Dollar falls against euro in Forex trading

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View Japanese yen continued strength in the Forex market

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Today more attention able draw European strikes

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Cost recognition acceleration, but doesn't move the dollar Peg

Chinese Yuan referred to a new level at CNY 6.69 USD. Considering that the Yuan has still only about 2%, as the peg has been weakened in June and most of them taking place in the last couple of weeks – still intense pressure on China to do more.

Statement last week the Bank of Japan will be redirected to the huge amount of attention to Yuan.In fact, many analysts argue that it is only from the Yuan-dollar peg (in itself, as well as Chinese buying assets yen it generates) that Japan was forced to act: "' countries to see that involve currency manipulation way to give yourself the advantages of ' ... ' China, they hit in Japan, and it strikes us." "The JPY also force the G20 to reemphasize Yuan and at least make some discussion at the next Summit.

It should be noted that two soundbites above example comes from the US congressmen, which is important because the u.s. Government is currently mulling action for Yuan currency peg. Politicians grows tired repeatedly call the Ministry of Finance of China "Paddle currency" for diplomatic negotiations, and even trade sanctions. Finance will be able to redeem itself in its next report on foreign exchange, due October 15th, but it is expected that the report will either delayed or released without an adequate solution of undervalued Yuan.

In fact, Treasury Secretary Geithner testified before Congress last week and at least admitted that what needs to be done: "the pace of appreciation too slow and too limited. We must find ways to change behavior. "However, it was only in response to criticism of acerbic-(Senator Schumer told him "I'm increasingly believed that the only person in this room, which considers China not manipulating its currency you.") – and he ultimately did not describe graphics/plan of action. Despite the consensus among politicians (and President Obama) that currency peg hurts the US economy Geithner made it clear that the Ministry of Finance continues to favour unilateral actions to resolve the problem without the intervention of the Congress. Then, now, politicians probably rattling Saber and name-calling.

China in response to this farce was predictable. Sales representatives hinted that China would not bow to external pressure, and that any attempt to "punish" will be met with compensatory measures.China also questioned the economy among the arguments that the dollar peg strengthens trade imbalances, the invocation of these claims "groundless." this position is supported by the fact that, while the Yuan against the dollar appreciated by 20% in 2005-2008, USA/China trade deficit has actually increased.

In practice, China is likely to stick to its policy of gradual Yuan appreciation or a couple of reasons.Firstly, while Chinese politicians know they don't have to completely placate U.S. politicians, they at least have to pretend that they listen to.It really depends on Chinese goods and the purchase of US Treasury bonds; however, it can be argued that just as THE US to buy it is dependent on exports, which contributes to employment and social stability, and he sought to avoid a trade war, if possible.

Second long-term appreciation of the Yuan is actually in the best interests of the people's Republic of China.If he wants to boost domestic consumption and contribute to higher value-added production need to be more valuable currency. Outbound M & A, particularly relating to natural resources company, will also be more economical if Yuan worth more also, if China has any serious ambitions of making Yuan in the global reserve currency, you must create a capital markets deeper and more liquid, which is currently the unmotivated to stimulate demand for Yuan for foreign institutional investors.

Finally, China should make it possible to evaluate because it is financially remunerated do Yuan as mentioned above, its trade surplus U.S. has increased over the past few years as prices for exports to grow together with the numbers at the same time, import prices and commodity prices and other natural resources fell Yuan terms; for this reason, I think China will probably continue to adhere to its current policies and allow cost still slowly inch up.

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Japan finally intervenes in the Forex market

After months of speculation the Bank of Japan (BOJ) finally took on the foreign exchange markets. As a recent low against the dollar BOJ quickly entered the market instantly driving yen up to 2%. On that day he finished 3% higher and the dollar.

Over the past few weeks Japan slowly soon intervention. [In fact, I was eager to write a post yesterday on intervention in the near future, but that's neither here nor there ...] Minister of finance, Central Bank Governors, members of Parliament and the Prime Minister began to become increasingly vocal Yen un-halting sea and the need to fight it.He said the 15-year high and only 4% of the lowest. Rhetorical intervention and the easy monetary policy, in the absence of the Bank of Japan to sway investors sold nearly $ 20 billion worth yen on the open market.

 

It is no coincidence that the intervention was carried out by only one day after the parliamentary vote to see whether Naoto ?shima Kan be replaced as Prime Minister. Defeat of Ichiro Ozawa and apparently that survived the challenge, Kahn was determined to make his promise of saving the economy from another recession.(Only a few days ago, he admitted, "we are holding negotiations, so that other countries will not say negative things, when Japan stands for. Now We examine various scenarios, exploring the possible answers in the markets in which we act decisively. ")

Reaction has been mixed. On the one hand the fact that you have been waiting before stepping is proof that the measure of despair. According to the billionaire investor George Soros "Japan was to act to reduce the value of the yen.Of course they're not hurting because currency is too strong, so I think they have the right to intervene ". "Politicians and decision makers, on the other hand, has not been so kind. One u.s. Senator, called an "alarming" step and Jean Claude Trichet, President of THE ECB, said that ' not … appropriate. "

Of these fragments, it is clear that the intervention is carried out unilaterally and lacks any support from the other central banks. Thus if you continue to sell yen, it will make it possible even with open insult other central banks.At the same time, it seems, some confidence that can back off Yen at present. This is because THE BOJ is trying to make own yen, unattractive, to the extent possible, the decline in interest rates and an attempt to accelerate the rate of inflation.Yet it is not clear whether investors take the hint and stop and come back Yen currency financing using the carrying trade.(Despite the unraveling in the past two years, the Yen carry trade may still exceed $ 500 billion).Japan also has to contend with China by upward pressure on the yen, buying Japanese bonds.

The answer is not clear, even, if you will continue to interfere. maybe he just wanted to signal to investors, indicating that it might weaken the yen anytime he wants. in addition, it will be expensive long campaign, hold yen and are doomed to fail in the long run, you learned the hard way in 2003-2004, probably on the recent failure of the Swiss National Bank to weaken Frank on the other hand you need to show investors that it seriously, and "shock and awe" campaign intervention is probably the only real way to achieve this goal.

In any case, I think it's fair to say that those who rate for the yen to do so at your own risk ... though I don't think the yen, suddenly is going back to 100 JPY/USD, the fact that my personal reserves, almost not huge as the Bank of Japan means that I don't tend to place bets in it…

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Thai baht from the ashes of 13-year high

As I pack my bags and head to Thailand on vacation (for Forex research purposes … yeah right), I thought it would be advisable to blog about the strength of the Thai baht. Boost bat was nothing reaches an incredible and as often happens in the Forex market, rising currency becomes a self-fulfilling. He evaluated 8.5% last year en route to a 13-year-old high, and some analysts predict that this is only the beginning.

Last time I went to Thailand in 2004, approximately 40 baht trade USD/THB, compared with a rate of 30.It's pretty incredible, if you believe that over time, Thailand experienced military coup and related political instability, the financial crisis, which is particularly serious in the world, emerging market currencies and even if you chart performance baht against USD, will have only the faintest idea what each of these crises.

  Of course financial crisis exacted a heavy toll on Thai financial markets and the economy of Thailand. Prices of shares and bonds lurched down as foreign investors moved in cash to the so-called safe haven currencies, such as the US dollar and Japanese yen. However, among the first to emerge from recession, expansion in 2009 and 2010, the economy is surging in Thailand. "Compared to the previous year, GDP grew by 9.1% while the economy grew 10.6% in the first half of the year" according to the most recent data.Tourism, one of the country's pillar industries, already has recovered 23, together with the export and consumption forecast BY THE IMF and the Thai Government to drive the economy forward 7-7.5% in 2010 is expected to increase projected exports of 27%.  Agree that the increase would have been even more impressive (maybe 1-2% above) if not politcal protests, which were finally quelled in May this year.

Despite concerns about the risk and volatility of foreign investors once again pouring money in Thailand at a record pace.More than $ 1.4 billion had been injected with prospe only a year after the date. As a result of "Thailand benchmark SET index has rebounded30% since Jun ... helping send SET to its highest level since November 1996." Capital flows have also caused by Thai interest rates that are (currently 1.75%), even while in industrialized countries have remained flat at this point ' money in Thailand are well in excess of cash, which remains low because of sustained import restrictions on capital outflows, Thai. This imbalance is reflected in the Central Bank of Thailand forex reserves, which recently topped $ 150 billion, more than 50% of the GDP.

Anticipation builds that Thailand will use some of their reserves in an attempt to stop or even reverse the baht.After the intervention of last week the Bank of Japan such intervention is not only how to be more appropriate, but also more necessary.Under pressure from the Prime Minister of the Central Bank convened at least one emergency meeting to determine the best course of action so far can only accept members, defuse restrictions on capital and lending standards for exporters.

For what it's worth, Thailand's richest man called CB does not work: "probably fruitless efforts, as well as foreign capital is expected to continuously flooding in Thailand from healthy economic recovery and growth of exports. baht per se should be an even stronger policy will remain in Thailand."It is supported by the facts that show that Thai exports held smoothly despite the rise in bat, though perhaps just because other Asian currencies grew up in a comparable speed.

If other central banks have stepped up their intervention (Deutsche Bank maintained through below that all "Asian central banks for many years, were more or less continuously on the market," stabilization "their currencies, but with a clear bias towards prevention of depreciation of USD in this region") Bank of Thailand is probably will have no choice but to follow their example.

Otherwise it may not be long before bath cleanses THB 30 USD my next post baht in 2015 will probably be similar lamentation ...

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Swiss franc reaches record high, election equality

A year before the date of the Swiss franc rose 3% against the dollar, 15% against the euro and more than 5% on the basis of balanced trade. He recently touched an all time low against the EUR and close parity with the USD. Since the beginning of summer, Frank has brought together an incredible 15% against the greenback. I don't think I'm alone in scratching my head in disbelief I wonder what can be behind Frank Rost?

At this point everyone is familiar with the safe-haven. In principle, the problem of double dip recession fire outbreaks in risk and prompted investors to shift of capital in locales and investment vehicles that are considered less risky. Switzerland and the Swiss franc, both benefited from this phenomenon: "an anxious investors, seeking refuge from concerns about the health of European banks which knocked stocks and sent overseas euro area Government bond spreads above, is the single currency.The Swiss franc's favor. "Suffice it to say.

At the same time, the USD and the JPY is also considered a safe-haven currencies, as you can see from the chart below, three hardly traded in lockstep. in other words there must be something different, Frank. Economists suggest a strong economy: gross domestic product grew 0.9% in the first quarter, when more than 1%. "Basic economics of Switzerland are very healthy. Concerns about deflation declined. " "The consensus is that the Swiss economy will grow by nearly 2% per year.However, this hardly impressive, especially when compared to other industrialized nations in addition Swiss interest rates remain low, it means the possibility for the Franc is high. There must be something else going on.

Actually it looks like the Swiss franc growth is kind of a self-fulfilling. For most of 2009, Swiss National Bank (SNB) spent about $ 200 billion-value artificially francs. During this period, Frank remained stable against the euro and depreciated against the dollar and yen. Finally broken "line in the sand" € 1.50, nevertheless, Frank is currently evaluating quickly. Why?Because OF THE SNB is no longer has any credibility he lost $ 15 billion (over EUR depreciation) tries to protect Frank, and in hindsight, the mission was a complete waste of time. As a result of a new round of intervention is speech.In the foreign exchange market, also rejected the possibility of a new intervention and it seems they punish THE SNB (Frank) to even try.

Analysts say markets also began to see Franck reincarnation of German, due to the strong economy, the massive reserves, traditional safe haven status and close ties with the German economy. "Those that fear eurozone collapse and/or want to make exclusive rates on Germany by Frank as a proxy.I personally do not understand the logic of this strategy, but where the perception of reality, the more important to understand that other investors see connection, instead of seeing the connection for yourself.

Go ahead, it's mixed feelings surrounding Frank.One analyst warns customers, "I would be wary of chasing it too far in the short term, there is still a huge amount of. headwinds there."According to another analyst, "we expect that Frank is still strong for decades. Personally I tend to side with the former point of view in terms of basic there isn't a whole lot to keep Franck, move up, and his recent surge, probably running on fumes. at least I would expect in the near future.

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Keep an eye on central banks

On monetary policy for quantitative easing forex intervention by central banks in the world quite busy at the moment. Even if the worst of the credit crisis of the past and the global economy moved cautiously in recovery mode, there is still work to be done. Unemployment remains stubbornly high inflation rate is too low and asset prices are on the brink of recession. In short the central banks would continue to pigs in the spotlight.

In the field of monetary policy, central banks began to split into two camps. One camp consisting of Federal Reserve Bank, the European Central Bank, the Bank of England, Bank of Japan and the Swiss National Bank (whose currency, it must be noted that most of the activities of foreign currency), remains frozen in place. Interest rates in all five countries/regions still rock bottom, near 0% in most cases.Though the ECB benchmark interest rates seemingly has a value larger than the other, the actual night of course also is close to 0%, however, none of these banks gave any indication that it is going to hike rates before the end of 2011.

In the other camp are banks in Canada, Australia, Brazil and a handful of other emerging market central banks, which gently moved to hike rates on the basis of economic recovery.In industrialized countries is now on the head of the Pack with New Zealand (3%) in a distant second in Australia (4.5). Brazil benchmark Selic rate 10.75%, making it the world leader among (then) of emerging market countries. it shall be accompanied by Russia (7.75%), Turkey (7%) and India (6.1%), among others. the lone exception appears to China, which supports the artificially low rates to influence Yuan. [Details below].

None of the industrialized countries of the central banks have unwound programmes quantitative easing, unveiled at the height of the credit crisis program the purchase of assets by Treasury rates and mortgage rates at record highs FED balance sheet now exceeds $ 2 trillion. The same for banks in England and Japan, the latter of whom moved to actually extend its programme in an effort to hold down the yen. At the same time, many credit lines, the ECB has been extended to the beleaguered banks and other enterprises remain unresolved and even expanded in recent months.

Central banks have been especially busy in foreign exchange markets. Swiss National Bank (SNB) was the first to get involved, and because of the cost of € 200 billion, it had a Frank below € 1.50.Due to the crisis of sovereign debt of THE EU, however, Frank broke through the peg and its since reached record against EUR. Unsurprisingly SNB relinquished its intervention programmes. During the past year, Canada, Brazil, Thailand, Korea threatened to intervene, but only Brazil has taken steps to date in the form of tax for all foreign capital. Last week the Bank of Japan broke his 6-year period of inactivity by, on behalf of the yen, which grew by 3% on the go. THE BOJ has promise to remain seized of this matter, but the magnitude and duration are not clear.

Finally, the Bank of China authorized Yuan appreciate for the first time in two years, but his pace is closely monitored, to put it mildly. over the past few weeks Yuan actually took the speed, but critics argue that it is still underestimated.In addition, China is contrary to the Yuan against the dollar growth through its purchase of Japanese bonds stimulated growth in yen.It's ironic and counterproductive for global economic recovery, "with China increased by 10%, it can afford to jeopardize export and stimulating domestic demand, allowing you to more quickly get Yuan against the dollar.But China doesn't want to do that actually although China management of foreign currency on the interbank market deregulated overnight, to make some exporters keep their currency reserves for one year, you should increase the private demand for dollars, not Yuan. "

Efforts listed above clearly moderated the impact of financial crisis and ensuing recession. Nevertheless, the banks have found impossible to engineer strong recovery and now probably not there is a lot more that they can do as a result many analysts ' expectations for fiscal policies (although equally dubious reputation) could be the title of this post: keep an eye on the Government and their plans stimulus.

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Hungarian Forint Touches Record Low

The one who bought the emerging markets, currency (s) at the height of the credit crisis in 2008 will have earned double digit annual interest rate drops to two years have passed since then. There are only a handful of exceptions to this rule, and the most famous of them, I think, the Hungarian forint. If you bought the Hungarian forint against the Swiss franc (base currency that most traders in forint view, for reasons which I will explain below) in the fall of 2008, will lose 63% if you sold today. Forint was down 11% a month only. This kind of numbers one might associate with mortgage-backed securities and credit default swaps, currency!

So why is forint in ob?evytâ?noj? Ironically, the answer is connected to the mortgages. In the course of inflation, housing bubble Hungarians prefer to take out in Swiss francs, because interest rates were significantly lower than the internal rate in Hungary. It's not just a trend; it is a full-blown phenomenon: "5.4 trillion (24.1 billion forint $ ), Or two thirds of Hungary as a whole home loans are denominated in foreign currency. That 82% in Swiss francs according to the Central Bank.Stable housing and credit markets, no one bothered to study foreign exchange risk. considering how many forint dropped against Frank, you can bet they are now.

If declines in housing prices was not bad, consider that the Hungarians who borrowed in Swiss francs are now seen their mortgage balances of payments will increase by more than 50%, depending on when they took their loans.It goes without saying that even in the best case, it would be difficult to find the necessary funds – let alone motivation – to pay off a loan when you throw your recession into the mix, the prospects for repayment is even bleaker. The Hungarian forint depreciated, increased credit default, further fuelling the forint depreciated and Loan defaults. 

Alas Hungarian State program to address this crisis will punish banks allowing borrowers to delay payment and charging mass is the highest in the EU-a tax on all banks. Although this can be useful to reduce the deficit to 3% of the EU, it probably won't do much for the economy. Speaking of budget deficits, it made S & P to alert you to possible cut in Hungary, a sovereign credit rating of the spam status.

Cause of Hungary not assisted by negotiations with the EU and the IMF, which will be provided with emergency funding.As if there had not been seen in forint, investors are beginning to fall fear the worst and slowly turning away from Hungary. benchmark stock index fell 4 percent in the last six months.At the same time, foreign creditors begin to balk when buying Hungary debt without any IMF EU pillar, like the one that was given to Greece: "saleshave auction was barometer of investor confidence in the country. September 2, 35 billion Hungarian forint sold 12-month Treasury bills, 15 billion forint less than planned, after receipt of the application of 4 billion forint Exchange. five days later, he sold 60 billion forint three-month Treasury bills, forint 10 billion more than expected."

At this point, all eyes are on the Hungarian Government simultaneously stimulate the economy and to restore its deficit: "rating agenciesare with the same line as the markets and the provision of Government before the local elections in October for the benefit of the doubt, but if they do not see either the next IMF programs or real, concrete measures, I think they are cut the top junk."If this happens, a self-fulfilling spirals in forint is likely to continue.

It makes you wonder if Greek drachma was still around, he would remind forint?

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Interview with Marc Chandler, "you win in the discipline".

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Today, we bring you an interview with Marc Chandler, the global head of currency strategy for Brown Brothers Harriman. Previously he was the chief currency strategist for HSBC Bank USA and Mellon Bank. Marc is a prolific writer and speaker whose essays have been published in the Financial Times, Barron’s, Euromoney, Corporate Finance, and Foreign Affairs. He is also the contributing economic editor for Active Trader Magazine and to TheStreet.Com. Below, he shares his thoughts on fundamental analysis versus technical analysis, the false Euro rally, Japanese Yen intervention, and other subjects.

Forex Blog: I would would like to begin by asking you to briefly explain your approach to analyzing the forex markets. Do you prefer technical or fundamental analysis, or a combination of both?

I’ve been analyzing currencies for a while, more than 20 years. I tend to think of myself as a fundamentalist, that is I look at macroeconomics, I look at policy, but at the same time, I’m a strategist, so I’m not just forecast GDP or trade. Ultimately, my goal is try to see where the currencies are going themselves, like the Euro or the Yen, or the Canadian Dollar. I find that technical analysis helps me quantify the risk at what level do I admit I’m wrong. And that’s very important. I think that often times, one would think that with economists, it’s always about being right. And I think that with trading and strategy, risk management is the most important thing. I find that technical analysis tells me where I should put my stop in effect – where I should admit that I’m wrong, unlike fundamentalists that say any level of US GDP or trade balance, the Dollar could be all over the place. Tehcnicals help me identify, help me fine-tune that a bit. I think that trading is so difficult that I need to use all of the possible tools that I have had at my disposal. It’s not just fundamental knowledge, but also studying psychology and price action.

Forex Blog: As head of currency research for Brown Brothers Harriman, it looks like you cover most of the major currencies, as well as a handful of emerging/exotic currencies. What do you think about the macroeconomic gulf that is forming between the “G4? economies (US, UK, Eurozone, Japan) and the emerging market economies (along the lines of debt, GDP growth, etc.)? Do you think that this division is reflected in forex markets?

Most of my career, I’ve focused on the major currencies, but to tell you the truth, it’s kind of blurry what’s an emerging market, especially with all that’s come to light during this crisis. Mexico, for example, Israel and South Korea are OECD countries and yet MSCI and some of these other investment agencies might consider them emerging market, so the line is really blurry.

For example, recently, the Bank of Japan intervened and they bought a lot of US Dollars. But it’s not clear to me – because the Chinese currency is so closely tied to the US Dollar – it’s not clear to me that maybe Japan wasn’t just as concerned, or even more concerned with the Yen against the RMB – since China is its biggest trading partners – as with the Yen against the Dollar. But they had to intervene on Dollar/Yen because of the way the foreign exchange market works and because China’s currency is not convertible.

While I tend to focus on the major countries, I don’t really know how to do the job and think about the world and global capital markets without recognizing and integrating what’s going on in many of the major emerging markets.

Forex Blog:  Do you develop your own macroeconomic forecasts or do you simply plug in the data that your economist colleagues have developed?

 Brown Brothers doesn’t really have a global economist- they’re not that kind of bank. So when it comes to GDP, for example, I will not have a formal forecast for it. I will have a guess of it and I’ll shy one way or the other from the broad market consensus. So for example, the broad market consensus for Q3 US GDP is about 1.9%. I would think of myself as a little bit above there. The important thing for the markets is instead of forecasting GDP as the end result, my end result is the Dollar or the Euro. And I would be looking at GDP, at relative economic strength as one of the inputs in an informal exchange rate model.

I would say that the emerging markets typically grow faster than the industrialized, mature economies. I find that faster emerging market growth – to me that’s more like a “dog bites man” story.  This crisis, unlike past crises, from 1995-2002, these were emerging market crises: East Asia, Latin America…this is among the first crises that originated in industrialized countries.

Many of the emerging market economies have strong domestic demand, so they were able to compensate for the weakness in foreign demand. But they’ve also benefited from the terms of trade: higher commodity prices than manufactured goods prices. I think in general, that many people look at the debt levels of advanced, industrialized countries and worry that the US is becoming Greece or Argentina. I think that kind of thinking is misguided. It confuses things. It confuses cyclical comparisons with structural developments. I think there’s no doubt that the US is not Argentina. The Dollar is a major reserve currency. Most trade is invoiced in US Dollars – even when Australia sells iron ore to China, it’s probably invoiced in US Dollars and paid in US Dollars – not Argentinian Pesos or Mexican Pesos or whatever the current threat to the US Dollar is.

Forex Blog: Based on this, then, you don’t see any inherent contradiction between the Dollar’s strength and the gap in growth fundamentals between the US and emerging markets?

Since the opening up of China, for example, in the late ‘70s, China has definitely grown faster than the US. I’d say that’s also true form many Latin American countries like Brazil. Of course they grow much faster than the US, Europe, and Japan. But sometimes what determines currencies are not relative growth differentials. If you think about what’s happened since Lehman’s collapse, the Japanese Yen has been the strongest currency, and I don’t think that’s because of strong  Japanese economic fundamentals. I think it has to do more with the unwinding of carry trades – Japan being a current account surplus country – that seems to be more telling than saying they have a booming economy, which of course they don’t. There’s no free lunches; the reason Brazil, Turkey, and South Africa offer higher interest rates is to compensate investors for some of the risk (political risk, inflation risk, maybe even historic risk – that you couldn’t depend on these counties in the past, and the market has to anticipate issues going forward). For example, Brazil (Real) is one of peoples’ favorite currencies, and the budget deficit is at an 8 month high, and they are approaching a current account deficit. So when I hear about fundamentals, it kind of begs the question, ‘Well, which fundamentals should be reflected, and what happens if the fundamentals are pointing in contradictory directions?’

Forex Blog: Is there a particular (emerging) currency that you think is not getting enough attention? 

I’m looking for an opportunity to buy the Brazilian Real, although I think it could weaken first. I also like India – I think they’re the tortoise compared to the rabbit of China. I like Malaysia. I like Columbia. I like China. We generally think that in the emerging market space, Asian currencies over time, will appreciate against the US Dollar. They have favorable dynamics, pulled into the Chinese economic orbit, still tied to the US tech cycle, strong underlying economic fundamentals, and pressure to raise interest rates.

Forex Blog: On your financial blog, Marc to Market, a recent post was entitled, “The Yen Conundrum.” Can you elaborate on the contradiction between weak Japanese fundamentals and the strong Yen? Do you expect the trends in capital flows that are arguably behind the Yen’s appreciation will reverse anytime soon?

To me, the Yen’s strength is kind of like a thermometer – a temperature check for a sick patient. I suspect that the Yen’s strength is a function of the deleveraging taking place in the world. When the deleveraging stops, I will be more confident that the Yen has peaked. I’m not sure that is the case yet. I think intervention kind of caught some people by surprise. They spent a lot of money to get the kind of advance they got. They got 3-Yen advance – about a 5% move. The big picture is that it might lose some strength, but gradually.

Forex Blog: Speaking of the Yen, the Bank of Japan recently “intervened” on its behalf. Do you expect that this is only the beginning of a long program of intervention? Given the poor track record of the Swiss National Bank (in terms of the Franc), do you think that other Central Banks may follow suit?

This was a unilateral intervention. There are people who say that this opens up a Pandora’s Box for other countries to intervene, but I don’t think so. I think that those Central Banks that were inclined to intervene have already been intervening, like some Asian Central Banks and like Brazil. They continue to intervene. I think that it’s unusual for a G7 country to intervene. I don’t think that any other G7 country will intervene, though earlier this year and last year, though Switzerland did intervene quite actively and aggressively as part of their quantitative easing. With Japan, it does depend on the Yen/Dollar. However, the Japanese Yen intervention was quite large, and usually the first intervention is the biggest intervention. It’s been a week now, and they haven’t been in. Since that Thursday, the low that we’ve been at was 85.25 and we’re just above there right now. But it does not appear that they are sterilizing intervention, though it’s hard to tell because of the volatility caused by it being the end of the fiscal half year. Generally speaking, I think that the Japanese are not committing yet- they bought just short of 20 Trillion Yen – about $2 Billion – and I don’t think that’s enough yet to have really changed the general tide in Dollar/Yen. I think the deleveraging process has more ways to work and it’s bigger than 20 Billion Dollars.

Forex Blog: When the Euro rallied in the beginning of the summer, a number of forex commentators (myself included) declared a paradigm shift, whereby investors would stop worrying about risk and instead focus on the fundamentals. Ultimately, this shift never materialized, and the Euro appears to have resumed its decline. What is your assessment of the Euro’s recent performance, and what can we expect for the immediate future?

I think that the Euro’s bounce over the summer was a function of people taking a step back from the abyss. In the spring, it maybe looked like the Eurozone would collapse and members would drop out. When people realized that the Euro would survive and institutions would be reformed, the Euro bounced back a bit.

I think that we’re kind of caught now between problems in Europe – I think that risk assessment is fundamental. I do think that most recently, the widening of the spreads in Europe has not read to new Euro weakness, that being said, it might be preventing a serious Euro rally. We’re still about 2 cents below where we were in August. On the other hand, the Dollar has stood on 2 legs. One is bad things in Rest of World (ROW) and the other is good things here. But those good things have faded, and quite quickly in Q2. And so my equilibrium level for the Euro if there is such a thing is probably a bit higher than at the beginning of the year, about 1.33 – 1.35 to the Dollar.

You also have to look at restructuring of Euro debt, and ask, ‘How did Greece live beyond its means.’ The answer is that they were buying lots of goods and German Banks were happily lending them the money to do so. In fact, 70% of Greek debt is owned by non-residents. Going forward, the problems can only be overcome by stronger growth, which doesn’t seem likely at the moment. Still, assuming that interest rate differentials (between Germany and the rest of the EU) narrow, we will see the Euro strengthen.

Forex Blog: I recall a Bloomberg News video segmentin which you highlighted the 200-day moving average as an important forex indicator, especially for investors with a long-term outlook. Could you explain this for the benefit of my readers? Are there any other basic technical analysis indicators that you think fundamental analysts should pay attention to?

First I just want to say that we must appreciate time frame. For example, most fund managers have a medium time frame, and it doesn’t make sense for them to look at daily bar charts. That’s really just false symbolism, noise.

I like the 200 day Moving Average because it gives you a sense of trend. I think I remember the Bloomberg story that you’re referring to. I was looking at 250 day Moving Averages, and the idea of what some people call Golden Crosses. The idea is that the 50-day Moving Average has gone below the 250 Day Moving Average, in the Swiss Franc and the Pound. If you look at the Euro/Dollar exchange rate, the last time this happened was when the Euro was launched in 1999, and it led to a large sell-off. As I aid though, you have to ultimately look at time frame.

Forex Blog: I haven’t read your book, but I’m intrigued by the title: “Making Sense of the Dollar: Exposing Dangerous Myths about Trade and Foreign Exchange.” Are there any particular foreign exchange myths that are especially pertinent and that you’d like to share?

The thesis of my book is that US Dollar expansion strategy is more robust than friends and enemies insist. For example, I look at the current account deficit. People say it makes us poorer but I show that’s not really the case. People think that companies service foreign demand through exporting, but they should be looking at sales from US affiliates, which have been 4 times as much as exports. In other words, build locally sell locally.

Forex Blog: What is your advice for (forex) investors that want to beat the market during these uncertain times?

Well I think that forex investor is an oxymoron, but anyway, there is a misconception that traders win by being right more than they are wrong. I think you win through discipline. That means honoring your stops and limiting your losses. Entry and exit levels are less important than discipline.

I started looking at currencies around the time the Plaza Accord was signed, and since then, I can’t remember ever seeing certainty in the currency markets. You can make a case for bonds and stocks being connected with the business cycle, but the forex connection is more elastic, more variable. I think that this is an advantage for currency traders because it means they are accustomed to uncertainty.

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Bullish on the euro?

Life just a little easier if EUR/USD, the most important forex pairs and French currency markets, you can simply choose the direction and stick to it. He Dove during financial crisis only surge recovery clear fell during the crisis of the sovereign debt grew up in paradigm, then fell as risk appetite is waning, only to rise again in September, from high 5 months.

There are several factors that currently form the basis of euro strength that is generally explained by the fact that the risk of "by" at the moment, and markets, moving away from the so-called safe haven currency and back to the investment growth. Of course, you can change tomorrow (or even 5 minutes!), but at this point the risk appetite and the euro symbolizes the risk.Never mind, ironically it is the growth in the EU is projected to remain 1.8% for the year, while the rest of the world (row) GDP is likely to be Top 5% of all that matters is compared against the dollar (and Yen, pound, Franc, to a lesser extent) the euro is accepted as currency risk.

The euro also helped Cause the current "currency war" that heats last week in Japan comes into play. In principle, the central banks around the world now compete with each other to devalue their currencies.In contrast, the European Central Bank (ECB) decided to stay away (in favor of tax savings), which leads to (or rather, all other currencies down) to make matters worse, "THE FED U.S. shows this summer that he can facilitate further… monetary policy, is often seen as printing money at the pump to the economy." As a result of the "euro looks set to keep on climbing in the trend, which looks more entrenched.

Of course there are those who argue that the recent surge of confidence in the economy of the euro represents the euro area and EU prospects for debt settlement. In the end the majority of the members of the euro will help to reduce the budget deficit in 2010 and auctions of new bonds again exceeded. On the other hand the interest rates for pigs (Portugal, Italy, Greece and Spain) have grown by multi-year highs, finally, the investors are trying to make a serious effort at default feature.

In addition almost do not function in the credit markets in the EU and major agencies are still dependent on THE ECB'S loans to finance. Finally, it should not be forgotten that the sole cause of the crisis was caused by the massive support (140 billion euros), extended to Greece. When this program is due to expire in less than three years, will be subject to financial constraints, Greece (other pigs) and new (temporary) you will be offered.

As every analyst, none EU financial difficulties were resolved. EU Member States are adept at addressing certainly acute crises and the ECB certainly deserves credit for the maintenance of functioning of credit markets, but no one offers a viable solution to recover the financial and economic status of member countries.Devaluation of the currency is impossible.Prohibited sovereign defaults.This leaves the reductions in wages and productivity, as only two ways to balance.The former can be carried out through inflation, but THE ECB seems to want to allow this to happen.

For better or worse it seems to be pushed these problems down the road, and if all goes according to plan, they should be reviewed for 2-3 years then, now, the euro is likely to be safe and can even thrive. short positions in EUR being unwound furious speed and data indicate that there are still plenty of opportunities for further unwinding. inflation remains subdued, economic growth is stable and the ECB has not expressed any objection of the growth of the euro while I this bullishness with the caveat that "traders willing to taste euro less from time to time the slightest News or rumor downgrading of the sovereign in the euro zone or of the Bank's ratings, the overall trend euro is now definitely up.

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CFTC has new guidelines for Retail Forex

I'm covering the products of the future Trade Commission USA (CFTC) efforts to redesign the regulatory structure that governs the Forex since it opened earlier this year. 30 August CFTC officially published final rules relating to retail off-Exchange foreign currency transactions. Rules for the implementation of Dodd Frank Wall Street reform and Consumer Protection Act and the food, conservation, and energy from 2008, which provide the CFTC with the broadest powers of registration and regulatory bodies wishing to act as counterparties to or intermediate, retail operations with foreign currency (forex). "

Not only the CFTC clearly established its power to be principal regulator Retail forex, but it also sets out specific rules.  Among them there are restrictions on the shoulder of major currency pairs and 20: 1 to other retail forex transactions. " [It is not clear at present what specific currency pairs will be classed as major]. Remember that the initial proposal (which, together with my approval, a strong protest) called for reducing leverage to 10: 1. Due to negative feedback from merchants and brokerage attributed to changes in malicious political motives and claim that it will move the entire industry, offshore, CFTC caved in and implemented only a modest decline of leverage.Nevertheless, it is important to note that the National Futures Association (NFA), as well as individual brokers will have discretion in establishing the limits a credit shoulder, lower than read. without a doubt, will continue to be some opposition from merchants, but I think we can all agree that the new rule is a fair compromise.

  As for the assertion that traders will be moved their accounts offshore it will be mostly moot, since all brokerage, irrespective of their nationality, must be registered with the CFTC and the regulation/supervision.Of course those traders who are so inclined still found a way to circumvent the rules by transfers "illegally" unregistered broker, but they do so at your own risk and you shall have no recourse against fraud as Forbes said, "it seems the new rules will put an end to the Americans, trade Retail forex offshore evade CFTC rules. This trend picked up pace in recent years, and it will quickly reversed. "

Broker must be registered as a Futures Commission merchants (FCMs) or retail foreign exchange dealers (RFEDs). they will maintain a "net capital 20 million plus 5% of the amount, if any, in which commitments to Retail forex customers in excess of $ 10 million," despite the fact that this rule will raise barriers to entry for potential forex basic brokerage, it will protect consumers from bankruptcy broker.In addition, receiving orders, discretionary trading or also act pools with Retail forex will have to register, either as an introduction to brokers, commodity trading advisors, commodity pool operators (if necessary) or associated persons of such organizations.

One change in the final rule is to be noted is quite interesting: brokerages should "disclose, on a quarterly basis, the percentage of non-discretionary accounts are realised profit, save and make this calculation."This calculation is useful both in and of itself, as well as to identify any major differences between competing brokers. for the first time we will be able to see whether forex trading is currently profitable (i.e. those who arrived in the majority and minority) and whether and how the rate of return will change over time, taking into account the conditions of a specific market.

The new regulations take effect on October 18.

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The trend is your friend

Raise your hand if you ever heard the phrase before? Well, now there is no evidence that this phrase well-worn more than just a meaningless truism: "Royal Bank of Scotland Group index track the performance of the four most popular Forex strategies shows that so-called trend style was best method, returning 7.3% this year until August.

Trend style of trading is also known as the following trends and exactly as it sounds. Traders identify one-sided in particular currency pair (s) and try to ride them as long as possible. In the light of all the large movements in foreign exchange markets this year, it is not surprising that the following trends is the most popular. If you look at 52 week trading range for the six most popular USD currency pairs, you can see the highs and lows often as 20% of each other. EUR/USD pair dropped to 20% in just 7 months. Whoever sold in December 2009 and bought to cover in June 2010, will have earned the equivalent of a 35% without shoulder! Even if you captured only a couple of months amortization would have given the impressive returns.In addition you would have traded euro back from June to August and reaped gets 60% of annual interest rate is the best, and these trends (down then up) were very smoothly, with only minor changes in the way.

I am confident that serious technical analysts rolling their eyes on the graph above, but it's worth, the following point of this trend has never been easier and more profitable than it is now rare. A Fund Manager, the summarized the following trends investor capturing momentum in several major currency moves.You have so much uncertainty in the world at present due to inflation or deflation, which usually does the currency markets and move the interest rates. It's good for followers of the trend, it causes instability, which is usually a good profits. "In other words an occurs on the Forex market at the moment, and this is reflected in the long-term, deep moving currency pairs can change direction without notice to you and still keep the inverse way is just so long. If you think that seems obvious, look at the historical data (5-10 years) for most currency pairs: Although trends have always been the richest, most recently they have longer and became more pronounced.

The other three strategies surveyed by Royal Scotland (RSG) were to trade, Commerce and trade volatility.Unfortunately the data only for trading strategies bear (confusingly called THE RSG volatility strategies) 5.9% a year before the date of the carry trade strategy includes sale of currency with low power and one with a high yield and profit from interest rates. To this strategy will be profitable but long currency must either be or remain unchanged. Thus when the volatility is high – as was the case in the past 2-3 years is a losing strategy.

We can only guess that true volatility strategies might be the second most profitable strategy. This strategy can be implemented through the use of long and short positions on the ground, as well as through the shopping options and other derivatives.Like I said, at the moment there is no shortage of volatility: "after the collapse of Lehman Brothers in 2008, the dollar saw record volatility against the euro … including six moves to at least 10%." for traders who profit from the volatility of the current uncertainty has created an emergency situation.

However, the importance of trade-based frameworks and the concept of Purchasing Power Parity (PPP) – risky and unpopular "volatility also has ensured that may seem a simple bet against the dollar.Three factors tend to move the exchange rate: the rate of growth, the level of debt and interest rates.These standards should drop dollar currencies of emerging market economies and raw. "not only is this not the case, (appetite turned dollar a safe harbour), but even bet on a long-term decline of the dollar is risky as surging. one way to get around this is to trade the dollar index (ETF), which was inherently less volatile (half as volatile, to be exact) than individual currency pairs.

This does not mean that trade is not profitable in the long run. "Empirical evidence suggests that currencies … show trend back to PPPS in the long term ". taking into account the current volatility/uncertainty, however, this strategy is unlikely to be profitable in the short term. Fortunately uncertainty do not deny the possibility, and traders should plot strategies accordingly.

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How to avoid typical pitfalls and start making more money in forex transactions

By Stephen Todd

In this report, we'll look at the history and background of the Fibonacci numbers and the golden ratio, then we will outline three specific money management tips that can help you increase your potential profits.

Support and resistance levels is an important consideration for most traders to identify entry and exit points when trading. Fibonacci retracement "levels" based on the Fibonacci number sequence and the golden ratio is very popular with exactly but many traders?

What are Fibonacci numbers and the golden ratio; The Fibonacci sequence first appeared as the solution to a problem in the Liber Abaci, a book written by Leonardo Fibonacci in 1202 to introduce the Hindu-Arabic numerals used in Europe today are still using the original problem Roman numerals in the Liber Abaci that raises the question: how many pairs of rabbits can be created from a single pair, if every month each mature brings forth a new pair, which, by the second month, becomes productive. The Golden RatioAfter the first few numbers in the Fibonacci sequence, the ratio of any number to the next larger number is approximately. 618 and a smaller number of 1618. these two elements is the golden mean or proportion golden ratio; Its is a pleasure to the human senses and displayed throughout the biology, art, music and architecture.Some examples of natural shapes based on the Golden ratio include DNA molecules sunflowers, snail shells, galaxies and hurricanes.

Significant Retracement levels

The two levels of Fibonacci retracement level is considered the most important negotiation is 38.2% and 62.8%. other significant retracement levels include 75%, 50% and 33%; Three gain tips for using the Fibonacci Numbers1. Fibonacci specifies the Stop loss LevelsA trader can use Fibonacci numbers to set stop loss orders.

For example, if at least three Fibonacci price levels in a relatively narrow zone may be set to a loss of brake just below or above the zone.

Fibonacci number helps determine stops in the following way, if a trader trades against support zone, if the support zone and the value of TRADE in this zone, negated the trade and where they should be closed.

Setting using Fibonacci retracements stops Gets the feeling of negotiation and gives a pre defined exit point.

2. Fibonacci determines the size of the position

Depending on the risk you are prepared to take per trade, Fibonacci numbers also set size position; for example, if the price is right for a certain level, you might want to have more seats than if the value is further away.

3. Fibonacci determines the objectives

With Fibonacci numbers, completes a pattern against a band Fibonacci you can use to set profit targets for Bank partial stop loss profits or tighten This clear objective levels. for merchants helps to lock in profits; the great advantage of Fibonacci numbers and the golden ratio is the fact that it takes the thrill of negotiation and to specify not only stop losses to exit a market and profit objectives and definition.

W. D. Gann and Fibonacci Trading-the Perfect combination!

A trader to be incorporated into the negotiation of the Fibonacci numbers and the golden ratio was the legendary trader W D Gann. we consider your use of the Fibonacci numbers, Gann negotiation method provides traders with the best combination to seek long term trading profits.

To learn how to increase your winnings by using FOREX Gann methods, visit our Web site: http://www.gann.co.uk

Article source: http://ezinearticles.com/?expert=stephen_todd

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Fibonacci numbers and the golden ratio-3 Tips for more profitable transactions

By Stephen Todd

In this report, we'll look at the history and background of the Fibonacci numbers and the golden ratio, then we will outline three specific money management tips that can help you increase your potential profits.

Support and resistance levels is an important consideration for most traders to identify entry and exit points when trading. Fibonacci retracement "levels" based on the Fibonacci number sequence and the golden ratio is very popular with exactly but many traders?

What are Fibonacci numbers and the golden ratio; The Fibonacci sequence first appeared as the solution to a problem in the Liber Abaci, a book written by Leonardo Fibonacci in 1202 to introduce the Hindu-Arabic numerals used in Europe today are still using the original problem Roman numerals in the Liber Abaci that raises the question: how many pairs of rabbits can be created from a single pair, if every month each mature brings forth a new pair, which, by the second month, becomes productive. The Golden RatioAfter the first few numbers in the Fibonacci sequence, the ratio of any number to the next larger number is approximately. 618 and a smaller number of 1618. these two elements is the golden mean or proportion golden ratio; Its is a pleasure to the human senses and displayed throughout the biology, art, music and architecture.Some examples of natural shapes based on the Golden ratio include DNA molecules sunflowers, snail shells, galaxies and hurricanes.

Significant Retracement levels

The two levels of Fibonacci retracement level is considered the most important negotiation is 38.2% and 62.8%. other significant retracement levels include 75%, 50% and 33%; Three gain tips for using the Fibonacci Numbers1. Fibonacci specifies the Stop loss LevelsA trader can use Fibonacci numbers to set stop loss orders.

For example, if at least three Fibonacci price levels in a relatively narrow zone may be set to a loss of brake just below or above the zone.

Fibonacci number helps determine stops in the following way, if a trader trades against support zone, if the support zone and the value of TRADE in this zone, negated the trade and where they should be closed.

Setting using Fibonacci retracements stops Gets the feeling of negotiation and gives a pre defined exit point.

2. Fibonacci determines the size of the position

Depending on the risk you are prepared to take per trade, Fibonacci numbers also set size position; for example, if the price is right for a certain level, you might want to have more seats than if the value is further away.

3. Fibonacci determines the objectives

With Fibonacci numbers, completes a pattern against a band Fibonacci you can use to set profit targets for Bank partial stop loss profits or tighten This clear objective levels. for merchants helps to lock in profits; the great advantage of Fibonacci numbers and the golden ratio is the fact that it takes the thrill of negotiation and to specify not only stop losses to exit a market and profit objectives and definition.

W. D. Gann and Fibonacci Trading-the Perfect combination!

A trader to be incorporated into the negotiation of the Fibonacci numbers and the golden ratio was the legendary trader W D Gann. we consider your use of the Fibonacci numbers, Gann negotiation method provides traders with the best combination to seek long term trading profits.

To learn how to increase your winnings by using FOREX Gann methods, visit our Web site: http://www.gann.co.uk

Article source: http://ezinearticles.com/?expert=stephen_todd

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Weaker Dollar Propels Oil Higher Amid Mixed Economic News

By OilPrice.com, on September 25th, 2010 in Commodities

Oil Market Summary for 09/20/2010 to 09/24/2010

Crude oil prices battled their way to a gain for the week as worries about the economy warred with the upward pressure from a weakening dollar.

Positive news in several categories of durable goods orders helped boost oil prices nearly 2% on Friday, so that the benchmark West Texas Intermediate futures contract, which switched from October to November this week, could tack on nearly 4% for the week.

The dollar was under pressure most of the week as the prospect of further quantitative easing from the Federal Reserve pushed the U.S. currency down against the euro, yen and most other major currencies. The failure of Japanese authorities to intervene further by selling yen also contributed to the dollar’s decline.

A decline of the dollar in foreign exchange markets generally means an increase in oil prices, which are denominated in dollars. In the middle of the week, concerns about oversupply and faltering demand for oil outweighed the impact of the weaker dollar and kept oil prices depressed.

The benchmark contract finished the week at $76.49 a barrel, compared to $73.66 the previous Friday. The euro gained more than 3% against the dollar during the week, trading at $1.3486 late Friday.

The dollar traded marginally lower against the yen Friday, at 84.34 yen, after spiking above 85 yen earlier in the day on rumors that Japan’s central bank might be selling yen again. The dollar fell back Friday as it became evident Japanese authorities were not intervening.

The Bank of Japan intervened in currency markets last week for the first time in six years to brake the rise of the yen against the dollar. A higher exchange rate makes it more difficult for Japanese exporters to compete in world markets.

The U.S. Commerce Department on Friday reported a decline of 1.3% of durable goods orders in August, but the breakdown showed the decline due to a drop in orders of transportation equipment while most other categories showed strong gains. The relatively strong showing for capital goods indicated the corporations were investing for further growth.

The midweek inventory report from the U.S. Energy Information Administration was bearish for oil prices because it showed a gain of 1 million barrels when economists had been expecting a decline of 1.5 million barrels in inventories. Inventory gains indicate weak demand for crude oil.

Darrell Delamaide
OilPrice.com

Source: http://oilprice.com/Energy/Oil-Prices/Weaker-Dollar-Propels-Oil-Higher-Amid-Mixed-Economic-News.html

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Peso averages at 5.4% vs US dollar in H1 '10

MANILA, Sept. 24 – Investors' risk aversion and renewed appetite towards emerging markets helped boost the Philippine currency as it appreciated by 5.4 percent against the US dollar in the first half of 2010.

Bangko Sentral ng Pilipinas (BSP) Department of Economics Statistics Director Rosabel Guerrero, in a briefing, said the local unit averaged at 45.77 to a dollar from January to June this year, better than the 47.8 to a dollar it registered same period last year.

“Remittances from Filipinos abroad also lifted the peso,” she said.

Inflows from Overseas Filipinos expanded by 7.1 percent year-on-year last July after it amounted to US$ 10.7 billion.

Monetary officials eye an eight percent growth for remittances this year from last year's US$ 17.3 billion.

This growth forecast already materialized last January when inflows rose by 8.5 percent when inflows totaled to nearly US$ 1.4 billion. The eight percent growth level was again registered in June and July although the highest cumulative year-on-year expansion stood at 8.5 percent last January.

However, the all-time high inflows for remittances was achieved last June when it totaled to US$ 1.62 billion.

Monetary officials attributed this robust growth to the continued strong demand for overseas Filipino workers as global recovery continue despite questions about the path of the US economy as well as the ongoing sovereign debt crisis in some parts of Europe.

They continue to see strong flows to continue in the coming months but is also open that inflows could have reached its peak because of base effect.

Last Wednesday, the peso closed to its highest in more than two years at 43.88 to a dollar, which analysts traced to risk aversion and the decision of the US Federal Reserve to maintain its policy rates to near-zero level.

Wednesday’s closing is near the 43.75 to a dollar level it registered in June 2008.

Analysts see the local unit ending at 43 level this year and Wednesday’s closing is the second time this year that it reached this level.

The peso first touched the 43 to a dollar level this year last September 13 but retreated and closed to 44 level after the trading. (PNA)

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Further yen gains should be stopped

TOKYO | Sat Sep 25, 2010 7:51am IST

TOKYO (Reuters) - Further gains in the yen should be stopped and Japan will maintain close coordination with the United States and European Union if it intervenes in the foreign exchange market to curb its currency's rise, Japan's foreign minister was quoted as saying.

In an interview with the Wall Street Journal on the sidelines of a U.N. General Assembly meeting in New York, Foreign Minister Seiji Maehara said he did not expect joint intervention involving other countries.

Japan intervened in the foreign exchange market on September 15 to curb the rising yen, which was at 15-year highs against the dollar. It was the first time Tokyo had stepped into the currency market in six years.

Maehara, in excerpts of the interview also published online late on Friday, said the yen had strengthened more than indicated by the actual strength of the Japanese economy.

"So with a very strong determination on the part of the Japanese government, any further appreciation of the yen should be stopped," Maehara, who has no direct responsibility for currency policy, was quoted as saying.

"Going forward, there may be a possibility for the Japanese government to show its very determined intent" to keep the currency from strengthening, Maehara was quoted as saying.

Tokyo would keep its economic partners informed of its actions, he was quoted as saying.

The dollar is trading at about 84.20 yen after falling to a 15-year low of 82.87 yen on September 15, shortly before Japanese authorities intervened to stop yen strength from damaging a fragile economic recovery.

A sudden slide in the yen against the dollar on Friday stirred suspicions Japan had intervened for a second time this month.

But the yen later recovered and Japanese Prime Minister Naoto Kan said on Friday he was unaware of any new market intervention by Tokyo.

Kan, just re-elected as leader of the ruling party, faces a weak economy and a divided parliament, so is keen to be seen as proactive in efforts to curb the strength in the yen, which has hurt Japan's stock market and sparked the ire of exporters.

(Reporting by Charlotte Cooper)

*We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language or appear to be spam and review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters.

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German data boosts euro, dollar down broadly

NEW YORK - The dollar fell against a basket of currencies on Friday to its lowest level since February as stronger-than-expected data in Europe and a drop in U.S. durable goods orders hurt demand for the greenback.

The dollar also hit its lowest in more than a week against the yen. Earlier the greenback rose on talk Japan had again tried to weaken the yen, but the dollar gave up the gains quickly.

Japanese Prime Minister Naoto Kan, speaking in New York at the U.N. General Assembly, said he was unaware of any intervention on Friday.

An unexpected rise in the German Ifo business climate index beyond a three-year high lifted the euro after a sell-off on Thursday.

Reports on U.S. durable goods orders and new home sales for August were considered soft and reinforced the view the Federal Reserve may provide additional monetary easing to help the economy.

"The dollar is on the outs now, as people are keen to take risk elsewhere, and the data supported that," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey.

However, he said the market may be ripe for a correction, which could come if the euro tests the $1.35-$1.3520 area, wherein lies the 50 percent retracement of a decline that began above $1.50 in November and bottomed below $1.19 in June.

"You've also got gold nearing $1,300 and the S&P near 1,150 -- nice round, psychologically important numbers -- so if we get above these levels, you could see a correction."

The euro rose 1.3 percent to $1.3490. It was up 3.3 percent since Monday for its best week since May. An index of the dollar against six major currencies, slid to 79.281, its lowest level since February.

The euro rose despite lingering euro zone debt worries and record highs in the spreads of Irish and Portuguese bond yields over their German counterparts.

"The Ifo data reversed some of the euro negativity," said Jeremy Stretch, head of currency strategy at CIBC in London.

Alan Ruskin, Deutsche Bank's global head of G10 FX strategy, added the euro was also helped by the "clean out" of shorter-term euro long positions on Thursday and subsequent rebound.

Against the yen, the dollar was down 0.2 percent at 84.18. It had reached 84.12 yen, according to Reuters data, its lowest since Sept. 15, when Japanese authorities confirmed they had intervened to sell yen in the currency market.

But in Asian trade, the dollar climbed suddenly to 85.38 yen from about 84.55, sparking talk the Japanese authorities may have intervened again.

"There was an overnight spike in dollar/yen, which sparked talk of intervention, but that has not been backed up and we have seen it dribbling back lower," said Stretch.

The dollar also hit a two-and-a-half year low of 0.9780 Swiss francs, below a reported barrier at 0.9800.

UPWARD PRESSURE ON YEN

The euro also gained 1.2 percent to 113.62 yen.

Japanese officials stayed silent on whether they had intervened.

Japan intervened for the first time in six years last week in repeated action that pushed the yen down from a 15-year high of 82.87 per dollar and shunted it above 85.

The dollar stayed above 85 yen until the Fed signaled this week it might take more quantitative easing steps, putting widespread selling pressure on the greenback.

Some dealers speculated an apparent lack of complaint by U.S. President Barack Obama about last week's intervention when he met Japan's Kan on Thursday was seen as tacit approval by Washington of Japan's action.

Obama, who urged Chinese premier Wen Jiabao to take more action on the yuan, did not mention currencies when he met Kan, Kyodo news agency reported.

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KARACHI: The dollar remained up against the rupee in the interbank market throughout the weeks trading, dealers said on Saturday. The dollar commenced the weeks trading at Rs 85.72 for buying, depreciated by 27 paisas and closed at Rs 85.99 for buying Rs

Claims Facility Offers Victims Pennies on the Dollar; Bon Secour Business Gets $15,600 Check For $612,000 Claim

When Kenneth Feinberg announced that his “independent” Claims Facility would provide emergency payments for six months – instead of the much shorter terms BP was providing – I thought it could be a huge (financial) setback for BP. Why? Such emergency payments would ease the financial panic that often forces victims to accept a “final settlement” that requires signing away future legal options. You offer even a tiny bit of breathing room through emergency payments, and victims are likely to insist that BP actually make them whole.

Of course, that’s only true if Feinberg’s Claims Facility pays the true extent of the damages. What we’re seeing across the Gulf is not only slow payments, but payments of only pennies on the dollar. And nobody at the Claims Facility is explaining the shortages. So BP gains the leverage of increased financial stress as people desperately await payments. Then the company gains even more leverage by short-changing claims, as victims are given a small dose of hope and become more dependent on the claims process to keep their businesses out of bankruptcy. Even better for BP, it gains this leverage and upper-hand from an administrator the company recruited, but who was ultimately approved by the President of the United States. Hey, I never said these guys were dumb.

A WKRG-TV news report offers a real-world example of how this process is working: Deborah Nelson had “hoped everything was going to be okay” when Feinberg took over the claims process. She and her husband run one of the few boats that exclusively fish for the deep-water, royal red shrimp. The Bon Secour (Ala.) couple filed a 192-page claim complete with pier forms, business records, even tax records. They got only $15,600 of their $612,000 claim – a devastating blow to the Nelson’s business.

That’s typical of what we’re hearing, but watch the story to the end (see link below) and note this: “In the meantime, Deborah called the claims office about the amount of the check and was told no one could explain why she got the amount she did but if she wasn’t happy with the amount she could go ahead and file for a final payment.”

Right. Move directly to a final payment with a financial gun to your head. Delay, delay…then underpay. That’s the strategy here. It increases the financial pressure to accept a final payment that releases BP from liability if damages turn out to be much worse than thought. That’s especially important if the oil spill wipes out entire fishing stocks – as happened in Alaska – some time from now. So much for Mr. Feinberg’s process offering any “setback” to BP.

Watch Debbie Williams’ report here: http://www.wkrg.com/gulf_oil_spill/article/pennies-on-the-dollar-for-bon-secour-shrimper/936821/Sep-23-2010_6-40-pm/

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Claims Facility Offers Victims Pennies on the Dollar; Bon Secour Business Gets $15,600 Check For $612,000 Claim ©, . This copying or redistribution of this material requires that this license must remain intact

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BSP eyes changes in forex regulations

MANILA, Sept. 24 – The Bangko Sentral ng Pilipinas (BSP) is now studying its foreign exchange regulations as emerging markets economies (EMEs) like the Philippines are re-experiencing large capital inflows on account of increased risk appetite.

BSP Deputy Governor Diwa Guinigundo told reporters large capital inflows benefits the country as this results to among others strengthening of the peso against the US dollar as well as it boost the country’s foreign reserves.

In the first half of this year alone, the local unit improved by 5.4 percent against the dollar as there are still questions on the recovery path of the world’s largest economy.

The peso averaged at 45.77 to a dollar from January to June this year and is stronger than the 47.8 to a dollar it posted in the first half of last year.

The Philippines' gross international reserves (GIR) further rose to US$ 49.6 billion as of end-August this year due to, among others, central bank’s foreign exchange operations, income from investments abroad and revaluation gains on its gold holdings.

At this level, the foreign reserves is enough to cover 9.2 months of imports of goods and services and income as well as equivalent to 9.5 times the country’s short-term foreign liabilities based on original maturity.

“(Accumulation of GIR) brings additional comfort to the market, particularly to investors,” Guinigundo pointed out.

He, however, cited that strong capital flows is a risk to domestic liquidity (M3), which after some time “will lead to a build-up in inflation pressures and at the same time to possible asset price inflation.”

Monetary officials said a 10-12 percent M3 growth is still a comfortable level but not so if higher than this.

As of last June, M3 grew by 10.3 percent year-on-year, slower than the previous month’s 10.7 percent. On a monthly basis, it expanded by 0.3 percent, also slower than the previous month’s 2.2 percent.

The central bank said the continued strong growth in M3 is in line with the increase in demand on account of the global economic recovery but noted that M3 growth is closely being monitored in “view of promoting monetary stability and ensuring well-functioning financial markets.”

Guinigundo said these factors concerning capital flows are being studied carefully by the central bank and would surely be discussed once its policy-making Monetary Board (MB) meets for the rate setting in October.

He said they have “always believed in market driven initiatives and measures to address the issue of large capital flows” noting that “what is important is that we maintain the fundamental strength of the domestic economy so that we avoid and minimize those very disruptive reversal of capital flows.”

“It is easy for capital to come in but if there is ground for speculation or doubts on the strength of both the domestic economy and the financial market, it is easy for those capital flow reversal,” he added. (PNA)

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