Archive for September, 2009
FOMC Prospects
The FOMC meeting is on 22nd and 23rd September. The whole world is looking forward for the results of the meeting and the consequences of the formulated policies on the Forex trade and market.
The data release regarding the decisions taken at the meeting will be opened on 23 September. They are expecting to retain the Fed Funds rate goal unmoved at 0.00% to 0.25% and to sustain the current echelon of purchasing bonds until October.
The trading is anticipating that whether they are considering discarding the idea of Quantitative Easing in the Forex trading and the attitude of FOMC towards the issue of withdrawal of stimulus and determines the base for increment in the interest rate in the near future.
The FOMC is indicating to withdraw the stimulus considering the recent US economic data release showing the end of recession but the recovering phase of economy is likely to be slow so they might drop the idea of stimulus withdrawal.
Purchase bond expiry in October
FOMC declared in March the plan of quantitative ease and the idea of buying 300$ billion in US treasuries under six month of time limit.
This plan and bond was to terminate in September but FOMC extended the bond termination date in August policy formulation meeting up to October.
This plan termination will signal the escape from the quantitative ease plan as it will discard its support for the bond trade. This would be little positive for the USD trade.
Sign of shift in FOMC policy bias
Ben Bernanke comment that the recession period has come to its end and the adjoined US economic report that have hit the anticipations push the FOMC to slowly but surely withdraw liquidity form the trading market.
The Forex trade is looking forward to see the language of the FOMC comments regarding the comments on policy modulations that will bound the timeframe for the lower level of interest rates that are supposed to be extended by the FOMC as economic conditions are changing.
Overall, the traders are having high expectation from this FOMC meeting as this going to be the most decisive one to cause Forex alterations.
Boost Your Trading with Forex Updates
These are some fresh updates from the Forex trading window and an insight to the weakening currencies at the floor.
USD-
The USD is in trouble again with little success in the industrial production level and stocks at peak. It showed some poor performance against EUR and other currencies.
Forex traders set their back towards the USD trading and investing in equities and commodities, setting behind the USD in Forex race.
With these changes, there is a hope that the building permits and housing will rise to 580 million from 560 million. The unemployment claims are still deteriorating, even though the other sectors are showing positive sign.
Another point to note for this week is the ignited issue of trade disputes between the US and China, that has laid down pressure on both economies. However, the Chinese government has filed the complaint in the WTO for resolving the issue.
EUR-
Hurray! New heights as the EUR/USD pair reached 1.4738 level last night when the USD going short once again.
The risk has strengthens its hold over Forex market making the USD and JPY fall. The consumer price index came back to its track and hitting the consensus. Overall, these are the good days for EUR right now.
GBP-
The mixed trading response for GBP/USD and the week is filled with news of BOE and Mervyn King’s statement regarding financial policies.
The awaited unemployment data release was the shocking one as it crossed the highest limit of unemployment in UK since 1996.
The retail sales data is pending for release and its waiting time to see the consequences of that data on Forex trading.
AUD-
Once again, they are on top with great trading performance last night. There are many supportive reasons for its strength.
The increasing yield advantage, RBA maintaining its benchmark interest rate of 3 percent higher against BoJ with 0.10 percent and Fed Reserve with 0.25 percent is the reasons that assist the rise in currency trading.
One more reason is the rise in gold prices and the minor growth in the GDP due to consumer confidence in commodity purchasing.
This is the weekly assessment of four currencies that speaks about the Forex condition at the global market floor.
Till next weekend Forex trading- stay calm and enjoy the weekend holiday.
US at odds with China: Trade in Question
Last Friday in Washington, President Obama declared that the US would impose tariffs of about thirty-five percent on the import of tires from China for three years.
In response to this American act, the Chinese trade and commerce ministry had raised a question and criticize this action on Saturday.
After speechifying, the anger over the American deed on the Chinese sites, the officials suddenly declared on Sunday night that the country would take first initiative to levy tariffs on American product and chicken meat export.
On Monday, China had filed the complaint against this American act, and this reaction might indicate the beginning of a trade war.
This is the issue of clashes between the two countries when both the nations are undergoing through massive internal pressures to take strong measures to resolve the economic problems.
These trade clashes are igniting in to a big political issue even though they are trying together to restore the global economic growth and fight against security threats.
The impact of this issue on Forex Trading Platform can be calculated from the failing European and Asian Forex market as on Monday, because of two reasons: on one side, there is less indication of economic recovery, but on the other side this trade dispute is now slipping out of the hands of the governments of the two countries.
The former chief of IMF, Eswar Prasad is expecting that the G-20 meeting on 24 and 25 September and the visit of President Obama to Beijing in November would suffer from this issue and in turn trade will suffer.
Possible failures to China and US due to this tariff issue:
China will loose a huge export market that will lead to increase in number of jobless in the country.
At the time of federal deficit China is the biggest holder of American government debts because of economic saving actions.
The disputes is going to affect both nations, one way or the other, because if US levy taxes on Chinese exports then China would also levy tariffs on the import of American products.