Forex Trading News

Eco Data 04/27/06

2006-04-27T05:22:00.000-07:00

GMT	Ccy	Events	Actual	Consensus	Previous
22:45	NZD	New Zealand Trade balance M/M Mar	59M	-268M	-372M
06:00	GBP	U.K. Nat/wide hse prices M/M Apr	0.10%	0.50%	1.10%
06:00	GBP	U.K. Nat/wide hse prices M/M Apr	4.80%	5.20%	5.30%
07:55	EUR	Germany Unemployment rate Apr	11.3%	11.30%	11.40%
07:55	EUR	Germany Unemployment change Apr	-40.0K	-35.0 K	30.0 K
12:30	USD	U.S. Jobless claims		305.0 K	303.0 K
14:00	USD	Bernanke testimony

Global Hopes Undermine Sterling

2006-04-27T05:20:00.000-07:00

Sterling is unlikely to gain significant support from domestic growth trends and there is also some likelihood of political stresses, although international trends will probably dominate over the next 24 hours. Optimism over global growth prospects and rising yields will tend to weaken the UK currency. Sterling continues to offer little value above 1.79 against the dollar.

Sterling remained on the defensive against the Euro with losses to beyond 0.6970 on Wednesday, but Sterling found support close to 1.78 against the dollar as the US currency failed to hold gains. Sterling strengthened to a high just over 1.7905 in New York before a retreat to 1.7850. Sterling has been unsettled slightly by political considerations with the government having significant difficulties and this will tend to undermine the currency slightly, although a substantial impact is unlikely. Sterling was drifting slightly weaker in early Europe on Thursday ahead of key US developments later in the day.

International interest rate considerations will be important and the increased speculation over US rates pushing above the 5.0% level, coupled with a tough stance from the ECB, will tend to undermine Sterling. These currency pressures will increase if there is further evidence that the UK economy is underperforming relative to the US and Euro-zone with UK consumer confidence data on Friday. The UK economic performance is unlikely to be strong enough to offer robust Sterling support. The UK currency will, however, gain some backing from the underlying strength of oil prices.

Investica
http://www.investica.co.uk

Euro Eases After Setting Yearly Highs

2006-04-27T05:18:00.000-07:00

US Open Market Points: Euro Eases After Setting Yearly Highs

Talking Points

RBNZ keeps rates on hold at 7.25% citing inflation concerns
German employment and unemployment pictures improve
Japan’s small business confidence drops
All eyes on Bernarke – hawk or dove in front of Congress?

Euro Eases After Setting Yearly Highs

The EUR/USD eased to 1.2440 after setting new yearly highs at 1.2470 earlier in the day despite the fact the German employment data showed a marked improvement in the country’s labor market. German unemployment decreased by 40K against expectations of a 35K drop and the ILO unemployment rate declined to 8.4% from 8.8% the month earlier. The news did not come as much of a surprise to the market as the figures were leaked several days earlier. The German labor ministry expects employment to pick up especially as better weather creates demand in the construction industry. However, euro bulls should be cautious in extrapolating these results as the ever climbing exchange rate may have a dampening effect on future labor demand in a heavily export depended economy such as Germany.

Improving labor conditions are critical to Eurozone growth, where the downtrodden consumers have been reluctant to spend for more than 3 years. A robust job market will generate the confidence to increase spending and further fueling gains in GDP. To that end, the rise of the euro , as we’ve noted in the past, may stand as a critical threat to a sustainable European recovery. At 1.2500 and above many of the European finance ministers are likely to escalate their rhetoric in an attempt to pressure the ECB to maintain a dovish monetary policy. While recent statements from ECB officials have been relatively hawkish, should the currency appreciate much further, we believe European monetary policymakers may decide to refrain from tightening monetary policy a move that is likely to surprise the majority of currency traders.

However, given the recent price action , none of these issues may matter in the short term as the market seems intent on challenging the 1.2500 barrier in the pair. In the current market environment all positive US news is ignored or discounted. Yesterday’s strong Durable goods orders had only the most fleeting of impacts on the EUR/USD as market players quickly bought the dip, while the huge jump in New Home Sales was dismissed outright by euro bulls for two reasons; the data is subject to massive downward revisions and anecdotal evidence from April suggests a severe slowdown in housing demand. Today all eyes will be on Chairman Bernarke as he testifies before Congress. The key question for the currency market is will he be a dove or hawk? Given the fact the Fed stressed its “datadependency” focus, the reasonable assumption in light of the recent positive US economic news, is that Chairman Bernarke will be hawkish. Whether the market responds to his rhetoric, however, remains an open questions.

FX Upcoming

Currency	GMT	EST	Release	Expected	Prior
USD	12:30	8:30	Initial Jobless Claims (APR 22)	305K	303K
USD	12:30	8:30	Continuing Claims (APR 15)	2430K	2439K

Currency	GMT	Release	Actual	EST	Previous	Comments
NZD	21:00	Reserve Bank of New Zealand Rate Decision	7.25%	7.25%	7.25%	Rates remain high on inflation
NZD	22:45	Trade Balance (MAR)	59.1M	268.0M	257.0M	Dairy exports boosted balance
JPY	5:00	Small Business Confidence (APR)	50.8	51.5	51.5	Remains above bust/boom level
GBP	6:00	Nationwide House Prices s.a. (MoM) (APR)	0.1%	0.5%	1.1%	Slowdown may alleviate pressure off of the BoE to raise rates
GBP	6:00	Nationwide House Prices n.s.a. (YoY) (APR)	4.8%	5.2%	5.3%
EUR	6:00	German ILO Unemployment Rate (MAR)	8.4%	8.6%	8.6%	--
EUR	7:30	Italian Business Confidence (APR)	96.1	93.5	94.2	Continued Strength
EUR	7:55	German Unemployment Change (APR)	40K	35K	30K	Employment picture improves.
EUR	7:55	German Unemployment Rate s.a. (APR)	11.3%	11.3%	11.4%
EUR	8:00	Italian Hourly Wages (MoM) (MAR)	0.3%	0.2%	0.6%
EUR	8:00	Italian Hourly Wages (YoY) (MAR)	2.7%	2.6%	2.6%

FOREX-Dollar near 7-month low vs euro, awaits Bernanke

2006-04-27T05:14:00.000-07:00

(Updates price, adds quotes, changes dateline, byline)

By Natsuko Waki

LONDON, April 27 (Reuters) - The dollar held near this week's seven-month low against the euro on Thursday as investors turned to congressional testimony from Federal Reserve chairman for clues on when U.S. interest rates are likely to pause. The greenback has been pressured this week as weekend comments from Group of Seven rich nations put renewed focus on U.S. deficits and structural problems.

That took attention away from otherwise solid U.S. economic data on housing and durable goods on Wednesday, triggering a short squeeze higher in the euro. "Sentiment is generally negative for the dollar even in the face of good news. The market is looking through the expected rate hikes. If you take away the interest rate support for the dollar... and the structural problem is still there, the trend for the dollar is downwards," said Adam Cole, currency strategist at Royal Bank of Canada.

"If anything Bernanke might be moderately hawkish, leaving the door open for rate hikes beyond what the market currently expects."

By 0740 GMT, the euro held steady at $1.2442 , after rising to $1.2470 earlier to match the previous day's 7-month high. The dollar was also steady at 114.67 yen .

Fed chief Ben Bernanke is due to testify before Congress on the economic outlook from 1400 GMT. Most analysts expect Bernanke to repeat that future Fed tightening will depend on the shape of upcoming economic data.

Last weekend G7 finance chiefs called on China and other Asian countries to let their currencies rise to help fix global imbalances, prompting investors to look at the U.S. deficit and a weakening of the dollar as a way of reducing it.

EURO MOMENTUM

The Fed has raised rates 15 consecutive times to 4.75 percent from 1.0 percent in mid-2004, with another quarter-point increase widely expected in May.

But there is growing expectation that the Fed tightening cycle is nearing an end, while investors think the European Central Bank may speed up its interest rate increases.

The ECB is expected to leave interest rates on hold at its meeting next week but is seen resuming tightening in June.

"A central bank contemplating allowing its domestic currency to appreciate against the dollar would not want to be `overweight' USD due to the adverse mark to market that will register on its balance sheet as a result," HBOS Treasury Services said in a note to clients.

"Commodity producers have obviously experienced acceleration in dollar revenues as a result of recent price gains and have dollars to sell down, while Asian central banks have probably had to soak up a fair amount of speculative capital inflow over recent days - boosting FX reserves and consequently EUR demand."

The euro has been also helped in recent days by strong euro zone data and speculation central banks might be buying euros to diversify their reserves away from dollars.

In Japan, a variety of events are due on Friday, including March consumer price data and the Bank of Japan's semi-annual report on the economy and prices.

The BOJ's report should help shape expectations for when the central bank will begin raising rates from zero, now seen happening as soon as July or sometime in the third quarter.

Bank of Thailand intervenes in forex market to halt baht's appreciation

2006-04-27T05:12:00.000-07:00

BANGKOK (AFX) - The Bank of Thailand has intervened in the foreign exchange market, central bank governor Pridiyathorn Devakula said, but declined to say how much has been spent on halting the currency's appreciation.

He said the baht has been hovering around a six-year high because of a major influx of capital estimated at 11.5 bln usd since January.

'It's impossible for the baht not to appreciate with support from that much capital inflow, but we have managed not to allow the baht to strengthen so much that it would jeopardize our economy. It will gradually increase,' he told reporters.

The strong baht makes Thai exports less competitive in overseas markets and lowers the value of companies' repatriated profits.

Exports are the driving force of the Thai economy as they account for 60 pct of the country's gross domestic product (GDP).

At midday, the baht traded at 37.59 to the dollar. The baht has appreciated by more than 8 pct this year.

Pridiyathorn urged exporters to adjust their planning to cope with a strong baht. Exporters have said they make business plans based on the baht trading at 38-40 against the dollar.

'It's not practical to maintain the baht at a fixed rate, but we will supervise the exchange rate so that it doesn't affect exporters too much,' he said.

In addition to the capital inflows, Pridiyathorn said the baht is also strengthening because of the US weak dollar policy aiming to correct its own current account deficit.

ask/gs/lh/swp

FOREX: Ringgit Reaches New High Of 3.62 After Rates Hike

2006-04-27T05:10:00.000-07:00

KUALA LUMPUR, April 27 (Bernama) -- Bank Negara Malaysia's decision to raise key interest rates yesterday coupled with prevailing positive sentiment for regional currencies boosted the ringgit to a new high of 3.62 Thursday.

As the foreign exchange market closed today, the ringgit staged a significant increase, moving up by more than 100 points within 24 hours to close at 3.6295/6305 against the U.S. dollar from yesterday's close of 3.6405/6425.

This was the highest level reached since its peg of RM3.80 against the greenback was dismantled on July 21 last year.

In Shanghai, the Chinese yuan ended higher at 8.0168 to the U.S. dollar compared with yesterday's closing of 8.0175.

Scaling back from previous estimates that the Malaysian currency would reach 3.50 by the year's end, analysts said they were buoyant about the ringgit touching the 3.50 level sooner than expected, perhaps in a few months' time.

When the market opened for trading today, the ringgit appreciated against the U.S. dollar at 3.6310/6330 in brisk activity.

A dealer said many exporters were selling forward to cover their positions in anticipation of a further appreciation in the Malaysian unit.

It was also higher against the British pound at 6.4732/4768 from yesterday's 6.4859/6.4906 and gained against the euro at 4.5136/5160 from 4.5153/4.5185.

The analyst said market players continued to invest in the ringgit after putting aside inflationary worries.

Malaysia's inflationary rate as measured by the consumer price index rose to a six-year high of 4.8 percent in March this year after petrol prices were raised by 30 sen in February after global oil prices scaled record highs.

Last year, inflation increased to 3.0 percent from 1.4 percent in 2004.

The central bank yesterday raised its overnight policy rate (OPR) by 25 basis points to 3.50 percent.

This is the third time in less that six months the central bank increased rates in a bid to curb rising inflation.

The OPR is the main interest rate which banks use to benchmark their own lending rate, which is based on supply and demand.

Despite the record figure for March, the central bank said the recent rise in inflation had been built into the earlier forecast of average inflation for 2006.

Inflation was expected to be higher in the first half of 2006 and moderating during the second half of the year.

The central bank previously raised its key interest rates in February by 25 basis points to 3.25 percent and by 30 basis points to 3.0 percent last November, in what was the first hike in seven years.

-- BERNAMA

FOREX-Dollar gains as Fed raises rates, hints at more ahead

2006-03-28T17:38:00.000-08:00

NEW YORK, March 28 (Reuters) - The dollar rallied sharply on Tuesday after the Federal Reserve raised U.S. interest rates for a 15th straight time and suggested more increases may be needed to keep inflation under control.

In the central bank's first policy-setting meeting since Ben Bernanke took over as chairman, the Federal Open Market Committee raised interest rates 0.25 percentage point to 4.75 percent, as widely expected.

The accompanying statement, which some said marked a slight departure in style from the last written under Alan Greenspan's tenure as chairman, said additional rate hikes "may be needed."

The prospect of a continued rise in U.S. borrowing costs spurred investors to push the dollar to a one-week high against the euro, and higher against the yen.

"The dollar has strengthened across the board in response to (the FOMC statement), which read slightly on the hawkish side," said Paresh Upadhyaya, currency portfolio manager at Putnam Investments in Boston.

"In particular, in the previous statement, the Fed had talked about the economic data having been uneven. This time they dropped that and emphasized that economic growth has rebounded strongly in the current quarter," he said.

In mid-afternoon trading in New York, the euro was last at $1.2020 against the dollar, down from $1.2070 just before the Fed published its statement, little changed on the day.

Against the yen , the dollar was up at 117.86 yen from 117.20 yen a few moments before the comments, up a full percent, marking its largest one-day rise against the Japanese currency since June last year.

The yen also fell sharply against the euro , staging its largest one-day fall against the single currency since early October 2005. The euro was last at 141.65 yen, up one percent on the day.

After almost two years of constant increases, U.S. rates are now at their highest since April 2001, and the chances for another move up to 5.0 percent and beyond looked much more likely after the Fed's statement, analysts said.

"The statement is slightly on the hawkish side and leaves the door open to 5 percent and possibly higher. This is certainly dollar-positive," said Brian Dolan, director of FX research at Gain Capital in Bedminster, New Jersey.

(Additional reporting by John Parry and Gertrude Chavez in New York)

FOREX-Dollar rises after Fed raises rates as expected

2006-03-28T17:36:00.000-08:00

NEW YORK, March 28 (Reuters) - The dollar firmed broadly on Tuesday after the Federal Reserve raised interest rates for a 15th straight time, as expected, and left the door open to further rate increases.

The euro slipped to $1.2041 after the Fed announcement from around $1.2070 shortly before.

Against the yen , the dollar rose to 117.30 yen, from around 117.20 yen.

In the first meeting since Ben Bernanke took over as Fed chairman, the monetary policy-setting Federal Open Market Committee raised interest rates 0.25 percentage point to 4.75 percent, as widely expected.

US Treasury open to change in forex report-official

2006-03-28T17:34:00.000-08:00

WASHINGTON, March 28 (Reuters) - The U.S. Treasury Department would consider discussing changes to a semi-annual report to Congress detailing possible currency manipulation by countries seeking a trade advantage, a Treasury official said on Tuesday.

"We're always willing to talk about how to make reports like this as useful as possible," Treasury Department spokesman Tony Fratto told reporters at the Treasury.

His comments came shortly after two U.S. senators proposed replacing the existing semi-annual Treasury report with another one that would identify "fundamentally misaligned currencies".

FOREX-Dollar soft vs euro ahead of Fed meeting

2006-03-28T17:33:00.000-08:00

(Updates prices, adds comment, changes byline)

By Kevin Plumberg

NEW YORK, March 27 (Reuters) - The dollar weakened against the euro on Tuesday, with traders positioning themselves for a potential signal from the U.S. Federal Reserve that it is near the end of its 21-month interest rate raising campaign.

The U.S. currency pared some losses in the wake of a stronger-than-expected U.S. consumer confidence index, which hit a near four-year high in March. [ID:nNAT002052]

But the euro was broadly stronger after a German business sentiment gauge marked a 15-year high and strong credit growth spurred strong expectations the European Central Bank will lift interest rates to 3.25 percent by the end of the year, according to the euro zone interest rate futures market. [ID:nL28146539]

Higher bond yields in the euro zone also supported the euro, with the yield on 10-year paper rising to a one-year high of 3.737 percent [ID:nL28610672].

"With the German Ifo coming in a bit high, the euro caught a little bit of a bid and took the shine off any sort of recovery in the dollar," said Michael Cairns, trading manager with FX Solutions in Ridgewood, New Jersey.

"In terms of risk and reward, the market is probably looking for the Fed to signal it is near the end of its tightening cycle," he added.

By mid-morning, the euro was up 0.4 percent at $1.2065 , staying within a well-worn range of $1.18 to $1.23 it has held since December.

It was also up 0.9 percent at 141.43 yen .

Against the yen, the dollar was up 0.5 percent on the day at 117.25 yen after the U.S. consumer confidence data.

Among the high-yielders, the New Zealand dollar gave up its gains to trade slightly lower at $0.6053 due to investment bank selling of the New Zealand currency for euros. The kiwi fell to a 22-month low of $0.6044 on Monday.

But the U.S. dollar kept a weaker tone as investors looked for signals from the Fed on future interest rate rises alongside an expected hike of 25 basis points later on Tuesday.

The Fed is expected to raise interest rates to 4.75 percent in the 15th straight increase since mid-2004. ECB rates stand at 2.5 percent.

Germany's Ifo survey showed the business sentiment index unexpectedly rose to 105.4 in March, and euro zone M3 money supply growth was a stronger-than-expected 8.0 percent in February.

"The Ifo and M3 numbers were very decent, although the market doesn't seem compelled to do a lot more before the FOMC statement later," said Ian Gunner, head of foreign exchange research at Mellon Bank. (Additional reporting by Veronica Brown in London)

CORRECTED-FOREX-Dollar soft vs euro ahead of Fed meeting

2006-03-28T17:29:00.000-08:00

In NEW YORK item "FOREX-Dollar soft vs euro ahead of Fed meeting, please read dateline as ...March 28... instead of ...March 27... (corrects date).

A corrected repetition follows. (Updates prices, adds comment, changes byline)

By Kevin Plumberg

NEW YORK, March 28 (Reuters) - The dollar weakened against the euro on Tuesday, with traders positioning themselves for a potential signal from the U.S. Federal Reserve that it is near the end of its 21-month interest rate raising campaign.

The U.S. currency pared some losses in the wake of a stronger-than-expected U.S. consumer confidence index, which hit a near four-year high in March. [ID:nNAT002052]

Higher bond yields in the euro zone also supported the euro, with the yield on 10-year paper rising to a one-year high of 3.737 percent [ID:nL28610672].

"In terms of risk and reward, the market is probably looking for the Fed to signal it is near the end of its tightening cycle," he added.

By mid-morning, the euro was up 0.4 percent at $1.2065 , staying within a well-worn range of $1.18 to $1.23 it has held since December.

It was also up 0.9 percent at 141.43 yen .

Against the yen, the dollar was up 0.5 percent on the day at 117.25 yen after the U.S. consumer confidence data.

But the U.S. dollar kept a weaker tone as investors looked for signals from the Fed on future interest rate rises alongside an expected hike of 25 basis points later on Tuesday.

The Fed is expected to raise interest rates to 4.75 percent in the 15th straight increase since mid-2004. ECB rates stand at 2.5 percent.

Germany's Ifo survey showed the business sentiment index unexpectedly rose to 105.4 in March, and euro zone M3 money supply growth was a stronger-than-expected 8.0 percent in February.

Senators propose new forex report from US Treasury

2006-03-28T17:26:00.000-08:00

WASHINGTON, March 28 (Reuters) - One proposal from two senior senators on Tuesday for toughening trade dealings with China and others would replace an existing semiannual report on currency practices with a new version.

Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, and Sen. Max Baucus, a Montana Democrat, said their proposal would "require the Secretary of the Treasury to identify fundamentally misaligned currencies that adversely affect the U.S. economy" as a step toward stiffer enforcement.

Currently, the Treasury sends a report to Congress twice a year that outlines currency practices of key trade partners, like China, and says whether they are manipulating their currencies for trade advantage.

It is a significant step to call a country a currency manipulator, and the designation is so rarely applied that many lawmakers are frustrated about its effectiveness as a tool.

The proposed broader definition of "fundamentally misaligned currencies" potentially would make it easier to bring the authority of global institutions like the International Monetary Fund to bear on countries that were not following accepted practices.

UPDATE 1-China forex reserves become the world's biggest

2006-03-27T21:06:00.000-08:00

(Adds quote, background)

SHANGHAI, March 28 (Reuters) - China has overtaken Japan to become the world's biggest holder of foreign exchange reserves after its stockpile grew $8.5 billion in February to $853.7 billion, the China Business News reported on Tuesday.

Japan had reserves at the end of February of $850.1 billion.

Growth in China's reserves last month slowed from $26.3 billion in January, the Shanghai newspaper said.

"The massive foreign exchange reserves have brought about many benefits, but they also reflect continued imbalances in the economy," the newspaper said.

China's reserves have ballooned in recent years as the central bank, in order to hold down the yuan, has bought most of the dollars generated by a growing trade surplus, inflows of foreign direct investment and speculative capital.

The average increase in reserves of $17.4 billion in January and February is close to the average rise of $16.6 billion a month in the last quarter of 2005.

The reserves total would have been even bigger if Beijing had not used $60 billion to recapitalise three big banks.

The central bank also sold $6 billion from its reserves in November under a one-year swap deal with local banks.

FOREX: Ringgit Higher Against Major Currencies In Early Trade

2006-03-27T21:04:00.000-08:00

KUALA LUMPUR, March 28 (Bernama) -- Ringgit opened higher against major currencies as it appreciated further in line with Malaysia's positive economic fundamentals, dealers said.

The ringgit which is in a strengthening mode, is predicted to hit RM3.25 to the greenback by the end of the Ninth Malaysia Plan (9MP) in 2010, said ECM Libra.

The investment banking group attributed this to lower imports of intermediate goods, higher food production and an improvement in energy efficiency usage.

At 9.00 am, the ringgit firmed against the greenback at 3.6920/6935 from 3.6940/6960 at yesterday's closing.

Against the yen, the ringgit decreased at 3.1688/1709 from 3.1629/1655.

At the same time, the dollar was quoted at 116.53/56 yen, compared with yesterday's closing of 116.69/79 yen in New York and 116.67/70 yen in Tokyo.

However, the local unit gained against the Singapore dollar at 2.794/2819 from 2.2828/2844.

The ringgit also strengthened against the British pound at 6.4503/4548 from 6.4545/4591 and rose against the euro at 4.4326/4348 from 4.4461/4504 previously.

-- BERNAMA

China Has World's Largest Forex Reserves, Overtaking Japan

2006-03-27T20:59:00.000-08:00

(RTTNews) - Tuesday, Chinese government data revealed that China's foreign exchange reserves climbed to $853.7 billion at the end of February, dislodging Japan to become the nation with largest holdings. Japan's forex reserves at end-February stood at $850.1 billion, down $1.6 billion from the end-January total.

China's forex reserves grew strongly last year to reach $818.9 billion by the end of 2005. They increased sharply by $26.3 billion in January and rose $8.5 billion in February. The data was published even as the official Economic Daily quoted China's central banker Zhou Xiaochuan as saying that China's forex reserves were not that high on a per capita basis. He added that forex adjustments were not a reliable way to achieve trade balance.

The China Business News report revealed that most of the nation's forex reserves are held in bonds with high credit ratings issued by overseas governments, international financial organizations, government institutions and corporates. However, China does not disclose details of how it invests its reserves, though US dollar-denominated assets are believed to account for a substantial portion of the holdings.

Caci International to buy AlphaInsight

2006-03-27T17:50:00.000-08:00

MAR. 27 3:46 P.M. ET Information technology services provider Caci International Inc. said Monday it signed an agreement to acquire outstanding shares of AlphaInsight Corp., a privately-owned technology company that specializes in serving the federal government.

Terms of the sale were not disclosed.

Caci said the sale is expected to close during the fourth quarter.

Shares of Caci dipped 21 cents to $65.24 in afternoon trading on the New York Stock Exchange.

FOREX-Wary dollar weakens ahead of Fed decision

2006-03-27T17:47:00.000-08:00

(Updates prices, adds comment, changes byline)

By Amanda Cooper

NEW YORK, March 27 (Reuters) - The dollar fell against most major currencies on Monday as investor caution prevailed ahead of any possible surprises in the Federal Reserve statement on Tuesday.

The yen hit a one-week high against the dollar earlier as Japanese investors repatriated funds in order to meet an accounting deadline by Japan's fiscal year-end on Friday.

But this was countered by profit-taking as investors prepared for the outcome of the Federal Reserve's monetary policy meeting on Tuesday and few were willing to sit on anything other than a largely neutral position.

"To look for a dollar move before 2:15 PM tomorrow would be looking for a bit much out of this, it's going to keep very very quiet going into the FOMC meeting tomorrow," said Thomas Molloy, a currency trader at Bank Hapoalim in New York.

A quarter-point rise in U.S. rates to 4.75 percent is as good as done, but traders will scour the post-meeting statement for any insight into the Fed's thinking on where rates will go beyond its March meeting. The two-day meeting got underway Monday afternoon [ID:nN27298622].

Mid-afternoon in New York, the dollar traded down 0.6 percent against the yen at 116.67 yen , but was up from an intra-day low of 116.38 yen, its lowest in a week.

The euro was down 0.8 percent against the yen at 140.09 yen . Against the dollar, the euro was down 0.2 percent at $1.2010 .

Going into the FOMC decision on Tuesday, the euro will most likely stick to a $1.1985-$1.2050 range, while the dollar will hold in a tight 116.50-117.00 yen band against the Japanese currency, traders said.

Sterling was up 0.3 percent at $1.7471.

The dollar was down 0.1 percent against the Swiss franc at 1.3092 francs.

WATCHING THE FED

The end of the Fed's monetary tightening cycle would probably weigh on the dollar, which was boosted by rate hikes in 2005 as global investors were attracted by rising yields on dollar deposits.

Ahead of the Fed's rates decision and statement Tuesday, "bond and FX markets continue with the assumption that rates are very, very near the top," said John McCarthy, director of foreign exchange trading at ING Capital Markets LLC.

"With the ECB and BOJ likely to be raising rates further, in general the U.S. dollar should decline," he said.

The dollar has been vulnerable to any evidence suggesting the Fed is set to stop raising rates soon, especially as the European Central Bank has made clear its plans to keep increasing them and as the Bank of Japan moves closer to doing so before the year-end.

One clue to the Japanese fiscal year's bearing on the yen's strength was the absence of the customary yen-bearish impact of a widening of the yield spread between benchmark U.S. and Japanese bonds.

"Today, what we are seeing is more 'window dressing' from institutional players repatriating into yen ahead of the fiscal year end, bringing capital back home," said Ronald Simpson, managing director of global currency analysis with Action Economics LLC, in Dobbs Ferry, New York.

(Additional reporting by John Parry in New York)

FOREX: Ringgit Higher Against U.S Dollar In Early Trade Monday

2006-03-26T22:16:00.000-08:00

KUALA LUMPUR, March 27 (Bernama) -- The ringgit was higher against the U.S dollar in early trading Monday on continued buying support for the local unit, dealers said.

At 9am, the ringgit was at 3.6905/6920 against the greenback from last Friday's closing of 3.6955/6975.

"The local currency continued to strengthen on investors' optimism of the future of the currency and the economy," said a dealer.

However, the local currency was easier against other currencies.

Against the Singapore dollar, the ringgit declined to 2.2823/2847 from 2.2784/2810 and was softer against the yen at 3.1554/1574 from 3.1275/1300 previously.

The ringgit was also lower against the British pound at 6.4314/4359 from 6.4013/4059 and against the euro at 4.4349/4385 from 4.4239/4274 previously.

-- BERNAMA

FOREX-Dollar slips as investors eye Fed meeting

2006-03-26T22:09:00.000-08:00

TOKYO, March 27 (Reuters) - The dollar slipped in early trade on Monday as investors waited to see whether the Federal Reserve would flag more credit tightening ahead after an expected interest rate rise at this week's meeting.

The yen gained across the board in what some players said could be Japanese investors repatriating funds to get their books in shape before the fiscal year ends this week. However traders played down such talk.

The Fed begins a two-day meeting on Monday and is widely seen lifting rates to 4.75 percent from 4.5 percent in what would be the 15th straight increase in its campaign that helped boost the dollar 15 percent against the euro and yen last year.

"A rate rise in May is more or less factored in but the market is looking for that extra confidence that the Fed will keep raising," said Hideaki Inoue, forex manager at Mitsubishi UFJ Trust and Banking.

The dollar has been vulnerable to any evidence suggesting the Fed is set to soon stop, especially as the European Central Bank has made clear its plans to keep raising rates and as the Bank of Japan moves closer to doing so before year end.

Data on Friday showing sales of new U.S. homes plunged 10.5 percent in February, the biggest drop in nearly nine years, were the latest to raise doubts about the Fed outlook and drive the dollar lower.

Futures on the fed funds rate reflect a roughly 75 percent chance the Fed will press on and raise rates to 5 percent at its May meeting, down from about 95 percent two weeks ago.

A lot of uncertainty surrounds this Fed meeting, the first with Ben Bernanke as chair and with two new board members on the Federal Open Market Committee, Randall Kroszner and Kevin Warsh.

The dollar dropped 0.6 percent to 116.90 yen by 0105 GMT, down from 117.45 yen in late New York trade on Friday.

The euro retreated to 140.70 yen from near 141.35 yen but was little changed against the dollar at $1.2030 .

European central bankers have made clear their worries about inflation flaring up and the need for more credit tightening. The ECB has raised overnight rates to 2.5 percent from 2 percent and is seen pushing rates up possibly as high as 3.5 percent this year.

ECB Governing Council member Christian Noyer told the German business daily Handelsblatt over the weekend that an ongoing economic recovery means risks to price stability are mounting.

High-yield currencies came under fire again as the credit tightening by the Fed and ECB erodes their rate advantage, with the New Zealand dollar taking the biggest hit as an economic slowdown stokes expectations of an eventual rate cut.

The kiwi hit a 22-month low of $0.6065 , down 0.5 percent on the day. The New Zealand currency has plunged 8.5 percent so far this month and more than 11 percent this year.

Japanese Forex Trading Preview by Korman Tam

2006-03-26T22:08:00.000-08:00

No Key Data

Markets have much to digest in the coming week with a multitude of key G7 economic events slated for release. The primary focus though, will be the FOMC monetary policy announcement, scheduled for Tuesday at 2:15 PM. While it is widely anticipated the Fed will lift its benchmark lending rate by 25-basis points to 4.75%, the uncertainty stems from the accompany policy statement.

Economists will closely scrutinize the statement for the Fed’s view of recent economic data, as well as for clues on the upcoming policy decision. The dollar may come under selling pressure if markets detect any signal of an end to the Fed’s tightening cycle. US economic data due out this week will also include March consumer confidence, Q4 final GDP, Q4 personal consumption, February personal income, personal spending, March University of Michigan consumer confidence, March Chicago PMI and February factory orders.

This article contains the following sections:

JPY steadies ahead of week’s data deluge

Euro Buoyed

Forex rules relaxed amid stronger peso

2006-03-26T22:06:00.000-08:00

By MARICEL E. BURGONIO
The Manila Times Reporter

Filipinos may now buy bigger amounts of foreign currency from money changers without need for voluminous documents proving the money is for a legitimate transaction, according to a recent policy adopted by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).

The move comes amid the peso’s strength vis-a-vis the US dollar. The local currency has risen by more than six percent since last year.

BSP Governor Amando M. Tetangco Jr. told reporters that the central bank’s policy-making body has approved the liberalization of foreign-exchange transactions, allowing money changers to require less documents from buyers of foreign currency in excess of $5,000.

Tetangco said there would be no need for notarization of the documents required when buying foreign currency.

The liberalization of foreign-exchange rules for money changers is aimed at facilitating over-the-counter transaction.

The BSP also aims to simplify penalties on violations.

About 3,000 money changers have registered with the central bank since January 2005.

Based on BSP Circular 471, foreign-exchange dealers, money changers or remittance agents are required to register with the BSP before they can operate as such.

They are likewise required to submit to the Antimoney Laundering Council a report on covered transactions and suspicious transactions.

Covered transactions refer to transactions in cash or other equivalent monetary instruments involving an amount in excess of P500,000 within one banking day, while suspicious transactions are transactions that are not backed by legitimate papers as to their purpose, regardless of amount.

The circular aims to strengthen the country’s fight against money laundering, after the Financial Action Task Force sought the coverage of the transactions of foreign-exchange dealers, money changers and remittance agents.

FOREX-Dollar keeps hefty gains as Fed in focus

2006-03-23T22:36:00.000-08:00

TOKYO, March 24 (Reuters) - The dollar clung to gains on Friday after a four-session winning streak driven by signs that the Federal Reserve will likely keep raising interest rates beyond an expected rise next week.

Surprisingly strong housing data on Thursday was the latest fodder for dollar bulls, adding to upbeat comments on the economy and housing market earlier in the week from Fed Chairman Ben Bernanke.

"All the news flow has been in favour of the dollar this week," said Nobuaki Kubo, forex planning manager at Resona Bank.

The market has become extremely sensitive to shifting expectations of when the Fed will wrap up its credit tightening campaign, which has carried the Fed funds rate to 4.50 percent after 14 straight rate rises since June 2004.

Only last week the dollar had fallen sharply after soft inflation data suggested to some that the Fed may be ready to take a break after next week's expected rise.

In early Asian trade, the dollar sat around 117.85 yen , little changed from its level in late New York trade and more than two yen above a low hit earlier in the month.

Traders said that Japanese exporters were waiting to sell dollars above 118 yen.

The euro was trading around $1.1965 , down slightly on the day and still trapped well within the range of $1.18 to $1.23 that it has drifted in so far this year.

Against a trade-weighted basket of six major currencies <.DXY> the dollar gained around 0.8 percent on Thursday, rising for a fourth straight session.

Elsewhere, the kiwi dollar tumbled on Friday, extending its recent rout after data showed an unexpected contraction in New Zealand's fourth-quarter gross domestic product.

The kiwi slid around 1.5 percent in early trade to $0.6137 , the lowest in 21 months.

The New Zealand dollar has tumbled more than 10 percent this year on mounting worries that an economic slowdown will prompt the Reserve Bank of New Zealand to cut rates later this year from 7.25 percent, the highest in the developed world.

The Fed is almost unanimously seen lifting rates to 4.75 percent from 4.5 percent on Tuesday, and many market players are expecting another quarter point rate rise in May.

Sales of U.S. existing homes rose to a 6.91 million unit annual rate in February, higher than the previous month's upwardly revised 6.57 million unit-pace and better than forecasts for around 6.50 million units.

U.S. durable goods and new home sales data for February are due later on Friday.

CORRECTED - FOREX-Yen leaps on US senator's comments on China FX

2006-03-23T22:34:00.000-08:00

In NEW YORK story headlined "FOREX-Yen leaps on US senator's comments on China FX," please read in first paragraph " ... an influential U.S. lawmaker visiting China ... " instead of " ... an influential U.S. lawmaker visiting Beijing ... "

Also in seventh paragraph, please read " ... Schumer told reporters in a conference call from Shanghai ... " instead of " ... Schumer told reporters in a conference call from Beijing ... " (corrects location of U.S. lawmaker).

A corrected repetition follows: (Recasts, changes prices, adds comment, changes byline)

By Kevin Plumberg

NEW YORK, March 23 (Reuters) - The yen jumped broadly on Thursday after an influential U.S. lawmaker visiting China suggested the Chinese yuan could rise through a key psychological level as early as next week.

U.S. Senator Charles Schumer, co-sponsor of a bill that would slap tariffs on all Chinese imports if the Chinese do not loosen controls on their currency, said that he felt better about the yuan's exchange rate but had not decided whether to postpone pushing the bill through the Senate.

Against the yen, the dollar dropped suddenly to around 117.45 yen from 117.75 where it was shortly before Schumer's comments -- what one trader called merely a kneejerk move. It is currently at 117.65, up 0.6 percent from late Wednesday.

The yen is traded often as a proxy to the yuan because of Japan's close economic ties to China, and often strengthens when news or events suggest China may be closer to allowing the yuan to float freely.

The euro is down 0.2 percent at 140.95 yen .

"Even if you are bearish toward the yen, this at least limits the pace of decline that could be built into yen because there is always a notion that something could happen (with the yuan) sometime soon -- be it spurred by political jawboning or by Treasury's currency report," said David Mozina, head of foreign exchange strategy with Lehman Brothers.

Schumer told reporters in a conference call from Shanghai that he projected the yuan could firm through 8 yuan to the dollar as early as next week. He stressed that this was an observation and not based on any inside knowledge.

The dollar currently is at 8.0277 yuan, slightly down from Wednesday's close of 8.0282 yuan .

The yuan was revalued last July by 2 percent against the dollar, but since then has appreciated too slowly for the U.S. Treasury, which has threatened to formally name China a currency manipulator if it does not make further moves to allow the yuan to float.

The U.S. has a large trade deficit with China, which officials blame in part on an undervalued yuan.

Since January, the yuan's pace of appreciation has picked up, although there appears to be no connection with comments from U.S. officials who continue to urge China to move more quickly on the yuan.

"When it comes to splitting hairs between euro and yen, I would say I expect a lower euro versus the yen. There's a bit more in this upward move in the dollar," said Mozina.

DOLLAR STILL UP

The dollar overall was higher after stronger-than-expected U.S. housing data fed a growing view the Federal Reserve may raise interest rates beyond the 4.75 percent already priced in by the market.

Analysts widely expect the Federal Open Market Committee to lift official short-term U.S. interest rates to 4.75 percent from 4.5 percent when it meets next Tuesday. But they are uncertain whether the Fed will raise rates to 5 percent or higher at meetings in May and June.

Thursday's data seemed to favor the prospect of rates going to 5 percent, analysts said, though some said that despite Thursday's gains, the dollar's rally could be limited.

The euro fell 0.8 percent against the dollar to $1.1979. The dollar rose 0.9 percent against the Swiss franc to 1.3163 francs , while sterling slipped 0.6 percent to $1.7361 .

Sales of existing U.S. home sales rose to a 6.91 million unit annual rate in February, higher than the previous month's upwardly revised 6.57 million unit-pace. Markets were expecting a seasonally adjusted annual rate of 6.50 million units.

"Markets had been going for a modest pullback. In that light, it is not surprising that we're seeing some dollar strength," said Todd Elmer, currency strategist at Citigroup in New York. (Additional reporting by Gertrude Chavez-Dreyfuss)

Snow-No timetable for U.S. forex practices report

2006-03-23T22:32:00.000-08:00

HAGERSTOWN, Maryland, March 23 (Reuters) - U.S. Treasury Secretary John Snow on Thursday said he still was unable to say when a hotly awaited report on currency practices of major trading partners, including China, will be issued.

"We don't have a precise timetable on that," Snow said in answer to a reporter's question after touring a Volvo truck engine-making plant.

"That's being worked on," he added. The currency report is issued twice a year and normally would come in April but it is often delayed.

Snow visited the manufacturing plant to highlight the Bush administration's drive to attract foreign investment in the wake of the Dubai Ports World decision, which kept a United Arab Emirates company from taking over management of some U.S. ports.

Snow said the U.S. economy was on a good growth path, partly because of healthy foreign investment and data on weekly jobless claims issued on Thursday reinforced that point.

New claims for state unemployment insurance benefits fell 11,000 last week to 302,000, the Labor Department said. That was below analyst's forecasts for a drop to 305,000 claims from the originally reported 309,000 claims the prior week.

"The numbers on weekly unemployment claims ... are further evidence that we are experiencing good healthy, strong labor markets," Snow said. "It suggests continued strong job growth."

Arroyo rules out forex market intervention

2006-03-23T22:31:00.000-08:00

Despite complaints from exporters that a stronger peso is hurting their competitiveness, President Gloria Macapagal Arroyo yesterday dismissed the possibility of any direct intervention in the currency market.

Instead, Arroyo said in a nationwide televised address that the government will provide assistance to exporters to cut their costs and maintain their competitiveness.

"The central bank which makes exchange rate policy doesn’t agree to (direct) intervention," said Arroyo. "So our intervention will be in other ways to reduce the cost of exporters."

She said government financial institutions will help provide cheap financing to exporters, while government offices will have to streamline export regulations.

"The appreciation of the peso helps the majority, but we must still protect our exporters," Arroyo said.

Arroyo said the government will also see if it can reduce or remove some of the fees paid by exporters.

Improved revenue and a narrower budget deficit have boosted the peso’s value against the dollar in recent months. Since the end of September — when Arroyo quashed an effort to impeach her — the peso has risen against the dollar by around 10 percent, with the greenback falling from P56.01 to a 3 1/2-year low of P50.88 early this month.

The Philippine Exporters Confederation has publicly urged the government and the central bank to adjust economic policies to balance the interests of other segments of the economy with those of exporters and of the families of 8 million overseas workers who send dollar remittances home.

The peso has gained 3.8 percent since the start of the year after a 6 percent gain in 2005 due to record remittances of .7 billion from Filipino overseas workers and a reduction in the government’s budget deficit.

The peso ended at R51.16 to the dollar yesterday, rising from R56 per dollar about six months ago.

Forex - US dollar nearly flat in Sydney morning ahead of Fed meeting

2006-03-22T19:57:00.000-08:00

SYDNEY (AFX) - The US dollar was trading nearly flat against major currencies as traders mark time ahead of next week's Federal Reserve policy meeting, dealers said.
They said many traders have taken to the sidelines as focus turns to the March 28 Federal Open Market Committee meeting.
While a 25 basis points increase to 4.75 pct is fully priced, there is
much uncertainty over whether the Fed will signal further interest rate increases.
Dealers said the yen failed to find support after the release of February merchandise trade data, showing a slightly higher than expected seasonally adjusted surplus for the month.
Nevertheless, the yen gained slightly overnight on higher Japanese government bond yields.
At 11:30 am Sydney (0030 GMT) the dollar was trading at 116.93 yen from 116.92 in late trade in New York while the euro was at 1.2075 usd from 1.2076.
National Australia Bank currency strategists said until the uncertainty about the US rate outlook is resolved, they doubt that euro/US dollar pair will break its two-week range of which has seen the euro trade between 1.1860 usd and 1.2210 usd.
The NAB strategists said the yen is eking out modest gains against the US dollar and euro on a rise in two-year Japanese government bond yields to a more than five year high, gaining 2.5 basis points to 0.585 pct.
They said the risk remains on the upside with the Bank of Japan likely to raise interest rates to at least 0.35 pct by the year end.
"Heightened talk of repatriation flows ahead of Japan's fiscal year
end on March 31 is also supporting the yen," the NAB strategists said.
They noted Japanese investors have been net sellers of foreign bonds for several months now.
"However, we won't be able to gauge whether this is largely seasonal or reflects less interest in overseas bonds now that Japanese yields are rising, until early April," the NAB strategists said.
Japan's seasonally adjusted merchandise trade surplus balance for February of 682.6 bln yen, released this morning was slightly ahead of expectations of a surplus of around 651.5 bln according the NAB strategists.
Meanwhile, the Australian dollar has stabilized above this week's 18-month lows, supported just below 0.72 usd by a steadier New Zealand dollar after New Zealand's current account data matched market expectations.

Sydney 11:30 am (0030 GMT)
US dollar

yen 116.93

sfr 1.3057
Euro

usd 1.2075

stg 0.6913

yen 141.18

sfr 1.5766
Sterling

usd 1.7465

yen 204.18

sfr 2.2792
Australian dollar

usd 0.7194

stg 0.4121

yen 84.155
New Zealand dollar

usd 0.6271

aud 0.8715

yen 73.30

bruce.hextall@xfn.com
blh/dg

FOREX: Ringgit Almost Unchanged Against Dollar In Early Trade

2006-03-22T19:55:00.000-08:00

KUALA LUMPUR, March 23 (Bernama) -- The ringgit opened almost unchanged against the U.S dollar for the second consecutive day with fewer participants by market players, said dealers.

At 9am, the ringgit opened at 3.6905/6925 against the greenback from yesterday's close of 3.6905/6920.

"Today's opening is quite slow, but we can expect to see some movement in the ringgit later as investors are upbeat on the country's economy," said a dealer.

The local currency, however, opened mixed against other major currencies.

The ringgit declined against the Singapore dollar at 2.2822/2841 from 2.2809/2832 and decreased against the yen at 3.1589/1615 from 3.1492/1512 previously.

Against the British pound, the ringgit was higher at 6.4370/4416 from 6.4539/4577 and advanced against the euro at 4.4516/4541 from 4.4574/5607.

-- BERNAMA

FOREX-Dollar calm as market awaits clues on Fed outlook

2006-03-22T19:40:00.000-08:00

By Eric Burroughs

TOKYO, March 23 (Reuters) - The dollar was little changed against the euro and the yen on Thursday, with trade calm as the market looks ahead to next week's Federal Reserve meeting for clues on how much higher interest rate will climb.

Earlier this week the dollar bounced back against major currencies as investors saw upbeat comments on the economy and housing market from Fed Chairman Ben Bernanke as a sign that rates could rise beyond next week's expected increase.

The Fed is almost unanimously seen lifting rates to 4.75 percent from 4.5 percent at a two-day meeting ending on Tuesday, but the big question is whether the central bank will raise rates to 5 percent or higher at meetings in May and June.

With the European Central Bank also raising rates, now at 2.5 percent, and the Bank of Japan expected to lift them from zero by year-end, market players have become extra sensitive to shifts in the outlook for Fed credit tightening.

"The expectations are fluctuating day by day, so there's no clear direction at the moment," said Masafumi Yamamoto, currency strategist at Nikko Citigroup.

One worry is the potential impact of a cooling housing market on the broader U.S. economy and Fed policy, so investors will scour data on existing and new home sales in February over the next two days.

Sales of existing homes are forecast to ease to a 6.5 million annual pace from 6.56 million the previous month, what would be the slowest pace in two years. The data is due at 1500 GMT.

During the Asian session, market players were awaiting comments from BOJ Policy Board member Shin Nakahara, who holds a new conference at 0600 GMT after speaking to regional business leaders in central Japan.

After the BOJ scrapped its ultra-loose policy of flooding the banking system with cash earlier this month, investors see the central bank lifting rates to 0.25 percent or 0.5 percent by year-end, what would be the first such move since August 2000.

But the BOJ has said it will keep rates low for a while, especially if inflation remains mild. The yen has been dogged by its zero-yielding status as short-term rates march higher in other major countries.

By 0030 GMT, the dollar was little changed at 116.95 yen , stuck in a broad range between 115.50 yen and 119.50 yen over the past few months.

The euro was flat at $1.2075 and has been unable to break decisively out of a $1.18 to $1.23 range for all of this year.

The yen shrugged off data showing Japan's trade surplus shrank 11.8 percent in February from a year earlier to 955.7 billion yen ($8.17 billion), worse that forecasts. But overall exports grew a healthy 20.8 percent year-on-year.

A combination of solid export growth, stronger business investment and improving consumer spending is helping power Japan's recovery from nearly a decade of deflation.

Elsewhere, the New Zealand dollar rebounded from 21-month lows after data showed the country's current account deficit came in at NZ$3.38 billion in the fourth quarter, less than forecasts.

The kiwi gained 0.5 percent to $0.6287 , pulling away from a low of $0.6178 struck the previous session, according to Reuters dealing data.

The New Zealand dollar has tumbled nearly 10 percent this year on mounting worries that an economic slowdown will prompt the Reserve Bank of New Zealand to cut rates later this year from 7.25 percent, the highest in the developed world.

($1=117.04 yen)

Embattled Air Zimbabwe Starts Charging Fares In Forex

2006-03-22T19:38:00.000-08:00

Thursday, March 23 2006 @ 03:02 AM GMT
Contributed by: correspondent

In a bid to stem the financial hemorrhage, troubled national airliner Air Zimbabwe (Airzim), has resorted to charging fares in U.S. dollars beginning Monday this week, a move largely expected to help meet its shooting forex-dominated operational costs. "Please be advised that effective from March 20, 2006, all Air Zimbabwe fares will be denominated in U.S. dollars For those paying in Zimbabwe dollars, the fares will be converted at the Interbank mid-rate applicable on the day of the ticket issues," the airline said in a statement.

While no reason for the change in the payment regime was given, analysts have said that the move would allow the airline to try and meet in expenses, 70 percent of which are in hard currency. Problems at Air Zimbabwe have been caused by, among others, weak financial controls and governance and persistent operation of unprofitable routes, the central bank has said. As at October 2005, the airline posted a foreign debt amounting to US$19.65 million.

The central bank has proposed a stabilization package for Air Zimbabwe, including measures such as diversifying business, entering into interline agreements with a view to expand its revenue base and ensuring that revenues and expenses were properly accounted for. The perennial loss making parastatal broke aviation records last year when it flew one passenger to Dubai. Airzim has been reeling under profitability problems since the turn off the millennium due to poor management synergy and failure to realign itself with modern aviation technology and inability to cash on viable routes due to the disastrous "Look East" policy that has forced it to fly a size-able fleet to the uncompetitive Asian destinations.

FOREX-Dollar stronger as market mulls Fed outlook

2006-03-22T02:43:00.000-08:00

By Eric Burroughs

TOKYO, March 22 (Reuters) - The dollar maintained sharp gains from a day earlier on Wednesday as traders felt more confident the Federal Reserve would keep pushing overnight interest rates beyond the expected increase at next week's policy meeting.

An upbeat view of the economy from Fed Chairman Ben Bernanke and data showing a surprisingly big jump in core producer prices in February revived expectations for the central bank to raise rates to 5 percent by May and possibly higher.

The sudden shift in the Fed's policy outlook drove two-year Treasury yields up 9 basis points to 4.74 percent, the largest one-day jump since last July and taking them back near five-year highs.

Just last week the U.S. currency tumbled more than 2 percent on its trade-weighted index against six major currencies as the market scaled back the Fed's likely tightening after soft consumer price figures and on reports the Fed was nearly done.

"Though Fed Chairman Bernanke's speech last night provided little new information, there was some relief that he did not validate other reports suggesting the FOMC is unlikely to raise rates beyond 5.00 percent," said currency strategists at Morgan Stanley in a note to clients.

"Against that backdrop, the higher PPI core reading seemed to strike a nerve in the market," they said.

In early Asian trade, the euro was flat around $1.2095 and has slid from a two-month high of $1.2208 struck last Friday.

Against the Japanese currency, the dollar was also little changed around 117.30 yen . The euro drifted up to 141.90 yen from around 141.80 in late New York trade.

The Australian and New Zealand dollars failed to sustain early gains, as investors sour on the high-yielding currencies with rates on the march higher elsewhere.

The Aussie was little changed on the day at $0.7170 , in sight of Tuesday's 18-month low of $0.7148 and down about 3.5 percent so far this month.

The kiwi hit a fresh 21-month low at $0.6208 , shedding 6 percent this month. From its peak in early December, the New Zealand dollar has plunged as much as 14 percent.

TUG-OF-WAR

Overall the top three major currencies remain locked in an undecisive tug-of-war as the Fed is seen raising rates a bit more, while the European Central Bank is also lifting rates and the Bank of Japan is expected to do so before year-end.

But with the Fed closer to the end of its long campaign after 14 consecutive increases since June 2004 to 4.5 percent, the dollar has been very sensitive to changing sentiment on how high U.S. short-term rates will climb.

Analysts are almost unanimous the Fed will bump up its funds rate to 4.75 percent at the two-day meeting ending next Tuesday, the first Bernanke will chair since taking the reins from Alan Greenspan.

The market is leaning towards another Fed tightening at the May meeting but is less certain about the economic outlook and the central bank's response beyond that.

The dollar briefly slipped after Bernanke said that the record U.S. trade deficit will not necessarily trigger a "precipitous" drop in the dollar, and that the economy and markets may be able to withstand any such slide.

Bernanke's comments came in a letter responding to questions that a congressman submitted following the Fed chief's testimony in the House of Representatives on Feb. 15.

FOREX: Ringgit Opens Little Changed Against The Greenback

2006-03-22T02:40:00.000-08:00

KUALA LUMPUR, March 22 (Bernama) -- The ringgit opened little changed against the U.S dollar, sustaining itself at a new high since it was unpegged in July last year, dealers said.

They said the local unit is expected to strengthen on continued demand supported by strong local economic fundamentals.

The change in the exchange rate regime would not allow the local currency to move much as Bank Negara Malaysia continues to ensure gradual movements in the foreign exchange market.

At 9am, the ringgit was at 3.6955/6975 against the greenback from yesterday's closing of 3.6955/6965.

The local currency was also stronger against other currencies. Against the Singapore dollar, the ringgit appreciated at 2.2810/2831 from 2.2841/2852 and was higher against the yen at 3.1472/1498 from 3.1683/1700 previously.

The ringgit was also higher against the British pound at 6.4553/4599 from 6.4612/4648 and against the euro at 4.4693/4721 from 4.4841/4861 previously.

-- BERNAMA

FOREX-Dollar keeps gains as U.S. rate outlook reassessed

2006-03-22T02:38:00.000-08:00

By Eric Burroughs

TOKYO, March 22 (Reuters) - The dollar held sharp gains on Wednesday as traders felt more confident the Federal Reserve would keep pushing overnight interest rates beyond the expected increase at next week's policy meeting.

An upbeat view of the economy from Fed Chairman Ben Bernanke on Tuesday and data showing surprisingly a big jump in core producer prices (PPI) in February revived expectations for the central bank to raise rates to 5 percent by May and possibly higher after that.

The sudden shift in the Fed's policy outlook drove two-year Treasury yields up 9 basis points to 4.74 percent, the largest one-day jump since last July and taking them back near five-year highs.

Just last week the dollar tumbled more than 2 percent on its trade-weighted index against six major currencies as the market scaled back the Fed's likely tightening after soft consumer price figures and on reports the central bank was nearly done.

"Dollar sentiment tanked due to speculation that this month could be the last month of rate rises, but since Bernanke's comments the possibility of a rise in May remains open," said Hideaki Furumaya, forex manager at Trust and Custody Services Bank.

"So now there's a view that the dollar has been oversold, and we're seeing some short covering."

In tight trading, the euro dipped to the day's lows around $1.2075 after German Economy Minister Michael Glos said that the European Central Bank did not need to raise rates further in the current price climate.

By 0615 GMT, the single currency had recovered to around $1.2090 , little changed from the level in late U.S. trade on Tuesday, but down more than a cent from the two-month high of $1.2208 struck on Friday.

Against the Japanese currency, the dollar was also little changed around 117.25 yen , pausing after climbing almost 1 percent in the previous session.

The dollar's rise could gain momentum if it breaks above around 117.45/50 yen, where traders say stop loss orders are lined up.

The euro was down slightly on the day at 141.75 yen .

The Australian and New Zealand dollars stayed under pressure as investors sour on the high-yielding currencies with rates on the march higher elsewhere.

The Aussie was up slightly at $0.7185 but lingered in sight of Tuesday's 18-month low of $0.7148. It is down about 3.5 percent so far this month.

The kiwi hit a fresh 21-month low at $0.6178 , down 6.5 percent this month. From its peak in early December, the New Zealand dollar has plunged 14 percent.

TUG-OF-WAR

Analysts are almost unanimous the Fed will bump up its funds rate to 4.75 percent at the two-day meeting ending next Tuesday, the first Bernanke will chair since taking the reins from Alan Greenspan.

"The next big crunch is going to be the Fed's post-meeting statement," said Furumaya at Trust and Custody. "The market will be looking for more insight to whether the Fed will keep raising rates in May."

The market is leaning towards another Fed tightening at the May meeting but is less certain about the economic outlook and the central bank's response beyond that.

The dollar briefly slipped after Bernanke said that the record U.S. trade deficit would not necessarily trigger a "precipitous" drop in the dollar, and that the economy and markets may be able to withstand any such slide.

Bernanke's comments came in a letter responding to questions that a congressman submitted following the Fed chief's testimony in the House of Representatives on Feb. 15. (Additional reporting by David McMahon and Naomi Tajitsu)

Forex - US dollar ends Asian trading flat after recovering from early drop

2006-03-22T02:35:00.000-08:00

SINGAPORE (AFX) - The US dollar ended the Asian session barely changed from its New York closing levels, despite being knocked lower at the start of the session.
At 3.52 pm (0752 GMT) here, the dollar was at 117.22 yen, down slightly from 117.29 yen in Tokyo just over three hours earlier. The euro was at 1.2084 usd, up slightly from 1.2075 usd in Tokyo.
Expectations about US interest rates are still the main driver for dollar movements, with an increase of 25 basis points expected at next week's meeting of the US Federal Open Market Committee, dealers said.
But beyond that, the direction of the US Federal Reserve's policy is up in the air, and so the dollar has been shuffling around in generally familiar ranges against other major currencies, they said.
"With slowing growth in key sectors of the economy such as the housing market as well as only moderate inflation pressures, the risk is still tilted towards a disappointment in Fed expectations to the detriment of the US dollar," UBS forex strategist Ashley Davies said in a note to clients.
So far this year, the euro has been held roughly within a range of 1.1800-1.2323 usd, while the dollar has kept to a range of 113.40-119.40 yen.
In morning trading in Asia, the dollar slipped against the yen in a mild retreat following overnight gains, but hovered near 117.20 yen through the afternoon, little changed from its New York closing level of 117.24 yen.
The euro spent the morning near 1.2100 usd, after coming off an early high of 1.2115 usd, but at the end of the session was not far from its New York closing level of at $1.2090 usd.

Singapore 3.52 pm (0752 GMT) Tokyo 1.30 pm (0430 GMT)

US dollar

yen 117.22 down from 117.29

sfr 1.3021 down from 1.3025
Euro

usd 1.2084 up from 1.2075

stg 0.6901 down from 0.6916

yen 141.63 down from 141.65

sfr 1.5735 up from 1.5733
Sterling

usd 1.7505 up from 1.7454

yen 205.15 up from 204.69

sfr 2.2793 up from 2.2739
Australian dollar

usd 0.7165 up from 0.7157

stg 0.4092 down from 0.4165

yen 84.00 up from 83.94

singapore@xfn.com
bur/jm

Forex Crunch Stalls Edible Oil Production

2006-03-21T18:36:00.000-08:00

(AllAfrica.com English Via Thomson Dialog NewsEdge)Mar 17, 2006 (Zimbabwe Independent/All Africa Global Media via COMTEX) --FOOD processor, National Foods Holdings Ltd (Natfoods), has temporarily ceased production of edible oils which contributed 20% to the group's total revenue.

The group said the stoppage had been caused by lack of raw materials.

Production of the oils is expected to resume in May when it is anticipated that key raw materials which include soya beans and cotton seed would be available.

"The Harare manufacturing plant of National Foods has run out of raw materials and is, at the moment, not producing any edible oils," said Natfoods spokesperson, Linda Musesengwa, in response to questions from businessdigest.

"Oils sales contribute approximately 20% of the group's total revenue," Musesengwa said.

Natfoods said the raw material shortage had been largely due to lack of foreign currency.

"We import our raw materials, foreign currency permitting, from the most cost-effective sources at any given time, which can meet our quality specifications," Musesengwa said.

She said crude oil was normally imported throughout the year to augment local raw material supplies which do not fully meet local demand.

"Unfortunately, the shortage of foreign currency has hindered the import of normal requirement of crude oil; it is this challenge which has resulted in the closure of our plants until the coming oil seed harvest," she said.

She added that the non-availability of soya beans for oil production was also likely to affect the production of stock feed.

In its financial results for the year ended December 31, 2005, Natfoods warned that operations would be affected by lack of raw materials, a view analysts viewed as a profit warning.

The company said the Grain Marketing Board (GMB), the key supplier of raw materials, had significantly cut supplies, leaving the food processor in the lurch.

"We expect the first quarter of 2006 to be extremely difficult," said Natfoods' board in a statement accompanying the group's financial results.

"GMB has significantly reduced our wheat allocation and we have no other source of raw materials as the availability of foreign currency is very limited," the board said.

The board added that supplies of stock feeds had been limited because critical raw materials like soya cake and maize were in short supply.

The Natfoods board said the flour division had performed well in the first half of the period under review, and this had been due to 4 000 tonnes of wheat procured under a Memorandum of Understanding with the GMB for allocations over and above those stipulated by the parastatal.

"In the second half of the year the division survived solely on GMB wheat allocations and flour rationing had to be enforced," the board said.

The group made a profit after tax of $701,7 billion in the period under review and declared a final dividend of $600 per share payable on April 28, after having paid an interim dividend of $250 per share.

Nicholas Bang

2006-03-21T18:35:00.000-08:00

ACM has more than 10,000 clients around the world, and a trading volume of around $60bn a month. The ACM website gets 30-40,000 visitors a day and operates in 13 languages, including Arabic.

'Over the past year online forex trading has grown by 200-300%, like online equity trading in the 1990s,' explains 32 year-old Nicholas Bang, Managing Director and one of the three partners who own ACM now that Refco is no longer involved.

'We offer much better value than retail banks with their wide spreads, and have completely changed the forex landscape in the last couple of years.

'The Refco collapse was difficult for us, but our clients' money was protected by numbered deposit accounts, and so we were able to weather this storm rather well. Swiss financial regulations are very strict and give you a protection that would not be as good in the US for example.

'We bought out the Refco stake in ACM and now the three partners have full control. This is a fast moving business and we want to put the Refco experience behind us and focus on the future, such as the opening of our new office here in Dubai.'

New to Dubai

But why choose Dubai, and why establish in the Dubai Media City and not the Dubai International Financial Centre? 'Dubai was a natural choice for us, this is the place where everything is happening,' says Mr. Bang looking from the window to a view over The Palm, Jumeirah.

'We are in the DMC because this is a representative office of a global Internet platform regulated in Switzerland, not Dubai, and have considerable experience of Arab clients from our base in Geneva.'

The ACM platform allows clients up to 100-times leverage, so if they invest $10,000 they can trade with up to $1 million in the forex markets. Is this not a bit risky? Could they not loose a lot more than they have invested?

'The client decides on the level of risk that they are comfortable with,' says Mr. Bang. 'But the account has a fail safe shutdown which will close all the positions if the client is coming near to losing the amount invested. This automatic position liquidation protects the client against large losses, and ACM as well.

'But that still means that the upside of leverage is available to the client. Thus you have a potential downside of $10,000 for this level of investment, and a potential upside based on funds 100 times bigger.

'The forex markets of the world are the biggest and most liquid with $1.3 trillion traded a day, more than 22 times larger than all the global equity markets combined.

'And we are one of the few firms which guarantee to trade in every single market scenario. There are no commissions on transactions or joining fees, and our spreads are among the lowest in the industry. The minimum entry level is $5,000.'

White labelling

ACM is also pursuing white-labeling products for banks in the GCC, and the Dubai office is partly to organize these sales.

'It is a risk-free service that a bank can offer its clients, using our platform but fully branded to the bank,' says Mr. Bang. 'We can lever off local bank branding strengths and not have to spend as long in acquiring clients.

'Our very stable platform is tried and tested and has conducted billions of trades, and represents an enormous investment in IT systems. We keep innovating and have recently introduced a trading system for cell phones. Next will be trading in petroleum derivatives and stock based CFDs.'

FOREX-Dollar up after upbeat Bernanke comments on economy

2006-03-21T01:49:00.000-08:00

(Updates price, adds quotes, changes dateline, byline)

By Natsuko Waki

LONDON, March 21 (Reuters) - The dollar rose from a recent seven-week low versus the euro and firmed against other currencies on Tuesday after Federal Reserve Chairman Ben Bernanke offered upbeat comments on the U.S. economy.

Bernanke said late on Monday the economy should keep growing at a brisk pace even if the housing market slows, but the dollar failed to receive a significant boost as Bernanke offered few new clues on how much more the Fed would raise rates.

"Bernanke was balanced. The Fed is trying to keep its options open and the rest of the (tightening) cycle is dependent on data," said Jim McCormick, head of foreign exchange research at Lehman Brothers.

"But the market is not looking at an isolated tightening cycle from the Fed. We have a much more coordinated global tightening cycle. You can see from the price action in the past 24 hours that the market lacks conviction with what to do in the G3 currencies and we are bouncing in ranges."

By 0847 GMT the dollar was up 0.3 percent at $1.2126 per euro , off last week's seven-week low of $1.2207.

It was also up a third of a percent at 1.2952 Swiss francs and 116.66 yen .

Trading volumes in Asia were thinner than usual with Tokyo markets closed for the Spring equinox holiday.

The New Zealand dollar extended recent losses to hit a 21-month low of US$0.6217 , bringing its losses this year to nearly 9 percent.

"Obviously the RBNZ (Reserve Bank of New Zealand) has told you it's done hiking rates. The issue going on now is the rate advantage is starting to deteriorate and I think the external backdrop is starting to turn sour," McCormick said.

"It's beginning to get hit from tightening liquidity (in the G3). I would say the Canadian dollar and the pound also have a minor risk from this."

TIGHTENING LIQUIDITY

The Fed is largely expected to raise interest rates by 25 basis points again from the current 4.5 percent when it meets next week, but investors are now less certain rates will move to 5 percent in May following benign inflation data last week.

Investors are also expecting the Bank of Japan to raise interest rates later this year after it ended a five-year-old ultra-easy monetary policy earlier this month.

BOJ officials have sought to calm down market expectations, repeating it would keep short-term interest rates near zero for some time.

But speaking in Chicago on Monday, Atsushi Mizuno, a member of the BOJ policy board, said it was not too early for a policy change and Japan can most likely take a "gradualist" approach to monetary policy normalisation given the low risk of significant inflation.

Investors were also focused on a visit to Beijing by U.S. senators Charles Schumer and Lindsey Graham.

Schumer and Graham are holding talks to decide whether to go ahead with a vote on their bill, which would impose a tariff of 27.5 percent on Chinese imports into the United States unless Beijing revalues the yuan "at or near its fair market value."

Schumer said on Tuesday he wanted to learn whether there was "a pattern of progress" in the yuan's quickening rate of gains.

"There is a lot of focus on the visit and understandably so," said Jan Lambregts, a senior currency strategist at Rabobank in Singapore.

"China... wants to do as little as possible and escape a protectionist fall out."

FOREX: Ringgit Opens Almost Flat Versus The U.S Dollar

2006-03-21T01:47:00.000-08:00

KUALA LUMPUR, March 21 (Bernama) -- The ringgit opened almost flat at 3.6980 versus the U.S. dollar, sustaining itself at its highest level since it was unpegged in July last year, a dealer said.

He said the market was taking a breather after breaking the psychological level of 3.700 yesterday.

Bank Negara Malaysia's strong support is still seen at 3.6980 level, he said, adding that the ringgit is poised to strengthen further but at a slower pace.

At 9am, the ringgit was stronger against the greenback at 3.6980/6990 from Monday's closing of 3.6980/6995.

The local currency was also stronger against other currencies, except for the Singapore dollar, which was firmer at 2.2888/2898 from 2.2885/2909, while the yen slipped at 3.1772/1784 from 3.1813/1859 previously.

The ringgit was higher against the British pound at 6.4856/4892 from the previous closing of 6.4992/5026 and appreciated against the euro at 4.4905/4928 from 4.5056/5078 previously.

FOREX-Dollar inches higher ahead of Bernanke speech

2006-03-21T01:45:00.000-08:00

(Updates prices)

By Kevin Plumberg

NEW YORK, March 20 (Reuters) - The dollar rebounded on Monday from last week's sharp losses after traders, eager for clues on the course of U.S. interest rates, squared up ahead of a speech by Federal Reserve Chairman Ben Bernanke.

Bernanke is due to speak on the Treasury yield curve and monetary policy at 7 p.m. EST (0000 GMT).

Last week the dollar fell 2 percent against a basket of major currencies amid reduced expectations for how high the Fed will raise rates this year in the wake of tame inflation data.

Traders attributed the dollar's partial recovery on Monday to profit-taking in other currencies, even as market sentiment on the greenback remained cautiously negative.

"The dollar looks like it got too weak last week," said Tom Benfer, vice president of foreign exchange with Bank of Montreal in New York.

"The Fed is not looking at current inflation numbers. They are looking beyond that and focusing on growth, and growth is pretty solid," he added.

By late afternoon the euro slipped 0.2 percent from late Friday to $1.2167 , after reaching a seven-week high of $1.2207 last week.

Against the Swiss franc, the dollar was relatively unchanged at 1.2908 francs . Sterling was little changed at $1.7562 .

DON'T EXPECT MUCH

Despite the laser-like focus on Bernanke's speech, some market participants were not expecting too much.

"Don't expect Bernanke or the Fed to tell us they are done (hiking) until they actually stop," said Andrew Busch, global FX strategist at Harris Nesbitt in Chicago.

Analysts said sentiment on the dollar has deteriorated in the past week and that a day of small gains did not erase the general view in the market that the Fed is closer to the end of its monetary policy tightening cycle that began in June 2004.

Higher U.S. interest rates have enhanced the attraction of dollar-denominated assets to foreign investors and increase speculation that flows into the dollar will continue.

"Weighing on the dollar lately has been pressure on carry currencies generally, as rates in the key funding currency economies continue to rise, a phenomenon we expect to continue, with a loss of U.S. carry advantage re-exposing the U.S. currency to long-standing structural vulnerabilities and reserve diversification," UBS analysts said in a client note.

Carry trades are a trading strategy in which an investor borrows in a currency with low interest rates to invest in another with higher rates.

However, the dollar on Monday posted sharp gains against high-yielding currencies such as the Australian and New Zealand dollars. The New Zealand unit fell to a 20-month low of US$0.6236 , taking its cue from a slowdown in the pace of economic growth there and a view the central bank's next move could be to lower rates.

The Australian dollar hit a 17-month low of US$0.7180 after recording its biggest one-day drop in almost nine months on Friday.

The yen briefly spiked against the dollar after Bank of Japan policy board member Atsushi Mizuno said it is not too early for a change in monetary policy. But it gave back the small gains when Mizuno added that he expects key overnight rates to remain near zero. (Additional reporting by Gertrude Chavez-Dreyfuss)

Forex Capital ends talks for Refco currency unit

2006-03-21T01:43:00.000-08:00

NEW YORK, March 20 (Reuters) - Forex Capital Markets LLC on Monday said it abandoned talks to acquire Refco Inc.'s (RFXCQ.PK: Quote, Profile, Research) unregulated currency trading business, after earlier winning an auction to acquire it for $110 million.

Forex said it had been the only company to make a bid for the unit, Refco FX Associates. It said it raised its offer to $130 million after Refco's creditors complained that the original price was too low. Refco and its creditors remain "unresponsive," it said.

"While our hope remains to effect a transaction, the creditors' demands remain unreasonable and their position inflexible," said Drew Niv, Forex's chief executive. "They leave us no choice but to abandon negotiations at this time."

Refco filed for Chapter 11 protection from creditors on Oct. 17, one week after saying former chief executive Phillip Bennett hid $430 million of bad debt. The revelation caused an exodus of customers. Refco is selling assets to pay creditors, whom it has said it owes $16.8 billion.

Stay Off Public Sector Funds, Forex, CBN Tells Banks

2006-03-19T23:56:00.000-08:00

Senior Finance Correspondent, Lagos

The Central Bank of Nigeria (CBN) at the weekend cautioned banks against over dependence on the juicy, but unstable public sector funds.

The warning aimed at avoiding the pitfalls of the past, which led to systemic distress with dare consequences for the economy.
The CBN also enjoined banks to stay off official allocation of foreign exchange for survival. Instead, banks are urged to perfect the traditional service of deposit mobilisation from the public.

Delivering a keynote address at the 15th delegates conference and annual general meeting of the Money Market Association of Nigeria, held in Lagos, Deputy Governor (Operations) of the CBN, Shamsudeen Usman, said such mobilised funds would be lent for investment in viable economic development projects.

Represented by Sarah Alade, a director at the CBN, the deputy governor identified factors that have led to the three major bank collapses in the country to include short tenured and volatile deposit liabilities and widespread foreign exchange malpractices, such as round tripping. More than 68 per cent of the total deposits in the industry at the advent of the consolidation exercise had tenure of less than 30 days, while about 90 per cent matured within 90 days, and about 20 per cent sourced from the public sector.

“Foreign exchange malpractices were also widespread, including round tripping, with the attendant adverse consequences for the naira exchange rate; and foreign exchange trading by the banks served as a source of cheap revenue which made some banks lose focus away from their core business.”

He argued that for the gains of the consolidation exercise to materialise further, there is need for the existing banking groups to imbibe a new culture of international best practices in corporate governance and customer service delivery.

“In this regard, the banking public is looking forward to a well diversified, strong and reliable banking industry that will ensure the safety of depositors’ money, provide prompt and efficient service, including instituting efficient payments arrangements.”

According to him, such would impact positively on the rest of the financial services industry and engender a reliable system capable of servicing new investments and adequately supporting ongoing businesses at competitive lending rates.

Part of the expectations from the operators, Shamsudeen continued, is that the consolidation would ensure greater competition in the industry. This is also expected to ultimately lead to the emergence of a more realistic interest rate regime, including a reduction in the wide gap between “the deposit and lending rates and facilitate increased lending to the real sector for employment generation and economic growth”.

He advised the banks to explore the huge economies of scale resulting from their new size to improve service delivery, especially to small depositors and borrowers, saying that the reforms are already addressing problems of dearth of foreign direct investment.

FOREX-Dollar near 2-month low vs euro on rates outlook

2006-03-19T23:53:00.000-08:00

TOKYO, March 20 (Reuters) - The dollar hovered near a two-month low against the euro on Monday, carrying over from the previous week's softness as traders scaled back their expectations about how much higher U.S. interest rates will climb.

The U.S. currency fell every day last week as a spate of downbeat economic data dented confidence that the Federal Reserve would tighten policy again after an almost certain quarter-point rise to 4.75 percent at next week's policy meeting.

The dollar has also suffered on growing expectations that the European Central Bank will bump up rates again in coming months after lifting its key rate to 2.5 percent earlier in March.
"Given weaker numbers from the U.S. and fairly hawkish comments from the ECB regarding inflation, the market is not expecting the rate gap to widen," said the chief trader at a European investment bank in Tokyo. "So that's not going to help the dollar go higher.

Traders were awaiting a speech later in the day by Fed chief Ben Bernanke on monetary policy for insight on where the Fed might go from here.

At 0325 GMT, the euro was at $1.2175 , down a tad on the day but within sight of $1.2208 hit on electronic trading platform EBS on Friday. That was its highest point since Jan. 27.

The dollar rose 0.4 percent to 116.35 yen , pulling away from a two-week low of 115.70 yen marked on Friday.

Yield-hungry Japanese investors were buying the dollar at more attractive levels after last week's pounding, traders said.

But they said the dollar's rise might not be sustained, given expectations for Japanese rates to start rising from near zero at the end of the year, after the Bank of Japan ended five years of super-loose monetary policy earlier this month.

The U.S. currency was also buoyed by Japanese importers' buying in early trade and by the euro's rise against the yen, dealers said.

The single European currency climbed 0.3 percent to 141.60 yen .
Some in the market don't see the dollar turning lower against the yen during Tokyo trade, given a dearth of economic data and ahead of a market holiday in Japan on Tuesday.
"We don't see any dollar/yen bearish factors this week," said Toru Umemoto, chief forex strategist at Barclays Capital in Tokyo, who called the dollar's rise against the yen a "healthy correction".

DOWN IN THE ANTIPODES

With the market focused on rate differentials, investors continued to punish the high-yielding Australian and New Zealand dollars due to mounting expectations that their rate premiums are set to narrow across the board.

The New Zealand dollar sank almost 1 percent to a 20-month low of 62.89 U.S. cents , taking its cue from a slowdown in the pace of economic growth in New Zealand and a view that the next central bank move will be to lower rates.

The Australian dollar hit a three-month low of 72.50 U.S. cents , after recording its biggest one-day drop in almost nine months on Friday.

The market's attention was also drawn to the yuan after the Chinese currency last week marked its biggest weekly gain against the dollar since revaluation in July.

Beijing raised the yuan's mid-point again on Monday, reflecting the dollar's weakness and ahead of a Beijing trip by two U.S. senators calling for more currency flexibility from China.

A rising yuan is thought to provide support for other Asian currencies including the yen.

Forex Weekly Review and Outlook 3-18-06

2006-03-19T20:42:00.000-08:00

Forex Weekly Review and Outlook

EUR/USD
EUR/USD's strong rally (close to 300 pts) this week started on Monday and never quite looked back. As mentioned during the week, breaking of the inner trend line has invalidated our immediate bearish view and has now put medium term falling trend line (from 1.2587 to 1.2322, now at 1.2220) back into focus. Next week will be a critical week from medium term perspective.

Firm break above resistance zone between 78.6% retracement of 1.2322 to 1.1825 at 1.2216 and medium term falling trend line will indicate that EUR/USD has completed a wide range head and shoulder bottom formation, with left shoulder at left shoulder at 1.1865, head at 1.1639 and right shoulder at 1.1825. Bullish convergence in daily MACD is also supporting this argument. In such case, medium term outlook will turn bullish.
Taking weekly chart into perspective, we have 55 weeks EMA now at 1.2170. and bullish convergence condition in weekly MACD and RSI too. Sustained trading above this EMA will endorse the above scenario too.

On the upside, there a a few interpretation on what could be unfolding. But in any case, on firm breaking of the above mentioned resistance zone, we'd expect further rally to above 100% projection of 1.1639 to 1.2322 from 1.1825 at 1.2508 and challenge 1.2587 resistance at least. But of course, it hasn't happened yet and we'll prefer to be conservative and wait till a firm break of the mentioned resistance zone of 1.2216/20 before confirming the bullishness.
On the downside, overbought condition might limit upside initially next week and turn EUR/USD consolidative with retreat towards 1.2091 resistance turned support. However, we will not re-consider the medium term bearish case until at least a firm break below cluster support of 1.2034 (with 50% retracement of 1.1859 to 1.2206 at 1.2033).

GBP/USD
Cable rebounded strongly last week, starting on Monday, and recovered most of the lost in the previous week. Breaking of the inner trend line on Thursday indicates the fall from 1.7935 has finished at 1.7230 already. However, whether the current rebound from 1.7230 represents a correction to the fall from 1.7935 or resumption of medium term rebound from 1.7047 remains unclear.
On the upside, initial focus will be on the medium term falling trend line from 1.8498 to 1.7935 (now at 1.7727). Break of this trend line will add much credence that the current rebound from 1.2730 is resumption of the medium term rebound from 1.7047. Key level will lie in cluster resistance of 1.7779/84 (78.6% retracement of 1.7935 to 1.7230 at 1.7784 and 61.8% projection of 1.7047 to 1.7935 firm 1.7230 at 1.7779). Also, 55 weeks EMA is in proximity at 1.7809 too. Firm break of this level will confirm medium term bullishness and bring further rally towards 100% projection of 1.7047 to 1.1.7935 from 1.72230 at 1.8118 at least and possibly further to retest 1.8498 resistance.

Even though bullish convergence condition in daily MACD as well as weekly MACD and RSI are endorsing the above mentioned bullish case, we'd prefer to be conservative and wait till firm break of the medium term fall trend line before turning more bullish.
On the downside, overbought condition might limit upside initially next week and turn GBP/USD consolidative with retreat towards 1.7498 resistance turned support. However, we will not re-consider the medium term bearish case until at least a firm break below cluster support of 1.7420 (with 50% retracement of 1.7230 to 1.7594 at 1.7412).

USD/CHF
USD/CHF's sharp fall last week has invalidated our immediate bullish view by breaking through the inner trend line as mentioned during the week. The decline from 1.3228 has now reached previous mentioned cluster support level at 1.2895 (50% retracement of 1.2556 to 1.3238 at 1.2897) but USD/CHF have yet to break firmly below. As discussed before, a firm break of 1.2895 with sustained trading below will complete a double top formation, with the tops at 1.3238 and 1.3228 which could bring deep fall towards medium term rising trend line (from 1.2339 to 1.2556, now at 1.2671).

From a medium term picture, it remains unclear whether the current fall is merely part of a consolidation pattern from 1.3238 or medium term reversal. But still, note that a firm break below the medium term rising trend line will complete a wide range head and shoulder top formation with left shoulder at 1.3084, head at 1.3283 and right shoulder at 1.3238. In such case, medium term outlook will turn bearish and at least a retest of 1.2556 low should follow and will likely push USD/CHF towards support zone between 1.2239 and 50% retracement of 1.1288 to 1.3283 at 1.2256.

Even though bearish divergence condition in daily MACD, as well as weekly MACD and RSI are both endorsing this medium term bearish case, we'd prefer to be conservative and wait until at least we see sustained trading below 1.2895 cluster support to turn more bearish.
On the upside, oversold condition might contain downside initially next week with risk of recovering towards 1.2988 resistance but we will not reconsider the medium term bullish case at least until a firm break above 1.3037 resistance.

USD/JPY
USD/JPY's sharp fall last week has invalidated our rally resumption view. Subsequent 350 pts fall has now put the long term rising trend line (from 104.02 to 108.75, now at 115.99) back into perspective. Sustained trading below this trend line will argue that a big top is already formed at 121.38 and subsequent price actions from there has already started a major correction to the whole up trend from 101.65. Such scenario will be further confirmed if we see a further break below 61.8% projection of 121.38 to 113.41 from 119.37 at 114.44. In such case, further decline to 113.41 low is inevitable with risk of further fall towards cluster support at 111.40/52 (50% retracement of 101.65 to 121.38 at 111.52 and 100% projection of 121.38 to 113.41 from 119.37 at 111.40)

On the upside, touching of cluster resistance of 117.06 (61.8% retracement of 117.88 to 115.67 at 117.03 and 38.2% retracement of 119.17 to 115.67 at 117.05) will indicate a low is formed. But as long as 117.88 resistance holds, based on current dollar's broad based weakness, risk of another fall remains. We'd be rather conservative and consider USD/JPY being supported by the long term rising trend line and look back into the medium term bullish case only when USD/JPY breaks above 117.88 resistance again.

Japanese Forex Trading Preview

2006-03-19T20:38:00.000-08:00

The greenback remains mired near its lows from last week’s sharp sell-off amid soft dollar sentiment triggered by a combination of lackluster US economic data and a dovish tone taken by several Fed Board Members. With markets anticipating the Fed tightening cycle to be nearing an end, the dollar may come under further selling pressure given expectations of additional rate hikes from the ECB and the prospect of the Bank of Japan eventually raising rates also.

Unwinding of Carry Trade Hits AUDThe Aussie continued to struggle against the yen following Friday’s sharp sell-off, trading near its lowest levels since Sept 2005. Since the Reserve Bank of Australia is widely expected to leave rates unchanged at 5.50% this year and the increasing expectations the Bank of Japan may lift rates as early as the latter half of the year, there has been heavy unwinding of the AUDJPY carry trade since last week. Selling in the cross has also dragged the Aussie lower versus the greenback, hitting a three-month low in early Tokyo trading at 0.7260.

This article contains the following sections:
* Unwinding of Carry Trade Hits AUD
* USDJPY mired near lows

Dollar Extends Sell-off

2006-03-19T20:30:00.000-08:00

The dollar damage took a turn to the worse as the currency broke below the 116 yen mark while hitting the 1.22 figure against the euro amid revisions in markets’ expectations for the Fed rate decision. Conflicting speeches from the presidents of the Atlanta and San Franciso Fed left traders mulling the outcome of the May Fed meeting after yesterday’s core CPI reduced expectations of a may hike from Interest 90% to about 75%.

The 0.7% rise in February US industrial production following January’s 0.3% drop had no market impact. Capacity utilization rose 0.4% to 81.2%, matching the highest level since September 2000. The 81.2% cap rate exceeded its 1972-2005 average, which reflects the Fed’s concerns that rising “resource utilization could spark inflation”. Nonetheless, capacity utilization rate in utilities failed to sustain a sufficient rebound from its Jan low and was down 0.2% from February of last year.

This article contains the following sections:
* Euro stabilizes gains at key resistance
* USDJPY extends damage

USD Mired in Soft Tone

2006-03-19T20:28:00.000-08:00

At 5:00 AM Eurozone January Industrial Production (exp 0.4%, prev 0.1%) At 9:15 AM US February Industrial Production (exp 0.7%, prev -0.2%) US February Capacity Utilization (exp 81.3, prev 80.9) At 9:45 AM US March University of Michigan Consumer Sentiment final (exp 88.0, prev 86.7)The dollar continued to trade on a softer tone versus the majors in the early Friday session, revisiting its lows from yesterday against the euro. The selling in the dollar on Thursday was prompted by tame US inflation data, which is expected to further ease pressure for additional Fed rate hikes. The focus will continue to remain on US economic data, with recent foreign exchange moves predominantly driven by interest rate expectations.

FOMC board members have highlighted the uncertainty that lies ahead for Fed rate policy and will be highly dependent on upcoming economic reports. In the session ahead, US data will include February industrial production, capacity utilization and the final reading of the March University of Michigan consumer sentiment survey. Industrial production is forecasted to improve to 0.7%, reversing January’s 0.2% decline. February capacity utilization is seen rising to 81.3, up from 80.9 a month earlier. Lastly, the final reading of the March University of Michigan consumer sentiment survey is expected to edge up to 88.0, compared with 86.7 in the previous report. This article contains the following sections:
* Euro Edges Higher
* USDJPY Delves Lower
* Swiss maintains buoyant tone

Dollar Extends Damage on Tame CPI

2006-03-19T20:06:00.000-08:00

The dollar sharpened its losses after a benign core CPI report reinforced speculation that the Fed may finish raising interest rates after this month’s expected tightening. While the headline CPI rose 0.1% in Feb from January’s 0.7%, the core CPI edged up 0.1%. On a year to year level, the headline CPI rose 3.6%, while the core index rose 2.1%, the lowest since October. We warned in yesterday’s Forexnews.com’s Audio Market Analysis that any core CPI figure below 0.2% would be dollar negative because as US currency is already sustaining a deteriorating sentiment from the external front. On the manufacturing front, the Philadelphia Fed index fell to 12.3 in March from 15.4, undershooting expectations of a 13.4 figure. The index was split, with advances in the new orders (12.5 to 20.8) and inventory (9.3 to 11.1) indices and declines in the prices paid (30.5 to 17.2) and employment indices (11.3 to 5.4). Nonetheless, the 6-month future index plummeted to 14.6 from 31.1, its lowest since September.

This article contains the following sections:
* EURUSD surges to 6 week highs, along with the crosses
* USDJPY targets 116.50

Leverage In Forex

2006-03-19T20:04:00.000-08:00

Leverage in Forex

Leverage financed with credit, such as that purchased on a margin account is very common in Forex. A margined account is a leverageable account in which Forex can be purchased for a combination of cash or collateral depending what your brokers will accept.

The loan (leverage) in the margined account is collateralized by your initial margin (deposit), if the value of the trade (position) drops sufficiently, the broker will ask you to either put in more cash, or sell a portion of your position or even close your position.

Margin rules may be regulated in some countries, but margin requirements and interest vary among broker/dealers so always check with the company you are dealing with to ensure you understand their policy.

Up until this point you are probably wondering how a small investor can trade such large amounts of money (positions). The amount of leverage you use will depend on your broker and what you feel comfortable with. There was a time when it was difficult to find companies prepared to offer margined accounts but nowadays you can get leverage from a high as 1% with some brokers. This means you could control $100,000 with only $1,000.

Typically the broker will have a minimum account size also known as account margin or initial margin e.g. $10,000. Once you have deposited your money you will then be able to trade. The broker will also stipulate how much they require per position (lot) traded.

In the example above for every $1,000 you have you can take a lot of $100,000 so if you have $5,000 they may allow you to trade up to $500,00 of forex.

The minimum security (Margin) for each lot will very from broker to broker. In the example above the broker required a one percent margin. This means that for every $100,000 traded the broker wanted $1,000 as security on the position.

Margin call is also something that you will have to be aware of. If for any reason the broker thinks that your position is in danger e.g. you have a position of $100,000 with a margin of one percent ($1,000) and your losses are approaching your margin ($1,000). He will call you and either ask you to deposit more money, or close your position to limit your risk and his risk.

If you are going to trade on a margin account it is imperative that you talk with your broker first to find out what their polices are on this type of accounts.

Variation Margin is also very important. Variation margin is the amount of profit or loss your account is showing on open positions.

Let's say you have just deposited $10,000 with your broker. You take 5 lots of USD/JPY, which is $500,000. To secure this the broker needs $5,000 (1%).

The trade goes bad and your losses equal $5001, your broker may do a margin call. The reason he may do a margin call is that even though you still have $4,999 in your account the broker needs that as security and allowing you to use it could endanger yourself and him.

Another way to look at it is this, if you have an account of $10,000 and you have a 1 lot ($100,000) position. That's $1,000 assuming a (1% margin) is no longer available for you to trade. The money still belongs to you but for the time you are margined the broker needs that as security.

Another point of note is that some brokers may require a higher margin during the weekends. This may take the form of 1% margin during the week and if you intend to hold the position over the weekend it may rise to 2% or higher. Also in the example we have used a 1% margin. This is by no means standard. I have seen as high as 0.5% and many between 3%-5% margin. It all depends on your broker.

There have been many discussions on the topic of margin and some argue that too much margin is dangerous. This is a point for the individual concerned. The important thing to remember as with all trading is that you thoroughly understand your broker's policies on the subject and you are comfortable with and understand your risk.

Forex Trading - An introduction

2006-03-19T20:02:00.000-08:00

A Little Forex History

The purpose of these articles is to introduce the forex market to you. As with many markets there are many derivative of the central market such as futures, options and forwards. In this book we will only be discussing the main market sometime referred to as the Spot or Cash market.

The word FOREX is derived from the words Foreign Exchange and is the largest financial market in the world. Unlike many markets the FX market is open 24 hours per day and has an estimated $1.2 Trillion in turnover every day. This tremendous turnover is more than the combined turnover of the main worlds' stock markets on any given day. This tends to lead to a very liquid market and thus a desirable market to trade.

Unlike many other securities (any financial instrument that can be traded) the FX market does not have a fixed exchange. It is primarily traded through banks, brokers, dealers, financial institutions and private individuals.

Trades are executed through phone and increasingly through the Internet. It is only in the last few years that the smaller investor has been able to gain access to this market. Previously the large amounts of deposits required precluded the smaller investors. With the advent of the Internet and growing competition it is now easily within the reach of most investors.

INTERBANK

You will often hear the term INTERBANK discussed in FX terminology. This originally, as the name implies was simply banks and large institutions exchanging information about the current rate at which their clients or themselves were prepared to buy or sell a currency.

INTER meaning between and Bank meaning deposit taking institutions. The market has moved on to such a degree now that the term interbank now means anybody who is prepared to buy or sell a currency.

It could be two individuals or your local travel agent offering to exchange Euros for US Dollars. You will however find that most of the brokers and banks use centralized feeds to insure reliability of quote.

The quotes for Bid (buy) and Offer (sell) will all be from reliable sources. These quotes are normally made up of the top 300 or so large institutions. This insures that if they place an order on your behalf that the institutions they have placed the order with is capable of fulfilling the order.

Now although we have spoken about orders being fulfilled, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words the person or institution that bought or sold the currency has no intention of actually taking delivery of the currency. Instead they were solely speculating on the movement of that particular currency.

Source: Bank For International Settlements http://www.bis.org/

Extract From The Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity.

Currency	1989	1992	1995	1998	2001
US Dollar	90	82.0	83.3	87.3	90.4
Euro					37.6
Japanese Yen	27	23.4	24.1	20.2	22.7
Pound Sterling	15	13.6	9.4	11.0	13.2
Swiss Franc	10	8.4	7.3	7.1	6.1

As you can see from the above table over 90% of all currencies are traded against the US Dollar. The four next most traded currencies are the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP) and Swiss Franc (CHF).

As currencies are traded in pairs and exchanged one for the other when traded, the rate at which they are exchanged is called the exchange rate. These four currencies traded against the US Dollar make up the majority of the market and are called major currencies or the majors.

Market Mechanics

So now we know that the FX market is the largest in the world and that your broker or institution that you are trading with is collecting quotes from a centralized feed or individual quotes comprising of interbank rates.

So how are these quotes made up? Well, as we previously mentioned currencies are traded in pairs and are each assigned a symbol. For the Japanese Yen it is JPY, for the Pounds Sterling it is GBP, for Euro it is EUR and for the Swiss Frank it is CHF. So, EUR/USD would be Euro-Dollar pair. GBP/USD would be pounds Sterling-Dollar pair and USD/CHF would be Dollar-Swiss Franc pair and so on.

You will always see the USD quoted first with few exceptions such as Pounds Sterling, Euro Dollar, Australia Dollar and New Zealand Dollar. The first currency quoted is called the base currency. Have a look below for some example.

Currency Symbol	Currency Pair
EUR/USD	Euro / US Dollar
GBP/USD	Pounds Sterling/ US Dollar
USD/JPY	US Dollar / Japanese Yen
USD/CHF	US Dollar / Swiss Franc
USD/CAD	US Dollar / Canadian Dollar
AUD/USD	Australian Dollar / US Dollar
NZD/USD	New Zealand Dollar / US Dollar

When you see FX quotes you will actually see two numbers. The first number is called the bid and the second number is called the offer (sometimes called the ASK).

If we use the EUR/USD as an example you might see 0.9950/0.9955 the first number 0.9950 is the bid price and is the price traders are prepared to buy Euros against the USD Dollar. The second number 0.9955 is the offer price and is the price traders are prepared to sell the Euro against the US Dollar.

These quotes are sometimes abbreviated to the last two digits of the currency such as 50/55. Each broker has its own convention and some will quote the full number and others will show only the last two.

You will also notice that there is a difference between the bid and the offer price and that is called the spread. For the four major currencies the spread is normally 5 give or take a pip (will explain pips later)

To carry on from the symbol conventions and using our previous EUR quote of 0.9950 bid, that means that 1 Euro = 0.9950 US Dollars. In another example if we used the USD/CAD 1.4500 that would mean that 1 US Dollar = 1.4500 Canadian Dollars.

The most common increment of currencies is the PIP. If the EUR/USD moves from 0.9550 to 0.9551 that is one pip. A pip is the last decimal place of a quotation. The pip or POINT as it is sometimes referred to depending on context is how we will measure our profit or loss.

As each currency has its own value, it is necessary to calculate the value of a pip for that particular currency. We also want a constant so we will assume that we want to convert everything to US Dollars. In currencies where the US Dollar is quoted first the calculation would be as follows.

Example JPY rate of 116.73 (notice the JPY only goes to two decimal places, most of the other currencies have four decimal places)

In the case of the JPY 1 pip would be .01 therefore

USD/JPY: (.01 divided by exchange rate = pip value) so .01/116.73=0.0000856. It looks like a big number but later we will discuss lot (contract) size later.

USD/CHF: (.0001 divided by exchange rate = pip value) so .0001/1.4840 = 0.0000673

USD/CAD: (.0001 divided by exchange rate = pip value) so .0001/1.5223 = 0.0001522

In the case where the US Dollar is not quoted first and we want to get to the US Dollar value we have to add one more step.

EUR/USD: (0.0001 divided by exchange rate = pip value) so .0001/0.9887 = EUR 0.0001011 but we want to get back to US Dollars so we add another little calculation which is EUR X Exchange rate so 0.0001011 X 0.9887 = 0.0000999 when rounded up it would be 0.0001.

GBP/USD: (0.0001 divided by exchange rate = pip value) so 0.0001/1.5506 = GBP 0.0000644 but we want to get back to US Dollars so we add another little calculation which is GBP X Exchange rate so 0.0000644 X 1.5506 = 0.0000998 when rounded up it would be 0.0001.

By this time you might be rolling your eyes back and thinking do I really need to work all this out, and the answer is no.

Nearly all the brokers you will deal with will work all this out for you. They may have slightly different conventions, but it is all done automatically. It is good however for you to know how they work it out. In the next section we will be discussing how these seemingly insignificant amounts can add up.

More On Market Mechanics

Spot Forex is traditionally traded in lots also referred to as contracts. The standard size for a lot is $100,000. In the last few years a mini lot size has been introduced of $10,000 and this again may change in the years to come.

As we mentioned on the previous page currencies are measured in pips, which is the smallest increment of that currency. To take advantage of these tiny increments it is desirable to trade large amounts of a particular currency in order to see any significant profit or loss. We shall cover leverage later but for the time being let's assume that we will be using $100,000 lot size. We will now recalculate some examples to see how it effects the pip value.

USD/JPY at an exchange rate of 116.73

(.01/116.73) X $100,000 = $8.56 per pip

USD/CHF at an exchange rate of 1.4840

(0.0001/1.4840) X $100,000 = $6.73 per pip

In cases where the US Dollar is not quoted first the formula is slightly different.

EUR/USD at an exchange rate of 0.9887

(0.0001/ 0.9887) X EUR 100,000 = EUR 10.11 to get back to US Dollars we add a further step

EUR 10.11 X Exchange rate which looks like EUR 10.11 X 0.9887 = $9.9957 rounded up will be $10 per pip.

GBP/USD at an exchange rate of 1.5506

(0.0001/1.5506) X GBP 100,000 = GBP 6.44 to get back to US Dollars we add a further step

GBP 6.44 X Exchange rate which looks like GBP 6.44 X 1.5506 = $9.9858864 rounded up will be $10 per pip.

As we said earlier your broker might have a different convention for calculating pip value relative to lot size but however they do it they will be able to tell you what the pip value for the currency you are trading is at that particular time. Remember that as the market moves so will the pip value depending on what currency you trade.

So now we know how to calculate pip value lets have a look at how you work out your profit or loss. Let's assume you want to buy US Dollars and Sell Japanese Yen. The rate you are quoted is 116.70/116.75 because you are buying the US you will be working on the 116.75, the rate at which traders are prepared to sell.

So you buy 1 lot of $100,000 at 116.75. A few hours later the price moves to 116.95 and you decide to close your trade. You ask for a new quote and are quoted 116.95/117.00. As you are now closing your trade and you initially bought to enter the trade you now sell in order to close the trade and you take 116.95 the price traders are prepared to buy at. The difference between 116.75 and 116.95 is .20 or 20 pips. Using our formula from before, we now have (.01/116.95) X $100,000 = $8.55 per pip X 20 pips =$171

In the case of the EUR/USD you decide to sell the EUR and are quoted 0.9885/0.9890 you take 0.9885. Now don't get confused here. Remember you are now selling and you need a buyer. The buyer is biding 0.9885 and that is what you take. A few hours later the EUR moves to 0.9805 and you ask for a quote.

You are quoted 0.9805/0.9810 and you take 0.9810. You originally sold EUR to open the trade and now to close the trade you must buy back your position. In order to buy back your position you take the price traders are prepared to sell at which is 0.9810. The difference between 0.9810 and 0.9885 is 0.0075 or 75 pips. Using the formula from before, we now have (.0001/0.9810) X EUR 100,000 = EUR10.19: EUR 10.19 X Exchange rate 0.9810 =$9.99($10) so 75 X $10 = $750.

To reiterate what has gone before, when you enter or exit a trade at some point your are subject to the spread in the bid/offer quote. As a rule of thumb when you buy a currency you will use the offer price and when you sell you will use the bid price.

So when you buy a currency you pay the spread as you enter the trade but not as you exit and when you sell a currency you pay no spread when you enter but only when you exit.

Forex Platform

2006-03-19T20:00:00.000-08:00

FOREX PLATFORM

please check forex platform below:

PLATFORM STREAMSTER

Streamster™

To download the client application, please click on the link below, choose the "Save" option in your browser, and save the client to your local computer. If you prefer to start the installation process right away, please click on the link below and choose the "Open" option in your browser.

File Version:	1.2283
File Size:	414 KB
Platform:	Windows 98 / Me / NT / 2000 / XP
Download File:	Streamster™ Installation Package

	Download Time <>
	No Spyware, No Adware, No Malware.
	Uninstaller Included.
	Option to Minimize to System Tray.

For any inquiries you might have during the client application download, installation or later use, please do not hesitate to contact our support team:

Get help with the client application

Novativa Streamster™ is a client application you need to download and install on your computer in order to subscribe to and use services provided by Marketiva. When you download and install the application on your local computer, you will be able to access Streamster Server at Marketiva that accepts connections from the client application.

The address of the Streamster Server at Marketiva is:

nss.marketiva.com

When you start the client application on your local computer, you will be asked to type-in your username, password and the server address where you want to connect to. You then need to type-in your username and password that you received through the registration process on Marketiva.com Web Site. For the server address, please type-in the server address specified above. After a few seconds your client application will connect to the Streamster Server at Marketiva and you will be able to subscribe to and use the services provided by Marketiva.

PLATFORM COMPARISON
* Rollover system highlights for more information



Real-time Streaming Quotes	Yes	Yes	On Demand

Click & Deal	Yes	Yes	No

P&L Updates	Real Time	Every 15 sec	On Demand

Integrated Charts	Yes	Yes	No

Trailing Stops	Yes	No	No

Margin Balances	Real Time	Every 15 sec	On Demand

Trade from anywhere	No	Yes	Yes

Automatic System Upgrades	Yes	Yes	Yes

Access through Firewalls	Yes	Yes	N/A

PLATFORM XPRESSTRADE

Live Streaming Quotes

Fast Order Entry
Price Guarantee
Immediate Confirmations

Instant Execution

Fast Order Entry
Price Guarantee
Immediate Confirmations

Margin Watcher

Real Time Tracking
Multiple Leverage Options
Automatic Account Debit Protection

Reports

24-hour Access
Compile Custom Statements
Detailed Info On Every Trade

etc ....

PLATFORM DEAL BOOK® FX

When we built our standalone Windows application for forex trading called DealBook® FX, we had no idea it would win over the world's most respected traders. We've developed DealBook® FX Version 2 on that same reliable, stable and proven standalone forex trading software-platform.

Whether you are a fundamental trader or technical trader, a forex beginner or professional forex money manager, DealBook® FX 2 is the FX trading platform designed for forex traders by forex traders. Finally, forex traders have access to all of the resources once thought to be only available to the world's largest banks.

Multiple Currencies Trading Platform

Our award-winning trading platform, DealBook® FX 2, supports multiple currencies so forex traders do not need to familiarize themselves with another base currency when trading forex with GFT. This new DealBook® FX 2 feature supports major denominations, including the Euro, Japanese yen, Australian dollar, Swiss franc, Great Britain pound and the Polish Zloty.

Our DealBook® FX offers you a natural setting for determining your real-time profits/losses and understanding your account statements freeing up your time to focus on your forex trading. The new multicurrency feature is one of many good reasons to trade forex with GFT.

Visualize the Future of Forex

Traders have the capability to trade visually from an enhanced quoteboard, customizable chart or our exclusive dashboard, which runs in the background so traders can work in other applications. All of the tools traders need are just a right-click away - whether it's a new order, a new chart or a currency pair's most recent price activity.

–	Take advantage of Global Forex Trading's advanced forex trading technology by trading directly from our charts. Never move from the information that you use to make your trading decisions.
–	Monitor your stop/limit, and OCO (order cancels order) orders visually from the forex charts.
–	Quick and prompt trading with only two clicks directly from the charting interface.
–	Edit and cancel your orders by simply dragging a particular line to a different price-level on the forex chart with your mouse.
–	DealBook® FX Dashboard gives you a unique and fully customizable navigation tool that allows you to monitor your trades while working in other applications, allowing you to access important functions at the move of the mouse.
–	Active forex traders can track and manage current working orders at a glance by currency, track open positions, close out existing positions or protect current positions without the worry of common order-entry errors.

Trading Software with Sensible Design

DealBook® FX 2.0 is a forex trading software platform designed for not only the way people trade but also for the ways in which traders think. After studying and listening to traders throughout the world, we have recognized people not only trade differently but operate software differently, too.

–	DealBook® FX Version 2 integrates standard Window's menus built for traders who work better within a traditional "screen environment." Traders can utilize short-cut commands built in for quick access to forex trading tools, studies and technical indicators.
–	Task bars allow forex traders to switch between important information and workspaces that can be customized to individual trading techniques. Build a workspace for a specific chart or currency pair then switch back and forth with just a one mouse click.
–	Built-in voice-recognition software allows traders to train DealBook® FX to recognize their voice to access critical functionality without a single keystroke.

PLATFORM FX TRADING STATION 1.1

Download the news plugin to access real-time forex news from ThomsonFX, the leading providers of forex news. Simply download it, install it, and restart your FX Trading Station.


	Download Software News Plug-In

The MarketScope charts allow you access charts from within the FX Trading Station. Simply download, install, and restart your FX Trading Station.


	Download Chart Plug-In

System Requirements

Operating Systems: Windows 2000 or XP suggested
Wireless internet connections are not supported nor recommended for live trading activity. Wireless internet connections do not provide a consistent uninterrupted flow of data between your professional FX Trading Station
and our dealing desk. A physical internet connection is highly recommended.
Web Browser: Microsoft Internet Explorer 6.0
Processor: 300MHz Pentium (600MHz or higher suggested)
RAM: 128 MB (256 MB or higher suggested)
Hard Drive: 60 MB of free space

Introduction to The Forex Market

2006-03-19T19:58:00.000-08:00

Background

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. In comparison, the daily volume of the New York Stock Exchange is approximately US$30 billion per day.

Until now, professional traders from major international commercial and investment banks have dominated the FX market. Other market participants range from large multinational corporations, global money managers, registered dealers, international money brokers, and futures and options traders, to private speculators.

There are three main reasons to participate in the FX market. One is to facilitate an actual transaction, whereby international corporations convert profits made in foreign currencies into their domestic currency. Corporate treasurers and money managers also enter the FX market in order to hedge against unwanted exposure to future price movements in the currency market. The third and more popular reason is speculation for profit. In fact, today it is estimated that less than 5% of all trading on the FX market is actually facilitating a true commercial transaction.

How It Works

Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen. In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In every open position, an investor is long in one currency and shorts the other. FX traders express a position in terms of the first currency in the pair. For example, someone who has bought dollars and sold yen (USD/JPY) at 104.37 is considered to be long US Dollars and short Yen.

The most often traded or 'liquid' currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, including the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.

The FX market is considered an Over The Counter (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets. A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

Factors Affecting the Market

Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time.

Fundamental vs. Technical Analysis

Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, whereas fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor.

The most dramatic price movements however, occur when unexpected events happen. The event can range from a Central Bank raising domestic interest rates to the outcome of a political election or even an act of war. Nonetheless, more often it is the expectations surrounding an event that drives the market rather than the event itself.