New York Session – September 30, 2009 6:09 PM

September 30, 2009

The NY session was an absolute chop-fest but the USD was once again the proverbial whipping boy. US equities slipped a modest -0.3% after testing multiple times into positive terrain. It was surprising that stocks did not give up more ground in the face of more bad news on the economic front. The most forward looking release of the session, Chicago PMI, showed some worrying details. Indeed, it looks like it is back to reality after the “cash for clunkers” government bailout. Full text » | Technorati | Stumble It!

Australian Dollar Forex Trading Forecast

September 30, 2009

Aussie heads higher on yield expectations

The risk trade was alive and well earlier today on the hopes of economic recovery. While the excitement has subsided a bit on news out of the U.S. (and as global equities tank), there is still some speculation that the Australian dollar forex trading forecast will lead to strength.

Right now, China is increasing its demand for commodities, and that is providing some help for Australia, which is a major partner with China. GFT’s Boris Schlossberg reports in FX360 that the Aussie may see an increased yield advantage soon as well:

As we noted earlier, “With Australian yields already the highest amongst the industrialized nations (currently at 3%), a move towards tightening by the RBA will attract even more capital into the currency as carry traders try to profit from rate differential especially against the US dollar and the yen. With little resistance to stand in its way, the unit could target the .9000 figure over the next several sessions if risk flows prove supportive.”

With forex traders looking for better returns, and experiencing less risk aversion, it is little surprise that the Australian dollar forex trading forecast is starting to look stronger.

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Unemployment Continues to Rise: 254,000 Jobs Lost in September

September 30, 2009

Slower pace of job loss indicates hope for economic recovery

It’s the end of the month, and that means that ADP is releasing its job loss report. For the month of September, the report is that 254,000 jobs were lost. This indicates a slowing trend, especially when one considers that the economy was shedding jobs at a rate of more than 400,000 a month at the beginning of the year.

However, even though the slowing pace of job loss is bringing some hope for economic recovery, it is important to note that the weak labor market will probably mean a gradual economic recovery. This is not wholly unexpected.

At any rate, the news was enough to give U.S. stock futures a bump earlier, and to help fuel an already robust risk trade. The optimism has faded by now, though. Economic data out of Chicago is causing investors to realize that the jobs data really isn’t that encouraging, and the stock market is tanking as the risk forex trade pares gains.

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London Session – September 30, 2009 5:51 AM

September 30, 2009

Following an initial move lower EUR/USD has pushed higher during the European session in tune with the better tone of stock markets.  A later boost for the EUR came from the results of the ECB’s 1yr tender.   News that the IMF has cut is estimates for global write downs on loans and investments by 15% on the back of the economic recovery has been seen as an endorsement of the better economic outlook.  Another +1.8% m/m rise in Japanese industrial production in August also supports the better outlook as does the overnight release of better than expected UK consumer confidence data.  Full text » | Technorati | Stumble It!

Asia Session – September 30, 2009 2:15 AM

September 30, 2009

Today’s trading in Asia was accentuated by the fact that in Japan it was month end, quarter end and fiscal half year end, thus pushing and pulling the yen, but with the yen ultimately higher as the session wound down. USD/JPY looked robust early as it pushed close to 90.40 highs, but Japanese exporters looking to close the books on the quarter sold dollars aggressively down to 89.65 levels. That level was still a far cry from the 88.24 lows from Monday. As opposed to yesterday’s moves that were sparked by comments by Japanese Finance Minister Fujii, today’s moves were purely generated by corporations. Full text » | Technorati | Stumble It!

New York Session – September 29, 2009 5:02 PM

September 29, 2009

Markets were exceptionally choppy in the NY session as approaching quarter-end continues to make for overall thin conditions. US equities could not hold on to modest gains and closed down about -0.3% on the day. It was surprising that they did not fall further following an extremely downbeat US consumer confidence report. The headline index fell to a much lower than expected 53.1 in September after a 54.5 read the prior month. Consensus was for an increase to 57.0 so the surprise was palpable. Full text » | Technorati | Stumble It!

Kathy Lien on BNN

September 29, 2009

BNN interviews Kathy Lien, director of currency research, GFT

Watch GFT’s Kathy Lien on BNN

"Central Bankers are starting to become fidgety while Investors are on the lookout for intervention"


GFT’s Kathy Lien talks about the US Dollar

September 29, 2009

Dollar’s the New Whipping Boy

GFT’s Kathy Lien on the dollar doing poorly as a currency.

Watch the full story on Fox Business

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U.S. Dollar Likely to Remain Linked Inversely to Stocks

September 29, 2009

In currency trading, dollar has been down when equities are up

For the most part, over the last year or so, the U.S. dollar has been moving inversely to U.S. stocks. As stocks fall, the dollar rises as investors use it for a safe haven. Conversely, as equities rise, the dollar has been falling. GFT’s Kathy Lien points this out in FX360:

Over the past year, when U.S. equities rise, the dollar tends to fall because the improvement in risk appetite eases safe haven flows that have been parked in the U.S. dollar. When 3 month LIBOR rates in U.S. fell below Japanese levels, the correlation between equities and currencies exacerbated as the dollar became the funding vehicle of choice for investors looking to assume risk.

The notable exception was yesterday. Even as U.S. equities surged higher, the dollar made gains in forex trading. However, this is likely an aberration due to the fact that ECB president Jean-Claude Trichet is talking up the importance of a strong dollar.

While the dollar and U.S. stocks may start moving in tandem again, it will take better proof that the U.S. economy is on strong footing for that to happen.

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Verbal Intervention for the U.S. Dollar in Forex Trading

September 29, 2009

Can verbal help be given for the greenback in currency trading?

Many policy makers are joining together to try and arrest the decline of the U.S. dollar in forex trading on the currency market. ECB president Jean-Claude Trichet has stated that a strong greenback in currency trading is important for the world economy. Today, with the news that ECB economic recovery is slowing, and with such statements fresh in the minds of forex traders, it is no surprise that the dollar is higher in forex trading.

However, how long can such verbal intervention help? The greenback has more serious issues in currency trading related to the U.S. economy. GFT’s Boris Schlossberg reports in FX360 on what is truly needed for the U.S. dollar to gain strength in forex trading:

While verbal intervention can slow down the pace of the decline, it cannot reverse it. The dollar remains dogged by the structural problems of the US economy, most importantly its alarming high unemployment rate and its ultra low short term interest rates. Until and unless the market becomes convinced that US short term rates will begin to rise, the greenback will rally only on safe haven flows.

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