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Italian finance minister proposes currencies be part of “new Betton Woods”
October 15, 2008

Italian finance minister Tremonti, the main proponent of what he calls ” a new Bretton Woods agreement” (which fixed exchange rates and adhered to a gold standard),suggests that currencies should be a part of the discussion. Tremonti is a noted antagonist to globalization.

Not only do the Italians want to legislate against hostile takeovers, they don’t want you to be able to speculate in currencies. This from a country which followed beggar-thy-neighbor policies for generations is pretty rich.

Wondering if any one else on here trades currency options and who may be a good broker to use for this?

I copied this from Forex Tsd, thought it might be useful. I think the first option pretty much describes myself

Hi Folks,
This is Stallion,veteran forex trader and mentor. I would be reviewing strategic tips on how the major currency pairs can be milked. Though I specialize in gbpusd, other pairs would also be taken into consideration during our analysis.

It has been theorized that your state of mind will dictate your trading methods. Experts in the field of trading psychology have pinpointed three main states of mind and how each has a direct effect on a trader's profitability.

These three mind states are "having", "doing" and "being". Psychologists have noted that those new to trading start with a "having" state of mind. As they gain more experience, they move on to a "doing" state of mind. The pinnacle of profitability occurs when a trader moves into the last and final "being" frame of mind.



The "Having" Mind Set
A novice trader may focus primarily on profits. In this "having" state of mind, they are out of sync with the markets. They are blinded by their obsession to obtain the all mighty dollar and what it can afford them. Trading is not viewed as a job that must be mastered, but as a vehicle to escape from a world of mediocrity.

Many traders are in the business to make money, as well as they should be. However, if they are blinded by greed, they tend to take uncalculated risks. Looking at the potential payoff without carefully calculating market trends and other factors is a recipe for disaster.

It is impossible to graduate to a high performance level when you concentrate on "having" instead of how the game is won. If you trade in a "having" frame of mind, you may become frustrated when profits are not immediately forthcoming. With frustration comes a lack of focus. Without the ability to focus, you cannot gain knowledge from your experience on the trading field.

Other negative consequences of this mindset are feelings of frustration and anger. Frustration stemming from a lack of expected profits and anger directed at oneself or the market in general. These adverse emotions will only cause further decline in profitability. Without witnessing gains from one's efforts, an individual may not give their best and may be tempted to "throw in the towel".



The "Doing" State of Mind
If an individual continues on to trade another day, they will eventually move from a "having" to a "doing" state of mind. Learning that there is more to trading than the amassing of money, a trader will turn their focus on learning new methods of trading and what does and doesnt work.

This state of mind is still primarily centered on how to turn a profit. Although a "doing" mind state is essential to becoming a seasoned adept trader, the main focus is still short of the mark. It is crucial to know what works and what doesn't. However, a skilled trader will tell you there is more to the business then choosing one method and using it arbitrarily to make trades across the board.

Becoming a trader of means requires not only a winning attitude, but also a fine honing of trading skills. To develop these skills, you must make trades using various methods under a wide spectrum of market conditions. Only then can you develop the needed intuition to master the art of trading.



Pinnacle of Profitability: The "Being" State of Mind
A successful trader almost instinctively knows how to make a trade using the best method available for the current market trend and/or condition. This ability does not occur overnight. It is only accomplished through perseverance, knowledge of various trading methods and learning which one works given a particular market condition.

No trade is ever a "sure thing". However, a profitable synchronicity almost naturally occurs when you are faced with a potential trade, have a feel for the current market trends and conditions, and utilize the method best suited for a potential payoff. This "being" state of mind ultimately lends itself to long-term success in the high stakes of trading.

Is cable starting to turn up?

Not sure but found this
Technical Analysis - Sterling plummets again!
By Michael Hewson

Wed 22 Oct 2008

LONDON (SHARECAST) - The big winners on the currency markets overnight have been the USD and the JPY especially against the pound.

In a previous article I indicated that a move through $1.6540 which is 61.8% retracement of the 1.3685/2.1140 up move would be negative for the pound against the USD. Well we didnt so much break it as smash straight through it last night, largely helped by a massive sell-off in GBP/JPY positions as the market piled out of carry trades.

This really makes the outlook for cheap holidays to the U.S somewhat bleak we could be heading to 1.5400 before the end of the year.

Carry trades for those who dont know, are long positions in high-yielding currencies against lower yielding ones, of which the Yen is the daddy with near zero interest rates. Being long of a high yielding currency like Sterling that is strong, makes the holders of Sterling money on a day to day roll-over basis.

As the recession bites and interest rates look to be cut traders will pile out of the stronger currency to take profit before the rates go down. This week alone GBP/JPY has come off from JPY179.00 to JPY161.00, a near 10% drop.

The Sterling Rate Index doesnt look much better it is trading near its lows around 87.80 again, a break of which would initiate a move towards levels last seen in July 1996 around 84.00.

What's not to be sure about, Falco?
Do please join in :)

Not sure whether cable is worth buying as oversold. Usually cautious of currency trades as things tend to go a lot further than expected and this whole de-leveraging process and carry trade reversal seems to have a fair tail wind behind it. Market ticker is ranting on about treasuries today and Hank and Ben digging themselves into a bigger hole, whether that means the dollar is about to implode I have no idea. I shall do a little more research!

Anyone for a Brazilian?

Is that a real clue?

:-)

SC
I'm with you, I have trouble understanding Hils and Choccy at times. Why cant they just say what they mean like men do.

I was picturing one of these, so yes please!

Please try to keep up, Jeffie. I've already given you 50 yards of clues!

Yes, I can guess

Спасибо. Насчет системы, в общем то ничего особенного :) Да и mathemat очень верно описал график моего эксперта на форуме. Риски в ритме чемпионате должны быть запредельными, но как мы видим у многих они просто абсурдные. Моя система построена на желании торговать и держаться на плаву имея все шансы вырваться в лидеры при благоприятных стечениях обстоятельств. С верой в победу и Вам желаю от души того же самого.

October 27, 2008
Flows remain “forced”

Dealers report few speculative flows again today with most trading decisions taken under duress. The sharpest moves are being attributed to prime brokers “selling out” clients; pulling the plug on all manner of positions as margin collateral falls to the point where clearing firms essentially close the doors on hedge funds without warning.

When those flows hit the market, the firm doing the liquidation tends to use minimal “finesse” in the liquidation process, hitting bids indiscriminately, sending markets downhill like a snowball. We’ve seen it repeatedly in all the asset classes.

Keep positions small in this environment as fundamentals and technicals matter less in a market with few speculative flows.

NEW YORK (Dow Jones)--The dollar rose sharply against the yen Tuesday after U.S. stock markets shot higher and on speculation the Bank of Japan may cut interest rates at a Friday meeting.

As the Dow Jones Industrial Average rose by more than 800 points, the dollar jumped by nearly five yen, reaching an intraday high of Y98.50. The euro also took off against Japan's currency, reaching an intraday high of Y124.69.

Currency investors tend to become less risk-averse when U.S. equity markets rise, and so they sell the lower-yielding currencies such as the yen and buy higher-yielding currencies or other assets, which offer better returns.

"I think the key thing behind today's move is a recovery in risk appetite, reflected in the move higher in equities," said Adam Boyton, a currency strategist at Deutsche Bank in New York. "Despite the bounce, however, I think that fundamentally there's still a bear market in equities and the dollar against the yen will again print lower."

Tuesday afternoon in New York, the euro was at $1.2715, up from $1.2521 late Monday, while dollar was at Y97.60, up from Y93.57, according to EBS. The euro was at Y124.10, up from Y117.17. The U.K. pound was at $1.5923, up from $1.5615, and the dollar was at CHF1.1555, down from CHF1.1564 Monday.

The Nikkei newspaper reported in its Wednesday morning edition - during New York trading hours Tuesday - that the BOJ is eyeing an interest rate cut of 25 basis points to help support a domestic economy battered by a strong yen and swooning share prices.

Such a cut would bring the BOJ's target for the unsecured overnight call money rate down to 0.25% from the already ultra-low rate of 0.5%. The BOJ policy board is expected to take into account market conditions and other factors when it makes a final decision at a meeting Friday.

The talk of a BOJ cut caused a knee-jerk drop in the yen as this would further reduce the already-small yield investors receive on yen holdings.

But the speculation of a BOJ rate cut seems to run contrary to comments made Monday by the deputy governor of the BOJ, who suggested the bank may leave rates on hold. Hirohide Yamaguchi told reporters that Japan's policy interest rate has been kept accommodative, suggesting that the central bank is unlikely to loosen monetary policy immediately.

The central bank's short-term rates are "extremely low given Japan's economic growth rates and the pace of price increases in the country," Yamaguchi said.

Currency markets on Wednesday will turn their attention to an interest rate decision by the Federal Reserve. It is expected to cut rates by as much as 50 basis points, which would bring the Fed's benchmark rate down to 1.0%.

Analysts aren't sure how the dollar might react to a 50-basis-point rate cut by the Fed. On the one hand, it would tend to reduce returns on dollar-based assets, which could hurt the dollar. However, markets may also view it as the necessary medicine to get the U.S. economy growing again, which could send a signal of support for the greenback.

Meantime, the euro's exchange rate against the dollar gyrated sharply Tuesday. The single currency fell to a new two-and-a-half year intraday low of $1.2329 early, but rebounded late in the New York session to close around $1.27.

The single currency's late rally was due largely to the rebound in U.S. stock markets. The dollar has been gaining in recent weeks on the back of weaker stocks, which led investors to dump bets on oil, emerging markets and other riskier assets and put their funds back into greenbacks.

The improvement in risk sentiment Tuesday helped the commodity-linked currencies such as the Australian and Canadian dollars.

The Aussie currency reached as high as $0.6429 Tuesday after falling to a fresh five-year low of $0.6020 near the start of the session. Canada's dollar also ended stronger, with the U.S. currency trading at C$1.2841 late Tuesday, down from a four-year high of C$1.3003 reached earlier.

CANTERBURY (Reuters) - The credit crisis could turn out to be more far-reaching even than the 1929 crash and big interest rate cuts are needed to avoid a deep recession, Bank of England policymaker David Blanchflower said on Wednesday.

Blanchflower, who has consistently been the most dovish member of the Bank's nine-member monetary policy committee, criticised his fellow policymakers for not being more forward looking and said inflationary pressures were now "clearly dissipating."

"My view remains that interest rates do need to come down significantly -- and quickly," Blanchflower told an academic audience in Canterbury. "If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession."

The U.S. Federal Reserve cut its key federal funds overnight lending target rate by a further 0.5 percentage point on Wednesday to 1 percent, the lowest since June 2004. The Bank of England's key interest rate stands at 4.5 percent.

Blanchflower said the energy price shock, which took oil prices up to a record high of $147 a barrel in July and down to below $70 now, would be less damaging than that faced in the 1970s. In contrast, the international financial problems may turn out to be more severe.

"It is even possible that this event may turn out to be more significant than the 1929 crash which primarily involved bank failures in the United States," he said. "The current difficulties in financial markets are more global in nature and more comparable to what happened in the First World War."

Interest rate cuts were needed, he said, not to protect the banks but to protect the public from the banks, many of which had made unwise lending decisions.

GOVT ACTION WELCOME

Blanchflower welcomed recent government efforts to re-capitalise major banks but said lending conditions would take some time to recover.

"Any improvement is likely to be passed on to households and the corporate sector slowly," he said. "Rather credit availability is more likely to be curtailed further in the near future."

He said the impact of constrained credit conditions had yet to fully feed through to the broader economy and a further retrenchment of consumer and investment spending was expected. Growth could take some time beyond 2010 to rebound, he said.

"It's going to depend on the oil price, it depends on what happens in China, it depends on what the U.S. does, whether the U.S. comes out of recession or not," he said.

Against such a backdrop, Blanchflower said worries about inflation were misplaced. There was no evidence workers were bargaining for wages to keep up with the cost of living and unemployment was set to rise.

More than two million people were likely to be out of work by Christmas, he repeated. Blanchflower told the Guardian newspaper the same thing on October 15. The number of Britons out of work now totals 1.792 million.

The economy contracted in the third quarter for the first time in 16 years and Blanchflower said he expected a further contraction in the fourth quarter and through 2009.

He implied his colleagues on the committee should have realised the gravity of the situation earlier, as he had done.

"With hindsight, monetary policy has not been sufficiently forward looking," he said. "Monetary policy makers must take a medium-term view concerning the forces hitting the UK economy and set policy accordingly. It is not sufficient to consider the data month by month until it emerges that the UK is in recession."

So what we're saying is that Blanchflower, the Dove, was actually Blanchflower with the Eagle vision.

Is it me or has cable got a strange feel about it at the moment? At this stage in the game I'd expect to see it around 2 cents lower than it is at around $1.56.

I've also been struggling to get orders away. No problem in selling sterling, but a real effort to buy it back.

So my suspicions were correct. When you struggle to get trades away, it's normally a sure-fire sign that the market's about to turn.