Asia Session – August 31, 2009 11:01 PM

August 31, 2009

Today’s Asia session got off to a lackluster start, with most pairs trading in tight ranges.  After huge moves in the NY am, and most traders still  the market seemed to take a breather for the first few hours.  Traders were able to take advantage, at what seemed an almost predictable 20 point range in EURUSD.  USDJPY saw only a bit of strength, trying to make a run at its short term resistance levels into the 93.20s. Full text »

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New York Session – August 31, 2009 4:51 PM

August 31, 2009

Month-end mayhem continued to dominate the NY trading price action in a session where inter-market correlations broke down. US equities dropped nearly -1% on the heels of the slip in global stock marts. Not even better than expected Chicago PMI data could bolster the market today. The report printed an above consensus 50 read for August, putting it right on the midpoint between growth and contraction. The details suggest the results were largely influenced by the government’s “Cash for Clunkers” bailout and we would take the improvement with a grain of salt as it could prove short-lived. The employment component improved but is still a dismal 38. In an environment where jobs hold the key to recovery, this continues to be an ominous indicator. Full text »

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Forex Trading Forecast: Risk Trade

August 31, 2009

The risk trade is in question for this week

The forex trading forecast has been interesting and unsettled this week, thanks to the fact that the risk trade has been questioned as volatility reigns in the financial markets. 

For now, the risk trade has been in the back ground. The U.S. stock market is following the lead of most other world markets, and is lower. Additionally, commodities continue to struggle. The risk trade may return later this week if consumer data turns out positive.

GFT’s Boris Schlossberg reports in FX360 on the risk trade, and what may be able to give recovery bulls some hope — and help — on the forex market:

Instead, the focus may now turn to the consumer. With the recovery story in the corporate sector now fully priced in, the bulls will need to see an improvement in consumer spending in order to provide further fuel to the risk trade. Last Friday’s muted US Personal Income/Personal Spending data were on one of the key drivers behind the fizzle in stocks and high beta FX as trading come to a close for the week. This week, German Retail Sales on Tuesday and EZ Retail Sales on Thursday could prove to be pivotal to success of the risk trade.

Even the fact that U.S. banks have repaid taxpayer bailout money hasn’t had a huge impact on sentiment. We will have to wait and see how consumers are feeling.

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Big Banks Repay Bailout Money; Taxpayers See $4 billion Profit

August 31, 2009

Is the economy on the way to recovery?

Today, it is being reported that U.S. taxpayers have a billion profit from the fact that big banks repaid their bailout money. This is spurring some speculation that big banks might have recovered enough to provide some cornerstone for economic recovery. 

Even so, it is important to be careful about optimism. The U.S. government still has a great deal of debt, and that could lead to dollar weakness later this year, even as economic recovery begins. Another thing to remember is that this repayment of bailout funds does not take into account the fact that the U.S. government did a great deal of other things to support financial institutions through the credit market crash. The U.S. government is still on the hook for billions in potential losses from corporate bailout efforts.

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London Session – August 31, 2009 7:45 AM

August 31, 2009

Risk aversion remained the name of the game in London as news out of China once again led equity marts lower. Reports that Chinese state-owned companies will be allowed to default on commodity derivative contracts created quite a stir and raised concerns about counterparty risk. Chinese shares plunged nearly 7% as a result. The ripple effect saw European bourses come off about 1% thus far while US futures remain in the red as well. The move away from risk helped the US dollar remain better bid, while the yen crosses remained heavy following the widely expected Japanese election results. Full text »

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Asia Session – August 30, 2009 11:15 PM

August 30, 2009

The first Asia session of the week kicked off with the much anticipated Japanese election results heavily weighing in the backdrop.  JPY was bid right out of the gate, with USDJPY opening 30+ pips to the downside from Friday’s close.  EURJPY saw similar pressure after closing Friday around the 133.80s area, the pair traded mostly one way through Asia, giving up over 100+ pips.  After a half hearted attempt of a rally midway through the session in JPY crosses, sellers swiftly came back in, landing the knockout punch. Full text »

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08/30/2009 – The USD bounces back from the brink

August 28, 2009

* A note on end of summer conditions
* Is this as good as it gets?
* Japanese election this weekend
* Details will matter in ECB and RBA rate meetings
* Key data and events to watch next week

Next week sees both month-end and a likely end to summertime trading conditions, both of which have the potential to generate heightened volatility. On Monday, Japanese election results (see below) will start the ball rolling, but liquidity will be hampered midday by the UK Summer Bank holiday which will see most of London absent. NY afternoons will likely remain thin as the US Labor Day holiday on Monday Sept. 7 leads to thinner interest than normal toward the end of the week. At the same time, summer will be ending for many asset managers and an increase in position adjustments may begin from Sept.1. Lastly, Friday will see the August US NFP report, always an important catalyst for volatility.    Full text »

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The US dollar: is it too big to fail?

August 28, 2009

Find out in this informative article in Futures Magazine

Kathy Lien, director of currency research at GFT, says dollar weakness is the predominant theme in the currency market for the second half of 2009.

Read the entire article by clicking here.

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Kathy Wraps up her Singapore Tour with another conversation with CNBC Asia

August 28, 2009

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Kathy Lien Talks with CNBC Asia during her recent visit to Singapore (again)

August 28, 2009

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