Forex Forum Archive for 04/14/2007

AZUSA 4x-ed 23:54 GMT April 14, 2007 Reply   
shanghai bc 12:10 GMT April 14, 2007 || thank you for sharing! There's alot of wisdom in your statement, but my humble opinion still leans toward the side of caution, as EU has alot to prove before it earns the 'safety premium' distinction. However, I do not dispute the fact that the European market (bonds, equities, etc) should earn a top ranking in any well balanced portfolio.

Sofia Kaprikorn 23:50 GMT April 14, 2007 Reply   
London NYAM & AZUSA

guys, I know you definately will like this:

On April 13, 1994 - - Geoge Soros said in a hearing at the House Banking Committee:

"Free-floating currencies are flawed because the markets always overshoot to excess."

His solution: "The monetary people in G7need to coordinate their monetary and fiscal policies so there are no great disparities where the markets are fundamentally unstable."

We all know who Soros is. Now the global inbalances theme is in vogue - so who says history is not repeating...

CANBERRA JD 17:25 GMT April 14, 2007 Reply   
Hmmm why do i see reversals again. I think the week might have ended the anti USD run on majors (particularly on u/chf and e/u).
A/u is the tough one here, and could drive more usd selling. 0.84? Perhaps, But I still want to see a correction of some sort before going up beyond 8400..

chicago hl 16:29 GMT April 14, 2007 Reply   
thanks for sharing your views BC.

shanghai bc 16:21 GMT April 14, 2007 Reply   
fairfield JC 15:56 GMT April 14, 2007

China's oil trade has been done on the basis of barter-trade in some 80% cases with Iran..Same with Saudis and Africans too..Same goes for mineral transactions in most cases..Not much currency impact on that front..But buying oil fields and mines need hard cash upfront affecting currency transactions..

shanghai bc 16:06 GMT April 14, 2007 Reply   
GENEVA DS 15:00 GMT April 14, 2007

Nothing is easy in the market..Who would have thought in 1971 Usd/Chf would fall from 4.31 to 1.11 at some point and Usd/Jpy fall from 360 to 79 at some point too..It was not many moons ago when Aud /Usd was at 1.18 and usd/Cad was above the parity too..Only reverting to the norms only in the case of the Anglo-Saxon currencies..

hk ab 15:57 GMT April 14, 2007 Reply   
bc, thanks very much for the comment. I found life gets easier when the trading direction is parallel with yours.

Some gossips now talking about e/j 180. But I think before that happens, something like 1998 will remind the brave carry hearts.

fairfield JC 15:56 GMT April 14, 2007 Reply   
China on the 27th of March "announced" kind of under the radar that they are buying crude oil in Euro's now and not US$. Japan is awaiting orders from Iran to change to buying in the Yen rather than US$........this may have something to do with the $'s decline as well, if anyone is interested. I dont see the $ gaining much ground after hearing this combined with the $ index about to hit the crucial support of 80. That is my 2 cents.

GENEVA DS 15:00 GMT April 14, 2007 Reply   
Shanghai Bc

Thanks for your input on currencies... So it will be very easy, if I do understand you well... BUY AUD sell USD, get a nice 1 or 2 percent more interest place it for your life time and get rich.... best is to do 10 or 20 leverage...

My advice... Nobody can tell where currencies will float in a decade or so... there will be NO !!!! Currencies left... Fiat will dissappear.. all mathematic calculations will have been wrong... a new currency system will prevail... which one... your guess.... good weekend...

shanghai bc 14:39 GMT April 14, 2007 Reply   
hk ab 13:00 GMT April 14, 2007

Hkd will follow Rmb in coming years..We are likely to see Usd/Rmb 1:4 in less than a decade..It is in China's interest too..I guess Cad,Aud,Chf and Jpy will all be around the parity or even more expensive than Dollar in that time frame too..That seems to be the wish of US ruling elites as well..I always thought Aud and Cad were heavily undervalued currencies given their enormous potential..

Mtl JP 13:56 GMT April 14, 2007 Reply   
Last one from me about Intervention
- typicaly NOT for a profit motive by the CB(s) involved as primary driver.

hk ab 13:00 GMT April 14, 2007 Reply   
bc//the accelerated devalutation of USD will bring impacts to HKD as well. I believe that the picked up inflation rate is more or less due to this factor. Do you foresee HKD delink with USD at some stage as well? TIA

Do you see this upleg of aud will reach .90 anytime soon in mid term? GT.

London NYAM 12:34 GMT April 14, 2007 Reply   
AZUSA// Thanks for your views. gt

Melbourne Qindex 12:14 GMT April 14, 2007 Reply   
USD/CHF (Monthly Cycle) : The normal trading range of my monthly cycle is 1.1832 - 1.2547. In the mean time the market is going to consolidate between 1.2070 - 1.2308. The lower barrier of my projected series is positioning at 1.1981 // 1.2070. Speculative buying interest will increase when the market is able to trade above 1.2380.

shanghai bc 12:10 GMT April 14, 2007 Reply   

European bond market is much larger than US bond market and European share market is larger than US stock market too..It was not like that for decades until a few years ago..And That was one of the major reasons why Dollar asset market was popular among Asians,the liquidity..The other major reason was that Dollar asset market was safe well away from political turmoils in other parts of the world,the safety premium..Those two major reasons are by and large a history now and European markets,both bond and stocks,are likely to be twice the size of those of US mainland in a decade or so..That is one thing we have to bear in mind as investors and traders..Large real money will try to park their long-term money in Euro assets adjusting their share of Dollar assets..It is a long-term movement which may last a few decades..And the rising size of Chinese and Indian stocks and bond markets on the world stage is one major factor in this game too for the next few decades..It is highly likely that even China alone will be the size US markets in a few decades..Add India to that dimension too..What we are witnessing today is a breakaway from the Brettonwood-2 on gradual basis..And that will be official when Rmb formally goes free floating in less than a decade..As of today,Dollar is still heavily overbought by cbs and individuals alike on long-term basis..Assuming those cbs adjust their Dollar holdings to the level of US share of the world economy,that is some 25%,we will witness the move of some 3 trillion Dollars moving from Dollar assets to other curreency assets..And that is only for cbs holdings..How many more trillions held by firms and individuals will follow the suit is a big question mark too..And as of today,US politicians shout for the devauation of Dollar at faster space while Chinese and Asians are trying to slow the speed of decline of Dollar..It is then no wonder that Chinese publicly anounced no more accumulation of Dollar assets on long-term basis while getiing into the business of more active forex management as of last week..One more step in the direction of free floating at some stage..The world will get serious adjustment of assets market and currency levels in time..And that will be obvious to anyone with open mind and reasonbly good eye-sight too..Fwiw..

Nigeria Basorun 12:10 GMT April 14, 2007 Reply   
no comments about commitment of traders

Mtl JP 11:59 GMT April 14, 2007 Reply   
Intervention
- sterilized
- unsterilized

Mtl JP 11:57 GMT April 14, 2007 Reply   
Intervention can be
- official
- unofficial (or covert, secret)

Nigeria Basorun 11:54 GMT April 14, 2007 Reply   
any body know enough about COT APPLICATION in forex

Mtl JP 11:51 GMT April 14, 2007 Reply   
the other kind of Intervention
- effective
- ineffective

AZUSA 4x-ed 11:48 GMT April 14, 2007 Reply   
NYAM - My view is this... I doubt that E$ will see 1.4 anytime soon. The carry trade will have to be addressed, but for now Japan is in control. Lastly, $73 billion sends a clear message as to what China will do if our pilots (i.e. G7) are not steady at the helm. The G7 rhetoric from the Honorary Pilot (HP) confirms this, imo.

Mtl JP 11:42 GMT April 14, 2007 Reply   
Intervention
- un-coordinated
- co-ordinated

London NYAM 11:23 GMT April 14, 2007 Reply   
AZUSA// I went back though your posts to try to get a handle on what your contrarian view is but I didn't come to it. Is it that the dollar will be allowed to continue appreciating becuase of continued carry trades?
The info on Chinese dollar holdings is very intersting. It ocmes after China 'leaked' that they may stop accumulating dollar reserves huh?

AZUSA 4x-ed 10:56 GMT April 14, 2007 Reply   
London NYAM 10:04 GMT April 14, 2007 || The rhetoric only affirms my contrarian view – we only have to look back to the time when oil was hovering at 50. I seem to recall the Saudis announcing/stating there would be no output cuts/reduction...

Sofia mik 10:46 GMT April 14, 2007 Reply   
add
3. direct sell / buy

Sofia mik 10:43 GMT April 14, 2007 Reply   
Caribbean! Rafe... 09:20 GMT April 14, 2007

How many types of FX interventions do you know of?

3 kind

1. news, tv, internet, newspaper,
2. sharp move in crosses
3. direct sell / for this decission, we understand 3-5 days after /

London NYAM 10:36 GMT April 14, 2007 Reply   
Alimin. Yes but would'nt the continuation of the carry trade exacerbate the 'imbalances' that they are claim need to be reversed. So dollar devaluation in a 'stable' way is what I thought would be needed. Obviously they can't say that outright but how would further dollar appreciation against the yen rebalance the gloabl economic system? Aren't the carry trades originlly financing global liquidity, now directly responsible for global 'instability'? I am not equating imbalances to instability, but in the present circumstances the two seem linked. A depreciation of the dollar annually at rate of the interest differential between japan and the US would make it a zero balance devaluation. Roughly 5-6 yen a year until trade flows altered. Ideal, but I don't think the markets would give them that luxury. Just thinking outloud.

Makassar Alimin 10:13 GMT April 14, 2007 Reply   
the difference in dec 2004 when euro was around 1.35-1.36 with now is that usdjpy at that time was 101 compared to 119 now, if the officials seem ok with the euro level at the moment then one will think they must be happy financing long euro position with some yen carry trades so if jpy is suddenly reversing side here, then perhaps Trichet will once again be getting nervous with euro, all in all things will get very messy if massive unwinding of the carry trades happen which I do not believe to be an orderly one...take care out there

London NYAM 10:04 GMT April 14, 2007 Reply   
Intesting points. Still seems to be a subtle indication that they favour Euro appreciation and some kind of step-wise and controlled Yen appreciation. Is that possible though? In the process the JCB could accumulate significant losses: a slow bleed rather than a global Trichet-damous calamity. And as HF says, if the hedge funds get wind of it, then everyone is helpless.

AZUSA 4x-ed 09:58 GMT April 14, 2007 Reply   
London NYAM 08:21 GMT April 14, 2007 || I would think that any kind would be most welcomed atm, except verbal. In fact, SteinbrĂĽck safari holiday may just be the masterpiece of this G7 meeting.

On a different note, I would like to make an official claim to the $73 billion that miraculously appeared in China's FX funds. It is clear there's a reluctance to offer an official explanation as to the source of this surplus, so my claim may just go unchallenged...

HK [email protected] 09:24 GMT April 14, 2007 Reply   
Definitely the G7 rep. showed this time some extra nervousness, but it means not that by monday morning, they will pull the leverages, to fit rates to fundamentals.

That irresponsible Trichet reiterated(not in resemblance with the G7 communique spirit): (http://www.forbes.com/business/feeds/afx/2007/04/13/afx3612036.html)
Trichet also reiterated his concerns that global imbalances may reverse too quickly and in a disorderly fashion when they eventually unwind.

'The risk is that the correction that will be observed probably on the market will be abrupt and sharp instead of being smooth and orderly,' and consequently that 'risk might be under-priced on a number of markets', he said.

The problem is not the nervousness of the central bankers, but if their nervousness will infect one or few big fund managers, so bringing them to decide selling some big positions, then we may see a little bit of an action.

Caribbean! Rafe... 09:20 GMT April 14, 2007 Reply   
London NYAM 08:21 GMT April 14, 2007

How many types of FX interventions do you know of?

London NYAM 08:21 GMT April 14, 2007 Reply   
Thanks Perrie. Particularly liked "Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely, and cooperate as appropriate."

I guess that spells out intervention. The question is what kind?

Como Perrie 06:57 GMT April 14, 2007 Reply   

Text of G7 communiqué

By MarketWatch
Last Update: 8:18 PM ET Apr 13, 2007

WASHINGTON (MarketWatch) - Here is the statement of the Group of Seven finance ministers following their meeting Friday in Washington.

Washington, DC -- We, Finance Ministers and Central Bank Governors, met today to evaluate the global economic outlook. Although risks remain, the global economy is having its strongest sustained expansion in more than 30 years and is becoming more balanced. In our economies, U.S. economic activity remains solid even as domestic demand moderates to a more sustainable growth path. The euro-area is experiencing a healthy upswing.

UK growth remains robust and Canadian growth is accelerating. Japan's recovery is on track and expected to continue. We remain confident that the implications of these developments will be recognized by market participants and will be incorporated in their assessments of risks.

Further strengthening and rebalancing of domestic demand is desirable to help ensure the global economic expansion remains robust. We continue to be committed to maintaining price stability as the best contribution that monetary policy can make to sustained global growth. We will do more to increase trend economic growth rates, especially through structural reforms such as improving labor markets and long-term fiscal sustainability. We are confident that the continuation of our policies will support economic growth and contribute to reduce international imbalances. We will continue to work together to support the global adjustment process and urge others to do likewise.

We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely, and cooperate as appropriate. In emerging economies with large and growing current account surpluses, especially China, it is desirable that their effective exchange rates move so that necessary adjustments will occur.

We believe that a successful conclusion of the Doha Development round is imperative. We are committed to resisting protectionist sentiment. Substantially lowering tariffs and other barriers is essential to spur new growth in global trade and reduce poverty. We welcome recent steps to intensify engagement, recognizing that substantive movement towards a comprehensive final outcome requires all parties to make additional efforts. We expect spending on Aid for Trade to increase to $4 billion, including through enhancing the Integrated Framework. We support initiatives to enhance cooperation to enforce intellectual property rights and combat counterfeiting which are crucial to our knowledge-based economies.

We continued our discussions on how to develop local currency bond markets to enhance the contribution of financial markets to sustainable economic growth and to reduce emerging market economies' vulnerability to external shocks and financial crises. We look forward to the results of the high level conference on May 9-10 in Frankfurt, which will help to identify concrete recommendations to sustain the momentum of reform.
We discussed recent developments in global financial markets, including hedge funds, which along with the emergence of advanced financial techniques such as credit derivatives, have contributed significantly to the efficiency of the financial system. We will continue to monitor the implications of these developments.

Market-led and official initiatives focused on issues around private pools of capital intended to strengthen market discipline, risk management, market infrastructure, information and valuation practices, are essential contributions to global financial stability. In this context, we welcomed the work of the United States' President's Working Group on Financial Markets and its "Principles and Guidelines Regarding Private Pools of Capital" and look forward to the Financial Stability Forum's update of its 2000 Report on Highly Leveraged Institutions. We discussed the issue of mutual recognition of comparable regimes and look forward to further progress being made on cross-border access by investors to our securities markets.

We agree to push forward the ambitious package of bold and fundamental reforms in order to retain the IMF's relevance and legitimacy. Reforms should ensure that actual IMF quota shares, especially those of the most dynamic members, many of which are emerging markets, better reflect relative weights and roles in the global economy. We agree that the voice of low-income countries should be enhanced. A necessary element of IMF reform is improved surveillance over exchange rates. Surveillance must focus on external stability and be applied equally and even-handedly without creating new obligations. In this context, we welcome the Managing Director's proposals to update the 1977 Decision on Surveillance over Exchange Rate Policies and to develop a surveillance remit. We look forward to finalizing these proposals rapidly after the Spring Meetings. We took note of the work of the External Review Committee on IMF-World Bank Collaboration as well as of the report of the Committee to Study Sustainable Long-term Financing of the IMF. We agreed to consider the latter proposal in time alongside measures to further reduce administrative expenditures.


We encourage the use of the debt sustainability framework by all borrowers and creditors. We welcome continued work on principles for responsible lending and seek to involve other interested parties. We advocate a rapid resolution to Liberia's arrears to the international financial institutions. Available internal resources should be fully used to this end. We are prepared to make additional financial contributions. We look forward to the forthcoming International Conference on Education in Brussels.


In order to ensure energy security and to address climate change, we consider energy efficiency and the promotion of energy diversification to be important issues for both developed and developing economies. Diversification can include advanced energy technologies such as renewable, nuclear, and clean coal. We agree that market based policy measures should be effectively designed to meet specific conditions in each country.
We commit to continue the fight against money laundering, terrorist financing, and other illicit finance that risks the stability and integrity of the global financial system. We call for the effective and timely implementation of UN Resolutions 1540, 1718, 1737 and 1747. We commend the Financial Action Task Force on its commitment to examine the risks of weapons of mass destruction proliferation finance. We urge that as it reviews its strategic direction, the FATF consider expanding its mandate, enhancing global implementation of its standards, improving its strategic surveillance, and examining ways to bolster accountability and outreach activities.


We look forward to the successful launch of the International Compact for Iraq in Sharm El Sheik on May 3. We discussed economic prospects in the West Bank and Gaza Strip, and agreed to keep this under review End of Story

London 06:02 GMT April 14, 2007 Reply   
A Japanese government official said Friday that the country's improving economy means that the yen has no domestic reasons to fall.

"If the yen is to reflect Japan's economic fundamentals, there's no reason for it to weaken," he told reporters on condition of anonymity. "But foreign-exchange rates are set by relative" factors, so the yen won't necessarily appreciate if other conditions - such as foreign countries' economic strength - change in favor of other currencies

NY RP 00:19 GMT April 14, 2007 Reply   
Paulson's position title should be Damage Control Minister and Chief Studderer. (just the vino speaking).
Good weekend all.

NYC BBG 00:15 GMT April 14, 2007 Reply   
G-7 Says Global Growth Needs Further Rebalancing