Friday 26 June 2009

Fair Forex Value? It Is All About Risk

In its natural stance, the financial market has three major attitudes towards risk, which models its behavior and actions throughout each of the global trading session. The three are; risk aversion, risk tolerance and risk-neutral.

Risk-aversion is characterized by investors selling assets considered risky, and swapping them for the safety of the bond market, mainly U.S. Treasuries. Risk-aversion can be seen relatively easy; commodities decline as investors consider that consumption will slow, while the S&P futures also head lower.

In the currency market, risk-aversion strengthens the dollar, as investor sell foreign denominated assets to buy U.S. Treasuries. In this period, higher yielding currencies are the one being sold the most.

The risk-tolerance phase is seen when Treasuries are sold as investors are looking for higher yields. In periods of relative calm and positive macroeconomic reports, traders abandon the safety of the bond market and invest their capital in stocks, commodities and foreign currencies.

Thus in this period the dollar is sold. Usually, bull markets are characterized by risk-tolerance phases and in this period S&P futures head higher, together with the euro and the rest of the pack.

In most cases, risk-neutrality happens when the financial market moves side-ways, unable to push anywhere decisively. This period is characterized by a redistribution period, as investors shift their assets between the various financial instruments to prepare for the next leg (risk aversion or tolerance).

The main difference being that the shifts are not only session-by-session, they literally happen hour-by-hour. Sentiment is seen to change from one to the other, empowered by the relentless flow of automated trades that trigger as a contingency play, as each individual market accepts risk neutrality.

The sideways moving market tends to be the more volatile as the channels are traded, and fair value sought at each regional market open. June has been a risk neutral month; the equity markets are unable to attract enough volume to make a stance on risk, and therefore the currency markets spin their wheels each day as dollar values are fought over.

WORLD FOREX: Dollar Slips Despite Higher Risk Aversion

LONDON (Dow Jones)--Risk aversion continues to edge higher but the dollar is mostly lower in Europe Tuesday.

The U.S. currency is lower against the yen, given the Japanese currency's greater safe haven status, and against the euro, as the latest German consumer confidence and euro-zone purchasing managers' surveys were being taken as evidence that the worst of the downturn has past.

Carsten Brzeski, senior euro-zone economist with ING Financial Markets in Brussels, said that, although there is no reason for overhasty enthusiasm, the purchasing managers indexes "add to recent evidence that the worst may be behind and the euro zone economy is stabilizing."

Nevertheless, overall market sentiment remains negative, with analysts pointing to the World Bank's disappointing 1.2% forecast for world growth in 2009. This is down sharply from 5.9% in 2008 and has sent most global stock markets lower.

The 2.4% fall in the Dow Jones Industrial Average was followed by a 2.8% loss in the Nikkei. Most European markets were opening as much as 0.7% down.

Most market commentators expect this negative sentiment to prevail until the U.S. Federal Reserve's latest Open Market Committee meeting ends Wednesday and the Fed has an opportunity to clarify its future policy.

Currency strategists at UniCredit say any economic data will now be overshadowed by anticipation of what the Fed has to say.

There was certainly limited reaction to the latest euro-zone figures.

German consumer confidence rose this month, with the index up at 2.9 from 2.6 in May.

The purchasing managers' surveys showed a more mixed picture with manufacturing still improving but service industries declining against expectations. Nonetheless the overall composite index for the region rose to 44.4 from 44.0 even though it didn't managed to meet the 45.5 forecast.

The market is now looking to see if the latest U.S. existing home sales contributes to optimism about a U.S. recovery or whether it simply contributes to the gloomy mood that has seeped back over global financial markets this week.

High yielders generally remain under pressure with currencies such as the Australian dollar, the Swedish krona and the Norwegian krone all finding themselves being sold off as risk appetite disappears.

See chart at

http://www.dowjoneswebservices.com/chart/view/2281

By 0930 GMT, the dollar had fallen to Y95.31 from Y95.99 late Monday in New York, according to EBS.

The euro rose to $1.3935 from $1.3865 but fell to Y132.84 from Y133.12.

The dollar was also down at CHF1.0786 from CHF1.0862 while the pound fell sharply to $1.6278 from $1.6349.

Eastern European currencies also suffered from the lack of risk appetite with the euro rising to HUF281.98 from HUF281.18 and to PLZ4.5569 from PLZ4.5366. The single currency was also up at CZK26.147 from CZK26.014.

 

-By Nicholas Hastings, Dow Jones Newswires; 44 20 7842 9493; nick.hastings@dowjones.com

 

TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkBackEurope@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments.

 

FOREX: Ringgit Likely To Move Within Tight Range Against USD Next Week

KUALA LUMPUR, June 27 (Bernama) -- The ringgit is expected to move within a tight range against the US dollar next week amid lingering concerns over global economy, dealers said.

They said the investors would keep a close watch on the movements of the greenback because if it were to go up, it would put pressures on the local currency.

A dealer said in the short term, the ringgit was likely to remain within the RM3.52-RM3.54 range to the dollar, with near term target at RM3.50.

He said overseas, the US dollar and yen were likely to move further downwards against most of their major counterparts on bets US, European and Chinese central banks' efforts to stabilise the global economy would spur demand for higher-yielding assets.

An analyst from RHB Investment Bank said in the short term, rising risk appetite would weigh on the US dollar.

On the local front, the market sentiment was seen as encouraging as inflows of foreign funds were expected to increase in the coming months given its status as a lower-beta market.

Foreign funds were net buyers of US$154 million worth of Malaysian shares last month compared with US$36 million in April, according to Emerging Portfolio Fund Research.

"All these positive signs would provide strong support to the local currency market," the analyst said.

On a week-to-week basis, the ringgit was firmer against the US dollar at 3.5300/5350 compared with 3.5350/5390 last Friday.

The local unit strengthened against the Singapore dollar to 2.4245/4304 from 2.4256/4305 previously but weakened against the yen at 3.6782/6850 from 3.6406/6458 previously.

It declined against the euro to 4.9561/9642 from 4.9112/9178 last Friday and went down against the British pound at 5.8121/8218 from 5.7857/7941 previously.

-- BERNAMA

Brazil Ctrl Bank: June 1-19 Forex Inflows Reach $380M

RIO DE JANEIRO (Dow Jones)--Brazil posted net foreign exchange inflows of $380 million in the June 1-19 period, the Brazilian Central Bank said Wednesday.

The central bank said this result was due to a trade surplus of $1.007 billion from exports totaling $7.59 billion in the first nineteen days of June, while imports were $6.58 billion.

In foreign financial transactions there was a $627 million net outflows, generated from total remittances of $20.63 billion and inflows of $20 billion.

What Online Forex Education Can Do For You

We all want to improve our income and personal financial situation. Unfortunately, when we think of doing this through the stock market, only two images come to mind, and neither of them very exciting. Online Forex education can provide a third option that offers a much better alternative.

The first image is that of handing over your money and trust to a broker who may or may not be sufficiently skilled or trustworthy to take your investments where they need to go… or where you want them.

The other way is trying to do it yourself. Sitting in front of your computer all day or all night, trying to master a market you don’t really have a solid understanding of and probably making some costly mistakes. You may even have to quit your job to devote sufficient time to this project to learn how to do it right. If your goal is to increase your income and improve your life, this isn’t really the way to go.

The online Forex education system will give you the knowledge you need to master the market. You won’t have to quit your job, spend endless hours tracking incomprehensible information, or pay a broker a commission.

You get live looks at the market and monthly six-hour interactive training sessions. Both of these show you how the Forex techniques work in real time trading situations. This live, online training gives you feedback that you can’t get trying to learn the market on your own, or with the help of books or articles.

There are also multiple opportunities for face-to-face interaction at onsite training sessions, where the energy and connection will reinvigorate you and your learning. Finally, Forex provides a mentor to help you see where you’re going right and wrong and help you continue you on your path to financial success.

FOREX-Dollar extends gains after Fed statement

(Updates with FOMC)

NEW YORK, June 24 (Reuters) - The U.S. dollar extended gains against the euro and the yen on Wednesday after the Federal Reserve's Federal Open Market Committee left interest rates unchanged as expected but removed the warning that inflation could be undesirably low.

The Fed also repeated they will evaluate the timing and size of purchases of securities in light of the evolving outlook. For details, see [ID:nN24478373].

The euro EUR= last traded at $1.3963, down 0.8 percent on the day, compared with $1.3995 before the statement, according to Reuters data. The dollar was at 95.66 yen JPY=EBS on electronic trading platform EBS, up 0.5 percent on the day, compared with 95.35 yen before the Fed announcement. (Reporting by Nick Olivari; Editing by Leslie Adler1)

WORLD FOREX:Dollar Rallies On Less-Dovish FOMC, Likely SNB Move

   By Riva Froymovich
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The dollar gained to session highs against its biggest rivals Wednesday on a benign policy statement from the Federal Open Market Committee and after the Swiss National Bank was said to intervene in the currency market.

The euro dropped to session lows of $1.3888 and Y132.98 Wednesday afternoon, while the pound fell to $1.6371 and the dollar advanced to Y96.07.

The Fed held rates near zero, and highlighted fresh signs of economic stability and the potential for an economic rebound.

"Many foreign exchange investors came into this expecting the Fed to be worried about the backing up of bond yields and trying to come out with a comfort statement. But the language certainly didn't go beyond what they said previously," said Steven Englander, chief U.S. currency strategist for Barclays Capital in New York.

In addition, the Fed failed to expand its quantitative easing program.

"From a foreign exchange perspective, it was not quite as dovish a Fed...for a Fed that's consistently surprised to the dovish side," said Englander.

As a result the dollar benefitted from a relief rally.

The Fed's aggressive easing policy for the last year has undermined the dollar's yield and attraction to investors.

However, dollar's move is likely to reverse, said Daniel Tenengauzer, head of foreign-exchange and emerging-market strategy at Bank of America-Merrill Lynch research in New York.

"This was exactly the same as the last statement," he said. As a result, "eventually, the move might be retraced."

Wednesday afternoon, the euro was at $1.3901 from $1.4081 Tuesday, and the dollar was at Y95.68 from Y95.24, according to EBS. The euro was at Y132.99 from Y134.11. The U.K. pound was at $1.6385 from $1.6460, and the dollar was at CHF1.0999 from CHF1.0666.

The dollar also found support on what traders said was likely two currency-market interventions by the Swiss National Bank.

The dollar gained as high as CHF1.1026 from an overnight low of CHF1.0633. The euro advanced to CHF1.5380 from an overnight low of CHF1.5011.

Officials at SNB couldn't be reached for comment to confirm. But North American traders said they saw the SNB buying dollars on the Electronic Broking System, or EBS, around noon in New York, after another sharp move near 7 a.m. EDT.

The SNB has been warning against excessive Swiss franc strength for months. The central bank has promised to fight the risks of deflation and shrinking economic growth, made worse by a strong currency, which also puts the price of Swiss exports at a disadvantage. Investors have been flocking to the franc because it is considered a safe haven amid the global financial crisis.

Currency analysts say the key level the SNB is watching is CHF1.50 against the euro and near CHF1.06 against the dollar.

The moves Wednesday follow another likely intervention June 18. But the market has retested that CHF1.50 level since then.

The last official intervention, which the SNB confirmed was in March after a policy meeting. The SNB sold the Swiss franc to push the euro up from the CHF1.48 area to over CHF1.53. It then signaled that this would be the central bank's policy to keep deflation at bay.

However, additional interventions have not come regularly and currency investors have tested the SNB's resolve. As a result, SNB jawboning, or comments by central bank officials that they'd like to see the Swiss franc exchange rate lower, has had a decreasing impact on traders.

Currency analysts are comparing the SNB's strategy to that taken by the Bank of Japan in 2003 and 2004 to weaken the yen.

In those years, the BOJ engaged in massive purchases of the yen's rivals and left its interventions unsterilized, at the same time as it was doing quantitative easing. This increased the level of available liquidity, eventually leading to reflation.

Analyzing the Forex Market- Fundamental versus Technical Approaches

In learning how to succeed at the Forex market, you will often hear about analyzing current trends in the market. This analysis is used to predict what direction the market will take and how you should be making trades. It falls into two main categories—fundamental analysis and technical analysis.


Many training sites will tell you to focus on just one, but there are two for a reason. The best approach is to understand the two techniques, consider their pluses and minuses and balance the information provided by both types of analysis. Here is a brief introduction to get you started.


Technical Analysis


Technical analysis is done by studying current trends in the market, comparing them against historic market trends, and making your trade decisions based on the resulting data. This method relies heavily on charts, numeric values and algorithms. Because of this quantifiable data, technical analysis is more straightforward than fundamental analysis. The data is contained within the charts and the main goal of traders is to determine the trend and trade in its direction.


Technical analysis looks at trends reflected in the market, but does not look at the factors influencing those trends. That is where fundamental analysis comes in.


Fundamental Analysis


Fundamental analysis studies the social and economic factors that influence currency value. It considers the strength of a country’s economy, current policy, and any upcoming changes that might influence the currency. Fundamental analysis will also look at interaction and trade between various countries. Because values rely heavily on the confidence placed in a particular country and its economy, fundamental analysis can be important in anticipating trends before they appear in the charts.


Important Tools


Focusing on only one type of analysis is trading without the whole story. Data discovered through both methods influence the market and the value of specific currencies. It is therefore, in your best interest to learn and utilize both analysis methods. When working the Forex markets, you want all the tools you can get.

WORLD FOREX: Dlr Up Vs Yen; FOMC, Stocks Fuel Risk Appetite

   By Takashi Mochizuki
Of DOW JONES NEWSWIRES

TOKYO (Dow Jones)--Higher Japanese stock prices and a positive outcome from the Federal Open Market Committee meeting overnight revved up players' risk appetite, lifting the dollar and euro up against the yen in Asia Thursday.

The U.S. currency will likely rise for the rest of this week, some dealers said, because the FOMC did not take additional stimulative measures such as boosting its Treasury purchase program.

Some investors had expected the FOMC might increase its future Treasury buying to support the U.S. economy, which is usually a negative factor for the dollar as the nation's interest rates decline.

"Reading market sentiment is fairly easy today: players are taking positive cues from the FOMC and stock prices to buy dollars and euros," said Jun Kato, a senior dealer at Shinkin Central Bank.

Japan's benchmark Nikkei 225 Stock Average stood at 9822.66 as of 0450 GMT, up 232.34 from Wednesday's close.

The pace of the dollar's climb, however, will likely be slow because players are unwilling to make aggressive bets ahead of non-farm payrolls data and business activity indexes from the Institute for Supply Management due next week, said Gaitame.com's senior dealer Tsuyoshi Ueda.

"Ahead of the data releases, the market lacks a decisive factor to make a strong, long-term trend in the currency market," he said.

Other dealers have similar views, saying Y98 is a cap for the dollar for the time being.

Later in the global day, market participants will turn their attention to U.S. weekly jobless data, and if the result shows an improvement and pushes up U.S. stock prices, the dollar may extend its climbs, dealers noted.

The data may record 605,000 claims, which is slightly better than the 608,000 claims in the previous period, according to a Dow Jones poll of economists.

The euro, meanwhile, rose against the dollar and yen. Dealers said the European currency is expected to keep rising unless European Central Bank officials say something surprising, dealers said. The bank's executive board member Juergen Stark will make a speech later in the day.

So far in Asia, Japanese importers and security firms and non-Japanese commodity trading advisors were seen selling the yen for the dollar, euro and Australian dollar, dealers said.

Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
USD/JPY Yen 96.22-27 95.61-63 +0.64 96.28 95.62 +6.20
EUR/USD Euro 1.3960-66 1.3926-29 +0.24 1.3975 1.3928 -0.13
GBP/USD Sterling 1.6451-55 1.6408-12 +0.26 1.6467 1.6414 +12.48
USD/CHF Swiss Franc 1.0952-58 1.0978-84 -0.24 1.0986 1.0948 +2.65
USD/CAD Canadian Dlr 1.1538-44 1.1566-71 -0.24 1.1563 1.1534 -5.15
AUD/USD Australian Dlr 0.8004-09 0.7956-61 +0.60 0.8013 0.7961 +13.16
NZD/USD New Zealand Dlr 0.6415-17 0.6384-90 +0.49 0.6420 0.6386 +9.94
EUR/JPY Yen 134.38-40 133.14-19 +0.93 134.41 133.34 +6.11

Reuters/Univ Michigan End-Jun Sentiment 70.8; May 68.7

Reuters/Univ Michigan End-Jun Sentiment 70.8; May 68.7

NEW YORK (Dow Jones)--Consumer confidence levels rose in June to their best level since September, a report Friday said.

The Reuters/University of Michigan consumer sentiment index for June moved to 70.8, from 69.0 in the preliminary index and 68.7 in May. It had been expected to hit 69.0.

The current conditions index for June was 73.2, from May's 67.7, while the expectations index was 69.2, from 69.4 the month before.

The one year inflation expectations reading was 3.1% in June, from 2.8%, and the five year reading was 3.0%, after May's 2.9%.

-By Michael S. Derby, Dow Jones Newswires; 212-416-2214; michael.derby@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=m4HHHlN1nUPNqBYBxuoHaQ%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 26, 2009 10:02 ET (14:02 GMT)

Fed Reserve Extends FX Swap Line With 14 Central Bks By 3 Months

Fed Reserve Extends FX Swap Line With 14 Central Bks By 3 Months

SEOUL -(Dow Jones)- The U.S. Federal Reserve has agreed to extend bilateral currency swap agreements with 14 central banks by three months to Feb. 1, 2010 to help stabilize global financial markets and ease liquidity shortages, the Bank of Korea said Friday.

The extension of the reciprocal currency arrangements, set to expire Oct. 30, is aimed at helping the countries provide enough dollars in their respective financial markets, Korea's central bank said.

The move applies to central banks of Australia, Brazil, Canada, the Netherlands, England, the European Central Bank, Japan, South Korea, Mexico, New Zealand, Norway, Singapore, Sweden and Switzerland.

"The Bank of Korea expects that this action of extending its swap agreement with the Federal Reserve will contribute to continuing stability of the foreign currency funding market and financial market in Korea," the BOK said in a statement.

In October last year, the BOK and the Federal Reserve signed a six-month currency swap line agreement, under which Korea will have access to U.S. dollar funds of up to $30 billion in exchange for the Korean won. The 13 other countries also opened similar arrangements with the Fed.

In February this year, the Fed agreed to extend the bilateral currency swap agreements by another six months to Oct. 30.

"This time, the Fed extends the agreements only by three months. This reflects improving dollar-funding conditions globally," said Kang Jae-taeck, deputy director-general of the BOK's foreign exchange market division. "After the three-month period, the relevant banks will discuss again whether to extend or end the regime."

The Bank of Korea has, since October, provided U.S. dollar liquidity in South Korea through competitive auction facilities to commercial banks, using funds from the swap line.

Since mid-March, however, the Bank of Korea has been reducing dollar supply to local banks amid signs of improving liquidity. The outstanding amount fell to $10 billion as of June 6, down from $16.35 billion in early March.

The 14 central banks tapped a combined $126 billion out of the bilateral swap lines with the Fed as of June 23, down from $513.8 billion at the end of 2008, according to the Bank of Korea.

-By In-Soo Nam, Dow Jones Newswires; 822-2198-2234; In-Soo.Nam@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=xaWSLnwIyLSCoci0MepO5A%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 25, 2009 12:15 ET (16:15 GMT)

Markets fell for second week in a row; USD ended down but still in range

FXstreet.com (Córdoba) – U.S. markets ended mixed of Friday. The Dow Jones fell 0.40% and the Nasdaq rose 0.47%. The Dow Jones lost 1.2% in the week. Oil fell today 1.50% and also ended the second week in a row with losses. The Dollar dropped across the board on Friday ending the week down. Despite that, Greenback is still moving in ranges against JPY, EUR and GBP.

EUR/USD climbed today and for the week but the Euro was unable to reach levels above the highs of the years. The pair is still trap in a big range with no clear trend.

Against the Pound, Greenback fell for the third week in a row. Despite that GBP/USD hasn’t been able to break above the highs of the year. The pair continues to move in a range between 1.6160 and 1.6600 the last three weeks.

USD/CHF is also moving with no clear trend, making lateral moves. Neither the jump on Wednesday (after the intervention of the Swiss National Bank), nor the plunge of Thursday and Friday where able to break a big range between 1.0570 y 1.1000, on which the pair has been moving the last six weeks.

Ballooning government debt

UniCredit Group


  • Stabilization. Even though the "green shoot" euphoria has been replaced by a greater sense of reality recently, the worst is nonetheless behind us, and the global economy should stabilize in the second half of the year – thanks primarily to the billions in economic stimuli programs.

  • Debt. The flip side of this is ballooning government borrowing. The US budget deficit will probably rise to 13% of GDP this year and also remain in double digits in 2010. The dimensions may be smaller in the eurozone, but here too deficit ratios of 5% and more are unavoidable. In addition, the prospects of a pronounced improvement here any time soon are lower (pages 3-6, 7-10 & 11-12).

  • Risks. Even in case of a quick return to trend growth, debt ratios would continue to rise. Without sustained consolidation efforts, there is the definite threat of running into a debt trap longer term. The Maastricht norm will be obsolete for years to come. Even if the primary balance in Germany were to be 2 percentage points higher than in our base case, it would take 20 years before the debt ratio falls below 60% again.

  • Market reactions. It is, however, not only future generations that will be saddled with the burdens. There is already the threat of tangible market reactions in the shorter term. Ballooning budget deficits drive up inflation expectations, resulting in increasing government bond yields. Furthermore, investors – in the case of the US primarily foreign investors – will presumably not accept a meager yield for much longer. High or rising twin deficits are, moreover, poison for the USD on a longer-term horizon.

  • Further topics:

    Weekly Comment: The OECD versus the ECB (page 2).

    US: Business investment restraint will retard recovery (page 13).

    Data outlook: EMU-wide economic climate to improve slowly; more layoffs in the US again (page 15).

    Market outlook: Yield curve to steepen; EUR-USD at 1.40 (p. 23).


The OECD versus the ECB

On Wednesday, the first ECB 12-month refinancing operation was a success: While there was a wide range of expectations on the likely take-up, the EUR 442 bn allocation represents a substantial amount, and confirms that this new 1-year refinancing is an important addition to the ECB’s arsenal. The ECB remains focused on the need to ensure sufficient and reliable longer-term funding to the banking sector, and both the longer maturity refinancing operations and the covered bonds purchase program go in this direction. While I would also have favored a more transparent zero interest rate policy, there is no doubt that these quantitative measures are very well targeted and should prove effective in averting the risk of a credit crunch. The launch of the ECB’s 1-year refinancing operations should allow for some more narrowing of eurozone money market spreads, whereas EUR-USD remains rangebound. Credit will play a pivotal role in the coming months: The banking sector will come under pressure because of the rise in NPLs (nonperforming loans), and a tightening of credit supply just as the real economy attempts to stabilize would be extremely damaging. The ECB appears to be well aware of this and is reacting appropriately. Meanwhile, the OECD forecasts confirm that key emerging markets will display the fastest and strongest exit from the recession, followed by the US – in fact, the somewhat brighter prospects for the US are the main reason for the improvement in the OECD’s forecasts. The OECD also calls on some countries to provide further fiscal stimulus, and identifies Germany as one of the countries that should do more, in sharp contrast to the German government’s emphasis on the need for consolidation.

Next week, the ECB will once again be under the spotlight. It will almost certainly keep its policy unchanged, holding the Refi rate at 1.0% and refusing to commit to any increase in the covered bonds asset program. In so doing, the ECB will continue to expose itself to the criticism that since it is willfully aiming to undershoot its inflation target, given that its own staff forecasts point to HICP at just 1.0% next year. However, the ECB will not be ready to provide further stimulus just as the data start to indicate a stabilization of economic activity – especially as its new, longer term liquidity provisions promise to support credit supply. Meanwhile the Fed stays the course, with no major changes in the FOMC statement released this week. In particular, the statement still includes the key sentence “…economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”, and re-affirms the existing targets for asset purchases. Nearly two months after the previous statement, the Fed shows no great enthusiasm for the additional signs of stabilization: The assessment of economic activity is largely unchanged, with activity likely to remain weak for some time – although the Fed reiterates its confidence that policy action and market forces will successfully restore growth, eventually. The FOMC statement scales down the risk of deflation or persistently low inflation: the Fed now believes that “inflation will remain subdued for some time”, whereas in April it saw “…some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.” On this note, the statement acknowledges the recent rise in commodity prices, but remains confident that this will be offset by “substantial resource slack”.

So the statement is imperceptibly more hawkish, but overall confirms that the Fed is in no hurry at all to launch an exit strategy, and we would expect markets to push further back expectations of rate hikes, as we have already seen in the past days. As discussed last week, we are set for a prolonged wait-and-see period, with the Fed on hold and the markets nervously watching.

CME Forex, Financial Est Futures Volumes - Jun 26

Fri, Jun 26 2009, 19:47 GMT
http://www.djnewswires.com/eu

CME Forex, Financial Est Futures Volumes - Jun 26

For today, in contracts. As of 1530 ET.

Currencies Financials
Australian dollar 58,312 Eurodollar 1,566,388
British pound 83,858 Libor 1,588
Brazilian Real 7 Euroyen 0
Canadian dollar 51,513
Euro FX 194,583
Japanese yen 63,267
Mexican Peso 10,979
New Zealand dollar 3,605
South African Rand 166
Russian Rubble 447
Swiss franc 37,765

-By Kathy Lang; Dow Jones Newswires; 913-322-5172;
csstat@dowjones.com


Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=m4HHHlN1nUPNqBYBxuoHaQ%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 26, 2009 15:47 ET (19:47 GMT)


Copyright 2009 Dow Jones & Company, Inc.

Argentina Peso Dn To 02 Lows; Stks, Bonds Flat Ahead Of Vote

Argentina Peso Dn To 02 Lows; Stks, Bonds Flat Ahead Of Vote

Shane Romig
Of DOW JONES NEWSWIRES


BUENOS AIRES (Dow Jones)-- Argentine stock and bond markets were quiet Friday ahead of Sunday's key midterm elections, but the peso came under renewed selling pressure.

The peso slid to 3.8000 to the dollar from 3.7950.

The peso has maintained a measured, but steady slide since September 2008, when economic growth started to slow and Argentines started flocking to dollars as a familiar safe-haven.

The peso is now trading at levels not seen since right after the devaluation of the currency in 2002 amid a debt default and economic crisis.

The Central Bank had to step in with heavy dollar selling again Friday to meet strong demand for the greenback, Puente Hermanos said in a market note. Low dollar selling by exporters added to the pressure on the peso, Puente Hermanos said.

Meanwhile stock and bond trade was muted ahead of an uncertain outcome in Sunday's Congressional elections.

Argentina's Merval Index shed 0.06% to close at 1,579.99 points. Volume was low at 27 million pesos.

Shares traded "without a defined tendency during the last session of the week in anticipation of the vote," Portfolio Personal said in a market comment.

The benchmark peso-denominated bond was unchanged in price terms at ARS67.50, to yield 16.49%.

The dollar-denominated Boden 2012 inched up 0.06% in price terms to ARS236.65%, to yield 28.15%.

The election is largely seen as a referendum on the record of Argentine President Cristina Fernandez and Kirchner, her husband, who ran the country from 2003-2007. Polls indicate Fernandez' party will fall well short of the 45% of the vote garnered in 2007, and that it stands a good chance of losing its majority in Congress.

Faced with signs of falling support for the ruling Victory Front Party, Kirchner is heading a list of congressional candidates in the key province of Buenos Aires and has pulled out all the stops to try and hold their majority in both chambers.

But polls provide little insight into how the vote will come out.

Five out of nine recent polls show a win for Kirchner's list, while the other four give opposition leader Francisco de Narvaez of the Union Pro party a slight edge.

Roughly half of the seats in the Lower House of Congress and one third in the Senate are at stake.

-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=m4HHHlN1nUPNqBYBxuoHaQ%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 26, 2009 16:57 ET (20:57 GMT)


Copyright 2009 Dow Jones & Company, Inc.

Markets fell for second week in a row; USD ended down but still in range

FXstreet.com (Córdoba) – U.S. markets ended mixed of Friday. The Dow Jones fell 0.40% and the Nasdaq rose 0.47%. The Dow Jones lost 1.2% in the week. Oil fell today 1.50% and also ended the second week in a row with losses. The Dollar dropped across the board on Friday ending the week down. Despite that, Greenback is still moving in ranges against JPY, EUR and GBP.

EUR/USD climbed today and for the week but the Euro was unable to reach levels above the highs of the years. The pair is still trap in a big range with no clear trend.

Against the Pound, Greenback fell for the third week in a row. Despite that GBP/USD hasn’t been able to break above the highs of the year. The pair continues to move in a range between 1.6160 and 1.6600 the last three weeks.

USD/CHF is also moving with no clear trend, making lateral moves. Neither the jump on Wednesday (after the intervention of the Swiss National Bank), nor the plunge of Thursday and Friday where able to break a big range between 1.0570 y 1.1000, on which the pair has been moving the last six weeks.

ECB Noyer: French Bks Solid, Must Reinforce Risk Management

French Bks Solid, Must Reinforce Risk Management

(Adds comment and detail.)

PARIS -(Dow Jones)- Recent stress tests demonstrate the solidity of French banks, but a number of remaining uncertainties linked to the global financial crisis require a reinforcement of risk management measures, the head of the French banking commission said Friday.

"The different stress test exercises carried out in recent months appear to me to confirm my view on the solidity of French banks," Christian Noyer, who is also a European Central Bank governing council member, said at a press conference Friday.

Noyer heads France's banking regulatory commission.

Given the fast evolving nature of the financial and economic environment, Noyer said such tests needed to be employed "regularly" and with varying macroeconomic scenarios. He urged French banks to reinforce the conditions of their own stress tests.

Turning to specific risks, Noyer cautioned that any efforts by banks to capitalize on the rebounds seen in some financial markets must go hand-in-hand with the development of appropriate risk management processes, adding that the banking commission would keep a close watch on this.

Noyer singled out four other areas of concern, starting with the "second round" effects of the crisis that could "fragilize" banking commitments to collaterized loan obligations, or CLOs, as well as leveraged finance products, particularly leveraged buyouts.

He also noted risks stemming from hedge funds as well as the need to closely track real-estate linked assets across the globe. So far, French banks have prudently covered risks connected to assets hit by the U.S. subprime crisis, Noyer said, but added that real-estate markets are now weakening in several European countries.

Noyer also pointed to a "significant increase" in credit risk due to the economic recession, notably in corporate financing, in French banks' domestic businesses and in their international operations covering regions such as Eastern Europe.

The French regulator will also keep a watchful eye on French banks' corporate governance practices, particularly those concerning remuneration policies, Noyer said.

Questioned about the level of pay at U.S. banks, Noyer said it would be very unfortunate if they were to return to pay structures that encouraged excessive risk taking. Such a move may need to be discussed by the Group of 20 industrial and developing nations, he added.

-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=m4HHHlN1nUPNqBYBxuoHaQ%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 26, 2009 07:34 ET (11:34 GMT)


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Forex: GBP/USD rises to 1.6560

FXstreet.com (Córdoba) – The Pound is rising so far today and during the American session has extended it gains. GBP/USD rose to 1.6560 hitting a fresh intra-day high. The pair has accumulated an increase of 50 pips since the opening bell at Wall Street. So far today the pair has risen 0.90%. Between 1.6590 and 1.6610 it has an important resistance zone.

GBP/USD is having the best day of the week in terms of gains. The pair has been able to erase almost all losses of the week and is only a few pips away of the price it had at the beginning of the week.

Brazil Real Closes Marginally Weaker As Commodities Fall

Brazil Real Closes Marginally Weaker As Commodities Fall

SAO PAULO (Dow Jones)--Brazil's real closed marginally weaker on Friday, with most of the forex action coming from the central bank.

The real settled at BRL1.939 to the dollar in trading on the Brazilian Mercantile & Futures Exchange, or BM&F, after closing at BRL1.932 on Thursday.

Brazil's real is considered a commodity currency and often rises and falls with major commodity prices. Oil and metals prices closed lower Friday.

In other markets, interest rate futures contracts closed relatively unchanged at 8.75% for the January 2010 contract, compared with 8.78% on Thursday.

The contracts reflect investor expectations for annualized interest rates at future dates.

The Central Bank was the major actor in the forex market Friday, selling $272.5 million in dollar swap contracts and buying an unreported amount of dollars on the BM&F.

-By Kenneth Rapoza, Dow Jones Newswires; 55-11-2847-4541; kenneth.rapoza@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=m4HHHlN1nUPNqBYBxuoHaQ%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 26, 2009 15:40 ET (19:40 GMT)


Copyright 2009 Dow Jones & Company, Inc.

Canada Afternoon: C$ Ends Up In Mostly Sideways Activity

Canada Afternoon: C$ Ends Up In Mostly Sideways Activity

TORONTO (Dow Jones)--The Canadian dollar ended slightly higher but off its best levels of the day Friday, as the currency responded to a global downtrend for the U.S. dollar but otherwise displayed the same lack of conviction that kept it meandering erratically in a range all week.

The U.S. dollar was trading at C$1.1532 at 3:35 p.m. EDT (1935 GMT), from C$1.1484 at 8:00 a.m. EDT (1200 GMT) and C$1.1570 late Thursday.

An improved risk environment and stronger commodity prices - notably a rise in oil prices back above $70 per barrel - helped key a strong early tone for the Canadian dollar that saw it trade to its intraday high at C$1.1445.

But while the U.S. dollar continued to struggle against a wide range of currencies throughout the day, the Canadian dollar faded its early rally and wavered erratically on both sides of the C$1.1500 figure for the remainder of the session.

The inability of equity markets to rally and the inability of oil prices to hold on to initial gains weakened the Canadian currency, and perpetuated its recent rather aimless drift around the C$1.1500 mark.

Lacking any major directional incentives at the moment along with other currencies, the Canadian dollar is generally seen as settling into a near-term range trading pattern.

The currency has corrected markedly lower from overbought levels in the C$1.0800 area from early June, and the U.S. dollar likewise has been unable to extend its corrective rally past the C$1.1650 area, suggesting that the pair may carve out a trading range between these two extremes for a while.

"The Canadian dollar still seems like it's on a bit of vulnerable ground, but I think it would be a real grind to see it weaken much more from here, in the short-term anyway," said Steve Butler, director of foreign exchange at Scotia Capital in Toronto.

These are the exchange rates at 3:35 p.m. EDT (1935 GMT), 8:00 a.m. EDT (1200 GMT), and late Thursday.

   USD/CAD     1.1532      1.1484     1.1570
EUR/CAD 1.6228 1.6173 1.6182
CAD/JPY 82.54 83.08 82.88


-By Paul Evans; Dow Jones Newswires; 416-306-2022; paulr.evans@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=m4HHHlN1nUPNqBYBxuoHaQ%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

June 26, 2009 15:35 ET (19:35 GMT)


Copyright 2009 Dow Jones & Company, Inc.

Forex: EUR/USD falls to 1.4075 after reaching intra-day high at 1.4115

FXstreet.com (Córdoba) – Dollar extended losses across the board during the American session. EUR/USD rose above 1.4100 to 1.4115 (fresh intra-day high). The Euro was unable to keep those levels and fell to 1.4075. On the upside the next resistance zone is located at 1.4150. Support, on the way down lies at 1.4060. Dollar lost previous gains of the session. The pair is 0.60% above today opening price. EUR/USD is heading toward a weekly gain of more than a hundred pips.

Dollar Drops on Interest Rate Outlook

The U.S. dollar had a weak performance today losing against most of the major traded currencies, as stocks rose for a third day, mainly in Asia, damping demand for the greenback.

Pound Rebounds as Risk Appetite Drive Investors to British Assets

The British pound had a day of gains versus the euro and the dollar as a new wave of risk appetite struck markets today, influencing investors to purchase assets in British stocks, weighing positively on the national currency.

Forex: EUR/USD falls to 1.4075 after reaching intra-day high at 1.4115

FXstreet.com (Córdoba) – Dollar extended losses across the board during the American session. EUR/USD rose above 1.4100 to 1.4115 (fresh intra-day high). The Euro was unable to keep those levels and fell to 1.4075. On the upside the next resistance zone is located at 1.4150. Support, on the way down lies at 1.4060. Dollar lost previous gains of the session. The pair is 0.60% above today opening price. EUR/USD is heading toward a weekly gain of more than a hundred pips.

http://www.fxstreet.com

Forex: USD/CHF falls to test 1.0800

Fri, Jun 26 2009, 17:18 GMT
http://www.fxstreet.com

FXstreet.com (Barcelona) - USD/CHF has fallen further in the American session after breaking down the 1.0830 support in the last hour. Pair is falling 1.10% so far today from opening price to the current 1.0800/10.


Valeria Bednarik, FXstreet.com collaborator, comments: "Downside correction continues after reaching the 1.1020 zone, yet as expected contained by the lows 1.0800. Hourly chart indicators seem a bit exhausted to the downside, so we could expect some upside correction in the pair capped by 20 SMA in 4 hours charts. Support levels: 1.0830 1.0800 1.0760. Resistance levels: 1.0880 1.0920 1.0950."

Forex: USD/JPY tests 95.00

Fri, Jun 26 2009, 16:38 GMT
http://www.fxstreet.com

FXstreet.com (Barcelona) - USD/JPY has fallen 0.70% so far today from 95.77 opening price to test yesterday's lows at 95.00, currently the pair is trading around 95.00/10 after falling 40 pips in the last hour.

According to Valeria Bednarik, FXstreet.com collaborator, Bearish pressure in the daily remains intact in the USD/JPY: "With hourly indicators a bit exhausted to the downside, pair can attempt a shy upside correction before next down leg to the 94.80 zone. Bigger time frames remain clearly bearish so expect some downside acceleration."

Forex: GBP/USD rises above 1.6500 and tests 1.6520 resistance

Fri, Jun 26 2009, 16:13 GMT
http://www.fxstreet.com

Fxstreet.com (Barcelona) - After finding support at 1.6460, coming from its 60 pips decline from 1.6520, GBP/USD has risen to trade above 1.6500 and test 1.6520 resistance. Currently the pair is trading around 1.6510/20, posting 0.60% daily gains from opening price action.

According to Valeria Bednarik, FXstreet.com collaborator, Cable is bullish: "Pair remains bullish in the hourly, still inside daily range between 1.6200 and 1.6600 level. Indicators lost steam yet bigger time frames support further rises in the next hours. Watch for a break above 1.6520. Support levels: 1.6471 1.6440 1.6400. Resistance levels: 1.6520 1.6560 1.6600"