Forex Market Overview

Forex Market Overview 01 August 2008

The Usd was able to hold on to late day gains in the Asian session, as weak initial jobless claims threaten to end the greenback strength. However, a late US session sell off in oil and less than hawkish comments from ECB members, quickly came to the Usd aid. The EurUsd traded lower from 1.5605 to 1.5550, while the UsdJpy bounced between 108.40 and 107.55. The AudUsd fell sharply lower, as a local media reported that the RBA was ready to start easing, trading down to 0.9360.. In the late Asia trading FX markets have gotten very quiet, as market seem willing to wait until this afternoon’s release of US Non Farm Payrolls. Crude is slightly weaker at $123.34bll, while gold is trading down to $910.50oz. As the trend of falling economic activity continues in the G10, we expect commodity prices to continue to soften, which, in turn, should support the Usd.

Paulson said yesterday in Washington that… "While the stimulus is making our economy stronger than it would have been otherwise, the housing correction, credit market turmoil and high energy prices remain a considerable drag on the economy -- and the effects of this drag can be seen in the soft job market". Paulson also expressed that he sees improvement in the US economy saying..."We are making progress, although not in a straight line. Housing continues to be at the heart of our economic challenges and remains our most significant downside risk…We must work though the necessary adjustments in housing and credit markets to return to growth next year and beyond."

A lack of data in European session will have the market squarely focused on the US session and the release of non-farm payrolls. The much better than expected ADP figures, which printed at 9k, has once again provided intrigue to today already volatile release. We still believe, after yesterday’s jump in initial jobless claims and further deterioration in the Conference Board survey (job component), that the risk are skewed to the downside. In addition, ADP has been overly optimistic in recent months. While we are expecting something slightly higher than the 75k consensus, our gut is saying that anything is possible today, especially how events and sentiment are falling in place for Usd bulls.

Daily Forex Pivot Point

AUDUSD
R 3: 0.9528
R 2: 0.9476
R 1: 0.9419
CURRENT: 0.9369
S 1: 0.9357
S 2: 0.9328
S 3: 0.9276

EURJPY
R 3: 169.73
R 2: 169.19
R 1: 168.31
CURRENT: 167.23
S 1: 167.10
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3717
CURRENT: 1.3694
S 1: 1.3606
S 2: 1.3567
S 3: 1.3501

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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.

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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.

USA Financial Sector Worries

US financial sector worries. Bank of England left rates unchanged

News and Events:

The Dollar fell against the Euro on Thursday, dragged down by persistent worries over the health of US financial sector, as shares and bonds of the
country's two mortgage finance giants tumbled on capitalization fears. The yield spread premium for the larger Fannie Mae rose to its highest since before the Fed's bailout of US Investment bank Bear Stearns in March.

Investors were slightly reassured by comments by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson in testimony to Congress that they were doing everything possible to restore calm to financial markets.

Bank of England held interest rates steady at 5% on Thursday, but analysts say rates will have to fall, making the GBP less attractive.

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.