Monday, November 30, 2009

We could issue a sell signal in the Australian Dollars to Japanese Yen,

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

Last week before the Thanksgiving holiday, we wrote that the Fed gave the market an excuse to sell dollars by speaking of the US dollar’s decline as “orderly.” It’s not clear (and probably never will be) whether the Fed actively wants a lower dollar or was simply accepting a fact of life - that until it raises rates, the US dollar rate will fall. To give the Fed its due, it was probably unhappy about the dollar becoming a safe-haven play last week and Fed officials no doubt huddled with BoJ officials and their Treasury - MoF counterparts on whether to intervene. It seems clear from the incoherent and inconsistent statements from Japanese officials that the US declined to participate.

It’s hard to say whether the Dubai story will become a bigger contaminant of all emerging markets or a one-time aberration. At a guess, it’s a one-time thing and the UAE, which has ambitious plans for the region to become a financial center rivaling New York and London, will fix it quickly and quietly, and we can all go back to worrying about China. Dow Jones has a story that the UAE may guarantee the Dubai World debt, all of it. This would be better than the bank liquidity plan already offered. If so, safe-haven flows into the yen will be short-lived, too.

The Dubai saga reminds us once again that the world can always deliver a Shock and on the whole, Shocks are US dollar exchange rate -favorable because they inspire an emotional safe-haven impulse. Something that is a lot less clear is the effect of underlying fundamentals on trading activity. We tend to complain that traders are short-sighted and interested only in their own bottom line, not first-class economic analysis (which is why first-class economists are lousy forecasters and worse traders). But foreign exchange traders have one characteristic that puts them back in the real economic world, and that is penchant for pointing out that the emperor is not wearing any clothes. In today’s market, we say the naked emperor is the Swiss franc, which breached parity last

Wednesday before the holiday at 0.9911. On Friday it bounced, hard, to 1.0076 and this morning it’s back to 0.9990. As we have noted before, Switzerland is always more expensive than its neighbors, but parity with the dollar is, economically, ridiculous. At some point the Swiss franc will be seen as overbought and then watch out.

This week is full of scheduled events, including retailers reporting on Black Friday, vehicle sales, the Bernanke hearing, another 10-year auction announcement, and more - but the biggie, as always, is payrolls on Friday. We don’t have forecasts yet but they will start coming today and up to Wednesday’s ADP Macro release for the private sector. With the UK fretting about a double-dip recession, should the US be fretting, too? Probably not, because there is still plenty of undisbursed stimulus money to be spent, even if Q3 GDP data still overstates the recovery so far, as most economists think.

Some politically-minded analysts say the Obama administration has until March to get employment up or the mood will turn decisively down, and mood counts. We are not so sure, since all the forecasts are for employment to keep falling for longer than March. So, perhaps the payrolls report will not have as big an effect this time, and retail sales will be a bigger factor. So far we know more people went shopping but they spent less per head than last year, not a big help, analytically. Clothes are not of interest but electronics and toys are hot. We continue to find it really weird that the US shopper is setting the tone for the global economy.

At a guess, the US dollar rates will resume its downtrend and the biggest winners will be the currencies that got the knee-jerk sell-off, especially the New Zealand Dollars and the Australian Dollars, but the charts are very scary. We could issue a sell signal in the Australian Dollars to Japanese Yen, for example, based on our rules. We didn’t do it because the end of last week was extraordinary, but were the market darlings to lose favor, we could get a re-shuffling of the deck that could (at least temporarily) favor buying US dollars.

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! Get a quote for Buying Euros now!
Buying Dollars? Buy US Dollars at the Best Dollar Rates! Get a quote for Buying Dollars Now!Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates! Get a quote for Buying Australian Dollars Now!

Need to Buy Holiday Money? Buy Travel money at the best exchange rates visit http://www.travelfx.co.uk/ and save on your travel and holiday money needs

Contact IMS Foreign Exchange + 44 207 183 2790

Thursday, November 12, 2009

We consider the Australian Dollar exchange rate outlook the canary in the coal mine,

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro exchange rate is falling this morning from yesterday's high at 1.5050, which was hit ahead of the US open. We can see on the charts that many currencies, including the euro, closed down yesterday from the open and well off the high, with the euro rate and Swiss franc actually closing at the low or near it. This was a warning sign for today, and sure enough, the euro exchange rates has dipped so far to 1.4918 (at 7:30 am ET).

One report says that a large amount of euro to us dollars options at 1.5000 are due to expire today and players are pushing the euro down to avoid paying out. Market News reports that slipping European stocks this morning took the edge off the euro, while the euro also "came under pressure from Russian sales which helped to knock the pair down around 80-points to lows under $1.4930." Market News also names "East Europeans" as sellers with German names adding weight before running into Asian demand during the European morning.

Explanations for the euros downmove range from the mundane (the options) to the sublime (Chinese revaluation, oil prices).

At a guess, this is a consolidative move rather than an outright reversal, but there are some worrying aspects to it. For one thing, the high yesterday failed to match, surpass and hold the high at 1.5063 from Oct 25. Thirteen points isn't much of a shortfall but it’s still a "failure." Another issue is that so many traders like Fibonacci numbers that it would be negligent not to calculate them. On the 6-hour chart, we get a 50% retracement to 1.4840 and a worst-case 62% retracement at 1.4789. These levels could be reached without scaring the horses but any more would create a new environment.

The trigger for such a new environment might be the Chinese actually changing from the de facto dollar peg to a basket, as suggested in yesterday's People's Bank report. Most commentary says this is not a realistic expectation until the middle of next year, but the probability is not zero for such an Announcement at the APEC summit or next week after the Obama visit. Obama has said he is taking the currency issue very seriously and it will be discussed directly (along with other trade and finance issues).

A second idea is that when we get the US oil inventory report today, foreign exchange traders will take seriously that the risk of rising oil is so dire for economic recovery that some government somewhere may do something about oil becoming a "security" and alternative asset. We have a fresh warning from the International Energy Agency to that effect, with some additional analysts saying the price of oil is the whole ballgame for recovery. A return to bubble levels would stop the recovery dead in its tracks. This argument has a lot of emotional appeal and has the added virtue of being largely correct. The question is whether government interference is realistic (it’s not) or that enough speculators think it might be (possible).

But real economic events are still drivers, too. The Australian dollar jumped over 100 points to 0.9371 on release of the employment report (a rise of 24,500 when a drop of 10,000 had been forecast). Foreign Exchange Traders immediately jumped the conclusion that the RBA can raise rates a third time in December, even though it has never done three in a row before. It’s interesting that the Aussie Dollar has now given back all of the gain and lost a bit more from the US close yesterday. We consider the Australian Dollar exchange rate outlook the canary in the coal mine, leading the euro for reasons we have never nailed down.

The pound remains under pressure, evidently on BoE Gov King talking it down yesterday. The yen rose against everything as a bit of a safe-haven after Chinese Premier Wen Jiabao said “The worst is over. The global economy is starting to recover but a total recovery will be a slow and bumpy process.” According to Bloomberg, among others, this was taken to mean a safe haven might be needed. One analyst (Mitsubishi) says the yen is headed straight for 85 again, but this source has a tendency to draw straight lines off the smallest of moves. The latest weekly capital flow report from the Japanese MoF shows that Japanese investors are buying foreign bonds and equities for a total of ¥332.1 billion) while foreigners were net sellers of Japanese bonds and equities but buyers of money market instruments for a new outflow of ¥431.3 billion.

This doesn’t support a rising yen but it’s for last week, not this one.

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! Get a quote for Buying Euros now!
Buying Dollars? Buy US Dollars at the Best Dollar Rates! Get a quote for Buying Dollars Now!Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates! Get a quote for Buying Australian Dollars Now!

Need to Buy Holiday Money? Buy Travel money at the best exchange rates visit http://www.travelfx.co.uk/ and save on your travel and holiday money needs

Contact IMS Foreign Exchange + 44 207 183 2790

Wednesday, November 11, 2009

foreign exchange traders is out gunning for Pounds sterling

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro exchange rate closed yesterday just under the magic round number at 1.4991 after hitting the high at 1.5021 before the US open, suggesting US traders were slow to jump on the bandwagon. The best euro rate made a new high at 1.5050, again overnight, on good data from Japan and China and despite a strong dollar policy statement in Tokyo from Treas Sec Geithner.

The change in attitude toward gold is interesting. You can’t follow currencies without knowing something about gold, and the only time when it was not dominated by ideologues and true believers was the run-up to over $800 in 1979 and 1980. Speculators joined the party then and are joining it again now, although this time gold is "just another commodity." According ot the FT, spot gold prices rose as high as $1117 before falling back.

Another curious development is in Pounds sterling exchange rates, which fell from 1.6754 to 1.6599 in a single hour yesterday on the news that Fitch sees the UK as potentially facing a sovcereign ratings downgrade (but probably escaping that fate upon fixing the deficit after the spring election). Pound to us dollars recovered yesterday after that shock and rose steadily, spiking to a level higher than the pre-Fitch level at 1.6799. But then it put in a giant downmove, again in a single hour, to 1.6625. Find an hourly chart if you can. Seldom can we see so clearly when a gang of foreign exchange traders is out gunning for sterling.

But the news from the UK is mixed. Job losses were less than expected, which was sterling-favorable. The Bank of England’s Quarterly Inflation Report said the CPI will average about 1.6% for the next two years, interpreted as meaning the Bank will keep rates on hold all year next year - and sterling-negative. But near-term, the BoE inflation forecast is for a possible pop over target. By now the market was weary of lobbing balls back and forth, and then Gov King spoke about 27 topics, among which was the observation that a weak currency has been of benefit to the economy, and that was the only thing the market heard.


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! Get a quote for Buying Euros now!
Buying Dollars? Buy US Dollars at the Best Dollar Rates! Get a quote for Buying Dollars Now!Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates! Get a quote for Buying Australian Dollars Now!

Need to Buy Holiday Money? Buy Travel money at the best exchange rates visit http://www.travelfx.co.uk/ and save on your travel and holiday money needs

Contact IMS Foreign Exchange + 44 207 183 2790

Monday, November 9, 2009

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro exchange rate rose over 1.5000 around 5 am ET today for the first time since Oct 26 as the market voted with its feet on the unemployment rate Friday and the failure of G20 even to mention Foreign Exchange and specifically the yuan. Reuters says "G20 leaves door open for fresh pressure on dollar rate," pointing out that Brazil (and Canada) had said ahead of the summit that they would bring it up.

The FT says "Furthermore, a report from the International Monetary Fund also weighed on the US dollar rate as it named the US unit as the currency of choice for funding carry trades, in which low-yielding currencies are sold to fund the purchase of riskier, higher-yielding assets elsewhere. The report said that while the dollar had depreciated in recent months, it still remained on the ‘strong’ side.”

Bloomberg elaborates a bit more on the IMF report, which was published just as G20 was meeting. “There are indications that the U.S. dollar is now serving as the funding currency for carry trades. These trades may be contributing to upward pressure on the euro and some emerging-economy currencies.” Bloomberg reports "While the dollar [in real effective terms]'has moved closer to medium-run equilibrium,' it is still 'on the strong side.'"

The IMF also says the euro exchange rate “is on the strong side of its equilibrium.” Hello? How can the dollar be on the strong side and the euro be on the strong side, too? The IMF doesn’t view the ever-changing market price of the euro/dollar as the benchmark and is using other measures, based on baskets, to derive “real effective terms.” This may be fine for ivory-tower economists but is not at all good for an agency that should have a higher sensitivity to the real world. Finally, the IMF said the yuan “has depreciated in real effective terms in tandem with the U.S. dollar and remains significantly undervalued from a medium-term perspective.”

In a word, bah.

Pounds Sterling exchange rate is rising strongly this morning, to over 1.6800, on a story that Kraft has until 5 pm ET today to increase its offer for Cadbury. M&A has often been a driver of the pound in the past. In dollar/yen, though, Friday’s big drop (from 90.75 to 89.59) has not been matched so far today. Still, it’s a breakout under the previous intermediate lows and we now await whether it also surpasses the Nov 1 low at 89.17.

Bye for Now

IMSFX and Travel FX

Buying Euros? Buy Euros at the best euro Rates! Get a quote for Buying Euros now!
Buying Dollars? Buy US Dollars at the Best Dollar Rates! Get a quote for Buying Dollars Now!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates! Get a quote for Buying Australian Dollars Now!

Need to Buy Holiday Money? Buy Travel money at the best exchange rates visit
www.travelfx.co.uk and save on your travel and holiday money needs


Contact IMS Foreign Exchange + 44 207 183 2790

Wednesday, October 21, 2009

euro exchange rate at $1.50 is a disaster for the European economy and industry

“The euro exchange rate at $1.50 is a disaster for the European economy and industry," said Henri Guaino, right-hand man of President Nicolas Sarkozy. The currency has risen 15pc in trade-weighted terms since March, equivalent to six quarter of a percentage-point rises in interest rates. It briefly flirted with $1.50 against the us dollar rate on Tuesday before falling back on intervention fears.

What concerns European policymakers most is the lockstep rise against China's yuan. Beijing has clamped the yuan firmly to the weak dollar for over a year, quietly benefiting from the export advantages. It accumulated $68bn (£41bn) in reserves in September alone as a side-effect of holding down the currency. Fresh reserves are mostly being invested in eurozone bonds, pushing the euro higher.

French finance minister Christine Lagarde said it was intolerable that Europe should "pay the
price" for a dysfunctional link between the US and China. "We want a strong dollar, and we have reiterated it again in the strongest manner," she said after this week's Eurogroup meeting. China's trade surplus with the EU reached €169bn (£154bn) last year.


Europe and Japan are now the last two blocs standing as everybody else lets their currencies
fall,
or takes active measures to hold down the exchange rate -- with "beggar-thy-neighbour" echoes of the 1930s.
Brazil has become the latest country to intervene, resorting to controls to cap the real after its 42pc rise against the us dollar exchange rate since March. It is imposing a 2pc tax on flows into bond and equity markets. Finance minister Guido Mantega said the move was to head off an asset bubble. Critics called it a "desperate move" that would distort markets.


Hans Redeker, currency chief at BNP Paribas, said the strong real is "eating away" at Brazil's
manufacturing base. "They are not willing to take any more of the adjustment burden as long as China and other surplus countries do nothing," he said.


Switzerland is openly intervening to hold down the franc in order to stave off deflation. Canada and New Zealand have talked down their currencies. Britain and Sweden have opted for stealth devaluations.


Korea, Thailand, Taiwan, the Philippines, Indonesia and Russia have all been buying dollars to
stem their currencies' rises. The effect is to perpetuate the imbalances that led to the credit bubble from 2004-2007 and ultimately caused the financial crisis. Reserve accumulation fuels asset booms because it creates a wash of liquidity and drives down global bond yields. Asia
clearly needs to sharply revalue against the West to right the system.

Professor Michel Aglietta from Paris University says the euro exchange rate is 40pc above its
purchasing parity of level $1.07 (a low estimate), citing it as the reason why Peugeot and Renault have shifted annual production of one million cars to Eastern Europe since 2004.


Airbus is moving plants offshore, building A320 jets in China. It is relying heavily on US
contractors for its A350 jet. Fabrice Bregier, Airbus chief financial officer, said the current exchange rate is "becoming very difficult for all industrial companies which have their costs and need to buy euros. We can only appeal to monetary authorities to see to it that there is stability in exchange rates."


The European Central Bank could take some of the steam out of the euro rate by signalling a less hawkish policy. It may be pressured into doing so. EU ministers have the final say on exchange rate under Maastricht, though they have never used this power – publicly.

What is missing is a unified front of EU governments. Italy has been remarkably quiescent,
given its export slide. Germany has a higher pain threshold for a strong currency after gaining competitiveness by squeezing wages. But there are limits even in Berlin. The IWK institute says the danger point for German exporters is $1.45.

Jean-Claude Trichet, ECB president, has stepped up his rhetoric against "disorderly" currency
moves, warning that authorities on "both sides of the Atlantic" were monitoring the markets. He made an unscheduled appearance on Monday to drive home the point. The body language is changing.

For the Full Story visit www.telegraph.co.uk

Bye for Now

IMSFX and Travel FX

Buying Euros? Buy Euros at the best euro Rates! Get a quote for Buying Euros now!
Buying Dollars? Buy US Dollars at the Best Dollar Rates! Get a quote for Buying Dollars Now!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates! Get a quote for Buying Australian Dollars Now!

Need to Buy Holiday Money? Buy Travel money at the best exchange rates visit
www.travelfx.co.uk and save on your travel and holiday money needs


Contact IMS Foreign Exchange + 44 207 183 2790


Wednesday, October 14, 2009

Canadian Dollar exchange rate not reach parity with the US

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The important release today is retail sales at 8:30 am ET, which will set the tone for the day until corporate earnings start having their effect. The Market News forecast comes in at -2.1% with the range minus 1.3 to -2.6% - no positive number is even possible. Since August sales rose 2.7% (led by autos), the Sept results will mostly offset and probably cause doubts about such a joyous and heedless embrace of risk. Ex-autos, Sept retail sales may rise 0.2%, which is nothing to write home about.

We may get a pullback today, or we may not. We may get one Friday as foreign exchange traders stand back and look at what they have wrought (and take profits). Note that there is no particular sense of panic or crisis abroad in the land. The US dollar rates is falling for reasons we think we can identify and understand, especially the oil/gold story. As for perspective, why should the Canadian Dollar exchange rate not reach parity with the US? It may have a messy political landscape but it also has commodities galore and some very smart guys in the BoC with a tart tongue. The closest the Canadian dollar has come to parity is 1.1163 in 1991, by the way.

While we don’t have a problem with the Canadian , or even the Australian dollar exchange rates, we do have a problem with the Swiss franc nearing parity with the dollar. Nobody much pays attention to purchasing power parity these days, but the Swiss franc was already overvalued at 1.1500 (November 2007), so it must be wildly wrong at 1.0200. We may pay $1.50 for a Coke in Connecticut, but in Switzerland, it’s about $4.50. Eeek. Besides, the SNB is not amused at too-strong a Swiss franc, and while its main concern is with the swiss franc to euro exchage rate relationship, the best us dollar rate counts, too. The Swiss franc reached its highest ever against the dollar in March 2008 at 0.9639, the height of the financial sector crisis (and the stock market low). We would be flabbergasted to see the same crisis-level seen again--without a crisis. In fact, it’s been a while since we had something that could be named a crisis. We can’t forecast the unforecastable, but we can warn that crises are a regular feature of the landscape and we should not act as though a new one is not possible.

Pounds to US Dollars = 1.5948
Pounds to Euros = 1.0710
Euro to Pounds = 0.9339
Pounds to Australian Dollars = 1.7472

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!

Buy Travel Money, Buy Holiday Money, Best exchange rates for Travel Money

Contact IMS Foreign Exchange + 44 207 183 2790

Tuesday, August 25, 2009

euro exchange rate continued its corrective dip yesterday from 1.4359

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro exchange rate continued its corrective dip yesterday from 1.4359 Sunday night to 1.4271 after the US close as Asia was gearing up for a new day. The lowest euro low was 1.4250 at the Asian hand-off to Europe, whereupon the euro rates took off to the upside again to 1.4336 so far. You can chart the euro’s fortunes move-by-move to the US equity markets yesterday, with a new risk aversion becoming visible and helping as traders were buying dollars - but not by much. The euro rate recovery this morning also matches the rise in US equity index futures. Overnight, the euro rate drop is attributed by Market News to "Asian and Russian supply of euros, as this pair triggered stops through the Asian base in the $1.4270 area down to $1.4254."

The euro’s low overnight is attributed to the Shanghai Composite falling as much as 5.7% overnight, according to Bloomberg, closing down 2.6% after the CEO of China Construction Bank said excess liquidity in the Chinese economy is leading to asset bubbles. In Asia, foreign exchange traders were also influenced by a comment from a regional US banker that commercial real estate has yet to bite and will continue to bite next year.

As usual, the rise in risk aversion during Asian hours affected the euro/yen and dollar/yen the most. Market News reports that "The morning's drop in Asian stocks led to another wave of risk aversion, which put yen crosses under pressure, and led investors to seek shelter in US dollar exchange rate instruments. Euro-yen fell steadily through the morning session, from a high near Y135.25 to a Y134.23 low. Dollar-yen followed the cross down, falling from Y94.60 through Y94.00 to lows around Y93.92." But the dollar/yen made it only to 93.77 before bouncing back up to 94.43 after Europe came in.

Pounds to US Dollars = 1.6358
Pounds to Euros = 1.1414
Euro to Pounds = 0.8758
Pounds to Australian Dollars = 1.9521

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!

Buy Travel Money, Buy Holiday Money, Best exchange rates for Travel Money

Contact IMS Foreign Exchange + 44 207 183 2790

Thursday, August 20, 2009

euro exchange rates rose from 1.4090 to 1.4265

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

Yesterday the US dollar rate flip-flopped on the US equity market shaking off the negative influence of the Shanghai Composite rout, causing dollar and yen longs great distress. As Market News puts it, "The overnight slide in Chinese stocks led to anticipation of risk aversion in U.S. action and market players entered into euro, sterling and yen carry shorts accordingly. When U.S. equities trimmed losses in early morning action, currency positions were pared back modestly. Later as stocks rallied further, market players raced to unwind existing dollar long position, with the euro exchange rate and other currencies rising sharply."

From the US open around 8 am ET, the euro exchange rates rose from 1.4090 to 1.4265 by noon. The euro has failed to build on it, though, and is sliding softly downward along a hand-drawn resistance line that lies about 1.4225 at 8 am today. We see ultimate support at the midpoint of yesterday's breakout bar at around 1.4188. The Market News technical analyst puts support at something he names the 9-day resistance line (whatever that is) around 1.4242, or maybe the Fibonacci retracement level 1.4246 (50% of the 1.4447 to 1.4046 move).

We say that technical levels are often powerful if everyone is looking at the same indicators, but right now, we have bigger things on our mind like the US equity market decoupling from the Shanghai and some actual economic data, which was in short supply on Wednesday, allowing the oil inventory report to hold the room.

Dollar/yen got a boost, or rather the yen took a hit, on rising oil and commodity prices and rising global equity prices overnight. The FT has an interesting report, saying "Weekly data showed continued currency inflows into the Japanese equity market, prompting BNP Paribas analysts to argue this suggested the dollar was 'increasingly used as a funding currency taking a position
previously occupied by the yen.'"

In the UK, a dire fiscal condition report had little effect, although sterling dipped from 1.6607 before the news to 1.6449. The pound is especially tricky these days, overreacting to the QE stories but now under-reacting to the deficit news. In one of our long-term model systems, sterling is a sell and in the other, it’s a buy, while in the short-term trading system, it’s a buy but with support at about 1.6430, close to the current quote at 8:10 am of 1.6477.

Pounds to US Dollars = 1.6496
Pounds to Euros = 1.1586
Euro to Pounds = 0.8628
Pounds to Australian Dollars = 1.9848

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!
Buy Travel Money, Buy Holiday Money, Best exchange rates for Travel Money

Contact IMS Foreign Exchange + 44 207 183 2790

Australian Dollar exchange rate rallies as do stock markets

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

We wrote last winter that at some point, hysteria and selling panic have to stop not because of fundamentals, but because people become exhausted. It's tiring to be truly fearful. It literally wears out the adrenal glands (the source of flight-or-fight juice). A 20% drop in the Shanghai may be just what the doctor ordered as long as it stops somewhere around there... having said that, we doubt the Chinese government is going to intervene in any signficant way. It is newly committed to free markets (one decade) and doesn't want to appear to be rigging them too much. These are very smart people with their eye firmly on the long-term horizon.

The market will just have to sort itself out.

The best of all possible worlds would be if Chinese credit is indeed tightened and the stock market decides it can live with that. Then global stock markets will rally like crazy, and so will the Australian Dollar exchange rate. The US dollar rate will sink back as the need for a safe-haven fades and relatively riskier currencies, including the euro exchange rate which yield a tad more - go back into favor. We imagine this is still the big-picture and the events in the Chinese stock market are just a bump in the road.

We can't find a reason to buy dollars other than safe-haven reasons, especially with the political picture in the US so nasty… even FIFO doesn’t work anymore, with Europe actually ahead of the US in the growth sweepstakes, a rare occurrence.

The problem is that we can't name the exact timeframe in which risk appetite comes back. We have to watch the Shanghai and commodity prices, especially oil. Instead of nice smooth swings, we could continue to get jumpy moves that are up one day and down the next. For tend-following traders, this is a recipe for big losses, so extreme caution is called for.

Pounds to US Dollars = 1.6496
Pounds to Euros = 1.1586
Euro to Pounds = 0.8628
Pounds to Australian Dollars = 1.9848

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, August 18, 2009

Euro exchange rate up against the US dollar

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The US dollar rate was already losing ground yesterday morning in New York, with the best level at 10 am at 1.4040, just shy of the round number 1.40. The euro exchange rate proceeded to put on gains all day, closing at 1.4080, although the range was narrow 40 points and the euro rate bounce was interpreted as the normal bounce off a level near support. The US dollar rates was on the firm side across the board yesterday on the global stock market story, with the riskier currencies (Canadian Dollar and Australian Dollars exchange rates) tracking US equities point-for-point.

But the euro exchange rate move kept going and turned out to be more than bounce, reaching 1.4135 by 7 am ET today, on the news that the German ZEW investor sentiment index rose to 56.1 in August from 39.5 in July and far better than the forecast of 45. Yesterday, US data was also pretty good, suggesting risk aversion on equity losses was overdone. The US data set the stage for the Germany data today. Well, that was one bounce. As of 8 am, the nice ZEW effect is already wearing off and the euro exchange rate is down to near 1.4100.

You'd think risk aversion would be too important a phenomenon to seesaw back and forth in a single day. Maybe it’s the wrong name, or maybe we are attaching too much importance to it. When we first started to use the term, we thought it was pretentious and self-important, but gradually came to accept it along with everyone else as useful shorthand. But now we are back to thinking "risk aversion" is pretentious and too weighty for the sentiments it is describing - plain old greed and fear.

Market News Singapore reports today the euro/yen and dollar/yen tracked the Shanghai and Tokyo stock markets move-for-move all morning in Asia, with improvements in the equity indices reflected almost immediately. "Euro-yen, a popular risk sentiment play, rose strongly earlier in the session, mounting its Y133.32 overnight to hit a peak of Y134.20 this morning. But by midday here, the cross was drifting back down to Y133.71 as stock market indexes headed back south." Special Case - the Mexican Peso: The US dollar rate rose strongly against the peso for the biggest one-day move since May, according to Bloomberg, led by the drop in global stocks yesterday that led traders to think the rise in "higher-yielding, emerging-market assets has outpaced the prospects for economic growth." The dollar peak in March at 15.5803 and dropped to 12.7686 last Friday, or about 17%.

Also, the Brazilian real fell "to the lowest this month as foreign direct investment in China plunged in July and Japan’s second-quarter economic growth missed estimates, raising uncertainty about the global economic recovery. The currency lost 1.7% to 1.8807 per U.S. dollar at 5:09 p.m. New York time, from 1.8484 on Aug. 14. It earlier fell as much as 1.9%to 1.8840, the weakest since July 31. Today's drop pared the real’s gain this year to 23%, the best performance against the us dollar exchang rate among 26 emerging-market currencies tracked by Bloomberg. The Bovespa stock index declined 2.5%, the most in eight weeks.”

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

US Dollar rate not the best again today as Madoff is sentenced to 150 years

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 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

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

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

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

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

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!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!

Contact IMS Foreign Exchange + 44 207 183 2790

Monday, April 27, 2009

Three guess what is the forecast for the Australian Dollar against the New Zealand Dollar

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro's breakout over the channel top was short-lived and it has moved back inside the channel without making a higher high for the third time. See the special chart. We wrote last Friday "It "should" stop and reverse now." And so it has, but the path downward may be rocky. Note that the WSJ says the highest high in the professional market was 1.3299 while the retail platforms (eSignal) had a highest high at 1.3301 - this is the two points that retail foreign exchange traders pay for the privilege of being somewhat near the game. The broker ads that say retail traders with their piddly $20,000 capital stake (or still-piddly $100,000) are playing in the same game as the big banks - they lie. Retail traders always pay a premium. Two points is minor compared to some of the spreads.

The Mexican peso took a nosedive by the most in a single day since November, according to Bloomberg, on the outbreak of swine flu, which will damage tourism. We say this is just an excuse - it was always unlikely to cross the 200-day moving average considering Mexican dependence on the US economy. You don’t expect a satellite to shine while the star is fading. The US dollar was already oversold while Mexico continues to release ever-worse data, including the forecast of a drop in GDP this year of 2.8%.

Not to downplay swine flu, which is having a ripple effect around the world. Emerging market Asian currencies are all down this morning on the story. Bloomberg says the Australian Dollars and New Zealand Dollars were hit on the outlook for tourism, not that many Mexican take their vacations down under. Evidently a global slowdown in tourism is to be expected, since we don’t know how the flu spreads (it’s not food). Oh, yes, and the Reserve Bank of New Zealand holds a policy meeting this week and is expected to cut rates by 50 bp. The Reserve Bank of Australia also meets and is expected not to cut rates.

Three guess what is the forecast for the AUD against the NZD.

Pounds to US Dollars = 1.4599
Pounds to Euros = 1.1136
Euro to Pounds = 0.8975
Pounds to Australian Dollars = 2.0462

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

Foreign Exchange Traders Buy US Dollars as Swine Flu scares the market

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

Foreign exchange traders are buying dollars and is gaining strength across the board as the outbreak of swine flu in Mexico and elsewhere is causing a knee-jerk reaction--risk aversion and flight to the US dollar as a safe-haven. This is a reversal from sentiment on Friday, when stock markets rose, indicating an on-going drop in risk aversion. Now risk aversion is back and that favors the us dollar exchange rate, which may break its link with the stock market one of these days.

Yes, we think the US stock market will keep rising on perception that the worst is behind us.

Pounds to US Dollars = 1.4612
Pounds to Euros = 1.1137
Euro to Pounds = 0.8976
Pounds to Australian Dollars = 2.0448

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, April 16, 2009

If this is a dollar recovery, as the fundamental suggest, it’s an odd one.

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The dollar exchange rate is stronger against the euro exchange rate this morning, from a minor intermediate high late yesterday at 1.3267 to a low of 1.3125 just after Europe took the baton from Asia. The euro rate looks choppy on the hourly chart but Europe keeps putting out bad news as well as evidence of conflict within the ECB, and sentiment is turning against it.

The interesting development is in the US Dollar/yen, where the seeming downside dollar selling breakout peaked at a dollar low of 98.13 on Tuesday and stumbled upward to 99.99 early yesterday but back to 98.50 overnight. If this is a dollar recovery, as the fundamental suggest, it’s an odd one. The reason seems to be cross-rate action. Overnight the euro-yen hit a fresh two-week low at 129.33 (from 134.21 on Monday) and that dragged the dollar down, too. Nobody really understands the euro/yen move and the commentary at various places is all but incoherent. Since the big Asian news today, expected since Monday, was the Chinese GDP, everyone blames that - but GDP was actually a tad better than forecast, and nobody knows what it means.

Pounds to US Dollars = 1.4892
Pounds to Euros = 1.1285
Euro to Pounds = 0.8855
Pounds to Australian Dollars = 2.0676

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, April 15, 2009

Pounds sterling exchange rate is stronger against the dollar

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The US Dollar Exchange Rate is recovering against the euro exchange rate, from 1.3265 at the close in NY yesterday to 1.3187 at 8 am today, the euro rate having tried and failed to make a new high overnight after Asia handed off to Europe. The best the euro rate could do was 1.3297, not breaking 1.3300, when yesterday’s high was 1.3303. These little things count.

The reason for the euro's sharp drop could include bad European data (although the US had bad data yesterday) but is more likely a renewed burst of risk aversion as stock markets everywhere are falling, led by banks. Today UBS reported a big loss and big job cuts, with the CEO saying markets “are very unstable.” The sentiment is back that the recession will get worse before it gets better. This is the reality check we were expecting but it arrived like a gale force wind.

The stand-alone factor behind traders selling euros drop could also be comments by BBK chief Weber, who repeated opposition to an ECB rate cut but said the bank will announce "non-standard measures" in May. This gets a little confusing. You’d think that preservation of the rate differential would favor the euro exchange rate.

But no, the market is rewarding cuts these days, and punishing acknowledgement of needed emergency measures.

We already saw risk aversion emerging when the US reported retail sales down 1.1% in March and the stock market fell. Weaker stock markets led to an unwinding in yen crosses that pulled dollar/yen down. In fact, the yen rose against everything as risk appetite was pared in every time zone. So much for the carry trade story. It’s possible that the halt in the dollar slide against the Mexican peso is meaningful, just ahead of the 200-day moving average. The peso is not the best proxy for risk appetite (that’s probably the AUD/JPY), but it’s not chopped liver, either. The peso, like any emerging market currency, can continue to rise only if foreign exchange traders think the recovery is here. We say the recovery is not here and recognition of that sad fact should be bad for emerging market currencies. Not everyone is Singapore.

One side-effect has been the emergence of sterling/yen, a favorite of Japanese securities houses, and even pounds to euros, which has fallen into oversold territory. As a result, sterling is strong against the dollar, despite appearing overbought and facing the round number 1.5000, always an obstacle. This morning it breached the level for a few minutes for the first time in three months, while also hitting a 6-week high of 88.12 pence - but it has pulled back sharply in both cases. Some analysts attributed the strong sterling tone to a less-bad RICS housing report that shows (perhaps) "green shoots."

Pounds to US Dollars = 1.4984
Pounds to Euros = 1.1332
Euro to Pounds = 0.8818
Pounds to Australian Dollars = 2.0614

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