Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US Dollar exchange rate is starting to slide again against the euro at the Asian hand-off to Europe around 3 am ET today, suggesting that foreign exchange traders are buying euros and upmove may be getting back on track to test last week’s high around 1.3739.
The US dollar Outlook firmed in nearly a straight line yesterday, from 1.3678 overnight in Asia to 1.3532 at the US open and hitting the best level of 1.3429 around 2 pm. This is almost exactly a 25% retracement of the move up from early March to last week.
As for timing, the Fed announced at 2:30 pm the start of Treasuries purchases - today. The euro exchange rate has risen since then, if not by much, held back by the worst IFO sentiment reading since 1982.
Pounds to US Dollars exchange rate is dipping for its own reasons, a bad Gilts auction and bad retail sales numbers. It has strong support around 1.4500, though. The dollar/yen, which had climbed nicely yesterday, stalled around 98.50 and is struggling around 97.50.
Pounds to US Dollars = 1.4570
Pounds to Euros = 1.0796
Euro to Pounds = 0.9258
Pounds to Australian Dollars = 2.0933
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, March 25, 2009
Pounds to US Dollars falls as BoE Governor King has to write another letter to the Chancellor
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US dollar rate lost yesterday by a small amount, starting around 1.3545 at the New York open at 8 am ET but the euro exchange rate creeping up to 1.3645 by 6 pm. Market News reports that there were some big US dollar sellers during the day yesterday but also some long euro position dumping. In the end, the euro rate failed to recapture the ground lost in the Asian and European sessions the night before, which presumably discouraged foreign exchange traders from buying euros. As the US day gets started today, the euro exchange rate is again testing lows.
At 7:30, the euro rate is at 1.3538, compared to the lowest low yesterday around the same time at 1.3484. This is not much room and a break of yesterday's low could set off a bigger correction. Everyone is looking, on the hourly chart, at the 50% retracement at 1.3363 of the euro move up from last Wednesday to the highest high Sunday night. An equally important level is the 62% retracement at 1.3273, which cuts the Wednesday breakout bar in half. The 62% retracement is also just under the channel bottom. Together the Fib retracement and channel bottom constitute formidable euro exchange rate support, assuming we do continue to get a pullback today.
The logic of a pullback is pretty good this time, even though we don’t need logic to expect profit-taking and second thoughts after a big move like this one. As we wrote yesterday, solving the toxic asset problem is a good thing, even if it’s only a partial solution and has some warts and pimples. The prospect of economic recovery is much stronger now, which accounts for equities and oil going up. Confidence in the US Treasury may not be fully restored, but TreasSec Geithner's reputation is a little better today than it was yesterday at the same hour. Normally we would think that a reduction in fear means a reduction in risk aversion and thus a reduction in safe-haven flows to the dollar, so "good news" in the US is, perversely, US dollar negative. And yet, growth counts. Will foreigners buy US dollars assets on the growth story, from equities to high-yielding toxic assets?
Well, why not?
The votes are still being counted.
And don't forget that a better proxy for risk aversion is euros to japanese yen, which reached a new high of 134.51 overnight and like euro/dollar, stalled. Euro/yen has since pulled back to 132.59. The 50% retracement of the euro/yen move up from the last low on March 12 to the overnight high is 128.32. We might say that if the euro exchange rate drops to that level, we have a new financial market “stability.” A runaway euro is an inappropriate overreaction to the US taking needed and desired remedial actions.
In London this morning, a reminder that fundamentals still count. According to Market News, "Pound Sterling received an unexpected boost on Tuesday as UK CPI inflation data came in stronger than expected, forcing BoE Governor King into writing another letter to the Chancellor to explain why CPI is more than 1% above target. Pounds to US Dollars had already put on 180-points in Asia, moving from $1.4710 to a six-week high at $1.4778 on the data release, while euro-sterling dropped from stg0.9250 to stg0.9205. Cable gains proved unsustainable as this pair gave over 100-points ahead of the US open to $1.4660, while euros to pounds bounced back to stg0.9225.”
Pounds to US Dollars = 1.4570
Pounds to Euros = 1.0796
Euro to Pounds = 0.9258
Pounds to Australian Dollars = 2.0933
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The US dollar rate lost yesterday by a small amount, starting around 1.3545 at the New York open at 8 am ET but the euro exchange rate creeping up to 1.3645 by 6 pm. Market News reports that there were some big US dollar sellers during the day yesterday but also some long euro position dumping. In the end, the euro rate failed to recapture the ground lost in the Asian and European sessions the night before, which presumably discouraged foreign exchange traders from buying euros. As the US day gets started today, the euro exchange rate is again testing lows.
At 7:30, the euro rate is at 1.3538, compared to the lowest low yesterday around the same time at 1.3484. This is not much room and a break of yesterday's low could set off a bigger correction. Everyone is looking, on the hourly chart, at the 50% retracement at 1.3363 of the euro move up from last Wednesday to the highest high Sunday night. An equally important level is the 62% retracement at 1.3273, which cuts the Wednesday breakout bar in half. The 62% retracement is also just under the channel bottom. Together the Fib retracement and channel bottom constitute formidable euro exchange rate support, assuming we do continue to get a pullback today.
The logic of a pullback is pretty good this time, even though we don’t need logic to expect profit-taking and second thoughts after a big move like this one. As we wrote yesterday, solving the toxic asset problem is a good thing, even if it’s only a partial solution and has some warts and pimples. The prospect of economic recovery is much stronger now, which accounts for equities and oil going up. Confidence in the US Treasury may not be fully restored, but TreasSec Geithner's reputation is a little better today than it was yesterday at the same hour. Normally we would think that a reduction in fear means a reduction in risk aversion and thus a reduction in safe-haven flows to the dollar, so "good news" in the US is, perversely, US dollar negative. And yet, growth counts. Will foreigners buy US dollars assets on the growth story, from equities to high-yielding toxic assets?
Well, why not?
The votes are still being counted.
And don't forget that a better proxy for risk aversion is euros to japanese yen, which reached a new high of 134.51 overnight and like euro/dollar, stalled. Euro/yen has since pulled back to 132.59. The 50% retracement of the euro/yen move up from the last low on March 12 to the overnight high is 128.32. We might say that if the euro exchange rate drops to that level, we have a new financial market “stability.” A runaway euro is an inappropriate overreaction to the US taking needed and desired remedial actions.
In London this morning, a reminder that fundamentals still count. According to Market News, "Pound Sterling received an unexpected boost on Tuesday as UK CPI inflation data came in stronger than expected, forcing BoE Governor King into writing another letter to the Chancellor to explain why CPI is more than 1% above target. Pounds to US Dollars had already put on 180-points in Asia, moving from $1.4710 to a six-week high at $1.4778 on the data release, while euro-sterling dropped from stg0.9250 to stg0.9205. Cable gains proved unsustainable as this pair gave over 100-points ahead of the US open to $1.4660, while euros to pounds bounced back to stg0.9225.”
Pounds to US Dollars = 1.4570
Pounds to Euros = 1.0796
Euro to Pounds = 0.9258
Pounds to Australian Dollars = 2.0933
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, March 17, 2009
Swiss franc has been virtually untradeable since the SNB intervention
Swiss Franc Outlook : The franc has been virtually untradeable since the SNB intervention last week, trading sideways in a narrow band of about 1.1800-1.1900 against the US dollar. We detect a tiny bias to the upside for the dollar, although that could be corrective on "pullback Tuesday." Yesterday SNB Pres Roth said the bank will act again if the Swiss franc rises too much against the euroexchange rate. Since the euro rate is on a rising trend against the US dollar exchange rate, his words have implications for the USD/Chf pair, too. Roth said, according to the FT, "We would be foolish, as a small and open economy, to try to gain competitiveness through the currency. This is not a beggar-thy-neighbour policy. It's just to protect the Swiss economy from deflation,"he said." Well, the usual route would be to print money, not intervene in the currency market. But Roth says "Although we have lowered interest rates aggressively since October, all our actions have ... been neutralised by foreign exchange developments. We concluded we had to do something. We have consistently said we will prevent a strengthening of the Swiss franc."
Separately, or maybe not, the Swiss government announced a new GDP forecast for a contraction of 2.2% this year and barely-there growth of 0.1% in 2010. This more than doubles the Dec forecast. According to Bloomberg, Q4 contraction was 0.3%, with industrial production shrinking 5.9%. Exports will drop 8.1% this year, with investment down 10% and the unemployment rate up to 5.2% in 2010.
Pounds to Swiss Franc = 1.6500
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Contact IMS Foreign Exchange + 44 207 183 2790
Separately, or maybe not, the Swiss government announced a new GDP forecast for a contraction of 2.2% this year and barely-there growth of 0.1% in 2010. This more than doubles the Dec forecast. According to Bloomberg, Q4 contraction was 0.3%, with industrial production shrinking 5.9%. Exports will drop 8.1% this year, with investment down 10% and the unemployment rate up to 5.2% in 2010.
Pounds to Swiss Franc = 1.6500
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Contact IMS Foreign Exchange + 44 207 183 2790
Euro Exchange rate lower - but for how much longer against the US Dollar
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
What's Happening This Morning: After spiking up before the US open yesterday to 1.3071, the euro exchange rate slid all day and corrected to almost exactly 50% of the upmove at 1.2950 after the New York close yesterday. Then it bounced around in a narrow range, failing to recapture either the high (only 1.3012) or the low, although near 8:30 am ET, foreign exchange traders started selling euros and the exchange rate slipped to 1,2934, near the Fibonacci 62% retracement level.
So we had a Monday pullback and now perhaps a bigger Tuesday pullback, but never mind. Unless the euro rate breaks the 62% Fibonacci level on the hourly chart at 1.2924 to (say) 1.2900, we must expect a test of the previous high, and thence another big move up - unless the previous high turns out to be a resistance barrier and we end up with a going-nowhere sideways move.
This morning the euro exchange rate got support from the ZEW research institute reporting sentiment among investors and analysts up for the 5th month in a row, albeit still negative, from -5.8 in Feb to -3.5 in March. According to Bloomberg, forecasts had a consensus outlook for -8. The euro rate is also influenced by a debate over whether the ECB can or should take rates to zero.
Overnight in Singapore, the euro exchange rates got support from a statement in the German newspaper Handelsblatt by German ECB board member Stark, who said too-low rates could help cause an asset bubble and might allow banks to avoid cleaning up their balance sheets.
"We still have some room to move rates down further,"
but
"From today's perspective it does not make sense to define a limit. For me personally, however, the limit is not far from what we have at the moment."
This implies a positive yield differential against US paper for some time to come.
Pounds to US Dollars = 1.4022
Pounds to Euros = 1.0781
Euro to Pounds = 0.9270
Pounds to Australian Dollars = 2.1180
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
What's Happening This Morning: After spiking up before the US open yesterday to 1.3071, the euro exchange rate slid all day and corrected to almost exactly 50% of the upmove at 1.2950 after the New York close yesterday. Then it bounced around in a narrow range, failing to recapture either the high (only 1.3012) or the low, although near 8:30 am ET, foreign exchange traders started selling euros and the exchange rate slipped to 1,2934, near the Fibonacci 62% retracement level.
So we had a Monday pullback and now perhaps a bigger Tuesday pullback, but never mind. Unless the euro rate breaks the 62% Fibonacci level on the hourly chart at 1.2924 to (say) 1.2900, we must expect a test of the previous high, and thence another big move up - unless the previous high turns out to be a resistance barrier and we end up with a going-nowhere sideways move.
This morning the euro exchange rate got support from the ZEW research institute reporting sentiment among investors and analysts up for the 5th month in a row, albeit still negative, from -5.8 in Feb to -3.5 in March. According to Bloomberg, forecasts had a consensus outlook for -8. The euro rate is also influenced by a debate over whether the ECB can or should take rates to zero.
Overnight in Singapore, the euro exchange rates got support from a statement in the German newspaper Handelsblatt by German ECB board member Stark, who said too-low rates could help cause an asset bubble and might allow banks to avoid cleaning up their balance sheets.
"We still have some room to move rates down further,"
but
"From today's perspective it does not make sense to define a limit. For me personally, however, the limit is not far from what we have at the moment."
This implies a positive yield differential against US paper for some time to come.
Pounds to US Dollars = 1.4022
Pounds to Euros = 1.0781
Euro to Pounds = 0.9270
Pounds to Australian Dollars = 2.1180
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, March 16, 2009
major hedge fund selling US dollars on the idea that the Fed will announce quantitative easing at the Wednesday FOMC
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
What’s Happening This Morning: Initially the lack of consensus at G20 was dollar exchange rate -supportive, but the euro rate broke through the 1.3000 level just after 5 am ET today, a few hours into the European open and stopping just below the 1.3050 level (so far). This means our charts, which show a flat move across the board from 5 am on Friday, will look very different tomorrow unless the move over the magic round number turns out to be a one-time spike. This is not likely since the move is driven, according to Market News, by major hedge fund selling US dollars on the idea that the Fed will announce quantitative easing at the Wednesday FOMC meeting, following the UK. In addition, the euro to japanese yen is up to 128.41 or nearly 200 points from the Friday close at 126.60 in the US. The yen is under some pressure because of speculation the BoJ will also announce quantitative easing measures at this week’s policy meeting, although the Nihon Keizai Shimbun reports the BoJ will be working out the details over the next month.
Pound Sterling got a lift to over 1.4200 on inflows to financial sector equities after Barclays confirmed it is in talks to sell (for £3-5 billion) its iShares fund management unit, thus avoiding the clutches of the government. The market also liked fresh data from Rightmove saying house prices are up for a second month (if still down 9% y/y).
Against the Swiss franc, the US dollar is failing to make progress and could easily break support around 1.1740. To the extent the Swiss franc tracks the euro, the SNB will be very unhappy about the new upmove in the euro exchange rate. We couldn't find any fresh commentary this morning on whether the SNB will intervene again.
Uncertainty on this point makes the dollar/Swiss virtually untradeable.
Pounds to US Dollars = 1.4070
Pounds to Euros = 1.0825
Euro to Pounds = 0.9235
Pounds to Australian Dollars = 2.1380
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
What’s Happening This Morning: Initially the lack of consensus at G20 was dollar exchange rate -supportive, but the euro rate broke through the 1.3000 level just after 5 am ET today, a few hours into the European open and stopping just below the 1.3050 level (so far). This means our charts, which show a flat move across the board from 5 am on Friday, will look very different tomorrow unless the move over the magic round number turns out to be a one-time spike. This is not likely since the move is driven, according to Market News, by major hedge fund selling US dollars on the idea that the Fed will announce quantitative easing at the Wednesday FOMC meeting, following the UK. In addition, the euro to japanese yen is up to 128.41 or nearly 200 points from the Friday close at 126.60 in the US. The yen is under some pressure because of speculation the BoJ will also announce quantitative easing measures at this week’s policy meeting, although the Nihon Keizai Shimbun reports the BoJ will be working out the details over the next month.
Pound Sterling got a lift to over 1.4200 on inflows to financial sector equities after Barclays confirmed it is in talks to sell (for £3-5 billion) its iShares fund management unit, thus avoiding the clutches of the government. The market also liked fresh data from Rightmove saying house prices are up for a second month (if still down 9% y/y).
Against the Swiss franc, the US dollar is failing to make progress and could easily break support around 1.1740. To the extent the Swiss franc tracks the euro, the SNB will be very unhappy about the new upmove in the euro exchange rate. We couldn't find any fresh commentary this morning on whether the SNB will intervene again.
Uncertainty on this point makes the dollar/Swiss virtually untradeable.
Pounds to US Dollars = 1.4070
Pounds to Euros = 1.0825
Euro to Pounds = 0.9235
Pounds to Australian Dollars = 2.1380
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
yuan's appreciation against non-dollar currencies
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
It is a basic premise of technical analysis that the charts are more reliable than analysis of fundamentals. For one thing, in foreign exchange we do not have an enduring model of what determines the level. Sometimes it's one thing and sometimes it’s something else. For another, not only do politicians lie, but foreign exchange traders lie, too. They say they are looking at this factor or that factor when secretly they are looking at something else entirely. And in Foreign Exchange, any factor and every factor can be the critical piece. We would say, for example, that the threat of rising oil prices should be dollar-favorable insofar as rising oil is a menace to recovery that should create demand for safe-haven. But this is backwards - when oil rises, the dollar drops, at least in the last year or two. So which is it? Nobody knows, and we will find out only when traders tell us that oil is the top factor, which it’s not today. This can be infuriating and frustrating, but you have to admit it’s also endlessly engaging.
Of the two big political developments, we think the Europea-nAmerican "rift" on stimulus is not really very much to be concerned about. It’s not new, either. Europeans want the US to join them in "remaking capitalism," although it’s not clear what that means. The FT is running a giant series on the subject, all of which is very interesting and valuable but tends not to face the core issue: The basic premise of capitalism is that free markets deliver the optimum outcomes, as least with respect to prices, if with no consideration of social fairness. A society may wish for social fairness but risks unintended consequences and misallocation of resources if it tinkers with the price mechanism. This is a risk the US has been mostly unwilling to take, in part because of regrets over bad outcomes in the past.
It’s an enduring conundrum that won't get resolved at a G20 summit. Alas, the discussion of this topic in the US does not constitute a dialogue or a debate-the two sides have an ocean between them and no willingness to cross even partway. This is the Number One real failure of economics, but it's also a real failure of the political process in the US. They actually do this aspect of the political process better in Europe-this is quite an odd thing for an American economist to say, but it universally held as a certainty among European economists.
Something we can expect to get resolved is China’s decision-making on the yuan. As a big holder of US debt, the Chinese are aware of the power they wield. Premier Wen Jiabao said today that Chinese exports are being hurt by the yuan's appreciation against non-dollar currencies, which is a de facto appreciation of the yuan and a threat to exports (which fell 25.7% in Feb). China has no plans to change anything, though. Before we get hot and bothered about Chinese intervention or manipulation, consider that when a debtor owes $30, the creditor has the upper hand. When he owes $300 billion, the debtor has the upper hand. This is the sense in which it would be really stupid for the US to take any actions to devalue the us dollar exchange rate on purpose. We give it a better than 50-50 chance that US-China talks behind the scenes are contributing to the very good Chinese responses today. China is willing to consider another stimulus, said Wen Jiabao, something the US is calling for from everyone. It is willing to contribute more to the IMF emergency funds, another US request. All he wants in return is the US to "protect its credit rating, honor its words and ensure the safety of China's assets." And oh, yes, please stop pressuring us on the yuan. "No country can impose appreciation or depreciation pressure on the Chinese yuan," Wen said.
This is a wonderful outcome that is not being interpreted correctly, to our way of thinking. Everyone is noting that Wen Jiabao said he is "worried" but missing the rest of it, that he hopes the US does the right thing. China has extended a hand in trust. Let’s hope the Obama gang has enough sense to honor it and the Fed has enough skill to avoid the inflation that will constitute betrayal.
Pounds to US Dollars = 1.4120
Pounds to Euros = 1.1244
Euro to Pounds = 0.8895
Pounds to Australian Dollars = 2.1980
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
It is a basic premise of technical analysis that the charts are more reliable than analysis of fundamentals. For one thing, in foreign exchange we do not have an enduring model of what determines the level. Sometimes it's one thing and sometimes it’s something else. For another, not only do politicians lie, but foreign exchange traders lie, too. They say they are looking at this factor or that factor when secretly they are looking at something else entirely. And in Foreign Exchange, any factor and every factor can be the critical piece. We would say, for example, that the threat of rising oil prices should be dollar-favorable insofar as rising oil is a menace to recovery that should create demand for safe-haven. But this is backwards - when oil rises, the dollar drops, at least in the last year or two. So which is it? Nobody knows, and we will find out only when traders tell us that oil is the top factor, which it’s not today. This can be infuriating and frustrating, but you have to admit it’s also endlessly engaging.
Of the two big political developments, we think the Europea-nAmerican "rift" on stimulus is not really very much to be concerned about. It’s not new, either. Europeans want the US to join them in "remaking capitalism," although it’s not clear what that means. The FT is running a giant series on the subject, all of which is very interesting and valuable but tends not to face the core issue: The basic premise of capitalism is that free markets deliver the optimum outcomes, as least with respect to prices, if with no consideration of social fairness. A society may wish for social fairness but risks unintended consequences and misallocation of resources if it tinkers with the price mechanism. This is a risk the US has been mostly unwilling to take, in part because of regrets over bad outcomes in the past.
It’s an enduring conundrum that won't get resolved at a G20 summit. Alas, the discussion of this topic in the US does not constitute a dialogue or a debate-the two sides have an ocean between them and no willingness to cross even partway. This is the Number One real failure of economics, but it's also a real failure of the political process in the US. They actually do this aspect of the political process better in Europe-this is quite an odd thing for an American economist to say, but it universally held as a certainty among European economists.
Something we can expect to get resolved is China’s decision-making on the yuan. As a big holder of US debt, the Chinese are aware of the power they wield. Premier Wen Jiabao said today that Chinese exports are being hurt by the yuan's appreciation against non-dollar currencies, which is a de facto appreciation of the yuan and a threat to exports (which fell 25.7% in Feb). China has no plans to change anything, though. Before we get hot and bothered about Chinese intervention or manipulation, consider that when a debtor owes $30, the creditor has the upper hand. When he owes $300 billion, the debtor has the upper hand. This is the sense in which it would be really stupid for the US to take any actions to devalue the us dollar exchange rate on purpose. We give it a better than 50-50 chance that US-China talks behind the scenes are contributing to the very good Chinese responses today. China is willing to consider another stimulus, said Wen Jiabao, something the US is calling for from everyone. It is willing to contribute more to the IMF emergency funds, another US request. All he wants in return is the US to "protect its credit rating, honor its words and ensure the safety of China's assets." And oh, yes, please stop pressuring us on the yuan. "No country can impose appreciation or depreciation pressure on the Chinese yuan," Wen said.
This is a wonderful outcome that is not being interpreted correctly, to our way of thinking. Everyone is noting that Wen Jiabao said he is "worried" but missing the rest of it, that he hopes the US does the right thing. China has extended a hand in trust. Let’s hope the Obama gang has enough sense to honor it and the Fed has enough skill to avoid the inflation that will constitute betrayal.
Pounds to US Dollars = 1.4120
Pounds to Euros = 1.1244
Euro to Pounds = 0.8895
Pounds to Australian Dollars = 2.1980
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, March 6, 2009
Britain saw some of the steepest house price falls in the world last year
Hi AllMore bad news
Britain saw some of the steepest house price falls in the world last year, collapsing by 14.7 per cent, with only Latvia performing worse, research from Knight Frank shows, the Independent reports. More than three-quarters of the 42 countries surveyed recorded falls in the value of property in the final quarter of 2008, compared with just 27 per cent in 2007, the paper says.
Pounds to US Dollars = 1.4220
Pounds to Euros = 1.1197
Euro to Pounds = 0.8929
Pounds to Australian Dollars = 2.2180
Bye For Now
IMSFX
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
Britain saw some of the steepest house price falls in the world last year, collapsing by 14.7 per cent, with only Latvia performing worse, research from Knight Frank shows, the Independent reports. More than three-quarters of the 42 countries surveyed recorded falls in the value of property in the final quarter of 2008, compared with just 27 per cent in 2007, the paper says.
Pounds to US Dollars = 1.4220
Pounds to Euros = 1.1197
Euro to Pounds = 0.8929
Pounds to Australian Dollars = 2.2180
Bye For Now
IMSFX
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, March 5, 2009
Foreign Exchange traders are still not willing to buy euros
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US Dollar Exchange Rate lost ground against the euro from the Asia open late Tuesday/early Wednesday to the New York close yesterday (1.2524 to 1.2664). As we have seen a few times recently, the Asian open last night reversed the US action and the euro exchange rate is now straight-lining back toward the Wednesday low and has recovered a little over 62% of it so far as Foreign Exchange traders are still not willing to buy euros. At 7 am it is also on the linear regression of the hourly chart, i.e., on trend.
This morning the ECB cut rates by 50 bp to 1.5%, as expected, and some analysts expect Trichet to announce additional cuts at the press conference later this morning, reserving any mention of quantitative easing for a later occasion. It’s the lowest rate since the euro was formed in 1999.
We were willing to buy into the idea of a rising euro in part because risk appetite came back - see stock market results below - and the usual beneficiaries, the Australian Dollar and Canadian Dollar, put in breakout moves. The Candian Dollar exchange rate moved over 200 points from 1.2944 at 6 am ET to 1.2709 by 3 pm. This is a sufficiently big and rare move to make anyone sit up and take notice. The Australian Dollar Rate also moved big, from 62.89 Tuesday night to 65.28 by 3-4 pm in New York yesterday. At a guess, if China had announced an additional stimulus plan, the rumor du jour, these moves could have continued and we would have been at risk of a more lasting breakout. Even the normally sedate Swissie broke a resistance line.
Another reason not to cling too hard to the standard analysis - a rate cut always harms a currency - is that in recent months the standard analysis has been wrong. Rate cuts can be good for a currency if the market likes the take-charge message.
We were similarly fearful of a sterling bounce since the pound seemed to have real support just over the 1.4000 level in recent days. But after rising along with the rest of the currencies yesterday (1.3981 late Tuesday night to 1.4234 at the 3 am handoff from Asia to Europe today), sterling has fallen back to the 1.4000+ level at 7 am.
This is a response to the BoE rate cut of 50 bp, as expected,
along with announcement of quantitative easing that was supposed to mitigate the cut. It didn’t, mostly because the amount was too small (£75 billion when the market wanted £100) and the timetable too slow - three months. Besides, yesterday the Treasury auctioned 30-year Gilts to the worst reception in 10 years, says the FT. The price fell and yields rose 20 points on worries that appetite will not match huge issuance this year--£146.4 billion, or triple the amount in 2008.
The yen continues to creep toward manifest destiny at 100, but with reluctance. The 200-day moving average lies just over 100 and a lot of people take it as gospel that the 200-day means something. Many tedious hours of back-testing tells us that 200 days is not a meaningful number in stock indices or in currencies, but never mind—it symbolizes “long-term,” and that’s that. The rise in risk appetite yesterday that carried stock indices upward also took the carry-trade currencies Australian Dollars and Candian Dollars up against the yen.
We are considering adding AUD/JPY to our list as a proxy for the carry trade.
Please write if you have a view.
Pounds to US Dollars = 1.4120
Pounds to Euros = 1.1244
Euro to Pounds = 0.8895
Pounds to Australian Dollars = 2.1980
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The US Dollar Exchange Rate lost ground against the euro from the Asia open late Tuesday/early Wednesday to the New York close yesterday (1.2524 to 1.2664). As we have seen a few times recently, the Asian open last night reversed the US action and the euro exchange rate is now straight-lining back toward the Wednesday low and has recovered a little over 62% of it so far as Foreign Exchange traders are still not willing to buy euros. At 7 am it is also on the linear regression of the hourly chart, i.e., on trend.
This morning the ECB cut rates by 50 bp to 1.5%, as expected, and some analysts expect Trichet to announce additional cuts at the press conference later this morning, reserving any mention of quantitative easing for a later occasion. It’s the lowest rate since the euro was formed in 1999.
We were willing to buy into the idea of a rising euro in part because risk appetite came back - see stock market results below - and the usual beneficiaries, the Australian Dollar and Canadian Dollar, put in breakout moves. The Candian Dollar exchange rate moved over 200 points from 1.2944 at 6 am ET to 1.2709 by 3 pm. This is a sufficiently big and rare move to make anyone sit up and take notice. The Australian Dollar Rate also moved big, from 62.89 Tuesday night to 65.28 by 3-4 pm in New York yesterday. At a guess, if China had announced an additional stimulus plan, the rumor du jour, these moves could have continued and we would have been at risk of a more lasting breakout. Even the normally sedate Swissie broke a resistance line.
Another reason not to cling too hard to the standard analysis - a rate cut always harms a currency - is that in recent months the standard analysis has been wrong. Rate cuts can be good for a currency if the market likes the take-charge message.
We were similarly fearful of a sterling bounce since the pound seemed to have real support just over the 1.4000 level in recent days. But after rising along with the rest of the currencies yesterday (1.3981 late Tuesday night to 1.4234 at the 3 am handoff from Asia to Europe today), sterling has fallen back to the 1.4000+ level at 7 am.
This is a response to the BoE rate cut of 50 bp, as expected,
along with announcement of quantitative easing that was supposed to mitigate the cut. It didn’t, mostly because the amount was too small (£75 billion when the market wanted £100) and the timetable too slow - three months. Besides, yesterday the Treasury auctioned 30-year Gilts to the worst reception in 10 years, says the FT. The price fell and yields rose 20 points on worries that appetite will not match huge issuance this year--£146.4 billion, or triple the amount in 2008.
The yen continues to creep toward manifest destiny at 100, but with reluctance. The 200-day moving average lies just over 100 and a lot of people take it as gospel that the 200-day means something. Many tedious hours of back-testing tells us that 200 days is not a meaningful number in stock indices or in currencies, but never mind—it symbolizes “long-term,” and that’s that. The rise in risk appetite yesterday that carried stock indices upward also took the carry-trade currencies Australian Dollars and Candian Dollars up against the yen.
We are considering adding AUD/JPY to our list as a proxy for the carry trade.
Please write if you have a view.
Pounds to US Dollars = 1.4120
Pounds to Euros = 1.1244
Euro to Pounds = 0.8895
Pounds to Australian Dollars = 2.1980
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, March 4, 2009
we can't see a reason why foreign exchange traders would be buying euros before it goes lower.
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US Dollar Exchange Rate had a good day yesterday despite equities stabilizing. The euro rate started the day at 1.2600 and closed the trading day at 1.2541. In the evening, it fell further to 1.2454, although both the Asian session and early European session are seeing it retrace those losses this morning. A 50% retracement would take the euro up to 1.2568. We imagine some traders are watching the 62% Fib level at 1.2594, too. We can draw a resistance line that gives us 1.2610 for the US morning. Instead of expecting these levels to break, we should expect a wall of stops.
Even if the euro exchange rate manages to spend the US day above the new lowest low just established, the hourly trend contains two big downmoves of nearly 100 points each and those are hardly ever reversed - it would take quite a shock to do that. Let’s note that the channel bottom today is 1.2290… and goofy as that may seem, it has a higher probability than an upside breakout over 1.2600 as we can't see a reason why foreign exchange traders would be buying euros before it goes lower.
Sterling is not exactly rising in a robust manner but after making a new low on Monday at 1.3954, is trading sideways in a range around 1.4050. This smells fishy. Tomorrow we expect a rate cut of 50 bp and announcement of the amount and other details of BoE quantitative easing. What if the BoE doesn’t cut but just announces it is buying Gilts? The pound could jump upward, perhaps as far as 1.4500. Remember, currencies get rewarded when central banks do bold and brave things. It all started with a Reserve Bank of Australia cut last fall - the Australian Dollar rose on the news, which normally would be seen as perverse. It’s not perverse in crisis conditions, though.
Besides, the UK keeps reporting fresh data that is either not too bad or beats forecasts, or is actually pretty good.
The dollar/yen rose to 99.49 in Tokyo, nearly the round number 100, reportedly on a political scandal, according to the NKS. An aide to the Democratic Party leader, Mr. Ozawa, was arrested for taking illegal donations. Ozawa is not resigning but in any case, this high-level scandal can stall the government in getting various initiatives rolling to rescue the economy. Considering that Japan has the worst outcomes in all of G7, this is probably correct. Normally, domestic politics don’t much affect the yen. Prime ministers can resign and the yen barely burps. But this time the unpopularity of the Aso government and weariness with government incompetence and bureaucratic nonsense can discourage business and the consumer even more, if that’s possible.
Pounds to US Dollars = 1.4120
Pounds to Euros = 1.1236
Euro to Pounds = 0.8895
Pounds to Australian Dollars = 2.1901
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The US Dollar Exchange Rate had a good day yesterday despite equities stabilizing. The euro rate started the day at 1.2600 and closed the trading day at 1.2541. In the evening, it fell further to 1.2454, although both the Asian session and early European session are seeing it retrace those losses this morning. A 50% retracement would take the euro up to 1.2568. We imagine some traders are watching the 62% Fib level at 1.2594, too. We can draw a resistance line that gives us 1.2610 for the US morning. Instead of expecting these levels to break, we should expect a wall of stops.
Even if the euro exchange rate manages to spend the US day above the new lowest low just established, the hourly trend contains two big downmoves of nearly 100 points each and those are hardly ever reversed - it would take quite a shock to do that. Let’s note that the channel bottom today is 1.2290… and goofy as that may seem, it has a higher probability than an upside breakout over 1.2600 as we can't see a reason why foreign exchange traders would be buying euros before it goes lower.
Sterling is not exactly rising in a robust manner but after making a new low on Monday at 1.3954, is trading sideways in a range around 1.4050. This smells fishy. Tomorrow we expect a rate cut of 50 bp and announcement of the amount and other details of BoE quantitative easing. What if the BoE doesn’t cut but just announces it is buying Gilts? The pound could jump upward, perhaps as far as 1.4500. Remember, currencies get rewarded when central banks do bold and brave things. It all started with a Reserve Bank of Australia cut last fall - the Australian Dollar rose on the news, which normally would be seen as perverse. It’s not perverse in crisis conditions, though.
Besides, the UK keeps reporting fresh data that is either not too bad or beats forecasts, or is actually pretty good.
The dollar/yen rose to 99.49 in Tokyo, nearly the round number 100, reportedly on a political scandal, according to the NKS. An aide to the Democratic Party leader, Mr. Ozawa, was arrested for taking illegal donations. Ozawa is not resigning but in any case, this high-level scandal can stall the government in getting various initiatives rolling to rescue the economy. Considering that Japan has the worst outcomes in all of G7, this is probably correct. Normally, domestic politics don’t much affect the yen. Prime ministers can resign and the yen barely burps. But this time the unpopularity of the Aso government and weariness with government incompetence and bureaucratic nonsense can discourage business and the consumer even more, if that’s possible.
Pounds to US Dollars = 1.4120
Pounds to Euros = 1.1236
Euro to Pounds = 0.8895
Pounds to Australian Dollars = 2.1901
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, March 3, 2009
Australian Dollar got a boost from the Reserve Bank decision not to cut rates
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US dollar exchange rate put in a big gain across the board yesterday as stock markets around the world took big losses. From the open Sunday night at 1.2676, the euro slid to a low of 1.2535 near the US close yesterday. It might have been a bigger move except the Northeast got a huge snowstorm that left many trading rooms short-handed.
In what seems to be a new pattern developing, the euro exchange rate started rising the minute the US market "closed" around 6 pm last night, retracing exactly 100% of the downmove from Sunday night before slumping again. Another way of looking at the chart is to say the euro rate failed to match and surpass the Sunday night opening, let alone the Friday high. Still, foreign exchange traders are reluctant to push it under the round number 1.2500 to test the low from last October at 1.2329.
The US dollar exchange rate put in a big gain across the board yesterday as stock markets around the world took big losses. From the open Sunday night at 1.2676, the euro slid to a low of 1.2535 near the US close yesterday. It might have been a bigger move except the Northeast got a huge snowstorm that left many trading rooms short-handed.
In what seems to be a new pattern developing, the euro exchange rate started rising the minute the US market "closed" around 6 pm last night, retracing exactly 100% of the downmove from Sunday night before slumping again. Another way of looking at the chart is to say the euro rate failed to match and surpass the Sunday night opening, let alone the Friday high. Still, foreign exchange traders are reluctant to push it under the round number 1.2500 to test the low from last October at 1.2329.
We still see this level as manifest destiny but it’s not a speedy process as traders continue to buy euros above 1.2500.
Pound Sterling managed a touch of a level under the "George Soros 1.4000" yesterday and after bouncing off it, seems headed that way again. Prime Minister Brown speaks with Obama and the economics/financial team today, and addresses the US Congress and public. Maybe he will be more popular here than at home, where criticism is running high on his weak regulation and oversight while Chancellor, overspending, and refusing to admit mistakes. Also causing consternation is lack of clarity about exactly how and how much quantitative easing will be done. Wild numbers are being thrown around. More guidance would be nice.
The foreign exchange market is still making up its mind whether it will favor the pound for decisive BoE action or punish it for needing to take action in the first place, having let the situation get out of hand.
Note that Britain was the first to nationalize of G7 countries (excluding Iceland and Ireland) and will be the first to implement quantitative easing (excluding Japan in the 1990's).
The dollar to japanese yen is rising again for another stab at the round number 100. The correction was only about 10%, depending on how you count. While the government is going to use Foreign exchange reserves for credit purposes (see below), the Bank of Japan is not entirely pleased at the prospect.
The Australian Dollar got a boost from the Reserve Bank decision not to cut rates, leaving the key rate at 3.25%, saying that demand has not weakened as much as in other countries and the economy is not contracting as much as elsewhere. "The Australian financial systems remains strong and the monetary policy transmission process is working to deliver large reductions in interest rates to end borrowers." The RBA decision ended a string of five cuts for a total of 400 bp that started last March. The forecast had been universal that it would cut again by at least 25 bp, so the market was surprised. The Australian Dollar surged to over 64¢ from under 63¢ and seems to be hanging on to gains. Japanese investors loved it.
Pound Sterling managed a touch of a level under the "George Soros 1.4000" yesterday and after bouncing off it, seems headed that way again. Prime Minister Brown speaks with Obama and the economics/financial team today, and addresses the US Congress and public. Maybe he will be more popular here than at home, where criticism is running high on his weak regulation and oversight while Chancellor, overspending, and refusing to admit mistakes. Also causing consternation is lack of clarity about exactly how and how much quantitative easing will be done. Wild numbers are being thrown around. More guidance would be nice.
The foreign exchange market is still making up its mind whether it will favor the pound for decisive BoE action or punish it for needing to take action in the first place, having let the situation get out of hand.
Note that Britain was the first to nationalize of G7 countries (excluding Iceland and Ireland) and will be the first to implement quantitative easing (excluding Japan in the 1990's).
The dollar to japanese yen is rising again for another stab at the round number 100. The correction was only about 10%, depending on how you count. While the government is going to use Foreign exchange reserves for credit purposes (see below), the Bank of Japan is not entirely pleased at the prospect.
The Australian Dollar got a boost from the Reserve Bank decision not to cut rates, leaving the key rate at 3.25%, saying that demand has not weakened as much as in other countries and the economy is not contracting as much as elsewhere. "The Australian financial systems remains strong and the monetary policy transmission process is working to deliver large reductions in interest rates to end borrowers." The RBA decision ended a string of five cuts for a total of 400 bp that started last March. The forecast had been universal that it would cut again by at least 25 bp, so the market was surprised. The Australian Dollar surged to over 64¢ from under 63¢ and seems to be hanging on to gains. Japanese investors loved it.
We have yet to hear what the Bank of Canada is doing today. It is expected to cut 50 bp to 50 bp.
Pounds to US Dollars = 1.4000
Pounds to Euros = 1.1175
Euro to Pounds = 0.8940
Pounds to Australian Dollars = 2.1901
Bye For Now
Forex Trading Reports - Click for a free trial
Contact IMS Foreign Exchange + 44 207 183 2790
Monday, March 2, 2009
Last week dollar-yen was the biggest mover
Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook
The US dollar exchange rate is continuing upward against the majors this morning, on a course to test the recent euro exchange rate low at 1.2513 from Feb 18 and then 1.2329 from Oct 28. Sterling has dropped to nearly 1.4000 (the "George Soros number") from nearly 1.5000 on Feb 9 and it is now a little under the Fibonacci 62% retracement of the move up from 1.3504 from end-Jan. A breakout of the 62% level implies a full run back to 1.3504. Only against the yen is the US dollar rate dipping, although that is seen as a normal correction of what was a huge rise from 87.10 in Jan to 98.72 last week. Last week dollar-yen was the biggest mover, from a low of 92.74 on Monday to a three-month high of 98.70 on Thursday - it’s allowed a rest for profit-taking and re-thinking.
Pounds to US Dollars = 1.4019
Pounds to Euros = 1.1146
Euro to Pounds = 0.8965
Pounds to Australian Dollars = 2.1215
Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial
Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Contact IMS Foreign Exchange + 44 207 183 2790
The US dollar exchange rate is continuing upward against the majors this morning, on a course to test the recent euro exchange rate low at 1.2513 from Feb 18 and then 1.2329 from Oct 28. Sterling has dropped to nearly 1.4000 (the "George Soros number") from nearly 1.5000 on Feb 9 and it is now a little under the Fibonacci 62% retracement of the move up from 1.3504 from end-Jan. A breakout of the 62% level implies a full run back to 1.3504. Only against the yen is the US dollar rate dipping, although that is seen as a normal correction of what was a huge rise from 87.10 in Jan to 98.72 last week. Last week dollar-yen was the biggest mover, from a low of 92.74 on Monday to a three-month high of 98.70 on Thursday - it’s allowed a rest for profit-taking and re-thinking.
Pounds to US Dollars = 1.4019
Pounds to Euros = 1.1146
Euro to Pounds = 0.8965
Pounds to Australian Dollars = 2.1215
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
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