A Tax on Forex Trading ? and forex trading futures

A Tax on Forex Trading ? and forex trading futures the Forex reported that Brazil is considering a forex tax on capital inflows as a way of discourage the inflow of speculative capital that is causing the Real to appreciate. It turns out that Brazil is not alone; England and France, among others, are also mulling taxes on forex transactions. Their goal is not necessarily to discourage capital inflows, but rather to raise money to fund projects that would otherwise not be viable under current budgetary conditions. The UK “levy would raise $30bn-$50bn a year - enough to double spending on health in low-income countries.” The French plan, meanwhile, would “involve taking 0.005% of the proceeds of currency transactions, perhaps on a voluntary basis, to benefit global aid projects.”

While Brazil and England/France appear to be pursuing different ends, together their plans capture the idea behind the “Tobin Tax.” Originally proposed by Nobel Laureate James Tobin after President Nixon declared the end of the gold standard, the tax would be levied on all forex transactions with the proceeds deposited in forex stability funds. One of the most popular versions would only impose the tax during periods of volatility (i.e. speculation) so as not to punish those exchanging currency for “mundane” reasons.

Tobin Tax on Forex Trading While still a fringe idea, the tax initially gained momentum following the 1997 Southeast Asian economic crisis, and has found new followers in the wake of the ongoing credit crisis. Consider the unprecedented volatility in currency markets of late, manifested in wild daily fluctuations.

2009 Forex Volatility Even the US Dollar, the world’s reserve currency, has been on a veritable roller coaster of late, rising and falling by 10% in a matter of months. Prior to the rise of forex speculation ( already a $1 Quadrillion/year market! ), it was rare for a currency to move that much in a year. Given that such speculation probably accounts for 90% of daily turnover, it seems obvious as to who is causing this volatility.

USDX Dollar IndexDon’t get me wrong; there’s a role for speculation in the forex markets , just like there’s a role for speculation in all securities markets. When markets function efficiently and players act rationally, currences should and will reflect economic fundamentals and act to minimize global imbalances. Due to the rise of the carry trade and the herd mentality, however, the oppose often obtains in practice. This can cause currency runs and or artificially inflated currencies that compel Central Banks to act counter to the way they otherwise would (i.e. by raising interest rates rapidly to deter capital flight, crimping economic growth.)

A Tobin tax would work both to minimize speculation in the short-term (by taxing trades) and promote stability in the long-term (by providing Central Banks with funds that they can use to fight speculative “attacks.” Besides, given that forex traders already enjoy favorable tax treatment - i.e. taxed below the short-term speculative rate - it wouldn’t be the end of forex trading as we know it.

Japanese Yen Sinks with US Dollar, but at Slower Pace

Japanese Yen Sinks with US Dollar, but at Slower Pace . Speaking of seven-month lows, did anyone notice that while the US Dollar was busy declining against pretty much every other tradable currency that the Japanese Yen was doing the same? The Yen has remained rangebound against the Dollar for the last three months - the period during which the market rally and Dollar decline have taken place - which just by simple mathematics explains why it has also fallen to a seven-month low around the same time.

The same set of factors that caused the Yen and Dollar to move in lockstep prior to the credit crisis seems to have coalesced again in March. Specifically, investor comfort with risk-taking have combined with low rates to make both very attractive candidates for carry trade funding currencies.

Both countries’ Central Banks are holding rates close to 0% (for several years now, in the case of Japan) and appear unlikely to hike them anytime soon. Simply put, ” ‘Risk appetite is improving in the market, which has been attracting cash away from safe-haven currencies like the dollar’ and the yen. Investors are ‘searching for higher yields.’ ”

At the same time, both countries have been aggressive in using fiscal and monetary policy to tackle the economic downturn, both of which could be highly inflationary and lead to currency debasement. Then, again, nearly every economy has responded with the same policy measures, which suggests that low interest rates represent the most plausible factor.

It could, however, explain why the Yen is rising against the Dollar, and is closing in on the 13-year high recorded earlier this year. In other words, while both currencies are being sold in the short-term to fund carry trades, investors may have determined that the Dollar will remain weaker in the long-term, due to inflation problems.

On a certain level, this is somewhat baffling. Japanese economic indicators make the US economic recession look like an economic boom by comparison. “Preliminary figures showed the world’s second-largest economy shrank at a record 15.2 percent annual pace last quarter,” which would be the worst on record. Meanwhile, Japanese corporations saw so-called recurring profits fall by “69.0 percent from a year earlier to 4.27 trillion yen (44.35 billion dollars) in the three months to March…the sharpest drop since comparable figures became available in 1955 and the seventh straight quarter of declines…Combined sales reported by corporate Japan both at home and abroad caved by a record 20.4 percent.”

In addition, the US has recorded a net capital account surplus with Japan of late, which implies that Japanese are net investors in the US- not the other way around. The government of Japan is equally confused, and is “in the middle of analyzing what is driving the yen higher.” Still, it insists that forex intervention is not currently on the table. If Japan’s economy contracts by another 15% next quarter, however, I wouldn’t be surprised if it did an about-face.

Chinese Yuan Inches Towards Reserve Currency Status

Forex trading online news Chinese Yuan Inches Towards Reserve Currency Status. The last week brought a few more developments in China’s quest to turn the Yuan into a viable reserve currency. Don’t get me wrong - I used the term “inches” in the title of this post for a reason - the Yuan will not supplant the Dollar anytime soon, if ever. Still, China deserves credit for their resolve on forcing the issue, as well as for providing an alternative to the Dollar monopoly.

An important boost came from Russia’s Finance Minster, who suggested that, “This could take 10 years but after that the yuan would be in demand and it is the shortest route to the creation of a new world reserve currency,” as long as it was accompanied by economic and exchange rate liberalization. The Head of the World Bank, Robert Zoellick, agreed: “Ultimately, that’s a good thing. And ultimately it’s good if you’ve got, I think, some multipolarity of reserve currencies to create, to make sure that people manage them well.”

These soft endorsements were precipitated by comments from a top Chinese banker that companies should start to issue bonds denominated in Yuan. “Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), also said he is exploring the possibility of issuing loans to trading companies in yuan, allowing Chinese and foreign companies to settle their bills in yuan rather than in dollars.” This would serve two ends simultaneously; not only would Chinese capital markets be strengthened, but the Chinese Yuan would benefit from the increased exposure. Already, “HSBC and Standard Chartered have both said they are preparing to issue bonds denominated in yuan” and international monetary institutions might not be far behind.

Conspiracies aside, the Chinese Yuan will become a reserve currency when it is ready to become a reserve currency. I’m sure this seems self-evident, but it’s important for China (and China watchers) not to get ahead of itself.

It doesn’t make sense for risk-averse investors to hold a currency that is still essentially pegged to the US Dollar and that isn’t fully convertible. If there’s no pretense that the Yuan fluctuates in accordance with market forces, and if investors aren’t guaranteed the ability to withdraw RMB if need be, what possible reason would they have to hold it in the first place?

Summarizes one columnist, “China would have to gradually make the yuan convertible on the capital account; it needed a more liquid foreign exchange market; its bond markets and banking system needed to be more developed; and there had to be proper monitoring of cross-border capital flows.” The importance of having functioning capital markets cannot be understated. Simply, investors and Central Banks buying Yuan would not want to simply invest in paper currency; instead they would want stocks and bonds that trade transparently.

Currently, foreign investors are limited to savings accounts and investing/lending to firms that record earnings opaquely and are ultimately subject to the whims of the Central government. This system has functioned well in the past, only because investors were betting generally on the Yuan’s appreciation, and not necessarily on specific opportunities within China. If China wants the Yuan to be a serious contender with the Dollar, it needs to give investors more and better options. Ironically, if China had taken these steps in the past, it wouldn’t have found itself with $2 Trillion worth of Dollar assets that it is desperately trying to dispose of.

Pick of the Day: USDJPY - Close Open Orders

Good evening! It looks like USDJPY did not go my way as the pair broke out to the upside. I have decided to close my entry orders, especially as we head into US jobs data.
Close open orders. No trade.
US employment data often causes fast market action and spreads to widen, so please be very cautious executing trades around its release time. For newbies, it is often best to stay away until you gain more experience.
Market expectations are for another 500k+ jobs lost. While the headline number is important, the revisions can be just as market moving.

Good morning! I've spotted a nice little chart pattern on USDJPY the may lead to a breakout opportunity. Will we see volatility once again before the end of the week?
That may be the case as price action in USDJPY has been consolidating over the past few days, forming a symmetrical triangle. This chart pattern often is a signal of a potential breakout as traders wait on the sidelines and will potentially re-enter the market after a significant event.
And what could that event be you ask? US employment data this Friday!
Yes, the big dog of economic events is out this Friday, and after seeing ADP Payrolls report 532k jobs in the private sector cut this morning, we may see another disappointing number and continued rise in unemployment rates in the US. This outcome could bring about a new round of risk aversion. Couple that with some profit taking after the monstrous runs we've seen in risk appetites, this could lead to a breakout lower in USDJPY.
If this does take place, I look to short below the rising trendline drawn on the chart and below that area of minor consolidation. We may see some minor support at the areas drawn with the blue line, around 94.50, but I am going to target 94.00 and beyond. Here's what I am going to do:
Short USDJPY at 95.25, stop at 96.50, pt1 at 94.00, pt2 at 92.50
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
If my orders have not been triggered by the time we do see NFP data on Friday, I may remove my orders to avoid slippage that fast market conditions can bring. Stay tuned!

US Dollar further gains

The US Dollar lastly indicated marks of an important revival and probable bottom in opposition to the Euro and other major currencies on an evidently action-packed week of trading. Better than anticipated, Non Farm Payrolls outcomes and a comparatively stable flow of positive economic blows caused a lot of enthusiastic analysts to state that the economic catastrophe is done, but most likely, this kind of statement is exaggerated. Non-Farm Payrolls went down considerably less than anticipated in May and at the slowest rate in 8 months, but some viewpoint is noticeably in order.

Forex news Since the beginning of the economic slump in December, 2007, US unemployment figures have gone up by an shocking 7.0 million—undoubtedly the worst decline since the Second World War A marginal boost in the labor market participation rate the same pushed the headline jobless rate to a quarter-century high of 9.4 %

Possibility of Euro to decline further

Possibility of Euro to decline further
The euro finished the week down against the US dollar, but the bulk of the pair’s decrease happened on Friday after the introduction of better than anticipated US non-farm payroll outcomes. EUR/USD fell around 200 points and finished under trend-line and psychological support at 1.4000, indicating that from a technical viewpoint, supplementary decrease might be coming up for the pair. There is as well probably for EUR/USD decrease from a basic viewpoint considering the European Central Bank’s (ECB) latest conference.

The ECB left rates unmoved at one %, and ECB President Jean-Claude Trichet’s succeeding press meeting at first provided some support for the euro, since he described existing rates “appropriate” and stated that latest data indicates that the Euro-zone slump can have hit the bottom throughout the preceding 2 quarters.

Professional Tutor by Forex Worldwide Training and Support

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The problem is we’ve seen it before. Again and again. It’s not a training system; it’s a focus on one part of technical analysis or another (often by people who don’t know the definition of technical analysis). They throw around words like “Fibonacci” or “Bollinger Bands” as if they themselves invented the term.

The tragedy is that “newbie” investors can get sucked in to the promises of huge earnings. They shell out for the ebook. And they’re left confused or overly-confident. Either way, they lose.

How does one succeed in the market? The truth of the matter is, one can succeed with solid, foundational forex training, and then back up that training with support and advice from real trading professionals, and then back up that training and that support with experience.

That’s where VIRT® Professional Tutor by Forex Worldwide Training and Support comes in. In a world of “me-too” content, VIRT® Professional Tutor is real forex training. This organization ignores the hype and instead focuses on doing one thing really, really well. They offer comprehensive, competent training delivered in a compelling way.

Their forex training is comprehensive and competent because it gives every level of investor a place to start. Are you brand new to forex investments? There’s a novice section. Are you experience in forex investments? There’s an advance section. Each section covers a wealth of material that truly takes the learner on a journey from basic introductions, step-by-step through the concepts.

trade forex and Forex training for novices at VIRT® Professional Tutor is made up of 6 modules covering such diverse but fundamental topics as Market Terminology, Business Environment, Predictability, Capital Management, Probability Study, and Application of Entry Point System. Each module contains 5 to 9 lessons that look at that topic in-depth. Each lesson ends in a quiz to help the student uncover the effectiveness of their learning.

Forex training for advanced investors at VIRT® Professional Tutor is made up of 4 modules covering expert topics like Advanced Fibonacci, the Rule of 8, Fundamentals, and System Development. Again, each module contains several lessons and finishes with a quiz.

Forex tradig online This material is compelling in its delivery. There’s text, of course, and interspersed throughout the text are videos and interactive content – including graphics and graphical stories – to explain the concepts and illustrate with real world examples. The text talks about a concept and then a graph is shown to demonstrate an example in real life and to drive home the point.

This level of training enables investors of all backgrounds and investing experiences to enter markets confidently and to exit investments profitably. But to back up their training, a support forum is also available where investors can interact and where expert traders can offer advice, guidance, and mentorship to participants.
source : forexcult.com

Possibility of Euro to decline further

The euro finished the week down against the US dollar, but the bulk of the pair’s decrease happened on Friday after the introduction of better than anticipated US non-farm payroll outcomes. EUR/USD fell around 200 points and finished under trend-line and psychological support at 1.4000, indicating that from a technical viewpoint, supplementary decrease might be coming up for the pair. There is as well probably for EUR/USD decrease from a basic viewpoint considering the European Central Bank’s (ECB) latest conference.

The ECB left rates unmoved at one %, and ECB President Jean-Claude Trichet’s succeeding press meeting at first provided some support for the euro, since he described existing rates “appropriate” and stated that latest data indicates that the Euro-zone slump can have hit the bottom throughout the preceding 2 quarters.

Imminent Crisis in Forex Markets ?

The only thing predictable about currencies these days is that they will remain unpredictable. Forgive me for speaking in cliches, but when you consider that the last twelve months have seen both record rises and record falls, I think a cliche might be justified in this case. We’ve seen the Dollar soar, only to collapse again. On the other side, we’ve seen the bottom fall out from emerging market currencies, before rising 20-30% in a matter of weeks.
Volatility levels have certainly declined (see Chart below) from the record highs of October 2008, when Lehman Brothers collapsed. At the same time, the oft-cited VIX index remains well above its average over the last decade. This suggests that while investors may have been lulled into a relative sense of security, serious doubts remain.If the current rally is to be seen as “legitimate,” then perhaps the worst of the 2008-2009 recession is truly behind us, and the global financial system has been given a reprieve from a meltdown. The concern going forward then will naturally shift past the steps that governments and Central Banks are taking to fight the crisis, towards the long-term economic impact of those measures.
Jim Rogers, a famous and perennially outspoken investor, is now sounding alarm bells over the possibility of “meltdown” in currency markets, due to inflation and currency debasement that he views as an inherent byproduct of quantitative easing and deficit spending.
Most of the attention is being focused on the US, whose stimulus and monetary programs are probably larger than all other economies in the world, combined. Offers one analyst, “We keep very low U.S. Dollar exposures because we think a further devaluation of the greenback is imminent, and we see a structural weakness for at least a number of years.” Meanwhile, there is speculation that the US could soon receive a ratings downgrade, following a similar threat by S&P directed towards Britain. But this remains highly unlikely.

The problem that Rogers (and all other investors who are worried about currency debasement) faces is how to construct a viable strategy to protect yourself and/or exploit such an outcome. Rogers himself has admitted, “At the moment I have virtually no hedges…I’m trying to figure out what to do there.” The difficulty can be found in the inherent nature of currencies, whose values are derived relative to other currencies. While you can short the entire stock market or the entire bond market (via market indexes), you can’t short all currencies simultaneously- at least not yet.
Instead, you can pick one currency or a basket of currencies, that you believed is best protected from currency collapse and buy it against threatened currencies. But how do you deal with an environment when all currencies appears equally questionable- when all governments all loosening monetary policy and risking inflation? Really, the only answer is to invest in commodities that you think represent good stores of value, such as oil or gold, or the currencies that benefit when prices of such commodities are high. Naturally, the relationship between commodities and currencies is not cut-and-dried, and if the currency system were indeed beset by meltdown, it’s not clear to me that commodities would hold their value.
Source by : Forexblog.org

US Dollar, Japanese Yen Ease Lower - US NFPs Could Determine Risk Trends on Friday

-US Dollar, Japanese Yen Ease Lower - US NFPs Could Determine Risk Trends on Friday
-British Pound Pummeled Despite Neutral BOE Tone as Political Uncertainty Builds
-Euro Ends Modestly Higher Amidst ECB Optimism, But Door Is Open to Further Rate Cuts
-Canadian Dollar Dominates Following the BOC’s Policy Announcement - Employment Numbers Could Weigh on Friday

US Dollar, Japanese Yen Ease Lower - US NFPs Could Determine Risk Trends on Friday
The US dollar and Japanese yen both fell against most of the majors on Thursday as risk sentiment improved, albeit very slightly. Indeed, US equities ended the day higher, as the S&P 500 gained 11 points to 842.46 and the DJIA rose by 75 points to 8750.24. While the DJIA closed above the 200 SMA, we can’t really call it a “breakout” unless the index continues to make headway on Friday. Whether this will happen may have a lot to do with the headline event risk for the US dollar: non-farm payrolls (NFPs). Based on both a Bloomberg News poll of economists and a variety of leading indicators, Friday’s release of the NFP report is likely to show job losses for the seventeenth straight month in May, but the rate of decline is anticipated to slow. At the time of writing, Bloomberg News was calling for NFPs to plunge by 520,000, but looking at the range of estimates, economists are anticipating that NFPs could fall anywhere between 450,000 and 600,000. Based on the improvements we’ve seen in leading indicators like initial jobless claims, consumer confidence, and the employment components of ISM non-manufacturing, we expect that NFPs may drop somewhere in the range of 500,000 to 540,000.

We’ve seen that risk trends are still the primary driver of price action, as the US dollar tends to fall when investor sentiment builds and usually rallies amidst market-wide risk aversion. Thus, it will be necessary to keep this correlation in mind when trading around the time of the release of NFPs. From a technical perspective, the daily chart of the US dollar index shows that the currency bounced on Wednesday from key support at the 61.8 percent fib of 71.32-89.62 at 78.29, but on Thursday, price subsequently backed off from former support at 79.80 (the May 22, 25 lows). These two levels - 78.29 and 79.80 - will essentially become “lines in the sand” on Friday. Indeed, daily RSI for the index rose from overbought levels on Thursday, but we also saw this occur last week, suggesting this is a weak bullish signal.

Related Articles: US Dollar Japanese Yen Monthly Exchange Rate Forecast, NFP Outlook

Trade Forex British Pound Pummeled Despite Neutral BOE Tone as Political Uncertainty Builds
The British pound was ultimately the weakest of the majors on Thursday, despite the fact that the Bank of England left rates at 0.50 percent once again, as expected, and comments within the central bank’s policy statement were straight-forward. Indeed, the statement simply reiterated that the Monetary Policy Committee (MPC) would its £125 billion asset purchase program, to be financed by the issuance of central bank reserves. The MPC also said that it will take another two months to complete the program, and its scale will be “kept under review.” All told, there was nothing surprising here and certainly nothing to suggest that the BOE’s policy bias has changed in any way, shape, or form. Accordingly, GBP/USD hardly moved upon the ECB’s 7:00 ET rate decision, but clear market-movement came at 8:00 ET when the pair plunged over 200 points in a matter of minutes. The drop was generally attributed to rumors that UK PM Gordon Brown was preparing to resign, and though Brown’s spokesman denied the rumor, calling it “complete nonsense,” GBP/USD wasn’t able to recover as daily RSI fell from overbought levels for the first time since March 2008.

Related Article: British Pound US Dollar Monthly Exchange Rate Forecast

Euro Ends Modestly Higher Amidst ECB Optimism, But Door Is Open to Further Rate Cuts
The release of the ECB’s decision to leave rates unchanged at 1 percent at 7:45 ET initially weighed on EUR/USD, as Credit Suisse overnight index swaps had actually been pricing in a 62 percent chance of a 25 basis point hike as of Wednesday.
However, ECB President Jean-Claude Trichet’s subsequent press conference at 8:30 ET proved to offer some support for the euro, as EUR/USD gradually climbed higher thereafter. In his comments, Trichet called current rates “appropriate” and said that recent data suggest that the Euro-zone recession may have bottomed during the previous two quarters, and that “economic activity over the remainder of this year is expected to decline at much less negative rates,” with quarterly GDP likely to rise into positive territory by mid-2010.
On the inflation front, annual CPI growth is projected to “decline further and temporarily remain negative over the coming months, before returning to positive territory by the end of 2009.”

During the Q&A session, Trichet said that rates aren’t necessarily at their lowest level, suggesting there may be room for additional rate cuts. He also went on to say that the ECB will begin their 60 billion euro covered bond purchasing program in July, and that the central bank plans to fully implement the purchases by June 2010.

The ECB will buy bonds directly in the primary and secondary markets, the issues are required to be at least 500 million euros in size, and bonds can be linked to assets from either private or public entities. The “credit easing” program is relatively small compared to those implemented in the UK and US, and Trichet refused to comment on any eventual expansion of the program.

Related Article: Euro US Dollar Monthly Exchange Rate Forecast

Canadian Dollar Dominates Following the BOC’s Policy Announcement - Employment Numbers Could Weigh on Friday
The Canadian dollar was easily the strongest of the majors, rallying no less than 1 percent against the Australian dollar, euro, Swiss franc, US dollar, and New Zealand dollar. The Loonie also gained close to 2 percent versus the Japanese yen and British pound after the Bank of Canada (BOC) left their overnight rate target unchanged at a record low of 0.25 percent at 9:00 ET, and reiterated their plan to hold their target rate in place through June 2010. The central bank’s policy statement was relatively optimistic and didn’t touch upon quantitative easing, which was first brought up in their April Monetary Policy Report. The Bank said that “financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly,” and while “macroeconomic risks are roughly balanced,” they believe that “overall risks to its inflation projection remain tilted slightly to the downside.” All told, the Canadian dollar was able to gain against the US dollar as Canada’s fundamental outlook seems to be much better than that of its neighbor to the south.

Forex news On Friday at 7:00 ET, the Canadian net employment change is forecasted to show that job losses totaled 36,500 during May following the surprise improvement we saw in April. Furthermore, the unemployment rate is anticipated to have risen to match April 1999 high of 8.2 percent from 8.0 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Canadian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.


Written by Terri Belkas, Currency Strategist
Source : dailyfx.com

Euro Advances Ahead of ECB Rate Decision as Governing Council Attempts to Put a Floor on Interest Rates

The Euro bounced back to reach an intraday high of 1.4243 against the U.S. dollar during the overnight session, and the single-currency may continue to push higher into the U.S. open as the European Central Bank attempts to put a floor on the benchmark interest rate.

Talking Points
Japanese Yen: Advances to 96.00 After Finding Support at 100-Day SMA
Pound: Halifax House Price Index Unexpectedly Increases in May
Euro: Retail Spending Improves in April
US Dollar: Jobless Claims on Tap, Chairman Bernanke to Speak at Fed Conference

The Euro bounced back to reach an intraday high of 1.4243 against the U.S. dollar during the overnight session, and the single-currency may continue to push higher into the U.S. open as the European Central Bank attempts to put a floor on the benchmark interest rate.

At the same time, the central bank is widely expected to unveil its outline for the EUR 60B covered bond purchase in full detail however, as the Governing Council fails to meet on common ground, a lack of decisive action could weigh on the exchange rate as the outlook for growth and inflation remains bleak.

The economic docket for the Euro-Zone showed retail spending increased 0.2% in April, which was in-line with expectations, while the annual rate of consumption slipped 2.3% from the previous year amid expectations for a 2.9% drop. Nevertheless, The ECB rate decision highlights the major event risk for the euro over the next 24 hours of trading, and the Q&A session with President Trichet is likely to move the markets as investors continue to weigh the outlook for future policy.

The central bank head is likely to hold a dovish tone as he expects inflation to fall below the 2% target later this year but at the same time, the CPI estimate fell to a record-low of 0.0% in May, and mounting risks for deflation could lead policymakers to ease policy further in an effort to stimulate the ailing economy.

The British pound pared losses during the overnight, and bounced back to reach an intraday high of 1.6435 during the European trade as U.K. house prices unexpectedly increased in May. The Halifax house price index increased 2.6% from April, which beat expectations for a 1.0% drop, while prices fell at an annual rate of 16.3% in the three-months through May.

the Forex News Meanwhile, the Bank of England is widely expected to hold the benchmark interest rate steady at the record-low of 0.50%, and market participants speculate that the central bank will utilize the remaining GBP 25B of the GBP 150B allotted by the Chancellor of the Exchequer in an effort to stem the downside risks for growth and inflation. However, the MPC may adopt a wait-and-see approach this month as policymakers anticipate an economic recovery this year, and long-term expectations for higher interest rates may continue to drive the British pound higher over the near-term as the BoE puts a floor on the interest rate.

The U.S. dollar weaken against its European counterparts during the overnight, and may continue to face increased selling pressures ahead of the BoE, ECB, and BoC rate decisions as the policymakers attempt to put a floor on their respective benchmark interest rate, and a rise in market sentiment is likely to weigh on the exchange rates as market participants raise their appetite for higher risk/reward investments.

At the same time, a report by the Labor Department is anticipated to show a fall in initial jobless claims, while continuing claims for unemployment benefits are expected to rise to a record-high of 6855K in the week ending May 23. As investors eagerly await the Non-Farm payrolls report scheduled for Friday, a dismal jobless claims report could spur demands for the greenback as the reserve currency continues to benefit from safe-haven flows.

Fx Upcoming. Forex Upcoming

Source : Dailyfx.com

Euro Consolidates After Hourly H&S Top Trigger

• Euro hourly H&S triggers but market not ready to break down

• Dollar/Yen breaches upper end of triangle resistance

• Cable shows good follow through from bearish outside day

• Dollar/Swiss attempting to base but not ready for upside break just yet

llow through from bearish outside day

•Dollar/Swiss attempting to base but not ready for upside break just yet

EUR/USD


source : dailyfx.com

Dollar Slides as GM May Announce Bankruptcy

The dollar fell against currencies in Asia in the beginning of this week’s session, as General Motors may file for bankruptcy this Monday.

General Motors Corp. a company which was once the biggest in the world in its sector, is ready to file for bankruptcy, and the fact that the U.S. government will inject money and become its main owner brought the Dollar Index to the lowest level in this year. the forex news and trade forex In Asia, China manufacturing production rose for the third month in a row, strengthening currencies like Taiwan’s dollar and the South Korean won against the U.S. currency. The current wave of optimism made the dollar, regarded as a risk aversion investment, to lose ground against the main currencies since March, and the current condition of American companies like General Motors is putting pressure on the greenback.

forex online Asian economists consider the optimism strong and solid, and the positive reports coming from China are sharpening the equities market rally, which help high-yielding currencies like the Australian dollar and the South Korean won to climb against refuge currencies in Asia like the yen, and globally like the U.S. dollar. The majority of analysts concord that the greenback will continue its downtrend as long as the rally in stocks continue.

EUR/USD traded at 1.4230 from a previous price of 1.4105 while AUD/USD also climbed to 0.8123 from 0.7913. USD/KRW fell to 1252.40 from 1253.13.

If you want to comment on the U.S. dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

Pound Slides as Traders Consider Current Rally Excessive

The pound sterling dropped versus the euro and the dollar, after hitting a seven-month high against the dollar in a sharp rally to be considered excessive, as traders agree it does not reflect the United Kingdom’s economic outlook.

The British pound also lost ground against the yen and the country’s main stock exchange index, the FTSE 100, dropped 1 percent after two days of significant gains. The benchmark measure of U.K. equities interrupted its climb to a five-month high after Barclays Plc lost 13 percent, as investors from the United Arab Emirates sold their shares in worth of 4.1 billion pounds.

Even if the pound has reached very low levels in the beginning of the year compared to much higher values it had before the global slump, Britain’s economy has still not showed sufficient signs of recovery that could sustain the pound’s rally for much longer.
the forex trading online news .Analysts consider the current uptrend weighing on the pound to be related directly to the extreme low levels it hit in the previous months, but as it may not be in a sustainable recovery path, it is expected that traders make profits after 2 days of sharp gains versus the dollar, as occurred during the past week. Without further optimistic reports confirming that the U.K. may soon be out of the current recession, the pound is not expected to climb further against currencies like the euro and the dollar.

GBP/USD traded at 1.6407 from yesterday’s top at 1.6495. EUR/GBP rose to 0.8650 from a previous price of 0.8615.

If you want to comment on the Great Britain Pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

Yen Declines Further as Investors Purchase Assets Overseas

The yen hit a 8-week low against the dollar and also lost ground against the euro, as Japanese investors, driven by a new wave of confidence on world markets, return to overseas investments.

The Ministry of Finance in Japan affirmed that national investors had the highest rise in foreign bonds purchases during the current month, this declaration reflected immediately in the Japanese currency market, making the yen to lose against all of the 16 most-traded currencies. The yen also lost ground against high-yielding currencies in Asia, such as the Malaysian ringgit and the South Korean won. Standard&Poor’s raised the outlook for the New Zealand’s debt rating, pushing it sharply up in the Pacific trading area.

Japanese investors are more comfortable to take riskier positions, since the global financial situation has been reporting sequential signs of recovery, the attractiveness of higher-yielding currencies is once again alluring for Asian traders. Analysts confirm that the Standard&Poor’s report on New Zealand may bring interesting profits for traders willing to enter long in the NZD/JPY currency pair. For the time being the safety profile of the yen as an investment is strongly not recommended among trading experts.

USD/JPY rose enormously from 95.15 to 96.79 and following the same trend GBP/JPY traded at 152.05 to 154.31 and NZD/JPY also rallied from 59.05 to 60.05.

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Stocks Rally Push Dollar Down as World Economy Improves

The month of May posted the biggest losses for the U.S. currency in a one-year period against the euro, as equities markets continue to rise on optimism about improvements in the global economic situation.

The greenback lost ground against currencies around the world, and after South Korea affirmed that its state pension fund will sell Treasury bonds and diversify their investments to other assets, the Australian dollar and its New Zealand counterpart rose sharply against the North American currency. In Europe, the dollar lost ground against the pound after an unexpectedly favorable report on house pricing in the United Kingdom damped demand for refuge currencies. Among the main currencies, the Japanese yen also slid together with the dollar, also due to improved confidence in markets spurring risk appetite among traders.

The dollar and the yen are under pressure, according to financial consultants. Instability still penetrates several sectors of the world economy, but signs of recovery coming from multiple reports in different corners of the globe brought risk appetite to markets sooner than what most economists could predict, and currencies like the yen and the greenback, regarded as safe investments, are threatened in a new scenario of diminished risk aversion.

EUR/USD traded at 1.4030 from 1.3825, The GBP/USD currency pair also rose from 1.5935 to 1.6087. AUD/USD rallied to 0.7941 from 0.7800.

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British Pound Climbs as House Prices Rebound

The pound sterling rallied against the dollar and the yen after a report on house prices revealed an unexpected rise in May, boosting confidence among investors that the real estate crisis may be easing.

The excellent news for the United Kingdom currency revived hopes for this European nation, one of the most hit by the global crisis and the credit crunch. A report on consumer confidence this month showed the highest level in almost a year, reversing a trend of extremely low marks, adding to that, the house prices, which had constant and severe losses since the second semester of the past year, jumped sharply in May, against most of the expert forecasts, adding an extra stimulus for the improved attractiveness of the pound.

According to analysts, the pound has been favored this week by a combination of two distinct factors: the positive house survey and the gradual recovery in markets boosted by evidences that the global slump is easing considerably. Specialists also indicate that multiple domestic and international news brought the pound down to levels which do not reflect the real value of the currency, and as the scenario is not so gloomy for the moment, the pound is coming back to a more reasonable pricing level.

GBP/USD traded at 1.6120 from 1.5915 and GBP/JPY also rose from 154.20 to 154.73.

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Canadian Dollar Had Highest Monthly Gain in 60 Years

A combination of factors involving commodities price rebound, stocks rally and a less attractive U.S. dollar in global markets made the loonie to post the highest gains since the Korean War years.

Canada is one of the main suppliers of oil and a several number of commodities to the United States, and the recovery signs of the global economy, coming mainly from Asia and to a lesser extent from Europe, spurred demand for the main Canadian export products, causing the national currency to enter a strong uptrend. The new wave of optimism spread around world markets made riskier high-yield currencies to be more interesting for traders, which were previously holding their assets in safer positions as the greenback and the yen. This favorable scenario for Canada’s dollar made it rise 9.5 percent against the greenback since the beginning of May.

Analysts indicate that as concerns about the global slump ease, favoring the Canadian commodities market, fear rises regarding the future of the U.S. dollar, even if they may not be confirmed, the pressure is rising on the greenback. The general opinion bet in a strong Canadian dollar for the next months, as long as the demand for oil continues to mount.

USD/CAD closed the week at a rate of 1.0931 from a previous price of 1.1145. CAD/JPY rose to 87.32 from 86.85.

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Russian Ruble Climbs on Oil Uptrend, Stocks Rally

The Russian ruble posted gains against the U.S. dollar for the third day in a row, as the demand for oil increases, causing the Russian stock market to have the highest rally since the beginning of the global slump.

Since the oil has rebounded reaching $67.50 a barrel this week, a sharp rally has followed in the Russian equities market, consequently pushing the ruble up, which had suffered severe losses as the global slump started last year. Russia’s economy is highly orientated to exporting its multiple natural resources mainly to Europe and Asia, and when the global slump struck the commodities market, Russia saw the Moscow Stock Exchange to drop even 20 percent in one session during the worst days of the crisis. Today UBS AG said that Russia’s economy scenario is improving, adding to the growing optimism in the domestic market and among exporters, helping the ruble to continue its rally.

As analysts predict that the Russian economy will revive its expansion path in the third quarter of this year or earlier, optimism is slowly gaining space among investors, and with the UBS AG report being positive towards Russia, it is very like that the MSE will post sequential gains during the next weeks.

USD/RUB fell to 30.61 from last week’s closing price of 30.83.

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Dollar Around 09′ Record Low as Risk Appetite Grows

The dollar continued its bearish trend against a basket of currencies after a report on U.S. pending home sales posted the third consecutive monthly rise, improving optimism on markets and extending the current risk appetite wave.

Commodity-linked currencies like the Australian dollar and the Brazilian real continued their rally against the greenback as confidence emerges about the world economic rebound, spurring demand for oil and several metals. U.S. pending home sales report had the highest jump in a 7 year period, and being considered as one of the key factors for an eventual economic recovery, this report fueled demand for riskier assets both in stock and currencies markets, consequently downgrading attractiveness of safe-haven currencies like the dollar and the yen. Since the global recession has been showing solid evidences of easing, the greenback is losing versus commodity-linked currencies like Canada’s dollar, and also against higher-yielding options like the euro.

Analysts affirm that not only the world economic rebound is weighing on the dollar outlook, but also the growing questioning on the dollar’s position as a world reserve currency. Since the beginning of the global slump, multiple statements from different governments and economists suggested that the dollar should be substituted as the main global reserve currency, this kind of declarations bring a certain amount of instability for the greenback, consequently weakening the North American currency.

AUD/USD traded at 0.8196 from 0.8070. USD/CAD remained rather stable at 1.0878 after a sharp fall in the beginning of the week. USD/BRL fell to 1.9230 from 1.9430.

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British Pound Climbs Against Euro as Confidence Emerges

The Great Britain Pound hit a six-month high against the Eurozone currency as domestic consumer confidence rose to a two-year high, indicating that recession might soon be over.

The British currency reached the $1.66 mark and the highest level against the euro since last December, after an index of U.K. service industries posted the first expansion in a period of more than twelve months. The Australian government reported that the economy unexpectedly grew in the first quarter, improving traders’ confidence globally that other countries may follow Australia’s economy, posting positive numbers for the next quarters. The pound sterling suffered massively the consequences of the credit crunch, reaching the point of being traded one to one against the euro, but since domestic and international data indicated that the global slump is easing, the pound entered a strong recovery trend.

Two main reasons would be behind the pound’s rebound, according to specialists. The rise of confidence in world markets is obviously helping the pound to reach higher levels, but the fact that the greenback is under pressure could be the main reason behind the British currency uptrend. Even if the national data in Britain is still not very optimistic, the actual drive in international markets is favoring the pound for the moment.

EUR/GBP fell to 0.8594 from 0.8634. GBP/JPY remained stable while GBP/USD rose to 1.6552 from 1.6400.

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Swedish Krona at Six-Week Low as Concerns Rise in Latvia

The Swedish currency hit a six-week low level after speculations rose that Latvia will devalue its currency, as an attempt to save the country from a deep recession, consequently affecting negatively loans held by Swedish banks in the Baltic Nation.

According to a note posted this week by Riksbank, an economic deterioration in the Baltic countries is an imminent risk to Swedish banking institutions, since Latvia’s financial system is highly linked and dependent on the Scandinavian nation’s funding. Mareks Seglins, the Latvian Justice Minister affirmed that the country’s currency should end the system that maintains it pegged to the euro, and this declaration impacted directly the Swedish krona, causing it to fall more than 4 percent against the euro since June 1. Since Latvia’s independence, Sweden is the main fund provider in the private loan market for the Baltic nations.

The risk of devaluation for the Latvian lat is considered high, according to analysts, even if they expect that a cooperation between the Eurozone and Sweden to maintain the lat pegged to the euro, the pressure is significant and rising. ING Groep NV affirmed that there is a 50 percent chance that the Latvian currency will be devalued during the next 12 months, which could ease the ongoing recession in Latvia, but cause an important impact on the Swedish banking sector and its currency.

USD/SEK traded at 7.6256 from a previous rate of 7.7160. EUR/SEK also fell from 10.9060 to 10.8500.

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Brazilian Real Falls from Eight-Month High as Stocks, Commodities Drop

Brazil’s Real had the largest drop in six months falling 2.2 percent against the U.S. dollar and declining from an eight-month high, as commodities and stocks declined, reducing capital influx to South America’s most influential economy.

After a rocketing rally that made the real to rise 24.6 percent since March 2, the real tumbled the most in six weeks, after a negative day in stock and commodities markets. The main reason that affected the real’s price this week was the remittance of profits from foreign investors that purchase assets in Brazil’s BOVESPA, the main national stock exchange market, which due to its highly volatile profile, attracts investors that often buy assets in a down market, sequentially selling it after hitting a target price, returning the capital to its country of origin, like happened this Wednesday.

Brazilian specialists relate the U.S. dollar’s gains against several currencies to the real’s decline. Brazilian exporters trade mostly using the greenback, and the outflow of profits from the national stock market also weighed on the South American currency. The real may continue its rally against the dollar, euro and the pound, as long as the commodity market remains heated, spurring demand for Brazilian exports and attracting investors to the stock exchange market.

USD/BRL traded at 1.9640 from 1.9267, the sharpest rise in six weeks, while the EUR/BRL rose from 2.7587 to 2.7811.

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