Forex Rates

Forex Rates

Mid-market rates at 2009-08-01 12:00 UTC. More currencies...

USD EUR GBP 1 USD = 1.00000 0.70731 0.59825 Inverse: 1.00000 1.41380 1.67154 1 EUR = 1.41380 1.00000 0.84581 Inverse: 0.70731 1.00000 1.18230 1 GBP = 1.67154 1.18230 1.00000 Inverse: 0.59825 0.84581 1.00000 1 JPY = 0.01057 0.00747 0.00632 Inverse: 94.65000 133.81635 158.21145 1 CAD = 0.92704 0.65571 0.55460 Inverse: 1.07870 1.52507 1.80309 1 AUD = 0.82810 0.58573 0.49541 Inverse: 1.20758 1.70728 2.01852 1 CHF = 0.93607 0.66209 0.56000 Inverse: 1.06830 1.51036 1.78571 1 RUB = 0.03210 0.02270 0.01920 Inverse: 31.15339 44.04473 52.07420 1 CNY = 0.14635 0.10352 0.08755 Inverse: 6.83290 9.66037 11.42148 1 ZAR = 0.12812 0.09062 0.07665 Inverse: 7.80497 11.03469 13.04634 1 MXN = 0.07569 0.05353 0.04528 Inverse: 13.21252 18.67988 22.08528

Turkey's July exports fall 27 percent yr/yr

CORRECTED-Turkey's July exports fall 27 percent yr/yr

Turkish exports fell 27.2 percent year-on-year in July to $8.89 billion, according to figures from the Turkish Exporters Association (TIM) on Saturday.

Exports in the first seven months of the year declined 20.4 percent from a year earlier to $52.76 billion, the state-run Anatolian news agency said, citing TIM's head, Mehmet Buyukeksi.

But July's exports were the highest in 2009 and the decline has slowed in June and July, Anatolian quoted Buyukeksi as saying. The automotive sector accounted for $1.715 billion, making it the country's biggest exporter, he said.

TIM's figures are released about a month before official data, which they usually match.

Official June trade data on Friday showed exports fell 29 percent year-on-year to $8.33 billion. Imports fell 36 percent to $12.48 billion.

The global recession has sapped demand for Turkish products overseas, while domestic demand has also fallen as the economy contracted. Gross domestic product fell 13.8 percent in the first quarter, the latest government data showed.

Daily Forecast

Japanese Yen (JPY)

The Yen was sold as risk appetite improved and the USD/JPY rose above resistance at 95.50. AUD/JPY and GBP/JPY also surged higher with US stocks. June Unemployment came in at 5.4% vs. 5.2% previously.

Euro (EUR)

The Euro remained in a tight band as the market consolidated recent losses. Germany's July Unemployment remained at 8.3%. Looking ahead, July Inflation is forecast at -0.4% vs. -0.1% previously y/y

Fri, Jul 31 2009 update

Dollar plunged as Wall Street ended a great July.

Markets in US finished mix on Friday. The Dow Jones rose 0.20% and the Nasdaq fell 0.30%. Both indexes ended the week in positive and the Dow Jones finished July with the highest monthly increase since 2002. Gold and oil rallied today rising 2% and 3.75% respectively, after a collapse in the price of the Dollar. Greenback fell across the board losing previous gains and ended near multi-month low.

EUR/USD rallied during the American session rising more than 150. The pair failed to break above 1.4300 but erased previous losses and ended the week with gains for the third time in a row.

GPB/USD jumped above 1.6700 posting a fresh one-month high. The pair rose more than 200 pips after the opening bell at Wall Street and finished the day above 1.6700 for the first time since October 21 of 2008

Colombia Peso Gained As Venezuela Concerns Ease; Stks Up

Colombia Peso Gained As Venezuela Concerns Ease; Stks Up

The Colombian peso gained slightly on Friday as concerns about possible trade

disruptions with Venezuela eased.

The Colombian peso ended at 2,037.90 to the dollar from COP2,045.30 on Friday amid a session that exchanged $730 million, less than the average $1 billion it trades on a regular day as it is the end of the month.

"Chavez has threatened Colombia many times in the past and nothing has happened. I don't see trade disruptions happening this time because the diplomatic spat is not that severe," said German Grijalba, analyst at Banco Popular.

On Tuesday evening, Chavez froze diplomatic relations with Bogota while threatened Colombian companies on Venezuelan soil with expropriation. He also pledged to break commercial ties if there is any new "aggression" from the neighboring country.

The deteriorating ties follow accusations from top officials in Bogota that Swedish-made rocket launchers sold to Venezuela were found in the hands of the Revolutionary Armed Forces of Colombia, or FARC.

As a result, Chavez ordered the withdrawal of his ambassador to Bogota.

On the equity market, the IGBC stock index rose 0.6% to 10,329.95 points.

The most-heavily traded stock was state-owned oil company Ecopetrol (EC), which rose 0.4% to COP2,775.

On Friday, crude-oil futures settle at a one-month high as the dollar plunged against major currencies. September settles at $69.45 a barrel, up $2.

Shares of the country's largest cement company Cementos Argos (CEMARGOS.BO) closed 0.6% higher to COP9,100. Shares hit as much as COP9,300 earlier Friday after the company agreed to buy cement grinding stations in Panama and the Caribbean from Switzerland's Holcim Ltd. (HOLN.VX).

Meanwhile, the yield on the benchmark local peso-denominated bond, known as TES maturing in 2020 ended at 8.876% from 8.92% on Thursday.

Central Bank dollar holdings - good for gold, bad for dollar

The latest figures from the US Department of the Treasury show not only how the US liabilities to other central banks have rocketed by 31% over the eleven months to May, but also that the balance of the maturities of these liabilities is shifting towards the short end as major counter parties increase their flexibility.

Gold surges above 950 dollars on plummeting greenback

Gold futures on the COMEX Division of the New York Mercantile Exchange went back above 950 dollars on Friday due to a much lower dollar. Silver and platinum both finished higher.Gold futures on the COMEX Division of the New York Mercantile Exchange went back above 950 dollars on Friday due to a much lower dollar. Silver and platinum both finished.

Daily Report:

Dollar Soft on Rally in Stocks and Commodities, All Eyes on 2Q GDP

Dollar and yen are generally soft today so far on the back of another day of rally in Asian stocks and further rebound in commodities. Following 0.92% rise in DOW, Nikkei gapped higher and surged 1.9% to close strongly at 10356. Crude oil is ba

ck above 67 level, after two volatile days of price actions on Wednesday and Thursday which saw the black gold dipped to as low as 62.70. Gold is also trading above 940 level again. Note that dollar has contrasting outlook against two groups of currencies. Against Euro, Yen and Swissy, the greenback is noticeably strong this week and some upside is in favor in near term. However, against Aussie, Loonie and Sterling, dollar remains weak and a new low is still expected.

Technically, Dollar index's rebound from 78.32, t hough strong, was limited by mentioned 79.66 resistance and retreated sharply. With 4 hours MACD crossed below signal line, intraday outlook is turned neutral for the moment. Note again that with 79.66 resistance intact, there is no clear indication of reversal yet. Below 78.76 will suggest that correction from 78.32 has completed and will bring fall resumption towards 77.69 key support. However, a break above 79.66 will firstly indicate that fall from 80.89 has completed. Also, this will build up the case of double bottom reversal in the index (78.33, 78.32) and will bring stronger rise to 81.47 resistance for confirmation

Is GDP Optimism Bad for U.S. Dollar? July 31st, 2009

Is GDP Optimism Bad for U.S. Dollar?

The U.S. dollar is falling against the euro for the second day today as the traders expect a decline in the contraction of the U.S. GDP for the second quarter of 2009.

British House Price Data Influence Pound

The Great Britain pound recovered from the two days of losses against the U.S. dollar and continued to gain against the euro today after the U.K. house prices data was released.

British Pound

British Pound Volatility Ahead on BOE Rate Decision, Equities Reversal

The British Pound is all but guaranteed a week of heavy volatility as the busy economic calendar headlined by a pivotal interest rate announcement from the Bank of England is compounded by hints of a downward reversal in risk appetite. An a

ctual change in benchmark borrowing costs is effect

ively off the table for the central bank, but traders will be closely watching to see if policymakers choose to ramp up quantitative easing measures after promising to “review the scale” of the program for the August rate decision in conjunction with the release of their quarterly inflation report. Despite the BOE’s apparent optimism and signs of stabilization in some leading indicators, economic growth disappointed in the second quarter, bolstering dovish arguments from the likes of the British Chamber of Commerce and the Shadow Monetary Policy Committee (a group of independent economists that meet at the London-bas

ed Institute of Economic Affairs). A timely GDP estimate tracking the pace of economic growth in the three months through July from the National Institute of Economic and Social Research (NIESR) will help set the tone for the monetary policy announcement: while usually quite good at estimating official economic growth figures, NIESR missed the mark in the second quarter having called for output to shrink just -0.4% only to be faced with a -0.8% result; this time around, the prestigious think tank will have likely identified the reason for their previously over-optimistic reading and may offer valuable insight on potentially overlooked weaknesses in the UK economy.

The remainder of the economic calendar is comparatively considering the themes behind further marginal improvements in PMI and Industrial Production are likely to have already been priced into the exchange rate while signs of moderating turmoil in the property market expected to be reported by Halifax have been adequately telegraphed by the latest Hometrack Housing Survey and the Rightmove House Prices report. Indeed, only a meaningful downside surprise in these metrics is likely to prove particularly market-moving, as the trajectory of stock prices and 12-month interest rate expectations (derived from trading in overnight index swaps) over recent months suggest traders are surely looking for the recession to begin to bottom.

Turning to risk sentiment, technical positioning is hinting that the equities rally that began in March is starting to run out of momentum and may be on track to putting in a double top at the October 2008 swing high, with volumes steadily declining since early May and clear negative divergence between rising prices and stalling relative strength studies. A trade-weighted average of the Pound’s value against a basket of major currencies is now over 83% correlated with the MSCI World Stock Index, suggesting sterling will be dragged along if stock markets do indeed turn lower. That said, US news has been the key fundamental catalyst in setting the trajectory of risk-related assets, and expectations of modest improvements for nearly all of the scheduled releases on the US calendar point to smooth sailing for equity markets (barring any significant downside surprises on key metrics or a particularly disappointing second-quarter earnings outcome from a major company).

U.S: Recession is over or not?

During his testimony in front of the house panel last week, president Bernanke confirmed a tentative stabilization for the U.S. economy at these levels, although rates should remain low for the next months as well. In reality, the huge consumer and business debit will require years to be repaid. Private sector spending has fallen to record lows and savings have increased. The average duration of the unemployment rate in the United States is at a record high, while tax incomes have declined sharply for the government agencies. The decrease of spending by the private sector has been only marginally substituted by the various government interventions and the trend should continue in the years to come. Unemployment remains the weakest spot, as jobless claims rose to 554,000 in the week of July 18th from 524,000 the previous week. The housing market is at the contrary designing an interesting bottom, albeit prices are still declining. For the third consecutive month, home sales rose 3.6% in June (+1.3% expected) to 4.84 million. The increase was broad-based with condos rising 14% and single-family homes moving up 2.4%. Unsold home inventories declined instead to 9.4 months from the all-time high of 11.3 months registered in March of 2008. In effect, the worst might be over for the real estate market, if history repeats itself. Since1963 important bottoms occurred every 8/9 years: 1967, 1975, 1983, 1991, 2000, 2008/9 (?)

Market Movers of the Day

Asia-Pacific

*Australian Building permits rose 9.3%MoM versus a fall of -11% a month before

*In Japan Nomura/JMMA manufacturing PMI rose to 50.4

Europe

*UK Gfk consumer confidence remained unchanged at -25

*UK Housing prices rose 1.3%MoM

*German Unemployment remained steady at 8.3%

*EU consumer confidence was -23 versus -25 a month before

Americas

*US Initial Jobless claims rose to 584K

The Overall Sentiment

As data publications stud largely in line with market expectations it was equities and equities profits that took the lead. Equity indexes across the board pushed to higher levels with a strong positive sentiment. The Dow rose close to 1% the S&P rose 1.19% and settled at the 986price zone. Oil the commodity which is one of the most strongly linked to the recovery story rose steeply and settled at the 67$ price zone. The FX trade was rather subdued although the Euro rebounded slightly from the 1.4$ support and the Sterling pushed back to the 1.65 zone. All in all it seems that whenever the market is gearing up for a bearish correction the bulls take the lead and push the market back to the higher range and keep the FX market in a typical August sideways.

The Day Ahead

Official data publications on the world economy will return to the centre stage with highly important data due to be published. The EU unemployment figure and CPI due at 9:00 AM will reflect the health of the EU job market and will shed light on the deflationary pressures in the region . Nevertheless it will be again data from North America which will dictate the sentiment. Both the GDP of the US and Canada are due this Friday and will conclude a week loaded with economic data mainly from the US. However the GDP will not be the only US data concluding for the week the Real consumption expenditure figures and Chicago purchasing managers index are also due this Friday and will help draw a clearer picture on the state of the world’s largest economy. Investors seem to wait for signs the steep economic nose dive is over thus if data publication will generally show a declining past of economic contraction the risk trade will remain a float whereas a rather negative data will spur some confusion among investors and could push markets to test the lower range.

UPDATE 2009-07-31

UPDATE 1-EU Commission to clear Lufthansa's buy of AUA

Lufthansa looked set on Friday to win approval from EU anti-trust authorities to buy ailing Austrian Airlines (AUA) after the German air carrier proposed remedies to address competition concerns.

'After talks earlier today about the results of this week's market test, Lufthansa has put forward further improved remedies to address the competition concerns raised in this case,' EU Competition Commissioner Neelie Kroes said in a statement.

'The draft decision will be submitted to the Advisory Committee of the Member States and a final proposal will be presented, for adoption, to the College of Commissioners as soon as possible,' she added.

With the committee having only an advisory role in the case, the Commission is expected to back Kroes' proposal. A Commission source said the final decision could be made in two weeks at the earliest.

The Commission did not say what remedies Lufthansa had proposed, but a source close to the deal earlier said the air carrier would give up some key takeoff and landing slots in Vienna to competitors.

Lufthansa has asked the Austrian Takeover Commission to extend the Aug. 31 to give it and the Commission more time to reach agreement, after a weeks-long standoff over EU concerns that combining the airlines would affect fair competition.

Lufthansa had originally agreed to pay up to 377 million euros ($531.3 million) for AUA and has since had to offer the European Union some concessions on lucrative routes. To offset rising costs of the purchase, AUA on Wednesday approved a 150 million euro savings programme.

AUA lost 429 million euros last year and has piled up more than 1 billion euros in debt, or more than five times its equity. It only survived this spring due to a 200 million euro lifeline from the Austrian government, two thirds of which it has used up.

unemployment rate increased

Colombia's urban unemployment rate increased to 13% in June from 11.7% in the same month last year amid a negative unemployment outlook for 2009, the country's DANE statistics agency said Friday.

The figures apply to the country's 13 major metropolitan areas, and observers of the Colombian economy tend to consider the urban unemployment rate - as opposed to the national rate - to be a better gauge of the job market's health.

On the national level, including rural areas, the average unemployment rate in June was 11.4%, up slightly from 11.2% in the same month last year but lower than the 11.7% registered last month.

DANE said there were 2.39 million unemployed people in Colombia in June 2009, up from 2.15 million in June 2008.

The Colombian economy is slowing down because of the global economic crisis. Colombia's economy contracted 1% in the fourth quarter of 2008 from the same period the year before and 0.6% year-on-year in the first quarter of this year.

Daniel Lozano, analyst at local brokerage Profesionales de Bolsa, believes urban unemployment could increase to 14% at the end of the year because the economy of the U.S., Colombia's largest trade partner, has not recovered.

"We believe the international financial crisis is not over yet. As long as the U.S. doesn't recover, Colombia will be hit," Lozano said.

Dollar Fails to Extend Post 2Q GDP Recovery

Dollar Fails to Extend Post 2Q GDP Recovery

There is no cheering in the financial markets on better than expected 2Q GDP report from US which showed recession in the economy eased quicker than expected. US stocks open nearly flat which commodities recover from earlier knee jerk reactions. Dollar fails to extend post GDP recovery and is back under pressure against most major currencies. After all, there isn't any clear direction in the financial markets in general.

Real GDP in US dropped -1.0% annualized rate in 2Q, better than expected -1.5% and showed significant improvement over 1Q's -5.5% contraction. However, personal consumption expenditures dropped -1.2% annualized rate versus a slightly increase in 1Q, suggesting consumer demand remains weak. Investment was another negative in the GDP report even though the decline of -13.5% was much better than 1Q's -39%. GDP price index rose just 0.2% comparing to expectation of 1.0%. Data from Canada saw GDP dropped more than expected by -0.5% mom in May.

Released earlier, Eurozone CPI dropped more than expected by -0.6% yoy in July comparing to consensus of -0.4%. However, unemployment rate rose slightly from downwardly revised 9.3% to 0.4% in Jun against expectation of 0.7%. Swiss KOF leading indicate also improved more than expected to -0.99 in Jul. Released from UK, Gfk consumer confidence was unchanged at -25 in July.

Data from Japan released overnight were generally negative. CPI inflation dropped more than expected by -1.7% yoy in June, a record low in at least 33 years. Unemployment rate rose more than expected to 5.4% in June, its highest level since June 2003. Household spending rose less than expected by 0.2% yoy in June. Housing starts dropped more than expected by -32.4% yoy in June. Though, Manufacturing PMI is back above 50 at 50.4 in July.

Forex Top Story

Second Quarter GDP Contracts At Slower Than Expected Pace


The U.S. economy continued to shrink in the second quarter, according to new government statistics released Friday, although the pace of contraction slowed by more than economists had been expecting.

The U.S. Commerce Department revealed that Gross Domestic Product, a closely watched measure of broad economic performance, fell at a pace of 1 percent for the second quarter. Economists had expected GDP to fall at a 1.5 percent rate.

This marks the fourth consecutive quarter of contraction, but the pace slowed considerably from the 6.4 percent decline that was seen in the first 3 months of the year.

While the moderated pace of decline is a step toward economic stability, experts are uncertain about the second-quarter report, noting that components of the report were mixed.

"We are set up for an improvement in inventories and trade, but consumer spending still remains in question."

Personal consumption was down 1.2 percent in the second-quarter report, significantly more than economists had been expecting. This followed a 0.6 percent increase in the first quarter.

forex update 31-7-2009

Score One for the Taxpayer as Goldman Sachs Repays Loans

Goldman Sachs quietly paid $1.1 billion to get out from under the thumb of – I mean – to redeem the US Treasury for the warrants held by the government since last fall. With this transaction, and the earlier repayment of the original $10 billion loan received as part of the massive taxpayer-funded bank rescue plan last October, Goldman Sachs is now free of its government debt. And what great timing! Now there is no need to figure out how to divide the record $3.44 billion profit the firm made last quarter with 300 million or so additional share holders.

Seriously though, it must be somewhat heartening for taxpayers to see that a major bank that appeared so close to collapse just nine months ago, is now able to pay back its public debt obligations. In fact, according to a statement released by Goldman Sachs, all told, the government received an annualized rate of return of 23 percent on its $10 billion investment in Goldman Sachs. Not too shabby at any time – especially now considering the current state of the economy.

Dig a little deeper however, and there may be more to this miraculous turnaround than first appears. Yes, Goldman Sachs did manage to make a healthy profit and pay off its government loans in a timely manner; a fact that both parties are eager to share with the public for obvious PR reasons. However, neither camp is really talking much about the AIG connection and the role this had in improving Goldman Sachs’ fortunes.

American International Group – which sold about $440 billion or so in credit default swaps – imploded in spectacular fashion when the financial crisis came to a head last fall. When its credit rating was subsequently downgraded, AIG found itself unable to meet the resulting increase in collateral obligations on its swaps and the government felt compelled to come to the insurer’s rescue to the tune of $85 billion. The total cost of this rescue has since grown to more than $180 billion, and in return, the government – read, the taxpayer – now holds 80% of the company. Finding itself suddenly flush, AIG immediately settled a series of its default swaps obligations; and at the top of its list of recipients was Goldman Sachs which received a payout of nearly $13 billion.

You can decide for yourself if Goldman Sachs could have turned its ship around so quickly without this payment. Nevertheless, by clearing its debts with the government, Goldman Sachs once again controls its own destiny and any talk of moderating compensation levels – even in a show of goodwill – was tossed out the window when the firm announced that $11.4 billion has been earmarked for employee pay and benefits. This works out to around $900,000 per employee so clearly, things are back to normal at the nation’s largest investment bank.

But honestly, was there ever a real expectation that we would see meaningful changes on executive compensations? Even President Obama – whose administration has been hinting at implementing more “control” over executive pay practices – seemed particularly resigned to the return of the status quo. When responding to a question in a recent interview, the President acknowledged that since Goldman Sachs has paid back its government loans, the government no longer “has the same kind of levers on them we might have”.

Perhaps taxpayers should just be happy they received their investment back and move on

French Economy Is Challenging

IMF: Near-Term Outlook For French Economy Is Challenging

The near-term outlook for the French economy is challenging and the provision of short-term stimulus without derailing medium-term fiscal consolidation objectives would be the main challenge for the country's fiscal policy, the International Monetary Fund said Friday.

The IMF forecasts France's real gross domestic product to drop by 3% in 2009, followed by a gradual recovery in 2010. It added that there are downside risks to this outlook due to the sensitivity of the French economy to a worse-than-foreseen contraction in the European Union and underlying tail risks, in particular in the financial sector.

After Article IV consultation with France, the International lender said the steep increase in unemployment could further shake confidence and weaken private consumption. A worsening of the financial crisis would hurt banks' balance sheets and could further depress credit growth. At the same time, lower trade openness and higher social protection are expected to continue to shelter the French economy relative to its peers.

Moreover, the IMF noted that some modest additional fiscal action might be needed if downside risks materialize, but should be focused on temporary and investment-based measures given France's limited fiscal space. At the same time, some of the IMF officials are of the view that there is no scope for additional fiscal support, in light of the sizable stimulus already in train and the pressing consolidation needs.

The IMF stressed that safeguarding medium-term fiscal sustainability and avoiding unsustainable debt dynamics is a key priority for French authorities in the coming years.

The near-term outlook for the French economy is challenging and the provision of short-term stimulus without derailing medium-term fiscal consolidation objectives would be the main challenge for the country's fiscal policy, the International Monetary Fund said Friday.

USD Edges up as Stocks Drift

The greenback recovered from its earlier losses against the majors as the US equity bourses slipped into negative territory by afternoon trading. The dollar bounced off its near 2-month lows versus the euro near the 1.43-level and recovered slightly after touching a new 10-month low against the Canadian dollar at 1.0781.

The June new home sales report blew away consensus estimates, posting its largest advance in 8-years, increasing to 384,000 units and up 11% on the month. The data reinforced sentiment that the US economy is beginning to bottom out. The reports slated for release during the week include the Richmond Fed manufacturing survey, the Conference Board’s consumer confidence survey, durable goods orders, weekly jobless claims, Q2 GDP and the July Chicago PMI. Forecasts for this week’s reports predominantly reveal improving fundamentals, which are likely to be positive for stocks and detrimental to the dollar.

Dollar Coming Under Pressure

Dollar Coming Under Pressure As Risk Appetite Continues With US GDP Figures Expected To Signal Recession Ending



The Euro has gave back earlier gains after reaching an intra-day high of 1.4157 at the beginning of European trading as equity markets have turned negative. A decline in the Euro-Zone July CPI- estimate to a 13 year low of -0.6% from -0.1% has added to bearish sentiment as continuing disinflation will force the ECB to keep rates at a record low 1.00%. We also saw Italian CPI fall to its lowest level since 1959 as food and utilities prices fell. Meanwhile, EZ unemployment figures for June showed a rise from a revised 9.3% to 9.4%, but the reading was lower than the initial May print of 9.4% and forecasts of 9.7%.

The EZ inflation data adds to the 0.6% decline in German consumer prices signaling that prices continue to remain depressed for the region which will put pressure on corporate profits going forward and could force the ECB to consider further easing. Although, it is widely expected that the central bank won’t go below the current 1.00%, the IMF’s recent call for the ECB to continue its accommodative stance as long as downside risks remain for prices started to lower interest rate expectations which could weigh on the Euro. However, the single currency’s correlation to risk remains and the improving outlook for the global economy has fueled demand for high yielding assets which could continue today. Indeed, an improvement in the Swiss KOF reading has started to help the Euro regain its footing as it reached its highest level since January.

The pound has reached an eight day high of 1.6573 as risk appetite continued in Asian trading and consumer confidence held at -25. The reading missed expectations for an improvement to -23, but considering that we have been seeing sentiment fall in other regions the stable print was viewed as a positive. A test of the 6/3 high of 1.6665 remains a possibility, especially of we see bullish sentiment continue in the U.S. However, we may see traders remain cautious with a slew of data due next week including a BoE decision. The 50-DAY SMA at 1.6339 remains as staunch support and a break below there could significantly increase downside risks.

The dollar has started to firm after earlier weakness as markets await 2Q GDP figures which are expected to show that the recession in the U.S. is abating. Forecasts are calling for a contraction of 1.5% following a 5.5% drop for the prior three months, which would be the fourth straight quarterly decline in growth making the recession the worst since WWII. Expectations are growing that the economy could see a return to expansion in the third quarter and an inline or better print would fuel optimism and prevailing risk appetite. Therefore, we could see continued pressure on the dollar unless we see its correlation to risk break as investors become bullish on the U.S. economy. We could also see the greenback rise on a bigger than expected contraction or a significant decline in personal consumption which is forecasted to fall by 0.5%. If consumers are continuing to retrench as they battle rising job losses, the outlook for domestic growth could dim sinking equity markets and sparking dollar support.

NY Gold Seen Up $2.50, Silver Up 10 Cents

PRECIOUS METALS: NY Gold Seen Up $2.50, Silver Up 10 Cents

NEW YORK (Dow Jones)-December gold futures are expected to open floor trading in New York around $2.50 an ounce higher Friday, based on electronic activity ahead of the pit session at the Comex division of the New York Mercantile Exchange. September silver is expected to be up about 10 cents an ounce.

In overnight activity, spot gold rose Friday on dollar weakness, but volumes were low as the metal was struggling to find direction.

U.S. economic reports on Friday include second-quarter advance GDP and second-quarter employment cost index at 8:30 a.m. EDT (1230 GMT) and July Chicago PMI at 9:45 a.m. EDT (1345 GMT).

Comex gold warehouse stocks were down 2,506 ounces at 9,141,713 ounces Thursday, while silver stocks were down 587,759 ounces at 118,309,732 ounces.

EUR/USD rises

Forex: EUR/USD rises to 1.4235

FXstreet.com (Córdoba) – EUR/USD has risen continuously after the pair fell to 1.4185. Since then the Euro moved with an upside bias and reached levels above 1.4230. The Euro was able to recover of previous losses during the American session. The pair is still moving sideways without a clear trend for the day and is 0.55% above the opening price, rising for the first time in four days.

Against the Pound, the Euro is stronger today. EUR/GBP rallied to the upside after reports show a bigger than expected contraction in the United Kingdom. The pair is holding above 0.8600 and has recovered from Wednesday and Thursday losses.

Euro Choppy As German Employment Data And Sentiment Indicators Give Mixed View

Euro Choppy As German Employment Data And Sentiment Indicators

The Euro has been choppy overnight trading between 1.4050-1.4100 as it was initially weighed by German unemployment data and then buoyed by an increase in optimism in the region. Euro-Zone economic confidence in July rose to 76.0 from 73.2 which was the fourth straight improvement. Consumer confidence for the same period also improved to -23 from -25 as low interest rates and government stimulus has improved the outlook for the economy. However, the number of unemployed Germans rose to 3.46 million from 3.41 million. Yet, on a seasonal adjusted basis there was a decline of 6,000 which left the unemployment rate unchanged at 8.3%. Bloomberg Retail PMI figures also crossed the wires showing a decline for the fourteenth month to 47.3 from 47.5

Despite the increase in the number of unemployed Germans and decline in retail sales, there were signs of improvement for the economy outside the improved sentiment readings. Indeed, the unemployment rate remaining unchanged and the decline in retail sales was mostly driven by slumping automobile demand which offset gains in clothing and household goods. Additionally, Germany-the region’s largest economy- showed an improvement to 49.8 from 46.0. However, there remain concerns that German banks restrictive lending practices could hamper growth. Tight credit markets and German CPI falling to -0.6% has lowered interest rate expectations for the region as the ECB will be hard pressed to start tightening with credit markets remaining frozen and deflation risks alive.

The pound reached back above 1.6500 before finding resistance as it found support early in from a rise in U.K. house prices. Nationwide building society reported that prices rose for a third straight month in July by 1.3% as inventory levels have started to fall. The increase in home values exceeded median estimates of 0.2% which builds upon yesterday’s improvement in mortgage approvals to paint a rosier picture for the sector. It is widely viewed that a recovery for the U.K. economy is dependent a rebound in the housing sector and the loosening of credit standards. We have started to see credit markets thaw and as Britons gain equity in their homes it should make itt easier for them to obtain funds for other purchases.

The dollar was mixed overnight as it see sawed against high yielders but saw weakness against the sterling despite European equity markets trading higher. We have started to see recent correlation trends begin to fail to hold which could be a sign that we are seeing a new paradigm emerging. Therefore, the greenback’s relationship to risk has to be evaluated on a daily basis at this point as signs the U.S. economy is stabilizing may begin to generate support for the dollar. Indeed, we saw the Fed Beige book report show that most federal districts are moderating or stabilizing which has raised expectations that we could see a return to growth in the third quarter. We will get 2Q GDP figures tomorrow which will give us further insight and could keep markets on hold until then. Initial jobless claims is the only release scheduled today and although it does have market moving potential we would need to see a significant variation from estimates to create sustainable momentum. The level of unemployment is expected to rise to 570,000 from 554,000 but we have seen the level consistently below 600,000 which is a sign of improvement.

EURO exchange rate

The Euro continues to build strength even against the dollar. Therefore, if you are planning a trip to France and some of the other European countries, it would definitely be too expensive. There are many ways of cheating that bad Euro exchange rate, just by making Euro-saving decisions about when you are going to go for your visit, where to go, where you are going to stay, what to do and where you are going to eat. Below are some tips as to how you are going to save Euros in a bad exchange rate.

As the Euro builds strength, particularly against the dollar, it will probably make a trip to Europe, and especially France much too expensive for your wallet. There are many ways that you will be able to cheat a bad Euro exchange rate. If you have your heart set on seeing France you can decide ahead of time about where you are going to go, when you want to go, where to stay, things to do and where to eat. Here are some tips about how you can save Euros in a bad exchange rate:

Saving Euros - Where to Go

One of the cities that you definitely want to avoid is Paris. This is a very expensive city, possibly one of the most expensive in this world. If you do not find that you can avoid Paris altogether, then fly to Paris, stay overnight and spend the day sightseeing. Some of the other expensive cities are Nice and Cannes.

There are so many wonderful regions and destinations in France that you probably not even miss Paris. Some of the inexpensive cities are the following:

• Strasbourg
• Avignon
• Toulouse
• Bordeaux
• Montpellier

You may wish to buy some more travel guides concerning places to go and the amount you will save as far as the Euro exchange rate goes:

• A list of the regions thst France is divided up into
• Some of the top French cities that will not be on your visit to see

Save on Those Euros!

If you feel you must definitely visit Paris during the spring, you may want to think twice about this. Spring and summer are quite costly times to visit and these seasons are not really the best times to visit.

If you absolutely feel that you must experience France in the spring, then it may be well to plan your trip either in late March or go to the French Riviera in October when it is still warm.

If you really want to save on those Euros, then it would be well to plan a trip to France in the fall or winter. You will not only save on Euros, but you will also experience the large crowds and experience France in the off-season.

Forex News Trader

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Education about forex

Factors affecting EUR/USD

The Eurozone: The 12 countries that have adopted the Euro in order of GDP: Germany, France, Italy, Spain, the Netherlands, Belgium, Austria, Finland, Portugal, Ireland, Luxembourg and Greece.

European Central Bank: Controls monetary po

li

cy for the Eurozone. The decision-making body is the Governing Council, which c

onsists of the Executive Board and the governors of the national central banks. The Executive Board consists

of the ECB President, Vice-President, and four other members.

ECB Policy Targets: The primary objective of ECB is price stability consisting of two main "pillars" of monetary policy. The first one is the outlook for price developments and risks to price stability. Price stability is defined as an increase of the

Harmonized Index of Consumer Prices (HICP) of below 2%. While the HICP is important, a broad number of indicators and forecasts are used to determine the medium-term threat to price stability. The second pillar is monetary growth as measured by M3. The ECB has a "reference value" of 4.5% annual growth for M3.

The ECB holds a Council meeting every other Thursday to make announcements on interest rates. At each first meeting of the month, the ECB holds a press conference in which it gives its outlook on monetary policy and the economy as a whole.

Interest Rates: The ECB’s refinancing rate is the Bank’s key short-term i

nterest rate used for managing liquidity. The difference between the refinancing rate and the US Fed Funds rate is a good indicator for the EUR/USD.

Three-month Eurodeposit (Euribor): Eurodollar deposits are bank accounts deposited in a country other than the country of the currency; e.g. Japanese Yen accounts deposited outside Japan are called “Euroyen.” Similarly, euro-denominated accounts deposited outside the Eurozone are called "EuroEuros". The interest rate on three-month Euribor deposits held in banks outside the Eurozone. It serves as a valuable benchmark for determining interest rate differentials to help estimate exchange rates. Using a theoretical example on EUR/USD, the greater the interest rate differential in favor of the Euribor against the Eurodollar deposit, the more likely EUR/USD is to rise. Sometimes, this relation does not hold due to the confluence of other factors.

Ten-Year Government Bonds: Another key factor of the EUR/USD exchange rate is the difference in interest rates between the US and the Eurozone. The German ten-year Bond is normally used as a benchmark. Since the rate on the ten-year Bond is below the US ten-year note, a spread narrowing (i.e. a rise in German yields or a fall in US yields, or both) is theoretically expected to favor the EUR/USD rate. A widening in the spread will act against the exchange rate. So the ten-year US-German spread is an important number to remember. The trend in this number is usually more significant than the absolute value. Naturally, the interest rate differential is usually related to the growth outlook of the US and the Eurozone, which is another fundamental factor of the exchange rate.

Economic Data: The most important economic data comes from Germany, the largest economy, and from the euro-wide statistics still in their infancy. Key data are usually GDP, inflation (CPI and HICP), industrial production, and unemployment. From Germany in particular, a key piece of data is the IFO survey, which is a widely accepted indicator of business confidence. Also important are budget deficits of the separate countries, which according to the Stability and Growth Pact, must be kept below 3% of GDP. Countries also have targets for reducing their deficits further and failure to meet these targets will likely be detrimental to the Euro (as we observed Italy’s loosening of budget deficit guidelines).

Cross Rate Effect: The EUR/USD exchange rate is sometimes impacted by movements in cross exchange rates (non-dollar exchange rates) such as EUR/JPY or EUR/JPY. For example, EUR/USD could fall as a result of significantly favorable news in Japan that filters through a falling EUR/JPY rate. On the contrary, USD/JPY may be declining, Euro weakness spills onto a falling EUR/USD.

Three-Month Euro Futures Contract (Euribor): The contract reflects market expectations on three-month EuroEuro deposits (Euribor) into the future. The difference between futures contracts on the three-month cash Eurodollar and on the EuroEuro deposit is an essential variable in determining EUR/USD expected rate.

Other Indicators: There is a strong negative correlation between EUR/USD and USD/CHF, reflecting a steadily similar relationship between the Euro and the Swiss Franc. This is because the Swiss economy is largely affected by the Eurozone economies. In most cases, a spike (dip) in EUR/USD is accompanied by a dip (spike) in EUR/CHF. The inverse also usually holds. This relationship sometimes fails to hold in the event of data or factors pertaining solely to either one of the currencies.

Political Factors: Similar to all exchange rates, EUR/USD is susceptible to political instability such as a threat to coalition governments in France, Germany or Italy. Political or financial instability in Russia is also a red flag for EUR/USD because of the substantial amount of German investments in Russia

USD: Breakout or Failure?

U.S: Recession is over or not?


During his testimony in front of the house panel last week, president Bernanke confirmed a tentative stabilization for the U.S. economy at these levels, although rates should remain low for the next months as well. In reality, the huge consumer and business debit will require years to be repaid. Private sector spending has fallen to record lows and savings have increased. The average duration of the unemployment rate in the United States is at a record high, while tax incomes have declined sharply for the government agencies. The decrease of spending by the private sector has been only marginally substituted by the various government interventions and the trend should continue in the years to come. Unemployment remains the weakest spot, as jobless claims rose to 554,000 in the week of July 18th from 524,000 the previous week. The housing market is at the contrary designing an interesting bottom, albeit prices are still declining. For the third consecutive month, home sales rose 3.6% in June (+1.3% expected) to 4.84 million. The increase was broad-based with condos rising 14% and single-family homes moving up 2.4%. Unsold home inventories declined instead to 9.4 months from the all-time high of 11.3 months registered in March of 2008. In effect, the worst might be over for the real estate market, if history repeats itself. Since1963 important bottoms occurred every 8/9 years: 1967, 1975, 1983, 1991, 2000, 2008/9 (?).

European markets rise Thu, Jul 30 2009

European markets rise as investors optimism returns; Pound bounces up, Euro in range

European stock markets are going through moderate gains on early trade as investors optimism returned on the back of positive earnings reports, adding reasons to the theory of global economy walking through the path of recovery.

Eurostoxx 50 Index is going through a 0.40% advance, while French CAC Index adds 0.43%, and the German DAX Index edges down 0.16%. In the U.K, the FTSE Index rises 0.55%.

On the macroeconomic front German Unemployment declined by 6,000 persons in Jul, against expectations of an increase, while the jobless rate remained at 8.3%. Furthermore, Euro Zone's Consumer confidence rose in July to -23 from -25 in Jun, reaching its highest level in 8 months.

Pound bounces strongly; Euro recovery , capped

GBP/USD has gone through a strong pick up after bouncing at 1.6340 during Asian session, as the Pair reached resistance level at 1.6500/10 on early European session.

EUR/USD Euro recovery move from 1.4000 has capped at 1.4100 on nearly European trading times, and the pair has reversed, giving away some 50 pips on its pullback to levels around 1.4050.

USD/JPY remains trading in a range from 94.85 to 95.15 after having bounced yesterday at 94.00 low.

Stronger Dollar Pressures Gold Futures

The stronger U.S. Dollar is putting pressure on December Gold this morning. The weak action comes on the heels of a closing price reversal top from two days ago. The short-term range is 907.60 to 962.70. Based on this range the first downside target is 935.20 to 928.70. Today’s low at 927.60 tested the low end of the range. Regaining this area could trigger a short-covering rally.

Yesterday’s closing price reversal top in September Silver was confirmed with a breakdown under 13.58. The first objective was met today at 13.26. Additional selling pressure may break this market to 13.07.

Overnight the Shanghai Composite Index dropped 5%. This put pressure on U.S. equity markets from the opening. After finding resistance at 50% of the week’s range at 974.00, the September E-mini S&P 500 is now poised to retest the low of the week at 964.00.

AUSTRALIAN DOLLAR CLOSES HIGHER

SYDNEY, Jul 30, 2009 (AsiaPulse via COMTEX) -- The Australian dollar closed higher on Thursday after positive local data and a strong day on regional equity markets lifted risk appetite and pushed the currency back above US$0.8200.

At 1700 AEST, the local currency was trading at US$0.8225 28, up from Wednesday's close of US$0.8188/91.

During the day, the Australian dollar moved between US$0.8144 and US$0.8226, the latter reached just before the local close.

The unit found support after Australian Bureau of Statistics (ABS) figures showed the number of home building approvals rose 9.3 per cent in June, the largest monthly increase in four years.

The result also beat market expectations of an eight per cent increase and almost offset an unexpected 11 per cent decline in May.

St George Bank (ASX:SGB) chief economist Besa Deda said the building approvals data helped spur the Australian dollar higher as financial markets brought forward expectations of interest rate rises from the central bank.

"What we are really seeing now is financial markets pricing in rate hikes quite early for next year, almost fully pricing a four per cent cash rate by the end of June," Ms Deda said.

"That does make interest rate differentials supporting for the Aussie dollar."

The Reserve Bank of Australia (RBA) has kept the cash rate at a 49-year low of three per cent for the past three months.

By contrast, official interest rates at 0.1 per cent in Japan, 0.5 per cent in the UK and 1.0 per cent in the eurozone.

The US federal funds rate sits in a target range between zero and 0.25 per cent.

The rally on local and Asian equity markets also played role in the Australian dollar's performance.

"You've seen the Chinese equity market come back and of course they were what drove down US equities overnight and lifted risk aversion,"

"When equities are moving higher, that reflects a greater appetite for risk and that generally would lift demand for the Aussie dollar, assuming all other factors are equal."

The Shanghai Composite index posted a 1.69 per cent rally on Thursday, bouncing back from a five per cent decline the previous session.