Dollar Index Falls to Lowest Since 2008 as GDP Misses Forecast; Yen Gains

The Dollar Index fell to its lowest level in more than two years as the U.S. economy expanded in the first quarter at a slower rate than forecast, encouraging the Federal Reserve to keep borrowing costs low.

The yen appreciated versus most of its major counterparts after a report showed Japanese investors sold foreign assets last week. New Zealand’s dollar was one of the worst performers against the greenback after Reserve Bank Governor Alan Bollard called the currency’s recent advance “unwelcome.” The dollar sank a day after Fed Chairman Ben S. Bernanke said he was unsure when monetary stimulus will unwind.

“The data is accelerating dollar weakness,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. “The yen is firmer today because it now seems that there is more of a potential for repatriation back into the economy, which would drive up demand.”

IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, dropped 0.6 percent to 73.118 at 10:54 a.m. in New York, from 73.519 yesterday, after touching 72.871, the lowest level since July 2008.

The New Zealand dollar decreased for the first time in three days versus its U.S. counterpart after policy makers left the official cash rate unchanged at a record low 2.5 percent. The kiwi dropped 1 percent to 79.98 U.S. cents after reaching 81.08 cents yesterday, the highest level since March 2008.

Global Economic Calendar (29-April-2011)

Global Economic Calendar for 29th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Pound jumps on resilient UK growth...

The pound gained and gilts fell after a report showed Britain’s economy rebounded in the first quarter on the strongest surge in service-industry growth for four years.

Sterling snapped three days of declines versus the dollar and euro. Gross domestic product grew 0.5 percent after shrinking the same amount in the fourth quarter, the Office for National Statistics said today, matching the median estimate of 28 economists surveyed by Bloomberg News. Services, which make up 76 percent of the economy, grew by 0.9 percent, the most since 2006.

“The reaction that we’re seeing in the pound right now is some kind of relief, because some thought the number would be even weaker,” said John Hydeskov, chief analyst at Danske Bank A/S in London.

The pound advanced against all but two of its 16 most actively traded counterparts. Sterling rose 0.3 percent to $1.6523 as of 4:31 p.m., extending its monthly gain versus the greenback to 3.1 percent. It strengthened 0.2 percent to 88.67 pence per euro, after earlier depreciating to 89.23 pence, the weakest level since April 13.

U.K. government bonds fell, pushing the 10-year yield up nine basis points to 3.57 percent. That’s the biggest intraday move since March 22. The 3.75 percent security due September 2020 slipped 0.68, or 6.8 pounds per 1,000-pound ($1,656) face amount, to 101.42. The two-year note yield rose 10 basis points to 1.19 percent.

Global Economic Calendar (27-April-2011)

Global Economic Calendar for 27th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Global Economic Calendar (25-April-2011)

Global Economic Calendar for 25th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Trade Share (EUR/JPY 20-April-2011)

 

"Trade Share" is sharing of my trades once in a while.

This trade was done today 20th April 2011 at 10:26am (Singapore Time) and I thought today was going to be one gloomy day.

Why EUR/JPY and not on USD/JPY? Good question, with the uncertainties happening with US, I do not feel the sincerity on the movements with USD/JPY. Although it bounces of 38.2% Fibo, it just did not have that uuummmmppphhhfffff to create a higher low.

On the other hand, EUR/JPY was showing more sincerity when it bounces off 38.2% Fibo and created a higher low with yesterday's price action. Hence, today, a long position was opened at the mentioned time, at the price of 119.368.

Stop Loss was easy to put, at 119even. Target Profit was given more attention before deciding. I could be greedy and put a ridiculous target at a higher high but that will be too far fetch. As it is, I am not a long term trader. With the R2 of pivot points at 120.298 and the 10ma of Daily chart at around 120.370 at the point of execution, the Target Profit has been set at 120.31.

As it is and always be, the usual things in life. Late again :P hahaha!!! Was checking up on the trade as and when on my Android Dell Streak and suddenly, my open position disappeared!!! Either the trade hit my stop loss which was unlikely because the previous check, the trade was at 86pips into the money or my target profit was hit. A quick look at the closed position window and that is where the truth lies, my target profit was hit at 6:43pm (Singapore Time), 94.2pips in the bag =^_^=

Not a bad day after all. I am all smiles tonight...

Global Economic Calendar (20-April-2011)

Global Economic Calendar for 20th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Aussie Rides Commodity Boom as Credit Suisse Joins RBS in Seeing 4% Gains

From coal to iron ore, soaring commodity prices are paving the way for the Australian dollar to rebound from its worst first quarter in five years.

Royal Bank of Scotland Group Plc says the currency may jump about 4 percent against the dollar by the end of September after the Standard & Poor’s GSCI Index of 24 commodities climbed three-straight quarters. Credit Suisse Group AG predicts it will rise that amount over a year. Futures traders boosted bets this month on a stronger currency to the highest since at least 1993.

The so-called Aussie may strengthen because the central bank will increase interest rates, already the highest in the developed world, while the Federal Reserve keeps borrowing costs at record lows, according to surveys of economists by Bloomberg. Demand from China for Australian raw materials, which account for about 60 percent of exports, may be augmented by Japan rebuilding from last month’s earthquake and tsunami that caused an estimated $300 billion in damage.

“The commodity story that is driving Australia, not just now but over the last few years, will continue,” said Ray Farris, chief strategist for Asia-Pacific fixed income and global head of foreign-exchange strategy at Credit Suisse in Singapore. “The fundamental picture for the Aussie over the next 12 months is very, very good.”

Bernanke Briefings May Offset Fed Hawks With Words as New Tool

When Federal Reserve Chairman Ben S. Bernanke convenes his first press conference next week, he may emphasize a point the markets seem to have forgotten: He’s serious about keeping interest rates low for an "extended period."

Futures markets in Chicago see a 29 percent chance of a rate increase by December, and Eurodollar contracts on interbank lending predict rates of 0.5 percent by year-end -- an imminent tightening encouraged by an inflationary uptick and suggestions from some regional Fed presidents that rates should rise soon.

“Yet again the market is running way ahead of the Fed,” said Julia Coronado, chief economist for North America at BNP Paribas SA in New York and a former Fed economist. “Bernanke’s press conferences will help mitigate the influence of some of the FOMC members who are further away from consensus and yet very, very vocal.”

The briefings -- after the Fed’s two-day meetings in April, June and November this year -- may allow Bernanke, like his colleagues in Europe and Japan, to steer or even correct market expectations by making him the first official to explain any central bank actions. Regional presidents who don’t necessarily represent the Fed’s consensus, including Kansas City Fed President Thomas Hoenig, often have spoken first.

Bernanke and his chief deputies on the Federal Open Market Committee -- Fed Vice Chairman Janet Yellen and New York Fed President William C. Dudley -- have used speeches in recent weeks to knock back investor perceptions, based on remarks by Hoenig and several other FOMC members, that the central bank may raise rates before year-end. They have countered that the committee’s leadership believes the threat from accelerating prices will prove “transitory.”

Global Economic Calendar (19-April-2011)

Global Economic Calendar for 19th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Global Economic Calendar (18-April-2011)

Global Economic Calendar for 18th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Global Economic Calendar (15-April-2011)

Global Economic Calendar for 15th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Obama Offers Plan to Trim $4 Trillion From Deficit in 12 Years

President Barack Obama vowed to cut $4 trillion in cumulative deficits within 12 years through a combination spending cuts and tax increases, setting the stage for a fight with congressional Republicans over the nation’s priorities.

In presenting his long-term plan for closing the budget shortfall, Obama set a target of reducing the annual U.S. deficit to 2.5 percent of gross domestic product by 2015, compared with 10.9 percent of GDP projected for this year. He reiterated his support for overhauling the tax code to lower rates while closing loopholes and ending some breaks to increase revenue.

“We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt,” Obama said in prepared remarks for a speech today at George Washington University in the capital. “And we have to do it in a way that protects the recovery.”

Over the next five years, the administration forecasts the government will pile up a cumulative deficit of $3.8 trillion; over the decade, the cumulative deficits would rise to $7.2 trillion. With today’s proposal, Obama is going beyond the fiscal 2012 budget he presented on Feb. 14, which forecast cutting the deficit by $1.1 trillion over a decade.

As with his budget, Obama in his latest plan calls for ending the Bush-era tax cuts for the wealthiest Americans, which are set to expire in 2012.

Global Economic Calendar (14-April-2011)

Global Economic Calendar for 14th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Global Economic Calendar (13-April-2011)

Global Economic Calendar for 13th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Discouraged Workers Complicate Fed's Response to Jobless Fall

The sharpest drop in unemployment in more than a quarter century obscures a simple fact: The jobs market still isn’t working for many Americans.

Some 6.3 million people have been out of work and looking for a job for more than six months. The employment-to-population ratio is lower than it was when the recession ended as companies have been slow to add to payrolls. And big sources of hiring in the past -- government, health care and retailing -- may not be able to reprise that role in the future as lawmakers limit outlays and consumers curb spending.

“The trends are a little bit scary,” said Nobel laureate Michael Spence, a professor at New York University. “There’s been a break in an important part of the social contract” for many Americans who are finding they can’t get ahead.

Mixed messages from the jobs numbers make decisions more difficult for Federal Reserve Chairman Ben S. Bernanke and his central bank colleagues as they wrestle over monetary policy.

Rising prices and falling unemployment -- the jobless rate dropped to 8.8 percent in March from 9.8 percent in November, the biggest four-month decline since 1983 -- suggest that the Fed should raise rates from near zero later this year to keep inflation in check, according to Joseph LaVorgna, chief U.S. economist for Deutsche Bank Securities in New York.

He sees yields on Treasury securities rising, with the two- year note hitting 1.25 percent to 1.5 percent and the 10-year- note climbing to 4 percent by the end of the year. They were 0.81 percent and 3.58 percent at 5:16 p.m. April 8 in New York, according to Bloomberg Bond Trader prices.

Global Economic Calendar (12-April-2011)

Global Economic Calendar for 12th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Global Economic Calendar (11-April-2011)

Global Economic Calendar for 11th April 2011

**Time is with respect to Singapore Time (GMT+8:00)

Oil Climbs Above $112 on Libyan Armed Revolt, Dollar Weakness

Crude rose above $112 in New York for the first time in 30 months and Brent topped $125 on skepticism that Libyan output will rebound when fighting ends and as a weaker dollar increased demand for commodities.

Futures rose as much as 1.6 percent in New York as Barclays Capital said strikes on Libyan oilfields by forces loyal to Muammar Qaddafi ended hopes for a prompt resumption of exports, and will help send prices toward $130 a barrel. Raw materials surged as the dollar dropped to the lowest level against the euro in more than a year.

“Since the Libya unrest began, there’s been a re-coupling of the inverse relationship between the dollar and oil,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “The Middle East is being used as cover by speculators looking to send oil higher.”

Crude oil for May delivery rose $1.59, or 1.4 percent, to $111.89 a barrel at 12:27 p.m. on the New York Mercantile Exchange. The contract reached $112.10, the highest intraday price since Sept. 22, 2008. Futures are up 3.7 percent this week and are 31 percent higher than a year ago.

Brent oil for May settlement climbed $3.15, or 2.6 percent, to $125.82 a barrel on the London-based ICE Futures Europe exchange. The contract touched $125.79, the highest price since Aug. 1, 2008.

The European benchmark traded at a $13.93-a-barrel premium over West Texas Intermediate, the oil traded in New York. London Brent, traditionally cheaper than WTI, has been higher than the Nymex grade since August because of ample U.S. stockpiles and Middle East unrest.

U.S. Stocks, Yen Up on Tokyo Quake

Stocks fell, dragging the Dow Jones Industrial Average down from an almost three-year high, while Treasuries erased losses and the yen rose as a magnitude 7.1 earthquake shook Japan less than a month after the nation’s worst temblor on record. Crude oil topped $109 a barrel.

The Dow slid 43.37 points, or 0.4 percent, to 12,383.38 at 12:02 p.m. in New York and the Standard & Poor’s 500 Index dropped 0.3 percent. The iShares MSCI Japan Index Fund, an exchange-traded security tracking the nation’s equities, lost 0.6 percent, paring a drop of as much as 1.7 percent after Japan canceled a tsunami warning. Ten-year Treasury note yields were little changed at 3.54 percent after rising earlier. The yen strengthened against 15 of 16 major counterparts.

The earthquake hit 215 miles northeast of Tokyo, the U.S. National Oceanic and Atmospheric Administration said in an e- mailed preliminary earthquake report, spurring concern that Japan will be hindered in its efforts to recover from a March 11 quake and tsunami that damaged nuclear reactors north of Tokyo.

“It’s created more uncertainty for the region,” said Thomas Garcia, head of equity trading at Santa Fe, New Mexico- based Thornburg Investment Management Inc., which oversees about $80 billion.

Cisco Systems Inc., DuPont Co. and General Electric Co. lost more than 1.1 percent to lead the Dow’s drop after the earthquake and amid growing concern an impasse over the federal budget may lead to a shutdown of the U.S. government.