Forex rebates on every trade - win or lose!

Oh how I love being paid in euro's

Morning all. Not really trading, but bringing this thread back to the front page.

Quite right, Helen. And where is the Mistress of this thread, pray tell?

Blimey first post of the year!
Happy New Year and good trading all :)

NEW YORK (Dow Jones)--China's yuan isn't likely to start the Year of the Ox on a bullish note, as stability has become a key theme for the country's leaders.

Moreover, the coming year won't be a propitious time for Chinese monetary authorities to continue any experimentation with diversification away from its dominant reserve currency, the U.S. dollar. Foreign-exchange policy and the yuan's rate are likely to remain essentially unaltered for some time.

In the two-week run-up to the traditional Lunar New Year Festival that marks the beginning of the Year of the Ox, the dollar is expected to remain around current levels. That trend could last until the Tiger takes over in 12 months.

The unwillingness to make changes will go beyond the mechanics of the tightly controlled yuan exchange rate. China isn't likely to sanction any changes in currency policy that would cause large fluctuations one way or the other.

This ties in well with the Year of the Ox. Of the 12 animals in the traditional Chinese zodiac, the ox is associated with steadiness and prosperity through fortitude and hard work. The ox definitely isn't a risk-taker, especially when it comes to financial issues. Right now, those seem to be perfect traits as China's economy struggles with the fallout from the global economic downturn and the credit crisis.

Stability is a bigger issue for China than most of its trading partners. Should growth flag to the point that misery begins to replace prosperity for too many of its 1.3 billion citizens, China could face the monster lurking under the beds of its top leaders - social instability.

That's the term government officials use when referring to violent protests and rioting in the streets. It's a scenario that President Hu Jintao and Premier Wen Jiabao will do everything in their power to avoid.

It's also why China won't allow the yuan to continue to appreciate versus the dollar in the near term. In the three years following its one-off devaluation and abandonment of the de facto dollar peg, the yuan rose about 20% against the U.S. currency. However, as the global slowdown began to reduce demand for Chinese exports, the government called a halt to the yuan's forward march in order to make life more bearable for the country's manufacturers.

With export growth declining and corporate profits down sharply, China's leaders can't let currency policy eat away too much of the country's competitiveness in world markets. If too many jobs are lost in the export sector, then social instability could manifest itself in a very ugly fashion.

China's overriding strategy for dealing with the global recession has implications for some of the broader strokes of currency policy as well. While the exact composition of China's reserves is secret, most analysts believe it's composed of around 65% dollars and about 20% euros, with the yen and a smattering of other currencies making up the rest.

China's reserves amounted to $1.946 trillion at the end of last year compared with $1.53 trillion in 2007. Most of the dollar reserves are invested in U.S. Treasury securities.

A persistent fear in currency markets has been the effect of China diversifying away from dollars because of the long-term slide in the U.S. currency's relative value. So far, there has been no concrete evidence of any dumping of the dollar. Instead, as China acquired new reserves, it put some of them in euros and yen. Most likely, the People's Bank of China bought euros as the single currency rose against the dollar over the past six years, but the euro has fallen back considerably since its all-time peak at just over $1.60 last summer.

But 2009 doesn't appear to be a good year for China to rock the reserve boat. Any overt move away from U.S. paper that has repercussions for U.S. bond markets would certainly damage the dollar and thereby reduce the value of China's overall reserve holdings.

Moreover, because of the credit crisis, China's export customers "are having trouble getting credit to finance purchases from Chinese companies," wrote Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., in a weekly update.

"No statistical data exist to support this conclusion," he stated, "but anecdotal evidence abounds."

Any move on China's part that would upset U.S. credit markets would indeed be counterproductive. Finally, U.S. capital markets remain the broadest and most liquid in the world. Commodity contracts continue to be priced largely in dollars. Those attractions by themselves contribute much to the dollar's status as the international reserve currency of choice.

Everything considered, Chinese currency policy, as well as the yuan's exchange rate, will endeavor to stay calm, steady and patient, as befits the Year of the Ox.

NEW YORK (Dow Jones)--The euro extended its slide against the dollar and yen Tuesday afternoon as risk appetite remained weak.

The euro fell to fresh five-week lows of $1.3140 and Y117.16, extending its drop since the start of the new year.

"It's really a reflection of lower risk appetite," said Vassili Serebriakov, a currency strategist at Wells Fargo in New York.

The European Central Bank's Governing Council meets on Thursday, and traders are wary of a potentially larger-than-expected rate cut. Investors failed to boost the euro overnight after Germany announced a second, EUR50 billion fiscal stimulus plan. One reason: Standard & Poor's threatened to downgrade the sovereign credit ratings of Portugal on Tuesday, and Spain and Greece in the days before.

"A downgrade at this point, when governments are looking to tap markets for significant financing, will make measures more costly in these economies and place more upwards pressure on interest rates at a point in time when they need to be moving lower," said Sacha Tihanyi, a currency strategist at Scotia Capital in Toronto. He said Greece may only remain in the "A" range due to the boost it receives from euro-zone membership.

Tuesday afternoon in New York, the euro was at $1.3191, down from $1.3371 late Monday, and the dollar was at Y89.16, little changed from Y89.12, according to EBS. The euro was at Y117.61, down from Y119.15, and the U.K. pound was at $1.4494, well below $1.4820. The dollar was at CHF1.1188, up from CHF1.1145 late Monday.

In general, the dollar and yen usually benefit during heightened periods of risk aversion, as both are considered safe-haven currencies.

A speech by U.S. Federal Reserve Chairman Ben Bernanke weighed down on sentiment. He said President-elect Barack Obama's administration and Congress will need to take more steps to revive the ailing U.S. economy. Bernanke said the government may need to provide more capital injections to financial firms to help stabilize the markets considering the worsening prospects for the economy.

The dollar also rallied Tuesday after the Commerce Department reported the U.S. trade deficit showed the greatest contraction in 12 years during November.

The U.S. deficit in international trade of goods and services plunged by 28.7% to $40.44 billion, compared with economists' estimates for a $51 billion shortfall in November.

A weaker dollar is often cited as a prerequisite for a contraction in the U.S. deficit. However, given the dollar's resilience at the end of 2008, this data report shows that dropping oil prices and falling imports have been the reason for the latest improvement, said Tom Fitzpatrick, global head of currency strategy at Citigroup in New York.

It "takes away a little of the focus from dollar weakness as a catalyst," said Fitzpatrick.

test

Economic Calendar Powered by Forex Pros

weekly

Economic Calendar Powered by Forex Pros

New toys, Hiltops?
Very smart :)

The jury's out on that, Chocopops. I was contemplating replacing the DailyFX calendar in the header.

There's not the same noise with this calendar but it's not as comprehensive. What do people think?

The calendar itself is certainly simpler to navigate.
How about shortening the DailyFX window and sticking the Forex Pro calendar underneath?

NEW YORK (Dow Jones)-- The euro will fall versus the dollar next week as investors flee riskier assets again due to continued financial-market risk and despite government aid packages.

The common currency advanced versus the dollar Friday, along with other currencies that typically gain when market sentiment turns up, after the U.S. government announced an aid package for Bank of America Corp. (BAC)and the Senate voted to release more funds from the Troubled Asset Relief Program.

But market analysts say that cheer will be fleeting.

"A particular concern is that government capital injections do not address the core problem of erosion of asset quality on bank balance sheets, which in turn impedes their ability to lend," said David Woo, global head of foreign exchange strategy at Barclays Capital in London.

Euro zone data scheduled for release next week will add momentum to the euro selling.

Germany's ZEW business sentiment current-situation index is expected to deteriorate. The flash releases of the January euro-zone purchasing managers indexes for both the manufacturing and service sectors are expected to decline. French consumer spending numbers for December are also expected to drop, as is French industrial sentiment.

While recent data in the U.S. have also disappointed, the euro has been exceptionally sensitive to the perception of risk recently.

Barclays Woo found the euro has been particularly sensitive to short-term interest-rate movements and increasingly sensitive to swings in stock markets.

A "10% decline in the MSCI World (stocks index) has been associated with a 1% decline in the euro versus dollar in the past year but a 3% decline in euro versus dollar in the past 50 days," said Woo. "This last development suggests that the dollar's supposed safe-haven status remains intact."

He notes that the options market is forecasting a 38% chance that the euro will trade below $1.20 and a 13% chance that it will be below $1.10 in three months.

Next week, analysts expect the euro to start off carrying through on Friday's rally, heading for near $1.34, before declining back toward the $1.31-area.

Friday afternoon in New York, the euro was at $1.3251, compared with $1.3145 late Thursday, while the dollar was at Y90.35 from Y89.71. The euro was at Y119.85 from Y118.00. The U.K. pound was at $1.4691 from $1.4651, while the dollar was at CHF1.1173 from CHF1.1225 late Thursday.

Meanwhile, the dollar is expected to trade between Y92.0 and Y89.0, as risk appetite continues to wane during the week.

Traders and domestic Japanese investors who used the yen to buy other assets when the global economy was healthier reverse those bets during periods of market uncertainty. This deleveraging process drove the yen higher in 2008 and has still to run its course, analysts said.

The "rapidly deteriorating Japanese economy encourages local investors to retrench further. The yen should see more appreciation in the weeks ahead," said Ned Rumpeltin, a currency strategist in London at Morgan Stanley, which has bet against the euro versus the yen.

The Bank of Japan meets next week on Thursday to decide on its main lending rate, reduced last month to 0.10%. On Friday, the BOJ downgraded its core economic assessment of the nation's regional economies for the second straight quarter. With rates already so low, many analyst say there is little room for the BOJ to cut again to answer these concerns. Instead, the bank is expected to outline other strategies to pump cash into the domestic economy.

Investment Biker Jim Rogers urges sell Sterling,get cash out of Britain!

It's hard to disagree with him Falco!

From another site, late last night:

Markets are putting in a massive reversal today, led by the dollar index which sky-rocket to its highest levels since early December only to reverse course and put in a low lower than yesterday on the daily charts, an outside day to technicians. Coming at a top, outside days can be especially cataclysmic. Note, there is is a gap on the USD index chart that could be filled in tonight, taking the pair from around 85.98 to 85.50 if filled.

EUR/USD, cable, EUR/JPYtheyve all seen massive shifts in fortune this afternoon as have many of the asset markets. With any luck, risk aversion will melt away and well all have retirement accounts worth owning again. Hope and change!

A Sterling bull...(quite a rare species)
http://business.timesonline.co.uk/tol/business/columnists/article5580642.ece

Why is the ECB supporting the euro? Where there’s smoke there’s fire


For the second day running we’ve heard reports of members of the Eurosystem of central banks protecting the euro. Friday they were rumored to have bought EUR/USD in the 1.2850 area and today when prices returned to that level they were rumored to have called around and “checked rates”, letting banks know that they were snooping around.

Why would a “country” that is dependent on exports try and shore up its currency amid a global economic slowdown? Shouldn’t they let the euro fall as far as it can? In ordinary circumstances, yes. But these are anything but ordinary circumstances. It looks as though the ECB is trying to avoid a Lehman-style run on the euro. In the Lehman case, investors would short the stock and buy the credit default swaps. In the euro case you would sell the currency and sell the bonds of the weak European credits like Greece (which yields over 300 bp over Germany today) and Spain.

By supporting the currency, they are trying to paper over the very severe crisis in European credit markets. My guess is that this may work for a few days, but the longer-term result will be to alert the market that where there is smoke, often there is fire. This one bears close watching.

Which is the best pair re. shorting it...yen/usd?

That will very much depend upon the diameter of your gonads, Falcothou.

But whichever one you chose, I'd wait until it starts falling first. This has the makings of an up week for the time being.

:o)

Diameter in nanometers when it comes to forex, so go for the steady eddy

For mouseticles it'll be chunnel then.

Ah yes my old friend eur/gbp better for the ticker!