Forex rebates on every trade - win or lose!

Just logging in at the end of my jolly hollies. Real shame about the Fx Hub - I enjoyed the humour as much as anything. Have just about caught up with what's been going on with the automated trading thread as well, you seem to have been doing a lot Hils!

Will be at home Monday to catch up properly.

NEW YORK (Dow Jones)--The dollar is maintaining most of its huge gains against the euro Friday in New York in what has perhaps been its most impressive performance since the credit market crisis began last year.

The euro has dropped to as low as $1.5005, more than 2% lower on the day and nearly 4% lower since the week began. It's almost 7% under its record high of $1.6040, reached a few weeks ago.

The dollar is also sharply higher against virtually all other currencies around the globe, with commodity currencies such as the Canadian and Australian dollars feeling it the hardest.

The move up comes after nearly a full year of sharp, steady declines in the greenback as the U.S. housing market collapsed, credit markets seized up and fears of a U.S. recession escalated.

The U.S. economy is still in trouble, but fueling the dollar's rebound are signs that European and Japanese economies are now also taking a sharp turn for the worse.

Much of the dollar's gains came after European Central Bank President Jean-Claude Trichet Thursday alerted to serious downside risks to euro zone economic growth.

Trichet's remarks have reduced expectations the ECB may consider rate hikes any time soon, and some analysts say rate cuts may now be in the cards, which would likely extend the euro's declines.

"The primary trigger (for the dollar's rise) was Mr. Trichet ... it seems that the euro zone economy is going to crack," said Joseph Trevisani, chief market analyst at Forex Solutions in Saddle River, N.J. "This has been the biggest two- or three-day move since the credit crisis began."

Friday in New York, the euro was at $1.5036 from $1.5322 late Thursday. The dollar was at Y110.16 from Y109.41, while the euro was at Y165.60 from Y167.67, according to EBS. The U.K. pound was at $1.9163 from $1.9429, and the dollar was at CHF1.0809 from CHF1.0624 late Thursday.

Despite the dollar's big gains, analysts warn thin trading conditions - the first couple of weeks of August are typically the least active of the year as investors take summer vacations - may be making it easier for dollar bulls to muscle the currency higher. As such, a correction could be on the horizon.

A drop in crude prices has also helped bring a measure of respect back to the dollar. As crude oil prices trade under $120 a barrel, investors who had long oil positions are removing those bets and transferring back into dollars.

If crude rebounds, analysts say the dollar may also retreat from its large gains this week.

But for now, the dollar continues to look strong. The Canadian dollar is at a 12-month low, the Australia dollar a five-month low, and the U.K. pound is at its lowest point in nearly two years, falling as low as $1.9147.

Against the Japanese yen, the dollar surged above Y110.00 Friday, its highest level since early January. Stronger U.S. stock markets are giving an additional boost to the dollar as risk appetite improves and investors bail out of the low-yielding yen.

U.S. data out Friday also helped the greenback, as the Labor Department reported that second quarter productivity remained robust.

Expect M & A Flows into the Euro on Monday.

SHANGHAI (AFP) - At a time when the world's top athletes strive to set records at the Beijing Olympics, the Chinese currency has unexpectedly put on hold its steady move towards new highs.

Over the past nine trading days, the yuan has declined against the US dollar six times, throwing into doubt the conventional wisdom that its strengthening was the inevitable result of China's rise as an economic world power.

"The current noticeable weakening in the yuan has never happened before," said Liu Dongliang, a Shenzhen-based foreign exchange analyst with China Merchants Bank.

"Previously, when the dollar rebounded, the yuan would either move sideways or appreciate more slowly," he said.

As a result, the yuan has declined nearly 0.70 percent against the American currency from a closing peak of 6.8113 hit on July 16, ending at 6.8588 on Friday.

The markets appear to be betting that this is more than a short-term phenomenon.

Non-deliverable forwards, which reflect expectations for future movements in the exchange rate, show a decidedly less bullish mood on the Chinese currency.

While in March, non-deliverable forwards still implied a forecast of an 11.5 percent strengthening of the yuan against the dollar, it has now fallen to a modest 3.4 percent, according to Capital Economics, a London-based consultancy.

Although the US dollar has generally strengthened on a global scale, this may only be part of the explanation of why the yuan has weakened.

Subtle changes in the economic conditions facing China may be the real reason, according to economists.

"We attribute it to the shift in domestic policy -- the central bank has adjusted its policy for a slower speed in appreciation," said China Merchant Bank's Liu.

"The signal from central bank's statement for second-quarter monetary policy meeting is quite clear. The change in phrasing is obvious."

The central bank statement, issued last month, said it would "use various monetary policy tools to create good conditions for stable, relatively fast growth," while mentioning in passing that "upward pressure on prices is clear."

This was a change from the first-quarter report in which the central bank had placed its priorities squarely on fighting inflation, and it reflected changes in macroeconomic dynamics.

China's economy expanded by 10.4 percent in the first half and 10.1 percent in the second quarter, the National Bureau of Statistics said earlier this month, down from growth of 11.9 percent recorded for all of 2007.

Growth in the consumer price index peaked at 8.7 percent in February -- nearly a 12-year high -- but softened to a more manageable 7.1 percent in June.

This removed some of the rationale for a continued strengthening of the yuan, which had been to ease inflation by lowering the prices of imported goods.

At the same time, a slowdown in the rise of the yuan might comfort the export sector, which is suffering from the weakened global economy.

In the first half of the year, the trade surplus declined nearly 12 percent from the same period in 2007.

"We do not believe the Chinese authorities will defy the law of gravity' to engineer a sustained renminbi depreciation despite persistent forex inflow," Morgan Stanley economist Qing Wang said in a research note.

"(But) it is likely that the central bank may fine-tune its intervention policy to effect a slower appreciation in the short run."

However, amid the decelaration in the appreciation of the yuan, some economists see this as a minor bump on the road of the Chinese currency to new heights.

"The economy is still in good shape, with consumption spending and export growth both much stronger than almost anyone expected a few months ago," Capital Economics analyst Mark Williams said in a research note.

"The arguments in favour of appreciation pre-date recent concerns over inflation. Simply put, China cannot rebalance its economy with a severely undervalued currency. We expect rapid... appreciation to continue."

Dollar Gain Signals Pain; Rally Prompts Exit (Update1)

By Ye Xie and Anchalee Worrachate

Aug. 11 (Bloomberg) -- Just because the dollar posted its biggest gain against the euro in almost eight years doesn't mean the U.S. currency won't continue to be plagued by the nation's slowing economy, widening budget and trade deficits and negative inflation-adjusted interest rates.

The 4 percent surge against the single European currency this month was enough to prompt Bank of America Corp. to tell its customers to exit trades betting on more gains. Morgan Stanley still forecasts the greenback will approach a record low by October as the U.S. housing slump and credit-market losses keep the Federal Reserve from raising interest rates this year.

Barclays Plc in London and New York-based Merrill Lynch & Co. said trading patterns suggest the dollar's 5.1 percent gain in the past three weeks measured by an index of six major trading partners can't be sustained.

That's mostly because there's no indication the U.S. will return to the late 1990s annualized gross domestic product growth of 4.23 percent with inflation running at no more than 3.3 percent. Since September, 2000, the dollar has declined more than 44 percent as inflation accelerated to an annual 5 percent today, growth slowed to 1.9 percent and U.S. interest rates provide no cushion for holding U.S. assets.

``I would not chase the dollar's strength versus the euro as the pair has moved beyond interest-rate support,'' said Sophia Drossos, a strategist in New York at Morgan Stanley, who also recommended closing out bets on the dollar versus the currencies of Malaysia and Singapore. ``The dollar is not out of the woods. It will take the market a while to come around to our point of view.''

Unsustainable Recovery

The dollar strengthened to $1.5005 to the euro last week from $1.5564 on Aug. 1, the biggest weekly increase on a percentage basis since January 2005. It surged 2.08 percent on Aug. 8, touching $1.4998, the most since Sept. 6, 2000, and the second largest rally since the euro was introduced in 1999.

Those gains sent the dollar above the $1.51 per euro yearend mean target of 39 analysts in a survey by Bloomberg. By the end of 2009, the dollar will likely strengthen to $1.40 per euro, based on the estimates. It gained 6.4 percent since hitting a record low of $1.6038 on July 15.

In addition to the gains against the euro, the dollar also appreciated 2.3 percent versus the yen to 110.18, the most in eight weeks. The euro lost 1.29 percent against the Japanese currency to 165.38, the biggest drop in 13 weeks.

U.S. economic data suggest that a sustained recovery isn't imminent, said Robert Sinche, head of global currency strategy at Bank of America in New York. Interest-rate swaps indicate the currency should trade at about $1.54 per euro, said Sinche, who still forecasts that the dollar will strengthen to $1.45 per euro by the second half of next year.

Foreclosures, Deficits

The number of U.S. home foreclosure filings more than doubled in the second quarter from a year earlier, according to RealtyTrac Inc., a seller of default data. Government reports this week may show retail sales fell 0.1 percent in July, the first decrease since February, and the U.S. trade deficit widened in June to $62 billion from $59.8 billion.

The U.S. budget deficit, which totaled $163 billion for 2007, is forecast by the administration of President George W. Bush to widen to a record $482 billion for 2009.

Morgan Stanley predicts the dollar will weaken to $1.60 by October, because the faltering U.S. economy means the Fed is unlikely to raise rates anytime soon, Drossos said. That means investors will continue to suffer inflation-adjusted returns that are negative based on the current annual consumer price index of 5 percent and Treasury securities yielding between 1.695 percent for three-month bills and 4.53 percent for 30-year bonds.

`Particularly Weak'

Rather than a vote of confidence in the outlook for the U.S. economy, the euro's tumble on Aug. 8 was triggered by traders paring bets the European Central Bank will lift borrowing costs after ECB President Jean-Claude Trichet said economic growth will be ``particularly weak'' through the third quarter. Trichet spoke after the central bank left the main refinancing rate at 4.25 percent.

Gross domestic product growth in the euro region is expected to slow to 1.7 percent this year and 1.3 percent in 2009, from 2.68 percent in 2007, according the median forecast in a Bloomberg survey. U.S. GDP will slow to 1.5 percent before rebounding to 1.8 percent next year, another survey showed.

``The outlook is looking certainly brighter for the dollar,'' said Nick Bennenbroek, head of currency strategy in New York at Wells Fargo & Co. ``The most significant factor is that there are now much clearer signs that U.S. economic weakness has spread to global economic weakness.''

`Overshoot Territory'

Wells Fargo forecasts the dollar strengthening to 1.48 per euro by the end of next year.

David Woo, head of currency strategy in London at Barclays, disagrees. ``The euro-dollar market is in an overshoot territory,'' he said. Barclays, the world's third largest currency trader, according to an annual survey by Euromoney magazine, expects the dollar to weaken to $1.57 per euro by year-end.

Dollar bears point to the Fed's decision on Aug. 5 to leave its target rate for overnight loans between banks at 2 percent for a second straight policy meeting. Policy makers said ``downside risks'' to growth remain, while inflation is a ``significant concern.'' Futures on the Chicago Board of Trade show a 38 percent chance the Fed will raise its target rate at least a quarter-percentage point by year-end and a 90 percent probability of higher borrowing costs by the end of March.

`Balance of Risks'

``We still see the balance of risks to the upside for euro- dollar given considerable headwinds facing the dollar and unrealistic pricing for Fed hikes,'' strategists led by Ray Farris at Credit Suisse Group in London wrote in a research note at the end of last week. The dollar may decline to $1.61 per euro by the end of next month and to $1.64 by year-end, they said, the most bearish forecast in the Bloomberg survey.

Traders who look at charts of price patterns say technical indicators suggest the dollar's rally may have been exaggerated.

Losses accelerated Aug. 8 when the euro dropped below $1.53 and broke the 200-day moving average for the first time since April 2006. Currencies typically revert toward their mean price after breaking through averages unless new ranges are established.

Trading envelopes, which measure how far from the mean a price has strayed, show the euro's decline is double the typical changes versus the dollar in the past 20 days, suggesting that the dollar is either establishing a new level or will trade closer to the average price.

`Bit Too Fast'

The 14-day relative strength index fell to 21.82, the lowest since the euro's debut. A relative strength index level below 30 suggests a currency's decline is extreme and a reversal may be imminent.

``We are looking for the euro-dollar to move down over the year, but feel that the current move is a bit too fast,'' said Emma Lawson, a currency strategist in London at Merrill Lynch, which still expects the dollar to rise to $1.48 per euro by January. ``The dollar has started from a position of being undervalued while a lot of these currencies are overvalued.''

Anyone have probs with EUR/USD on ODL MT4. I get a straight graph line on M1 and nothing on M5 or M15

Seems to be OK here on ODL jeff

OK here too, Jeffie.

ok now, slow connection I think

Hil, you have mail.

They're getting all philosophical on the Hub today. Sadly it's the last day for what I consider to be the best website on the whole internet thingey.

Agreed Hil. I shall miss it - I hope they do something similar soon - lots of hints that they might.

Whats "The Hub"

ThomsonReuters FX Hub, Spacie. It's been the best kept secret out there.

thanks Hils, trust me to find out about it as it ends. In fact has it already gone? I cant access it at the mo.

Managed to get in now, what a shame i love the calendar, site si nice and simple and clear, so why are they closing?

How annoying, I closed this morning's cable short earlier and left 3 pips for the next man ;-)

edit and even more annoying, I should have reversed!

Re: The Hub.

ThompsonReuters are in massive post merger/takeover consolidation and cost-cutting mode. Many babies are going out with the bathwater. People I deal with are in fear of their jobs -- slash and burn is the order of the day. Expect no good judgement or even commonsense.

BTW, who's going to get post 10,000? It should be you, Hil . . .

It looks like it's me then. Well spotted, DelBoy.

:o)