.6%
CUT TO 0BP 32.0% 32.7%
HIKE TO 50BP 0.0% 8.7%
CUT TO 75BP 0.0% 0.0%


The US dollar strengthened across the board today following better than expected economic data and more clarity from the Federal Reserve on their plans to stimulate the economy going forward.  However the strength of the greenback could be fleeting particularly against the Japanese Yen as the upside surprises in US data masks underlying weakness. The December retail sales report is due for release tomorrow. Even though there is a chance that we may see an upside surprise, consumer spending is still expected to be negative for the sixth consecutive month. 

Bernanke: Credit Easing Not Quantitative Easing

For the first time since cutting interest rates to 0.25 percent, Federal Reserve Chairman Ben Bernanke outlined his plan of action. In a speech at the London School of Economics, Bernanke talked about the additional tools available to the Fed, an orderly exit strategy, concerns about inflation and suggestions about how the Obama Administration should use the remainder of the TARP funds. Most importantly, Bernanke created a new name for his regime – credit easing. In contrast to Quantitative Easing, which Bernanke explains focuses on the liabilities portion of the central bank’s balance sheet, Credit Easing focuses on expanding the asset side of the balance sheet. However since the balance sheet is suppose to balance, this may just be a difference of semantics since both efforts ultimately add liquidity into the financial system.  The Federal Reserve wants to draw a distinction between their current policies and the Bank of Japan’s policies between 2001 and 2006.  

The Fed’s Toolbox and Exit Strategy

As for the tools that they have at their disposal, there was nothing groundbreaking. Their number one tool is policy communication, followed by liquidity facilities for banks, facilities for other markets and purchases of long term securities. Like Federal Reserve President Lockhart, Bernanke expects interest rates to remain low for an extended period of time. As we expected, inflation is not a concern because the Fed believes that weaker growth will keep inflation low. In terms of an exit strategy, he expects demand for the emergency facilities to wane as the US economy improves.   Like many members of the Bush Administration, Bernanke supports using the rest of the TARP funds on the credit markets. Without stabilization in the financial system, he does not believe that any fiscal stimulus will have a lasting impact on the economy.

Trade Deficit Hits 5 Year Low, Retail Sales Outlook

Meanwhile the US trade deficit narrowed materially in the month of November to the smallest level since June 2003. The better than expected report helped to fuel the dollar’s rally. Although a narrower trade deficit is normally something to cheer about, the details of the report indicate that the only reasons why trade improved are because of falling oil prices and slower domestic demand. The big story is in imports, which plunged 12 percent in November. Unfortunately the strength of the dollar did not drive stronger US demand for foreign goods but it did cut exports by 5.8 percent.  The IBD/TIPP economic optimism index also improved marginally. However dollar bulls need to cautious ahead of tomorrow’s retail sales report. There is no question that consumer spending will be negative but the pace of contraction could slow given the smaller decline in the ICSC and SpendingPulse reports.  If retail sales drops less than the market expected, the US dollar could extend its gains. The Fed’s Beige Book report is also due for release and we expect the report to cast more doubt on the health of the US economy.


If inflation is only thing keeping the European Central Bank from cutting interest rates, then the latest wholesale price report from Germany should eradicate their concerns. Wholesale prices plunged 3 percent on a monthly and annualized basis. This sharp decline can be almost entirely attributed to lower commodity prices. Other than a much weaker than expected US retail sales report, there is nothing stopping the EUR/USD from falling further ahead of the monetary policy decision. With US equities falling for the fifth consecutive trading session, risk aversion is also weighing on the EUR/USD. The market is already pricing in a 50bp rate cut for Thursday and the price action of the EUR/USD indicates a similar belief amongst currency traders. As a result, the risk is for a more Euro bullish outcome. ECB officials have been moaning and groaning about having to cut interest rates, which means that 25bp rate could be the middle ground.


The UK trade deficit for the month of November hit the highest level since the country began keeping records in 1697, more than 300 years ago. The last time there was a surplus in the visible trade balance was in May 1985. Exports dropped 6 percent while imports fell 2 percent. Unfortunately the weakness of the British pound has failed to increase foreign demand. In the month of November, EUR/GBP rose from 79 cents to 85 cents while the GBP/USD fell from 1.6050 to 1.49. The latest trade data indicates that weakening global demand has completely dwarfed the stimulative effects of a weak currency. Based upon this data alone, the Bank of England will have no choice but to continue to cut interest rates because demand is not improving.  According to the British Retail Consortium, retailers have suffered the weakest Christmas on record. The only silver lining is the hope that the impact of currency fluctuations on trade will hit the economy with a lag which means that the December figures could be better. Now that the GBP/USD has broken below the 1.45 level on an intraday basis, there is no major support until the 6 year low of 1.4350.  


The Canadian, Australian and New Zealand dollars continued to weaken against the greenback as risk aversion sent investors flocking into the safety of the US dollar. Both the New Zealand and Australian dollars weakened significantly, breaking important support levels in the process. There was no Australian or New Zealand economic data released last night, but Standard and Poor’s reduced their credit rating for New Zealand from stable to negative, which puts the country at risk of losing its AAA sovereign debt rating. Meanwhile Canada reported a much weaker than expected trade balance. The country’s trade surplus shrank from 3.3B to 1.3B, an 11 year low. The toxic combination of falling oil prices and weaker US demand for vehicles has caused exports to drop 6.8 percent. Exports have fallen for the fourth consecutive month and will probably continue to fall in the months ahead. The disappointing report has sent the Canadian dollar lower against the US dollar and Japanese Yen. Over the next 24 hours, the market’s focus will shift away from the Canadian dollar and onto the Australian and New Zealand dollars. Australian business confidence, home loans and investment lending reports are due for release tomorrow while New Zealand will be releasing its building permits data.


The Japanese yen appreciated against all of the major currencies today but the most significant gain was against the British pound. On an intraday basis, GBP/JPY fell to the lowest in more than 30 years. Weak economic data has not stopped the Japanese Yen from rising, but it will stop the Japanese economy from improving. The country’s trade surplus turned into a deficit in the month of November. The current account surplus also dropped 65 percent due to a 26 percent decline in exports. The current account now stands at JPY581 billion, down from JPY960.5 billion. The amount of the negative news associated with trade and current account balance reports might support the claim that BOJ needs to intervene in the foreign exchange markets and stop the JPY from rising.  This is a very tough decision for the BoJ and if verbal intervention continues to fail, they may have to resort to physical intervention for the first time since 2004. In reaction to the trade numbers, Finance Minister Nakagawa told the markets that he is watching the foreign exchange markets carefully and that rapid moves in currencies is undesirable. Other economic data also provides cause for concern. Bankruptcies surged 24 percent in December, the highest in close to 8 years. Bank lending accelerated at the fastest pace in 16 years, climbing to 4.1% in the month of December as companies are scrambling to receive monetary support to stay in business. Consumers are also feeling the pressure of the slowdown, as the Economy Watchers index plunged to the lowest levels since its initiation. Tomorrow, Japan is set to release its numbers for Machine Tools orders and Domestic Corporate Goods Prices which should confirm that manufacturing sector is continuing to contract. 

EUR/USD: Currency in Play for Next 24 Hours

The currency in play over the next 24 hours is the EUR/USD. Eurozone industrial production numbers are due for release at 10:00 GMT or 5:00 EST while US retail sales numbers are due for release at 13:30 GMT or 8:30 EST.

The EUR/USD is trading well within the Sell Zone, which we determine using Bollinger Bands. It has also broken below the 50-day SMA, which was the closest level of support for the currency pair. It is now flirting with the 1.32 level, which is the 23.6 percent Fibonacci retracement of the 1.6037 to 1.2330 sell-off that lasted from July to October of 2008. The next level of support is not until the psychological level of 1.30. If the EUR/USD manages to rally back above today’s high of1.3375, we could see a stronger rally that takes the currency pair above 1.35. However if it rallies, a close above 1.3600 will be needed to negate the downtrend. 

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 upon as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. This forum and its information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision based upon this forum or any information contained within. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Kathy Lien 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 Lien do not render investment, legal, accounting, tax or other professional advice. If such advice is sought, 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."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 10 Sep 2018
AA 08:30 GB- GDP, Trade, Output
Tue 11 Sep 2018
AA 08:30 GB- Employment Decision
A 09:00 DE- ZEW Survey
Wed 12 Sep 2018
A 12:30 US- PPI
A 14:30 US- EIA Crude
A 18:00 US- Beige Book
Thu 13 Sep 2018
A 1:30 AU- Employment
AA 11:00 GB- Bank of England Decision
AA 11:45 EZ- European Central Bank Decision
A 12:30 US- Weekly Jobless
AA 12:30 US- CPI
Fri 14 Sep 2018
A 08:30 GB- GDP
AA 12:30 US- Retail Sales
A 13:15 US- Industrial Production
AA 14:00 US- prelim University of Michigan

John M. Bland, MBA
co-founding Partner,

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.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

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.

Request a TRIAL of Max's Forex Service.


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

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 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 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.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

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