Thursday, October 30, 2008

UK interest rates need to fall a lot and need to fall soon to avert a deep and lasting recession

Bank of England policy member Blanchflower said UK interest rates need to fall a lot and need to fall soon to avert a deep and lasting recession. Blanchflower has been the sole voice on the MPC calling for rate cuts over the past year. He says growth will contract this year and next, with inflation falling to under 1% and perhaps even going negative - a wild statement in light of inflation at 5.2% in Sept. Blanchflower blames the Lehman bankruptcy for intensifying the credit squeeze. It has yet to really hit companies and households.

Blanchflower makes the most important comment with this: “The key economic policy over the last decade has been the unsustainable rise in asset and equity prices and the associated credit boom. Does mainstream theory have an adequate explanation of why things have gone so badly wrong? It is not clear that it does. It may well be time for a rethink.'' Chancellor of the Exchequer Darling agreed that upcoming stimulative actions can be taken without fear of igniting inflation.

In hard data, Nationwide reports UK house prices house prices fell by 1.4% m/m in Oct, for the 12th monthly drop and 14.6% y/y. The average UK house price is now £30,000 lower than it was a year ago but still around £30,000 higher than it was five years ago. We have no idea what this means.

Pounds to Euros Exchange rate to buy euros last at 1.2684

Pounds to Australian Dollars currently 2.4100

Pounds to US Dollars currently 1.6420

Buy for now

Barbara Rockefeller
Forex Trading Reports - Click here for a free trial

Buying Euro Pounds? Buy Euros at the Best Euro Exchange Rates visit IMS Foreign Exchange

Tuesday, October 28, 2008

Reserve Bank of Australia confirmed that it is Buying Australian Dollars

The Reserve Bank of Australia confirmed that it intervened for a third day today by buying Australian Dollars. The Australian Dollar is up about 150 points from the US close yesterday.

Buy Australian Dollars at 2.4750

Buy for Now

IMS Foreign Exchange

the ECB will cut rates next week

Euro Exchange Rate Outlook:

ECB chief Trichet did hint yesterday that the ECB will cut rates next week-it’s possible, he said. The market took no notice. This is the dog that didn’t bark in the night. For Trichet to say such a thing and the foreign exchange market not to move is remarkable. One foreign exchange trader said Trichet has been marginalized by events. We can’t buy that. Institutional events like central bank interest rate cuts are the top factor in short-term moves. What is going on? We deduce that either it was expected and so already built in, or that the unwinding of euro to japanese yen carry trades is a bigger force and since Trichet’s comment was “with the wind,” it was absorbed without the need for comment.

Pounds to euros currently 1.2520

Euros to pounds currently 0.7979

Buy for Now

Barbara Rockefeller
Forex Trading Reports

Buying Euros? Call IMS for the Best Euro Exchange Rate +44 207 183 2790

Euro Exchange Rate falling to a low of 1.2330

The US dollar continues to gain across the board, with the euro exchange rate falling to a low of 1.2330 around 5-6 am from 1.2622 at the close on Friday and the bounce up to 1.3007 last Wednesday. Sterling fell to 1.5274 in early European trading, nearly matching Friday’s lowest low at 1.5259. The Other Dollars are much lower, including the Australian Dollar, despite two interventions (Friday and today) by the Reserve Bank.

The real action is Japanese yen action. The yen has risen to a bit over 90 on Friday from 110.67 on August 15. Against the euro exchange rate, the yen has gained from 169.44 to 114.38 or 33%, in under three months (Aug 7 to today). Bloomberg says that in just the past month, the Japanese Yen has jumped 15% against the US dollar, 35% against the euro, 58% against the Australian dollar and 46% against the New Zealand dollar as foreign exchange traders slash carry trades.

Buy for Now

Barbara Rockefeller
Forex Trading Reports

Need Buy Euros or Buy Australian Dollars contact IMS Foreign Exchange for the Best Exchange Rates

Monday, October 27, 2008

Sterling tumbles as 'currency market tsunami' sweeps markets

Sterling tumbled another two cents against the dollar on Monday and weakened against the euro exchange rate as foreign exchange traders speculated the Bank of England may deliver an emergency cut in interest rates and as investor’s poured money into the US dollar.
By Rosie Murray-West and Jamie DunkleyLast Updated: 7:29AM GMT 27 Oct 2008
Full story visit The Telegraph

The pound to dollars fell to almost $1.56 in early trading and slid to almost 80p versus Europe's common currency as what one expert called a "currency market tsunami" continued to sweep the foreign exchange markets.

The weakness in sterling leaves the currency 13pc lower against the dollar this month alone as expectations that the UK economy is now facing a severe recession becomes the mainstream view. News on Friday the economy contracted 0.5pc in the three months to September sent the currency tumbling almost 9 cents at one point.

The increasingly bleak news from the economy is putting pressure on the Bank of England to cut interest rates before its schedule meeting next month.

Dr Lyons, chief economist at Standard Chartered, said: “The economic data available to us shows that the UK economy is crying out for a further cut in the rate of interest. Mervyn King’s comments last week suggest that the Bank of England will do that at its next meeting, but I think action needs to be taken immediately.

However he added: “I don’t expect this to happen, though, and think we will need to wait until the Monetary Policy Committee’s next meeting in November.”

Pounds to Euros currently 1.2400
Pounds to US Dollars currently 1.5418
Pounds to Australian Dollars currently 2.5283

Thursday, October 23, 2008

Bid-offer spreads have widened dramatically and the amounts that can be done at even widened spreads have shrunk

Hi All,

We asked the meaning of the phrase “dire liquidity” in a Market News report yesterday, and Market News obliged with a full report on worsening conditions in the supposedly liquid Foreign Exchange market. Bid-offer spreads have widened dramatically and the amounts that can be done at even widened spreads have shrunk. This phenomenon is across the board from majors to emerging market currencies. In the Mexican peso, the usual spread was 15 points and good for $5 to $10 million. Now it’s 100 points wide and good for only $1-2 million. In the Australian Dollar exchange rate, the normal 1-point spread used to be good for $10 million, but now it’s good only for $1 million. If a client wants AUDUSD 100 million, the spread goes from 9-10 points to 40-50 points. In the euro exchange rate, the spread for €50 million used to be 3 points and now its 5-7 points. Market News goes on to cite reports showing a big and steady unwinding of unhedged long-term investment positions in emerging markets -and also in Europe.

Buy for Now

Barbara Rockefeller
Forex Trading Reports - click here for a free trial

We remain astonished that what started as $200 billion in failed US subprime mortgages could have turned into $3 trillion in global losses

Foreign Exchange Outlook : The global financial system is under severe stress, and so is the global economy. Ripple effects are only just now starting to appear in places like China, which was partly insulated from the free-market world but can’t hide forever. It’s interesting that the richest entities are the ones in the most denial that everything has changed-the oil producing Middle East as well as China. OPEC is busy trying to raise prices in a world of falling demand, which seems particularly foolish. Of course, these are the very countries that are getting richer by the minute as their dollar reserve values go up, but these reserves may be needed for domestic spending if their exports, whether oil or socks, start falling apart.

We remain astonished that what started as $200 billion in failed US subprime mortgages could have turned into $3 trillion in global losses, showing that even financial professionals are having a hard time grasping the extent of the leverage that was out there and still remains. It’s easy to see how nonprofessionals are bewildered by the collapse of pyramid-upon-pyramid, including our presidential candidates. We think only two things are clear;
  1. the bottom will come only when US housing bottoms, no matter the state of deleveraging at the time.
  2. And the US economy will survive, however tattered. It is literally too big to fail. But other sovereigns are not too big to fail.

We already have Iceland and Argentina. Well, Argentina is too easy a target for sarcasm. It always fails the minute the wind blows. The most interesting aspect of this whole debacle is that not one single analyst or commentator is calling on G7 or the new summit group (that will include China) to deliver a global rescue. Everyone seems to assume that no major Bretton Woods-level response is likely or maybe even possible. That’s because you need capital controls to enforce such things, and the US is against capital controls.

At some point in this trend the currencies will bounce up and at some point the trend will reverse, but in the meanwhile, keep the faith—the US dollar is the safe place to be.

Buy for Now

Barbara Rockefeller

Forex Trading Reports - Click her for a free trial

Buying Euros? Buying Dollars - Need to Buy Australian Dollars?

Contact IMS Foreign Exchange +44 207 183 2790 for the best exchange rates

New Zealand Dollar strengths as RBNZ cuts Rates - No further Rates Cuts is the current Outlook

Hi All,

the Reserve Bank of New Zealand cut rates by 100 bp to 6.5% yesterday, with Gov Bollard
saying it’s a “frontloading” of future interest rate cuts. "One should not necessarily expect or build in further cuts of this magnitude. We've done quite a lot right now to try to get rates re-calibrated right down to where we think they should be. One should not assume we would continue in such radical fashion."

The Reserve Bank has meets scheduled for Dec 4 and Jan 29.

The Pounds to New Zealand Dollar Exchange Rate went from 2.76 to 2.71 and you can buy New Zealand Dollars at the moment at 2.7250

Buy For Now

Barbara Rockefeller
Forex Trading Reports - click here for a free trial

Tuesday, October 21, 2008

The euro exchange rate should fall to 1.28 by year-end and lower in 2009

In Foreign Exchange Markets Yesterday in the New York morning, the US Dollar Exchange Rate broke out of the sideways range (of 1.3343 to 1.3538) from last Thursday. It sank under the previous intermediate low to 1.3286, crawled along sideways for the rest of the day, then put in another breakout move to a new low of 1.3205 so far this morning.

Foreign Exchange Analysts have come up with numerous explanations. The FT says "hedge funds were liquidating long positions in riskier assets funded by selling US dollars and returning to cash in anticipation of massive investor withdrawals." Also, according to the FT, the US dollar was supported by Bernanke’s support of a second fiscal stimulus, despite the hit to the deficit--foreign exchange traders like a pro-active stance instead of dithering. Bloomberg says Citibank analysts are encouraging euro sales on the grounds that the euro exchange rate is in for a perfect storm as the ECB cuts rates toward 2.5% on slowing growth. The euro exchange rate should fall to 1.28 by year-end and lower in 2009. Even the IMF is saying the ECB has room to cuts interest rates further (in association with its new lower growth forecast for the eurozone).

We say the Foreign Exchange market is not only buying dollars because US dollars are in authentic demand for transaction purposes, but also selling euros because of greater uncertainties in Europe than in the US. We simply do not know the extent of bad loans and investments. The ECB recently tightened colalteral rules but the suspicion runs high that the quality of European bank balance sheets (including stupid investments in toxic US paper) is lower than the quality of bank balance sheets in the US.

This reflects the bigger perspective that the US may have generated bad loans but then dumped them on unwitting foreigners.

This is somewhat parallel to selling Rockefeller Center to the Japanese.

This time the fear arises because today is settlement day for some Lehman CDS paper, an issue we don’t understand. Surely derivative paper comes nearly last on the recoverable list of a bankrupt entity and anyone holding it is screwed.

And interest rates do count, even if we don’t buy the argument that the ECB will stop being a one-note Johnny. In Australia, the Australian Dollar took a nosedive on release of the latest RBA minutes. This was the early Oct meeting at which the RBA decided to cut australian interest rates by 100 bp, and in the discussion, the policy committee determined that growth was getting so weak that inflation would subside faster than previously thought. The consensus is not that the RBA will cut aggressivley by another 50 bp and maybe 75 bp by year-end - wow.

(Pounds to australian Dollar exchange rate currently 2.5000. The Outlook for the Australian Dollar suggest that there may be further opportunities to buy australian dollars over 2.6000)

The Japanese Yen is quite confusing, having softened from the high last week under 100 to 102.42 early yesterday but now rising again to 100.73. We are talking about the Japanese yen exchange rate and not the dollars to yen exchange rate because the market is thinking about the yen as the bellwether for risk aversion/risk preference, and noting that it has been tightly linked to equities.


We say the relationship is sometimes very strong but lacks logic to forecast the yen based on what equities are doing.

It’s like forecasting the US dollar up because oil is down.

Buy For Now

Barbara Rockefeller
Forex Trading Reports - click here for free trial

Buy Australian Dollars at best exchange rates - call IMS Foreign Exchange for a free quote
+44 207 183 2790

French banks were unwilling to tap the government fund in case it made them look weak

Euro Exchange Rate Outlook : The French government shoved €10.5 billion of its €40 billion rescue plan down the throats of the 6 biggest French banks today, a bit like food down the gullet of a goose. Until the government forced the issue, French banks were unwilling to tap the government fund in case it made them look weak. The stocks of all the banks rose on the announcement that Credit Agricole will get €3 billion, BNP Paribas will get €2.55 billion, SocGen will get €1.7 billion, and so on.

It’s interesting that the form of the capital injection is not preferred shares, as elsewhere, but subordinated loans at the base rate plus 400 bp. According to the FT, “the loans are repayable after other debts have been met, do not dilute existing shareholders and do not require a change in dividend policy. Nevertheless, subordinated debt can nonetheless be used to increase the banks’ tier one capital ratios, a main measure of balance sheet strength.

The Euro exchange rate today is still very weak as a result and the pounds to euros exchange rate is currently 1.2900

Buy For Now

Barbara Rockefeller
Forex Trading Reports - click here for a free trial

Buy Euros at the best euro exchange rates

call IMS Foreign Exchange for a free quote +44 207 183 2790

Friday, October 17, 2008

This is puzzling - how can Europe’s biggest economy avoid recession while the rest fall into it?

Euro Exchange Rate Outlook: The German Econ Minister, Mr Glos, praised the newly weaker euro exchange rate as a good thing for exports. Most commentary continues to deny that Germany will fall into recession, even if the eurozone does, as is highly likely, having already marked one quarter of negative growth. This is puzzling - how can Europe’s biggest economy (40%) avoid recession while the rest fall into it?

Eurostat reported that construction activity inched up in August by 0.1%, the same July, for a quarterly drop of 3.5% q/q. Year-over-year, Aug was sown 2.5%, which is better than 03.3% in July.

In trade, the eurozone Aug deficit was €6.1 billion after €6.7 billion (revised) in July, with imports down 1% and exports down less, 0.6%. We remain a little confused about why Europe has a trade deficit at all.

Exchange rate to buy euros today against the Pounds is currently 1.2852

Buy for now

Barbara Rockefeller
Forex Trading Reports

Buying Euros - Best exchange rates call IMS Foreign Exchange +44 207 183 2790

Thursday, October 16, 2008

Average Property Prices in Australia Fall

Hi All,

Thought i havent been here for a while and point out a new opportunity. The credit crunch and global meltdown has presented a very unique opportunity;

Australian Property.

The pound to australian dollar exchange rate has risen by more than 27% and you can now buy australian dollars at 2.6500+.This means an average priced australian property would have cost $300,000 australian dollars in July this year would have cost in;

US Dollars - $288,000.00
Euros - E191,000.00
Pounds - £150,000.00

Today the costUS Dollars - $195,000.00 saving 93k us dollars
Euro - E144,000.00 saving 46k euros
Pounds - £113,000.00 saving 37k pounds.

this could be a brilliant opportunity for the australian property market and especially since you can still get a decent range of australian mortgages. Also the fact that rental prices are soaring in sydney to a rental property shortages make the opportunity all the more if you need to have a look start at Real Estate, Property, Land and Homes for Sale, lease and rent -

Buy for now

call if you need to buy australian dollars

Buying Euros - watch the 1.3650 pivot against the US Dollar Exchange Rate

Euro Exchange Rate Outlook : The US dollar appears a little stronger this morning against the majors, with the euro exchange rate having dipped to 1.3347 from 1.3624 at 6 am ET yesterday. But this disguises a lot of choppiness. After the close yesterday, the euro rose from 1.3440 to 1.3517 and then fell again during Asian hours to 1.3343-only to rise back to 1.3518 by 7:40 am ET. This surpasses the interim high late yesterday and so is cause for concern, although we won’t get worried until the euro exchange rate matches a pivot level around 1.3650.

The US dollar to Japanese Yen is also soft as the US day begins, having firmed yesterday from 101.12 to 99.24 overnight. Fear of today’s US data and stock market are pressuring the dollar to Japanes yen higher 100.77 so far today, seemingly on the idea that the US stock index futures, which are rising this morning, will lead the dollar. This may be correct - currency traders are in thrall to global stock indices these days. Bloomberg says “The Japanese Yen weakened on speculation that investors will slow carry trade reversals.” That takes a minute to digest. Sterling, likewise, looks heavy on the re-emergence of risk aversion ands presumably the unwinding of quickie carry trades. Exchange Rate for buying euros against the pound is currently 1.2800

Buy For Now

Barbara Rockefeller
Forex Trading Reports

Buying Euros, Buy Euros at the Best Exchange Rates call

IMS Foreign Exchange for a free quote +44 207 183 2790

Wednesday, October 15, 2008

Slowing economies and falling oil will help - ECB to Cut Interest Rates - Yes

Euro Exchange Rate News The ZEW index of professional financial confidence slipped to –63 from –41.1 in September, although it’s a hair better than –63.9 in July. Bloomberg reports that economists had forecast a drop to only –51, so –63 is worse.

Market News reports that the Germany's leading economic research institutes cut their joint GDP forecast today from 1.4% to 0.2% for 2009. The 2008 forecast remains at 1.8%. Germany is on the brink of recession, they say, expecting a contraction of 0.7% in the first half of next year. They still say, all these years later, that private domestic consumption will pick up.

Separately, ECB official Stark told the press that inflation in the eurozone will fall to the ECB target of 2% by the second half of next year. Slowing economies and falling oil will help. Does this mean the ECB can cut again? Yes, although we are not yet to the point of forecasting it for the Nov 6 policy meeting.

Bye For Now

Barbara Rockefeller - Forex Trading Reports

Buy Euros, Pounds to Euros at the Best Euro Exchange Rate - IMS Foreign Exchange

Thursday, October 9, 2008

Why are the ECB and the Euro Exchange Rates not being punished for foolish policy choices?

Foreign Exchange Outlook : The IMF chief economist said this is the greatest shock since the 1930’s but should not turn into another Great Depression because the policy response this time will be the right one. The major countries will not raise interest rates and has instead cut them, trade protectionism will be resisted, and so on. But what about the public’s response? Is it possible that governments can do the right things and we get a Great Depression anyway? Bloomberg points out that yesterday the VIX, a measure of fear in the stock market, reached an intraday record high of 59.06.

Stock markets are not economies but have many of the same participants. Stock market participation in the US is exceptionally high, with well over 60% of individuals having some association with it, if only through a pension fund or IRA. At what point does the government, any government, intervene in the stock market to boost confidence? It is seldom done-the number of instances can be counted on the fingers of one hand (Hong Kong during the Asian crisis, Japan via state-owned entities at various times). We doubt that the US would do it-Congress would scream-but hey, you never know.

This is a new form of moral hazard-that once the Treasury decides it can buy preferred shares, it selects its investment targets according to the free-market fortunes of certain stocks. This would be truly awful and raise all kinds of questions about insider trading, stock price manipulation, backdoor deals, and so on.

The US reputation for honesty and transparency has already taken near-fatal stabs to the heart by Enron, WorldCom, various option pricing scandals, executive pay, and so on.

How much more can it take?

We agree that preferred shares are a better fix than buying toxic paper and praying, but it must be handled with kid gloves and in the middle of a well-lit stage.

Anyone pinning hopes on G7 tomorrow and Saturday is making a mistake. Treasury Sec Paulson said yesterday that "When we look at the G-7, we have very different countries, economies of different sizes, financial systems with different needs. And so it would not make sense to have identical policies." What he really means is that monetary policy has little to contribute now-although the coordinated action yesterday had a good effect and gave a nice appearance, as though somebody is in charge-but fiscal policy and institutional change are now the keys to a real and lasting fix. As noted before, the eurozone doesn’t have a joint fiscal position. There is no federal budget of any consequence. Therefore, it’s up to each country to fund their bailouts as best they can, and national differences and quirks are only to be expected.

Does this mean the euro-zone is in a weaker position than the US? Not necessarily. These guys are not second-raters. They have already accepted that budget deficit constraints (3% of GDP) need to be thrown out the window. What else do we need? Each country’s plan doesn’t have to be coordinated with everyone else’s plan to be effective. The real problem lies with the big multinationals that have fingers in every country, like ABN Amro, ING, Deutsche Bank and the British banks. As we saw with Iceland, we could end up with governments suing each other. Iceland doesn’t have the cash reserves but most EMU countries do, or the capability to tax it into existence. This will be fun but not fatal if it’s the UK suing (say) France, but it will be less fun if it’s Poland suing (say) Germany. We have no evidence that this will be the outcome, but it’s an interesting idea. More interesting is how Europe is going to reduce leverage without triggering failures. This is still under the radar but it seems obvious that leverage of 50x is a fire waiting for a match.

Meanwhile, European banks are still bidding like mad for dollar funding from the ECB at rates reaching 10% yesterday, although it was down to 5% today. With Fed funds at 1.5%, this is an extraordinary premium. Usually overnight money is cheaper (due to the absence of reserve requirements), not more expensive. We will know that trust and confidence has returned to European banking when these rates come down. What if they do not come down? At a guess, it means the European banking crisis has further to go. European banks are almost certainly in worse shape than US banks at this point.

What does this have to do with the level of the euro exchange rate? It’s murky. The rising euro rate is a sign of confidence in European institutions, including especially the ECB. We find this mysterious, since the ECB raised rates only in July, evidently not having read Mr. Bernanke’s book on the Great Depression, which repeats the accepted wisdom that the Fed raising rates in 1930 was precisely the wrong thing to do. Why are the ECB and the Euro Exchange Rates not being punished for foolish policy choices?

If and when the US and UK do these things, the pound and dollar exchange rates get punished.

Well, it’s the Teflon euro.

We see this effect repeatedly. For example, money supply growth never once hit ECB targets during the entire life of the ECB but the euro dollar didn’t get sold off because of it. We offer only the idea that the idea of monetary union is such a fine one for countties that had spent 1000 years fighting wars against one another that the markets are willing to overlook little things like 50x leverage. Does this make sense? No. But it’s a lesson in why Big Picture macroeconomic analysis doesn’t help much in forecasting exchange rates.

Charts are more realiable. This time the chart is saying that the pullback in the euro is just that-a corrective pullback. We will not Buy Euros into it as a reversal for hundreds of points more, probably not until it breaks the channel top resistance over 1.4200 or 1.4300. We can try to buy the euro correction, but beware-it can spit in your face. As for the Japanese Yen, the US dollar got a boost on short-covering on the Paulson announcement that the Treasury can do preferred shares-but Japanese companies are still planning as though the break below 100 is the real deal and they are in for an ordeal. Euro to Japanese yen is going to be very interesting-what is the real driver?

Buy For Now

Barbara Rockefeller - Forex Trading Reports

Buy Euros at Best Exchange Rates - Call IMS Foreign Exchange +44 207 183 2790

European Banking Crisis - US is entirely at fault for the global crisis due to irresponsible lending

European Banking Crisis : Britain’s PM Brown said the US is entirely at fault for the global crisis due to irresponsible lending. “We have led the world today with a proposal to restructure our banking system. We are taking the steps that I believe other countries will take in the future.” The three-part UK plan announced today entails £200 billion in a “Special Liquidity Scheme,” £50 billion in direct investment in 8 banks, probably in the form of preferred shares, and a guarantee of bank bond issuance of £250 billion. It might well be called a 4-point plan since it includes menacing remarks about executive compensation. There was no favorable announcement effect, which must gall Brown and Darling-stocks continued to fall, including bank stocks, and the pound to us dollars bounced only to 1.7665 before falling back (from the low of 1.7315 yesterday). But on the face of it, it’s a better plan than the Paulson plan—more encompassing.

The Swedish Riksbank said it will lend up to SKr 5 billion to Iceland’s biggest bank, Kaupthing, to help it avoid “liquidity problems” (and protect Swedish depositors). In Spain, the government said it will inject €30-50 billion into the banks (buying up paper) and also raise the guarantee for bank deposits from €20,000 to €100,000.

The EU finance minsiters meeting yesterday agreed that bank deposits should be guaranteed up to €50,000 and on “joint principles to guide bank bailouts,” according to the WSJ. The orientation is to invest in the banks themselves rather than to buy their paper, the US solution.

The ministers noted the European approach is cheaper.

In the money market—where the real action is—today the ECB allotted $70 billion in a 1-day US dollar facility to eurozone financial institutions at a marginal lending rate of 9.5%. Not a typo, 9.5%. Market News reports that “The operation, which had a pre-set maximum allotment volume of $70 billion, received 69 bids and the total bid volume was $122.03 billion. 96.04% of bids were allotted at the marginal lending rate, the ECB said. Today was the first time the ECB's applied a multiple rate auction method. The change from the single rate method means that "the auction method will be the same for the overnight US dollar operations and for the Eurosystem's euro credit operations," the ECB said yesterday. This is the 16th overnight U.S. dollar funding operation conducted by the ECB” since the agreement on Sept 18.

Separately, the Bank of England allotted $8.564 billion in overnight money at a lowest accepted rate of 1.010%, and covered 0.86 times. The weighted average rate was 3.592%. It also allotted $12.49 billion in 1-week money at a lowest accepted rate of 1.210%, and covered 1.01 times. The weighted average rate was 3.286%. These numbers suggest that the stress in the UK system is a lot less than in the eurozone system.

And the US is doing even better, perhaps. Market News reports that the 85-day Term Auction Facility offered more money than the banks needed. The cover ratio was only 0.92, meaning banks bid for 92% of the $150 billion on offer. Well, maybe. The previous TAF was much smaller, $25 billion, and bank stocks still fell even with guaranteed funding.

Buy for now

Barbara Rockefeller - forex trading reports

Need to Buy Australian dollars or exchanging Pounds to Euros - Call IMS Foreign Exchange on 0207 183 2790 for a free Quote

Friday, October 3, 2008

Banks predicting a interest rate cut in Europe before the end of the year

The ECB meets today and all eyes are on the Trichet press conference, as usual. The rate decision was made at 7:45 am ET but as of 8:30, we can’t find the news. This happens every time—and we wonder why it’s not available in Reuters, Market News, Bloomberg, et al.

Bloomberg reports that all 58 of the economists it surveys say the ECB will keep rates on hold, with Trichet not heeding the wake-up call of bank failures this week. But economists at Deutsche Bank, Goldman Sachs, and JPMorgan Chase “this week followed Citigroup in predicting a interest rate cut in Europe before the end of the year.”

Yesterday the head of the pan-EU employers' federation BusinessEurope said the ECB should loosen monetary policy in the early part of 2009 since inflation and growth are set to slow markedly in the coming months. How sedate.

In economic data, EMU industrial producer prices fell 0.5% in Aug from a rise of 1.3% in July (revised). The rise is 8.5% y/y for Aug after 9.2% in July.

UK House Prices continue to fall as Outlook is Bleak

Housing lender Nationwide reports its house price index fell 1.7% m/m in Sept for a 12.4% drop y/y, the steepest y/y since 1991. It’s the 11th month of decline. On the quarter-by-quarter basis, house prices are down 4.6% in the latest quarter. But the price drop is stabilizing, not accelerating. The Nationwide economist told the FT “that current conditions were in stark contrast with those of a year ago, when UK house prices were rising at an annual rate of 9 per cent and nearly 40 per cent of first-time buyers were borrowing more than 100 per cent of the purchase price of their home.” But long-term cycles do exist in housing. She said “Price movements from the peak to a trough of a cycle simply show the extent of the volatility in prices around the trend rather than anything more meaningful about their future path.

The long-run trend growth in real house prices in the UK is around 2.7 per cent per annum and there is no reason to expect that over the longer term house prices should not continue to go up in real terms, even if we are going through a sharp correction now.”

Buy For Now

Barbara Rockefeller - Forex Trading Reports

Need to Buy Euros,

Pounds to Euros at best exchange rates visit IMS Foreign Exchange or call 0207 183 2790

Wednesday, October 1, 2008

BHP Billiton wins right to Bid for Rio Tinto

Hi All,

For all of you that follow the Australian Dollar watch this story regarding BHP Billiton Ltd who last night won approval from Australia's competition regulator for its hostile $101 billion bid for Rio Tinto Group, boosting speculation that the world's largest mining takeover may succeed.

I would imagine this story would give the AUD exchange rate a boost as BHP would become a commodity - mining superpower which can only be seen as a positive for the Australian Economy.

Pounds to Australian Dollars exchange rate currently 2.2200

Buy for Now

IMS Foreign Exchange - Buy Australian Dollars at best exchange rates