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Forex Forum Archive for 01/04/2004
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Porto PJT 23:56 GMT January 4, 2004
St. Louis SAJ 23:52 GMT , 8 January, 12,45 gmt.
St. Louis SAJ 23:52 GMT January 4, 2004
Porto -- When do ECB meet, and what is approximately the timing for their announcement(s) after the meeting? TIA, and good trading!
Porto PJT 23:48 GMT January 4, 2004
good night/morning all, here in Europe all banks are ready for a rate hike from ecb, is what is suggested in all newspapers preparing consumers for that.Personaly i doubt , many families were in trouble if a rate hike happen.
Aud have some resistences at current levels, 05 till 15/20 channels tops, in 1 h and daily, hard to belive in a acelleration of the trend at current levels.
London Paul_ex trader 23:42 GMT January 4, 2004
amazing, went home short GBP/CHF and left stops at 2.2225, managed to get myself filled at 2.2235. That's lfe I guess. I wanted to resell, as it really looks soft, but thought that would be chasing it! Just look now 2.2155 offered!
Tas 23:29 GMT January 4, 2004
Strongest ISM manufacturing index in 20 years spurring some action in Fed funds futures, though just in terms of magnitude of possible hike, not timing; market still punting on hike in June with contracts now pricing in around 8% chance of 50bp hike then, vs no chance beforehand. Still 100% chance of 25bp hike. Data "definitely start the year off right," says Bank of America's Gerald Lucas. Eurodollars also shifted a bit with deferred contracts down more than 10 bps Friday, pricing in around 250 bps of hikes by 3Q05
hk ab 23:13 GMT January 4, 2004
any fig. for aussie this week?
Global-View 22:48 GMT January 4, 2004
GVI 22:44 GMT January 4, 2004
Fed Gov Bernanke (DJ)
-- Fed Can Be 'Patient' With Faster US Econ Growth
-- US Dlr Still High By Historical Standards
-- '04 GDP Growth May Beat Wall St Forecasts
-- US Labor Mkt May Be Weaker Than It Seems
Doesn't seem like any rush to raise interest rates.
Also from GVI:
Singapore 22:35 GMT January 4, 2004
Bernanke on Reuters saying monetary policy stance appropriate.. and downplaying USD fall ..
"Dollar slide likely to have only small impact on inflation"
"Broad Dlr Index about 7 pct above 1990s, 17pct above 1995 low"
Mtl JP 21:27 GMT January 4, 2004
AS 05:33 / how far will dlr fall ? Reasonably to 1.30, overshoot to 1.32, prior to G7 Feb meeting.
Athens 18:42 GMT January 4, 2004
Here are some extended excerpts from Trendways weekend analysis for this very early part of the new year. There is more analysis and finetuned technical levels are discussed in detail on Trendways analysis page, however I hope the selective few paragraphs I am posting here at the moment illustrated by several graphs may be of some assistance to viewers of this forum.
The big question hanging in the air is whether or not the Dollar has reached a major bottom of its two year downtrend and a large long term correction is due. Looking at the most important pair, EUR/$, we can see three major uplegs, broadly the first from 0.86 to 1.02, the second from 0.95 to 1.19 and the third from 1.14 to 1.26 with two obvious large correction downlegs in between i.e. we have a seemingly complete five way pattern but surely their size isn't what wave analysis would call ideally proportional...I must add, however, that I am not a e-wave fan, even less so an advocate of ideal ratios and patterns. In the following few paragraphs I will try to examine the probability of a near end USD major low is a high probability case based on more familiar to me (and therefore more trusted) tools.
Modelwise it is only the extremely high TC's which suggest that further large Dollar losses are not very probable or at least, if seen, they should be sustained. Already that of EUR/$ is one if the highest I have seen while I can't recall one as high as that for GBP/$. Here are TC graphs for the five major pairs in the last two years: EUR/USD, USD/CHF, USD/JPY, GBP/USD and USD/JPY. The lower than would otherwise be USD/JPY TC is due to the fact that following the downside model break the BOJ didn't allow this pair to fall like it should. What continues to confuse the picture is the still present model divergence between EUR/$ and $/CHF where the preferred directions for the USD remain opposite and, until this divergence is cleared out, we may yet have to see erratic moves. It is obvious that with the model still hostile to the Dollar in the three of the four major pairs, there is little $/CHF can do alone for the time being.
...In my effort to detect any early signs of a possible trend end I have dug out from the dust an old medium term indicator (MTI) I used in the 80's and early 90's and it worked very successfully at that time. I have not used in recent years to avoid confusing my readers with an overflow of technical parameters but, since I plotted it on graph for my personal use, I feel it would be more honest to share it with you. As a medium term tool it shouldn't be used for a daily analysis and by no means for short term moves, however it could be helpful in indicating marginal price cases and the probability of a forthcoming significant medium term market trend. When there are no aberrations the MTI values don't normally exceed 104-105 and 0.96-0.95 ut there have been exceptional vase that they have reached 106-107 and 0.94-0.93 in the past and I noticed that such exceptional values have been seen during the last two years for which I have constructed the graphs again. For anyone interested here are MTI graphs for EUR/USD, USD/CHF, USD/JPY, GBP/USD and USD/JPY. Notice that the current value for EUR/$ is already 1.05+.
Have a good trading year all.
Perth AS 05:33 GMT January 4, 2004
THE EURO / U.S. DOLLAR
Friday, January 2, 2004
How far will the dollar fall, and should we care? We should be concerned, but if the administration, the Federal Reserve and the Congress act responsibly, the dollar should be near its bottom and begin to rise against most foreign currencies.
The dollar has fallen sharply, about 30 percent, against the euro during this past year. At the moment, one has to pay about $1.24 for each euro, while three years ago one only had to pay about 80 cents for a euro, but at the beginning of 1999 the euro cost about $1.15. The dollar has also fallen in recent months against the British pound, the Japanese yen and many other currencies, but as much as it fell against the euro.
These wide swings in currency values increase instability in the world economy by impeding international trade and investment because of rising uncertainty. Some applaud the dollar's fall because they believe it makes U.S. exports less expensive and that higher demand will cut the trade deficit. The downside of a low-value dollar is that it makes all the imports we consume more expensive, including raw material and parts used by U.S. businesses, and makes it costlier for U.S. dollar holders to travel or invest outside the U.S. A continued drop in the dollar's value could destabilize the international economy, leading to a worldwide recession.
Some argue our large trade deficit (or current account deficit) is responsible for the fall in the dollar's value. They have it backward. It is the flow of foreign investment dollars (the capital account) into the U.S. economy that drives the trade deficit. The U.S. economy's higher return on capital than Europe or Japan for the last 20 years caused private foreign investors to buy U.S. stocks and bonds and other assets. In addition, foreign governments, particularly of China, Japan and other Asian states, have steadily increased their purchases of U.S. dollars as reserve backing for their own currencies.
The world now is actually on a two-currency standard -- the dollar and the euro. China in effect has fixed its currency to the dollar for the last two decades, and the Japanese central bank only allows the yen to fluctuate within a limited range against the dollar. In the fall 2003 issue of the International Economy, monetary economist Criton Zoakos noted: "Europe, Japan, China and the Asia-Pacific region are all export-driven economies whose growth depends on U.S. markets. The U.S. economy depends for its growth on internal, entrepreneurial high-tech ferment."
So long as the U.S. continues to offer a higher return on capital than its foreign competitors, both foreign banks' and private investors' demand for dollars grow, and the current account deficit can be sustained.
The whole world has a vested interest in exchange-rate stability. The export-driven economies of Asia and Europe cannot afford for the dollar to fall too much, both because their markets will dry up and the value of their dollar assets in their own currencies will decline. It appears the dollar rose too high against the euro two years ago and now has fallen too low. The current drop in the dollar's value owed primarily to a decline in private foreign investment, and not to a decline in foreign central bank demand for dollars. The decline in private foreign demand for dollars was partially fueled by a belief the dollar had become too expensive -- a normal market response.
However, the U.S. government made a series of mistakes that have discouraged foreign investors. America now is viewed as unfriendly to foreign investors. Certain provisions of the Patriot Act and the Sarbanes-Oxley Act produce excessive and costly paperwork and unnecessary privacy intrusions. The president's tax bill reduced the tax on capital for U.S. taxpayers, but kept very high withholding rates on dividends for foreign investors, making them pay relatively more for helping our economy.
The Treasury Department also has not withdrawn the proposed, destructive foreign interest-reporting requirement, opposed by nearly all economists, even the administration's.
To grow, the world economy needs reasonable currency stability. That will return when the U.S. government reaffirms belief in a strong dollar and stops driving away foreign investors by making it very costly and difficult for them to invest.
If our leaders fail to understand the problem is not "the trade deficit" but destructive taxation and regulation, they will be personally responsible for the unnecessary suffering of millions of the worlds' people. The U.S. needs foreign investment to sustain its economic growth, and foreign governments and private investors need a safe and stable haven, with reasonable rates of return, for their savings.
by Richard W. Rahn
Richard W. Rahn is an adjunct scholar of the Cato Institute.
Perth AS 05:20 GMT January 4, 2004
Saturday January 3rd 2004. 10.30 GMT.
Dollar now oversold
Overall dollar sentiment will remain weak in the short term, especially with the US struggling to benefit from strong data. There will be further concerns over the financing difficulties resulting from the current account deficit and the US currency will also be vulnerable on adverse short-term interest rate differentials. Central bank intervention will continue to provide support and the US currency is now much closer to fair value which will eventually attract bargain hunting at times. The dollar will find it difficult to find a trigger for a significant correction, especially as security concerns are liable to continue, but an early move to a tightening bias by the Fed would provide such a trigger. There is also the potential for verbal intervention by European central banks, especially with a desire to avoid disorderly markets. The dollar will certainly remain vulnerable and there are likely to be fresh lows against the Euro during the first half of 2004. Nevertheless, the US currency looks oversold at this point and there should be scope for a correction within the next few weeks
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