User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Friday February 6, 2009 - 15:35:24 GMT
BHF-Bank - www.bhf-bank.com

Share This Story:
| | Email

FX Briefing - Euro remains under pressure

FX Briefing 6 February 2009

Highlights

·        ECB signals interest rate cut in March, keeps all options open

·        Speculation pushes rouble to the tolerance limit; central bank set to cut lending

·        Only limited scope for yen to depreciate despite drastic fall in GDP

 

Euro remains under pressure

The forex markets have continued to follow the familiar pattern: on signs that the crisis is escalating, the yen firms against the dollar, and at the same time, the dollar strengthens against the euro, and vice versa. Towards the middle of the week, EUR-USD rose to over 1.30. This was presumably due to firmer equity markets because of some positive news from the corporate sector, and possibly also because of the BoJ’s announcement that it was earmarking 1 trillion yen to purchase corporate shares. In the US, pending home sales rebounded, which probably also contributed to the favourable mood.

 

During the course of the week, however, the euro gave up its gains again: due to the ECB governing council meeting, weaker US economic indicators and concern about the US labour market figures, the euro fell to around 1.28. Speculation against the Russian rouble could have weighed on the euro too.

 

ECB Council is keeping its options open

As had been announced in January, the ECB governing council left interest rates unchanged at 2% at its meeting on Thursday. However, it signaled quite plainly that an interest rate cut was likely in March, when the new staff projections were available. By referring to the current market expectations, ECB president Jean-Claude Trichet hinted at the press conference that rates would probably be cut by 50 basis points.

 

But what is perhaps even more significant, in our view, is that, in its statements on further monetary policy action, the ECB council is keeping all its options open – from zero interest rate policy to quantitative easing measures. It has not said anything concrete, but it is no longer ruling anything out either. If the economic situation continues to deteriorate, the ECB can thus be pragmatic.

 

The ECB council itself is expecting an “extended period of significant economic downturn” and

points to “very negative” GDP growth in the fourth quarter. Thus the ECB seems to be approaching our estimate. We are expecting GDP to have fallen by 1.5% quarter-on-quarter in the eurozone in Q4, and by 1.8% in Germany. The European growth data will be published this coming Friday and could put pressure on the euro next week.

 

Rouble trouble

Since at least mid-December, the Russian rouble has been under significant pressure to depreciate. The central bank is trying to stabilise the rouble’s exchange rate against a currency basket of US dollar (55%) and euro (45%). On 22 January, the central bank announced that it would stop the rouble from depreciating beyond 41 against this basket. The markets immediately started pushing the rouble to that limit. The rating agency Fitch helped a bit too by downgrading Russia’s rating by one notch to BBB on Wednesday. For the last few days, the rouble basket has been just under 41. The central bank, which has lost about 1/3 of its $600bn reserves in the last 6 months, is probably intervening massively at the moment.

 

The Russian central bank is in a dilemma: on the one hand, the economy and the financial sector are in a difficult situation, because as a result of the international financial crisis and the plunge in commodity prices, foreign capital inflows have plummeted. Accordingly, the Russian central bank is trying to stabilise the financial sector with generous supplies of liquidity and keep corporate lending going. On the other hand, the central bank is thus nurturing speculation against its own currency: the banks are said to be using a large proportion of the central bank loans to speculate against the rouble – which apparently appears more lucrative to them at the moment than lending to Russian companies.

 

Given the extensive speculation, the Russian currency reserves are melting away rapidly. The

central bank is not likely to just sit back and watch this happening. It could either give up the

rouble’s peg to the currency basket, in which case the rouble would probably depreciate significantly, or it could stop the speculation by means of monetary policy and administrative measures. A return to capital transaction controls is unlikely for political reasons. It is more likely that central bank lending will be drastically reduced, possibly in combination with increasing interest rates. At the moment, Moscow appears to be leaning more in this direction. We are therefore inclined to think that it will be possible to uphold the 41 mark for the time being.

 

USD-JPY: limited upward potential

During the course of the week, USD-JPY firmed somewhat from just under 90 to over 91. Remarkably, the yen’s strength is in complete contrast to the fundamental state of the Japanese economy. Here Q4 is set to be the third negative quarter in a row. The GDP data, due to be published on 16 February, will probably show that macroeconomic performance contracted by around 3% quarter-on-quarter.

 

The national trade association sees exchange rate developments as being responsible for this to a large extent, as export revenues are falling a good deal faster than export volumes. It is demanding that the yen should be stopped from appreciating further. There are rumours that the Japanese government is considering intervening.

 

From a technical point of view, there are plenty of potential ways of weakening the yen: intervening against one’s own currency is not a problem. However, politically, there is only limited scopefor doing so: on the one hand, it must be borne in mind, that by most standards, the yen is not overvalued; its development over the past months is rather a correction of its having been significantly undervalued in the past years. Thus the Japanese government will probably find it difficult to get international support. This applies particularly to the US, where the new government has already adopted a position against the valuation of the yuan, and where, in view of the crisis, protectionist tendencies appear to be increasing. Furthermore, it must be assumed that Japanese investors and companies will take advantage of the yen’s weak phases to unwind foreign investments (carry trades) or repatriate foreign revenues.

 

Against a background of dire growth data we are expecting USD-JPY to recover somewhat; the risk of intervention is likely to support this trend. On the whole, however, we only see limited upward potential.

 

 

Stephan Rieke +49 69 718-4114

Economics Department

+49 69 718-3642

volkswirtschaft@bhf-bank.com

Foreign Exchange Trading

devisenhandel@bhf-bank.com

Jörg Isselmann

+49 69 718-2695

Matthias Grabbe / Klaus Näfken

+49 69 718-2688

 

<i>This 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 States.

© 2007 BHF-BANK Aktiengesellschaft

All rights reserved. Please mention source when quoting from it.




 

 

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 23 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Tue 24 Oct
All Day flash PMIs
Wed 25 Oct
01:30 AU- CPI
08:00 DE- IFO Survey
08:30 GB- GDP
14:00 CA- BOC Decision
14:30 US- EIA Crude
Thu 26 Oct
11:45 EZ- ECB Decision
12:30 US- Weekly Jobless
14:00 US- Pending Homes Sales
Fri 27 Oct
12:30 US- GDP
14:00 US- final Univ of Michigan

Forex Trading Outlook


Potential Trading Opportunities


  • POTENTIAL PRICE RISK: Medium Tue-- All Day Global flash PMIs. First good look at October economic performances.



  • POTENTIAL PRICE RISK: HIGH Wed-- 01:30 GMT AU- CPI. Top Inflation indicator.

  • POTENTIAL PRICE RISK: HIGH Wed-- 08:00 GMT DE- IFO Survey. Top German indicator.


  • POTENTIAL PRICE RISK: HIGH Wed-- 14:00 GMT CA- BOC Decision. No Policy Change Expected.


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



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