Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The calendar has some juicy stuff on it, holiday mentality or not. Today Bernie Madoff is sentenced to 150 years. His lawyer wants 12 years of jail time. The law would allow 150 years. It’s up to the judge. So far the liquidation manager has found only $1.3 billion of the $13.2 billion stolen and the rest will have to come from investor insurance and "clawbacks," or taking money from those smart enough to have gotten something back from Bernie. This seems inherently unfair, doesn't it? We were a bit shocked when the other Bernie, Ebbers, got 25 years, but it would set a good tone for Madoff to get a really high number, too. We can't believe that long jail sentences don’t serve as some kind of deterrent, and financial criminals are particularly dense.
Tomorrow we get Case-Shiller house prices, but for April - a real lag. The payrolls report on Thursday will be preceded, as usual, by the ADP Macro estimate on Wednesday. It's hard to see how the report can be good. High school and college kids will swell the ranks of the unemployed, with their usual service sector jobs not getting created this year.
Stock market guru Sandi Lynne (www.wallstreetinadvance.com) says "Bear in mind, as this week draws to a close, markets will be a mere two weeks away from earnings season. As expectations rose with stock prices, the opportunity for disappointment rose, as well, especially since the reality of business conditions may not fit the rose colored glasses of the anticipators who celebrated depression being taken off the table Worry, especially, about the growing number of people who’ve exhausted their unemployment benefits. The more people who fall off the continuing claims list, the more risk there is that another group of consumers will drop off the grid and stop paying their mortgage, credit card bills, and even their phone and electricity bills."
The WSJ reports today that Michigan, for one, is getting ready for a surge in applications for welfare once unemployment benefits run out. Michigan has 680,000 on the unemployment rolls already, which is about 10% of the national number. Here’s a shocker—the welfare check for a family of three is $492/month.
The End-is-Nigh club would have it that the Fed's enormous balance sheet expansion will inevitably cause inflation and foreign exchange traders will sell dollars buy euros, and that's the only way the US can repay all that debt. We can think of 18 reasons why this ain’t necessarily so, and one of them is that according to the University of Michigan survey, one-year inflation expectations are 3.1% and 5-year inflation expectations are lower, at 3.0%. This is not to say the great unwashed public is wiser than hordes of PhD-card-carrying economists, but it is to say that inflation fear is premature. You don’t get a bond market rally when inflation fear is rampant. There are multiple reasons for the June rally, but one of them is pushing back against inflation fear.
On the whole, we can imagine plenty of reasons for the us dollar rate to survive in the current environment, not least of which is doubt and skepticism about how stable the European financial sector really is and how much growth the continent can get, especially compared to the US with multiple green shoots. But look at a big-picture chart of the euro exchange rate - it’s on an uptrend, and the current phase is just that - a corrective, consolidative phase. On the daily chart, the linear regression drawn off the April euro rates low leads to a level over 1.5000 before end-July. With so much confusion and conflict over the fundamentals, the chart may rule.
Pounds to US Dollars = 1.6550
Pounds to Euros = 1.1768
Euro to Pounds = 0.8495
Pounds to Australian Dollars = 2.0550
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
Monday, June 29, 2009
Monday, June 22, 2009
euro exchange rate fell off the cliff overnight
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The euro exchange rate rose on Friday (from 1.3925 at the US open to an intraday high of 1.4012), in part on a story that Moody's issued a ratings warning on California because of its $20 billion deficit and "imminent fiscal challenges," referring to the dysfunctional referendum system.
But then the best euro rates fell off the cliff overnight and today in European trading on the prospect of a 12-month ECB auction on Wednesday, according to the FT. It fell from 1.3940 at the Asian open to 1.3826 so far, or a little over 100 points in half a trading day. This is not much in the grand scheme of things but see an hourly chart - the euro rate can easily test last Monday’s euro low at 1.3745. On the daily chart, we could be forming the right side of a head of a big head-and-shoulders pattern (with the first shoulder in March).
The FT says the Wednesday auction has inspired talk that "funds will leak out of the eurozone as foreign banks tap the auction and convert the proceeds into other currencies." In other words, the ECB's colalteral conditions are too lax and the world’s banks wil ltake advantage of them. The euro fell despite a superficially good IFO survey this monring, and normally IFO sets the tone. In reality, the IFO results are not that hot. See below. And it's a little unclear which currencies would benefit from the supposed leakage, since the high-yielding Australian Dollars itself took a fall on local reports that the Reserve Bank of Australia should not be considered done lowering rates - when only last week the Australian Dollar exchange rate was being touted as the wonder-currency again with everything going for it.
The US dollar rate and yen benefitted from rising risk aversion after the World Bank issued a grim outlook and cut the 2009 forecast for most economies. Most of all, stocks closed down last week for the first weekly drop in a month, amid much chattering about a big pullback, perhaps to the March low or beyond.
Reuters says "Stock index futures pointed to a lower open on Monday as investors assessed the
potential strength of an economic recovery ahead of a round of key data this week. Energy shares could come under pressure as oil fell below $69 a barrel as the dollar exchange rate strengthened."
Off on the side is another factor mentioned in the WSJ today, that Germany’s budget deficit is ballooning at a torrid pace while at the same time upcoming elections (Sept 27) mean taxes cannot be raised.
Pounds to US Dollars = 1.6337
Pounds to Euros = 1.1785
Euro to Pounds = 0.8489
Pounds to Australian Dollars = 2.0754
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The euro exchange rate rose on Friday (from 1.3925 at the US open to an intraday high of 1.4012), in part on a story that Moody's issued a ratings warning on California because of its $20 billion deficit and "imminent fiscal challenges," referring to the dysfunctional referendum system.
But then the best euro rates fell off the cliff overnight and today in European trading on the prospect of a 12-month ECB auction on Wednesday, according to the FT. It fell from 1.3940 at the Asian open to 1.3826 so far, or a little over 100 points in half a trading day. This is not much in the grand scheme of things but see an hourly chart - the euro rate can easily test last Monday’s euro low at 1.3745. On the daily chart, we could be forming the right side of a head of a big head-and-shoulders pattern (with the first shoulder in March).
The FT says the Wednesday auction has inspired talk that "funds will leak out of the eurozone as foreign banks tap the auction and convert the proceeds into other currencies." In other words, the ECB's colalteral conditions are too lax and the world’s banks wil ltake advantage of them. The euro fell despite a superficially good IFO survey this monring, and normally IFO sets the tone. In reality, the IFO results are not that hot. See below. And it's a little unclear which currencies would benefit from the supposed leakage, since the high-yielding Australian Dollars itself took a fall on local reports that the Reserve Bank of Australia should not be considered done lowering rates - when only last week the Australian Dollar exchange rate was being touted as the wonder-currency again with everything going for it.
The US dollar rate and yen benefitted from rising risk aversion after the World Bank issued a grim outlook and cut the 2009 forecast for most economies. Most of all, stocks closed down last week for the first weekly drop in a month, amid much chattering about a big pullback, perhaps to the March low or beyond.
Reuters says "Stock index futures pointed to a lower open on Monday as investors assessed the
potential strength of an economic recovery ahead of a round of key data this week. Energy shares could come under pressure as oil fell below $69 a barrel as the dollar exchange rate strengthened."
Off on the side is another factor mentioned in the WSJ today, that Germany’s budget deficit is ballooning at a torrid pace while at the same time upcoming elections (Sept 27) mean taxes cannot be raised.
Pounds to US Dollars = 1.6337
Pounds to Euros = 1.1785
Euro to Pounds = 0.8489
Pounds to Australian Dollars = 2.0754
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
Friday, June 19, 2009
Foreign Exchange Traders were hard-pressed to explain the dollar rally
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The euro exchange rate rose yesterday in the US morning to a high of exactly 1.4002, breaking the magic round number but not able to hang on to it. The best euro rates then fell in the afternoon to 1.3868 before rising modestly into the close on the usual late-day short-covering. Market News reports that the afternoon euro selling was set off by a single name (a German bank) and then picked up by others on stop-loss selling. This suggests the market is not very deep these days, which is hardly surprising considering that everyone is licking wounds from very large losses.
Market News also notes that "Foreign Exchange Traders were hard-pressed to explain the dollar rally in afternoon dealings. Some pointed to the modest rise in US Treasury yields in afternoon dealings where the yield on the benchmark ten year Treasury lifted to 3.84% after beginning the day around 3.714%. Others pointed to simple weight of positions in euros to dollars, explaining that, earlier in the day, players built longs in the pair in anticipation that stop-loss buy euros orders would be triggered atop $1.4000. When those orders failed to trigger, longs were left holding the bag and quickly headed for the exit, chased out by the German bank sales." Well, that's instructive.
You can also look at the action as a function of data and other information. In the morning, risk appetite was spurred by good US data (see below) but then dragged back down by the LIBOR-fixing story (also below) and a rumor that a rogue North Korean ship with missile capability was possibly roaming around in the open seas. The story came from Fox News and lacked credibility. Finally at 6 pm, Reuters asked the Navy, which confirmed it is watching the ship, with Defense Secretary Gates saying the US can shoot down any N. Korean missile aimed at (say) Hawaii. The possibility of some kind of showdown with N. Korea is vaguely dollar-positive on the safe-haven theme, although everyone knows the N. Koreans are irrational and act in ways not consistent with any sane idea of self-interest. Let’s note again for the umpteenth time that anytime the US gets aggressive, the dollar goes up. We don’t know whether this is because Foreign Exchange traders are inordinately blood-thirsty, or what, but it’s a really reliable factor.
Pounds Sterling is coming back strongly this morning from what looked like the edge of the cliff late yesterday. From the low early yesterday at 1.6195, the pound rose to 1.6452 so far, nearing the high from the overnight session yesterday. Again, on the hourly chart we have a series of lower lows and lower highs, so today will be critical.
The dollar to japanese yen may have bottomed on Wednesday at 95.48. It has been rising in a straight line ever since to a high overnight of 97.18. Analysts try to torture the japanese yen’s moves into a risk appetite model, but that works only sometimes. The only explanation anyone has for the recent move is institutional - assuance of foreign currency denominated bonds and/or redemption/coupon payments.
Good luck trying to get hard data from the Investment Trusts Association (Toushin) website - click on a category and all the data is labeled in Japanese. You need a story from a trading desk and while these stories abound, they are by definition one-sided.
Yesterday the SNB said its intervention to manage the Euros to Swiss Francs exchange rate was a success and it would keep doing it as necessary. Foreign Exhcange Traders obediently took the Swiss francs down again.
Pounds to US Dollars = 1.5305
Pounds to Euros = 1.1752
Euro to Pounds = 0.8050
Pounds to Australian Dollars = 2.0600
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The euro exchange rate rose yesterday in the US morning to a high of exactly 1.4002, breaking the magic round number but not able to hang on to it. The best euro rates then fell in the afternoon to 1.3868 before rising modestly into the close on the usual late-day short-covering. Market News reports that the afternoon euro selling was set off by a single name (a German bank) and then picked up by others on stop-loss selling. This suggests the market is not very deep these days, which is hardly surprising considering that everyone is licking wounds from very large losses.
Market News also notes that "Foreign Exchange Traders were hard-pressed to explain the dollar rally in afternoon dealings. Some pointed to the modest rise in US Treasury yields in afternoon dealings where the yield on the benchmark ten year Treasury lifted to 3.84% after beginning the day around 3.714%. Others pointed to simple weight of positions in euros to dollars, explaining that, earlier in the day, players built longs in the pair in anticipation that stop-loss buy euros orders would be triggered atop $1.4000. When those orders failed to trigger, longs were left holding the bag and quickly headed for the exit, chased out by the German bank sales." Well, that's instructive.
You can also look at the action as a function of data and other information. In the morning, risk appetite was spurred by good US data (see below) but then dragged back down by the LIBOR-fixing story (also below) and a rumor that a rogue North Korean ship with missile capability was possibly roaming around in the open seas. The story came from Fox News and lacked credibility. Finally at 6 pm, Reuters asked the Navy, which confirmed it is watching the ship, with Defense Secretary Gates saying the US can shoot down any N. Korean missile aimed at (say) Hawaii. The possibility of some kind of showdown with N. Korea is vaguely dollar-positive on the safe-haven theme, although everyone knows the N. Koreans are irrational and act in ways not consistent with any sane idea of self-interest. Let’s note again for the umpteenth time that anytime the US gets aggressive, the dollar goes up. We don’t know whether this is because Foreign Exchange traders are inordinately blood-thirsty, or what, but it’s a really reliable factor.
Pounds Sterling is coming back strongly this morning from what looked like the edge of the cliff late yesterday. From the low early yesterday at 1.6195, the pound rose to 1.6452 so far, nearing the high from the overnight session yesterday. Again, on the hourly chart we have a series of lower lows and lower highs, so today will be critical.
The dollar to japanese yen may have bottomed on Wednesday at 95.48. It has been rising in a straight line ever since to a high overnight of 97.18. Analysts try to torture the japanese yen’s moves into a risk appetite model, but that works only sometimes. The only explanation anyone has for the recent move is institutional - assuance of foreign currency denominated bonds and/or redemption/coupon payments.
Good luck trying to get hard data from the Investment Trusts Association (Toushin) website - click on a category and all the data is labeled in Japanese. You need a story from a trading desk and while these stories abound, they are by definition one-sided.
Yesterday the SNB said its intervention to manage the Euros to Swiss Francs exchange rate was a success and it would keep doing it as necessary. Foreign Exhcange Traders obediently took the Swiss francs down again.
Pounds to US Dollars = 1.5305
Pounds to Euros = 1.1752
Euro to Pounds = 0.8050
Pounds to Australian Dollars = 2.0600
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
Wednesday, June 17, 2009
Euro and Australian Dollar rates fall against the Japanese exchange rate
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US dollar Rate put on modest gains yesterday, from 1.3907 at the US open to 1.3827 at the close, but again overnight this was reversed back to the starting point during the Asian session, giving us the same up-down swing in a short period we are beginning to dread. During Asian hours, the yen crosses set the tone, with both the Euro to Japanese Yen and Australian Dollar to Japanese Yen falling by a lot. When Europe came in, the euro exchange rate fell back to 1.3820 so far this morning.
We really want to see the euro rate fall below Monday’s low at 1.3745 to convince us that a US dollar rally is real. We get US CPI this morning and that may do the trick. Market News reported late yesterday that "On the downside, technical analysts were focussed initially on a pullback to $1.3610-15, the 50% Fibonacci retracement of the April lows near $1.2883 to the June highs near $1.4337. On the upside, the euro exchange rate will need to see a sustained break above Tuesday's highs and then psychological resistance at $1.4000 before there is talk of a return to last week's peak of $1.4177." In other words, stalemate between US dollar bulls and bears.
Sentiment today is influenced by the price of oil picking up the pace to the downside this morning, hitting $69.90 around 7:30 am ET. Foreign Exchange dealers were also watching S&P futures, around 906.50 at 7:15 am and approaching the 200-day moving average around 904.78, according to Reuters.
Pounds to US Dollars = 1.5305
Pounds to Euros = 1.1752
Euro to Pounds = 0.8050
Pounds to Australian Dollars = 2.0600
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The US dollar Rate put on modest gains yesterday, from 1.3907 at the US open to 1.3827 at the close, but again overnight this was reversed back to the starting point during the Asian session, giving us the same up-down swing in a short period we are beginning to dread. During Asian hours, the yen crosses set the tone, with both the Euro to Japanese Yen and Australian Dollar to Japanese Yen falling by a lot. When Europe came in, the euro exchange rate fell back to 1.3820 so far this morning.
We really want to see the euro rate fall below Monday’s low at 1.3745 to convince us that a US dollar rally is real. We get US CPI this morning and that may do the trick. Market News reported late yesterday that "On the downside, technical analysts were focussed initially on a pullback to $1.3610-15, the 50% Fibonacci retracement of the April lows near $1.2883 to the June highs near $1.4337. On the upside, the euro exchange rate will need to see a sustained break above Tuesday's highs and then psychological resistance at $1.4000 before there is talk of a return to last week's peak of $1.4177." In other words, stalemate between US dollar bulls and bears.
Sentiment today is influenced by the price of oil picking up the pace to the downside this morning, hitting $69.90 around 7:30 am ET. Foreign Exchange dealers were also watching S&P futures, around 906.50 at 7:15 am and approaching the 200-day moving average around 904.78, according to Reuters.
Pounds to US Dollars = 1.5305
Pounds to Euros = 1.1752
Euro to Pounds = 0.8050
Pounds to Australian Dollars = 2.0600
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
Thursday, May 14, 2009
Traders are Buying Euros, than selling euros get bored than buy euros again
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The euro dollar, having risen dramatically last Thursday and Friday, was already decelerating by Monday and Tuesday, with the highest high 1.3722 late Tuesday night. From there the euro has retraced almost 25% of the gain from the April 22 low at 1.2883. Some technical traders like these Fibonacci and Gann numbers. The euro made the lowest low (1.3523) late last evening as Asia was coming in and needs to get past it today for the congestion to be considered a correction. For what it’s worth, the 32% retracement level is 1.3404 and the 50% is 1.3305. We like the channel bottom as support and it lies at 1.3434 at noon today.
Sterling in unstable, having broken a support line on the hourly chart early yesterday around 1.5150, with sentiment contaminated by a slew of factors, not least of which is expected skimpy demand for the giant upcoming Gilt issuance. The UK can’t raise rates in the face of the worsening recession, despite evidence inflation is not falling as much as desired, and potentially the Treasury could have another failed auction. Beware pity—the US faces the same thing not too many months down the road.
The yen is also considered a proxy for risk aversion, and has risen from 99.77 last week to 95.07 around 6 am ET today. This is, of course, bad for the export-driven Japanese economy and the Nikkei. Pretty soon we will have to start looking for threats of intervention. We imagine the “line in the sand” is probably 90. Earlier, most analysts would have said 95 was the limit, and the speed of the move to that round-number level is pretty scary.
Pounds to US Dollars = 1.4650
Pounds to Euros = 1.1122
Euro to Pounds = 0.8987
Pounds to Australian Dollars = 2.0643
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the Best Euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The euro dollar, having risen dramatically last Thursday and Friday, was already decelerating by Monday and Tuesday, with the highest high 1.3722 late Tuesday night. From there the euro has retraced almost 25% of the gain from the April 22 low at 1.2883. Some technical traders like these Fibonacci and Gann numbers. The euro made the lowest low (1.3523) late last evening as Asia was coming in and needs to get past it today for the congestion to be considered a correction. For what it’s worth, the 32% retracement level is 1.3404 and the 50% is 1.3305. We like the channel bottom as support and it lies at 1.3434 at noon today.
Sterling in unstable, having broken a support line on the hourly chart early yesterday around 1.5150, with sentiment contaminated by a slew of factors, not least of which is expected skimpy demand for the giant upcoming Gilt issuance. The UK can’t raise rates in the face of the worsening recession, despite evidence inflation is not falling as much as desired, and potentially the Treasury could have another failed auction. Beware pity—the US faces the same thing not too many months down the road.
The yen is also considered a proxy for risk aversion, and has risen from 99.77 last week to 95.07 around 6 am ET today. This is, of course, bad for the export-driven Japanese economy and the Nikkei. Pretty soon we will have to start looking for threats of intervention. We imagine the “line in the sand” is probably 90. Earlier, most analysts would have said 95 was the limit, and the speed of the move to that round-number level is pretty scary.
Pounds to US Dollars = 1.4650
Pounds to Euros = 1.1122
Euro to Pounds = 0.8987
Pounds to Australian Dollars = 2.0643
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the Best Euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
ECB to cut rates?
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
Bloomberg reports that ECB policy members are already clashing over asset purchases less than a week after Trichet "engineered a truce." Slovenia's Kranjec said "the ECB is 'likely' to spend more than the €60 billion buying euros bond purchases and hasn’t ruled out acquiring corporate bonds and commercial paper. Hours later Germany's Axel Weber, who had already said there’s 'no need' to buy euros or any other assets, insisted 60 billion euros is the 'maximum.'"
Former BoE policy member Buiter said the €60 billion is "peanuts," anyway, for an economy the size of the eurozone’s.
Of course it will need more.
But Weber is opposed and also opposed to a further cut in rates under the 1% "floor," although others say nothing should be ruled out (the Cyprus central bank chief). But Weber is more equal than the others. Germany has more weight than Slovenia and Cyprus combined, or many others combined, maybe all the others combined as long as Trichet seeks unanimous agreement.
Pounds to US Dollars = 1.5230
Pounds to Euros = 1.1158
Euro to Pounds = 0.8957
Pounds to Australian Dollars = 1.9999
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
Bloomberg reports that ECB policy members are already clashing over asset purchases less than a week after Trichet "engineered a truce." Slovenia's Kranjec said "the ECB is 'likely' to spend more than the €60 billion buying euros bond purchases and hasn’t ruled out acquiring corporate bonds and commercial paper. Hours later Germany's Axel Weber, who had already said there’s 'no need' to buy euros or any other assets, insisted 60 billion euros is the 'maximum.'"
Former BoE policy member Buiter said the €60 billion is "peanuts," anyway, for an economy the size of the eurozone’s.
Of course it will need more.
But Weber is opposed and also opposed to a further cut in rates under the 1% "floor," although others say nothing should be ruled out (the Cyprus central bank chief). But Weber is more equal than the others. Germany has more weight than Slovenia and Cyprus combined, or many others combined, maybe all the others combined as long as Trichet seeks unanimous agreement.
Pounds to US Dollars = 1.5230
Pounds to Euros = 1.1158
Euro to Pounds = 0.8957
Pounds to Australian Dollars = 1.9999
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
Tuesday, April 28, 2009
how long the swine flu panic will affect the financial markets
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
We honestly do not know how long the swine flu panic will affect the financial markets. A lot depends on whether the public health initiatives around the world are effective, or at least seem credible and trustworthy. As noted above, bird flu and mad cow panics were contained, mostly, by strong action in the countries of origin. Britain slaughtered hundreds of thousands of cows and China slaughtered many hundreds of thousands of birds. The prospect of the same thing happening to pigs is very sad; we happen to like pigs. Who didn’t like the movie "Babe"? According to the World Health Organization, SARS affected a total of 8,098 people worldwide in 2003 and of these, 774 died--the tsunami killed more people. Car accidents kill more people. Like SARS, swine flu is transmitted person-to-person. Restrict travel, make people wash their hands (and get banks to disinfect ATMs), and it could be short-lived. Not to be cavalier, but recent history teaches us that the world can contain this thing. The people who will end up suffering the most, including economically, are the Mexicans, where it seems the swine flu originated.
Once the panic fades away, assuming it does, we will be left with the same landscape we had last week. This includes probable rate cuts in New Zealand Dollars (this week) and Europe (next week). For some reason, this time the prospect of rate cuts is weakening the currencies, not strengthening them as has been the case of late. We are still clueless about "unconventional measures" the ECB may take. Yesterday Trichet spoke of "improving confidence and more favorable conditions." We say this doesn’t pass the reality check and must be a public relations exercise.
Today in the US, we get the Case-Shiller home price index for Feb, probably a drop of 18.7% y/y, a little better than –19% in Jan. Some economists say the pace of decline is slowing and the market is stabilizing. Well, perhaps, but we have yet to see unemployment at its worst, and surely that has something to do with home sales and prices, however much "affordability" improves. Conference Board consumer confidence comes out today, too, expected to rise to 29.9 in April from 26 in March, according to the Bloomberg median forecast. It had hit a record low of 25.3 in February.
An astute Market News reporter points out that the list of worries gets longer every day. We say there is a limit of how much adrenaline the body can pump before it gets, literally, exhausted. After the stupid airplane trick yesterday, foreign exchange traders don't have enough juice left to face all the stuff that will come flying over the wires. Tomorrow is the big day, with the Fed meeting, Q1 advance GDP, the Treasury refunding announcement, and even an Obama press conference in the evening - and that's just Wednesday. Commentators say the GDP number is probably the one to watch. Market News reports one analyst says "The market looks for Q1 GDP to come in around -4.7%, an improvement from the "massive" -6.3% contraction seen in Q4."
On Thursday it’s March personal income and spending (a more reliable metric than "confidence"), weekly jobless claims, the ECI for Q1, and the NY NAPM. Friday delivers the final April University of Michigan confidence index, March factory orders and April ISM. We may all be hiding under our desks by then. The main point is that the market is just about untradeable now. Any scenario is plausible. We could argue 'til the cows come home about whether the US dollar exchange rate "deserves" the boost it is getting from a tragedy, but the point to keep in mind is that bad news is dollar-friendly, and like to remain so. One fly in this dismal ointment is US equities, which are actually quite resilient, even if they don’t deserve to be on a hard-hearted look at earnings and other facts. A rising stock market has been, in recent months, a negative correlation for the US dollar.
We could see the US dollar correct sizeably today if equities come back.
Pounds to US Dollars = 1.4650
Pounds to Euros = 1.1122
Euro to Pounds = 0.8987
Pounds to Australian Dollars = 2.0643
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the Best Euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
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We honestly do not know how long the swine flu panic will affect the financial markets. A lot depends on whether the public health initiatives around the world are effective, or at least seem credible and trustworthy. As noted above, bird flu and mad cow panics were contained, mostly, by strong action in the countries of origin. Britain slaughtered hundreds of thousands of cows and China slaughtered many hundreds of thousands of birds. The prospect of the same thing happening to pigs is very sad; we happen to like pigs. Who didn’t like the movie "Babe"? According to the World Health Organization, SARS affected a total of 8,098 people worldwide in 2003 and of these, 774 died--the tsunami killed more people. Car accidents kill more people. Like SARS, swine flu is transmitted person-to-person. Restrict travel, make people wash their hands (and get banks to disinfect ATMs), and it could be short-lived. Not to be cavalier, but recent history teaches us that the world can contain this thing. The people who will end up suffering the most, including economically, are the Mexicans, where it seems the swine flu originated.
Once the panic fades away, assuming it does, we will be left with the same landscape we had last week. This includes probable rate cuts in New Zealand Dollars (this week) and Europe (next week). For some reason, this time the prospect of rate cuts is weakening the currencies, not strengthening them as has been the case of late. We are still clueless about "unconventional measures" the ECB may take. Yesterday Trichet spoke of "improving confidence and more favorable conditions." We say this doesn’t pass the reality check and must be a public relations exercise.
Today in the US, we get the Case-Shiller home price index for Feb, probably a drop of 18.7% y/y, a little better than –19% in Jan. Some economists say the pace of decline is slowing and the market is stabilizing. Well, perhaps, but we have yet to see unemployment at its worst, and surely that has something to do with home sales and prices, however much "affordability" improves. Conference Board consumer confidence comes out today, too, expected to rise to 29.9 in April from 26 in March, according to the Bloomberg median forecast. It had hit a record low of 25.3 in February.
An astute Market News reporter points out that the list of worries gets longer every day. We say there is a limit of how much adrenaline the body can pump before it gets, literally, exhausted. After the stupid airplane trick yesterday, foreign exchange traders don't have enough juice left to face all the stuff that will come flying over the wires. Tomorrow is the big day, with the Fed meeting, Q1 advance GDP, the Treasury refunding announcement, and even an Obama press conference in the evening - and that's just Wednesday. Commentators say the GDP number is probably the one to watch. Market News reports one analyst says "The market looks for Q1 GDP to come in around -4.7%, an improvement from the "massive" -6.3% contraction seen in Q4."
On Thursday it’s March personal income and spending (a more reliable metric than "confidence"), weekly jobless claims, the ECI for Q1, and the NY NAPM. Friday delivers the final April University of Michigan confidence index, March factory orders and April ISM. We may all be hiding under our desks by then. The main point is that the market is just about untradeable now. Any scenario is plausible. We could argue 'til the cows come home about whether the US dollar exchange rate "deserves" the boost it is getting from a tragedy, but the point to keep in mind is that bad news is dollar-friendly, and like to remain so. One fly in this dismal ointment is US equities, which are actually quite resilient, even if they don’t deserve to be on a hard-hearted look at earnings and other facts. A rising stock market has been, in recent months, a negative correlation for the US dollar.
We could see the US dollar correct sizeably today if equities come back.
Pounds to US Dollars = 1.4650
Pounds to Euros = 1.1122
Euro to Pounds = 0.8987
Pounds to Australian Dollars = 2.0643
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
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Buying Euros? Buy Euros at the Best Euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
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