Dollar rose Friday helped by lower Crude Oil prices and Warren Buffer comments

The Dollar surged on Friday, recovering from the previous day's losses, as gloomy British growth data backed views of a slowing global economy and raised prospects of interest rate cuts outside the United States. A sharp drop in US crude oil prices to below $115 per barrel and comments by influential investor Warren Buffett that he has no bets against the Dollar also added to the US currency's upward momentum. Federal Reserve Chairman Ben Bernanke's comments that a stable Dollar and falling commodities should help slow inflation this year and next. His remarks on Friday prompted analysts to reduce expectations of a US interest rate increase this year.


News and Events:

The Dollar surged on Friday, recovering from the previous day's losses, as gloomy British growth data backed views of a slowing global economy and raised prospects of interest rate cuts outside the United States.

A sharp drop in US crude oil prices to below $115 per barrel and comments by influential investor Warren Buffett that he has no bets against the Dollar also added to the US currency's upward momentum.

UK data showed the British economy stalled on Q2, suggesting a recession might be looming, and added to the outlook of a slowing European economy. It raised the possibility of European Central Bank and Bank of England monetary easing.

EurUsd dropped to a session low of 1.4758, edging toward a six-month low hit earlier last week at 1.4631. It was last trading at 1.4788, down 0.68%. UsdJpy jumped 1.52% to 110.09. GbpUsd dropped 1.32% to 1.8517. UsdChf rose 1.06% to 1.0988.

Federal Reserve Chairman Ben Bernanke's comments that a stable Dollar and falling commodities should help slow inflation this year and next. Bernanke's remarks at an annual Fed symposium in Jackson Hole, Wyoming, prompted analysts to reduce expectations of a US interest rate increase this year, which could diminish the Dollar's appeal to investors. But analysts said even without an interest rate hike this year, the Dollar would probably continue to recover.

Persistent problems at US mortgage finance companies Fannie Mae and Freddie Mac and speculation over the future of investment bank Lehman Brothers could make the road to recovery difficult.




Today's Key Issues (time in GMT):

00:00 GBP Market Holiday
07:30 DKK August Consumer confidence -8 vs -9.7
07:30 SEK July Trade balance 8.2b (mom)
09:00 EUR June Industrial new orders -6.3% vs -4.4% (yoy)
12:30 USD July National Activity Index -0.6
14:00 USD Existing home sale 4.92m vs 4.86m
22:45 NZD Merchandise trade 4b vs 3.81b
22:45 NZD Merchandise trade – expo 3.44b vs 3.59
22:45 NZD Trade Balance Month -526m vs -223m
22:45 NZD Trade Balance Year -4.2b vs -4.48b


The Risk Today:

EurUsd: Market dropped as low as 1.4631 last week, new initial support. Further weakness will put the focus on strong support 1.4366 22nd January low. On the upside, only a return over 1.5000 and 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200.

GbpUsd: Cable hit 2.0158 high 6-weeks ago and 1.8505 low last Friday. On the downside, further weakness would open the way down to 1.8395 end July 2006 low and maybe 1.8091 June 2006 low. Initial support holds 1.8414 today low. On the upside, initial resistance holds 1.8795 last week high. Former support 1.9363 holds also strong resistance. Key level holds 2.0100 resistance.

UsdJpy: Last 6-weeks recovery pushed the market up to 110.67 high. Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance and 108.14 last week low will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. Initial support holds 108.14 Thursday low.

UsdChf: Continuous Dollar strength consolidated over 1.0800 last week and hit 1.1041 6-months high on last Wednesday. Initial resistance holds 1.1107 13th February high. Strong resistance holds 1.1593 December 2007 high. On the downside, initial support holds 1.0863. Only renewed weakness below 1.0500 and 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.


Resistance and Support:

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Slow Growth In EURO

Market is looking for Euro-zone and Britain for more evidence of slowing growth.

News and Events:

The Dollar rose on Wednesday, reversing a two-day losing markets, supported by views that slowing global economic growth would prompt a wave of interest rate cuts outside the United States. It gained in quiet trade despite a rebound in Crude Oil prices to $115.51 a barrel.

Data from Europe and Japan are increasingly pointing to deterioration in the growth outlook for those regions, leading
investors to anticipate early rate cuts from both the European
Central Bank and the Bank of England.

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There are worries that US home finance providers Fannie Mae and Freddie Mac may need a government bailout.

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USA Financial System Problems

Forex market believe the worst of the problems in the US financial system are not yet over

News and Events:

The Dollar fell near a record low against the Euro as investors believe the worst of the problems in the US financial system are not yet over. While the Dollar has recovered somewhat after better results than expected from big financial institutions such as Citigroup, JPMorgan Chase and Bank of America, investors are awaiting more earnings reports this week.

With the economy suffering as the credit crisis hits the housing market and banks, expectations for the Federal Reserve to raise interest rates before the end of the year to curb inflation pressures are fading quickly, hurting the dollar.

The market's focus remains on a rescue plan for troubled US mortgage finance giants Fannie Mae and Freddie Mac. On Monday, US Treasury Secretary Henry Paulson said in an interview with CNBC that confidence in US capital markets and the US economy was the most important thing to support a strong Dollar.

The Euro may gain against the Yen as Japanese Investors ship more funds into higher-yielding currencies for better returns, with traders watching whether the single currency tops Monday's record high and reaches the 169.92 level. The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

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USA Financial And Housing Sectors

Dollar stays weak near record lows on concerns about health of financial and housing sectors.

News and Events:

The Dollar rose from a near record low against the Euro on Monday after the United States announced an emergency plan to restore confidence in mortgage finance companies Fannie Mae and Freddie Mac. The plan helped calm market concerns about the health of the US financial and housing sectors, since the two companies fund half of all US mortgages.

Billionaire investor George Soros told Reuters on Monday that government debt accumulation coupled with a U.S. recession leaves the Dollar vulnerable. Analysts said the Dollar's recovery would depend on whether the U.S. initiatives were enough to calm investors' concerns about the financial health of Fannie Mae and Freddie Mac.

Investors will also be watching to see how the latest developments affect Fed Chairman Ben Bernanke's views on monetary policy and the economic outlook when he testifies before the Senate Banking Committee on Tuesday. Money markets have scaled back their expectations for monetary policy tightening from the Fed and now don't expect it to start hiking until the final months of the year.

The Forex Market Overview

The Forex Market Overview 14 July 2008

The Usd continued to come under significant selling pressure in Asian session as the bearish dollar sentiment carried over the weekend. EurUsd gapped at the open, quickly trading to 1.5971, however Gbp/Usd which rallied at the open was unable to sustain the upwards momentum and traded lower from 1.9914 to 1.9823. Commodity currencies traded basically sideways with Aud/Usd jumping between 0.9670 to 0.9711 and Usd/Cad moving slightly upward from 1.0070 to 1.0118. Jpy fueled carry trades performed slightly better as the Jpy had a weak tone. Aud/Jpy traded up to 103.21 and Try/Jpy moved to 87.624.

In a massive move to restore the markets confidence in Fannie and Freddie Trsy Sec. Paulson said that the US Federal government would buy or finance almost half of the $12 trillion of U.S mortgage market. Specifically, Pauslon stated, he would ask the Fed to increase credit lines extended to GSEs, seek Congressional approval to buy equity in the GSE's and expand the Feds role in defining the regulatory structure for the GSEs (specifically their future capital requirements). While the markets are still digesting the statement, a change of policy towards clear “bailout” by the government should help the equity market, risk appetite andUsd intraday

The BoJ began is two day monetary policy meeting today and are expect to hold rates at 0.50%.

New Zealand reported a dismal retail sales figure (m/m) at -1.2% vs. -0.1% exp. but grew Ex Autos 0.7% vs. 0.5% exp (likely lifted by food price inflation). Clearly higher energy cost, deteriorating economic expectations and weak labor market has wrecked consumer confidence and this downward trend doesn’t seem to be ending near term. Today’s poor growth figure will now place the emphasis on tomorrow CPI figure as a key factor to when the RBNZ begins cutting rates. Should the figure come in softer than the q/q 1.4% expected reading, we could see a decline unwinding of long NZD positions.

In a light calendar day markets will be watching UK Junes producer prices. It will be interesting to see if the decline in business activity has halted producer’s ability to pass on their increased costs. We don’t think so however, especially given the fact that energy has continued to move up and sustained these elevated levels for an extended period of time. Most likely, producers price increases are being pass to the consumer which the MPC won’t be happy about.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9923
R 2: 0.9792
R 1: 0.9718
CURRENT: 0.9678
S 1: 0.9597
S 2: 0.9546
S 3: 0.9477

EURJPY
R 3: 171.88
R 2: 170.00
R 1: 169.63
CURRENT: 169.28
S 2: 167.83
S 2: 167.13
S 3: 166.09

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3729
CURRENT: 1.3554
S 1: 1.3553
S 2: 1.3506
S 3: 1.3470

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

Profile regulatory information:

ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.

The Forex Market Overview

The Forex Market Overview 10 July 2008

The Usd was stable in Asian session as a lack of real news provided no real impetus for a directional move. EurUsd traded in a 1.5700 - 1.5750 range while UsdJpy slipped from 107.50 to 106.90. Strong Jpy buying spilled over into select carry trades with GbpJpy the hardest hit dropping from 212.30 to 211.40 while AudJpy was able to rally back from early selling to 102.70. Oil was trading at $136.50 barrel after rising above $138 after a sharp fall in U.S. stocks. Gold closed with strong gains, amid geopolitical tensions thus increasing the metals attractiveness as a safe-haven instrument; the most active Aug '08 contract up $5.30 to $928.60. Sep '08 silver +22.0 ¢ at $18.175/oz.

Wall Street fell over 2% as rumours abound that investment banks still have large write-downs to declare. Merrill Lynch fell over 9% after Fitch Ratings indicated that it may cut the banks debt rating. Merrill's along with other U.S. banks report earnings next week. Asian markets are mostly trading mixed this morning in a directionless session. Lenders lost ground in Australia on worries about the US financial sector, but financials came off early lows in volatile trading in Japan and Korea as the markets reversed early declines. European stocks are coming under significant selling pressure, but so far ,US index futures are still in the positive.

With the Aud looking a little vulnerable ( due to deteriorating fundamentals) today’s better then expected employment figure 29.5k vs. 25k exp (prior -19.7k) help give the currency some support.

The highlight of this data devoid day will be the BoE's interest rate announcement. It is universally expected that the MPC will hold rates at 5.00% due to worrying inflationary pressures. Economic activity in the recent month has shown clear deterioration. In addition, negative data from the housing market, industrial sector that has probably fallen into a recession and a consumer spending ready to decelerate significantly. But the BoE members at this point are still leaning to the inflation side of the story which means a strong chance of a technical recession in the UK. With economic indicators well in the region which historically the BoE would be cutting rates, we believe its just a matter of time before rates come down.

Ex Fed President William Poole in a conference yesterday stated he believes that the government-sponsored mortgage companies, Fannie Mae and Freddie Mac, are insolvent. Interesting questions maybe asked of Fed Chairman Bernanke and Treasury Secretary Paulson when they testify on the health of the financial system later today.

17.45gmt - ECB's Trichet speaks
19.30gmt - Fed's Yellen speaks

Daily Forex Pivot Points
AUDUSD
R 3: 0.9670
R 2: 0.9642
R 1: 0.9618
CURRENT: 0.9590
S 1: 0.9545
S 2: 0.9477
S 3: 0.9459

EURJPY
R 3: 169.46
R 2: 169.14
R 1: 168.90
CURRENT: 168.54
S 1: 167.83
S 2: 167.13
S 3: 166.10

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3606
S 1: 1.3565
S 2: 1.3505
S 3: 1.3470

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

Profile regulatory information:

ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.