Archive for November, 2009
Stunning Wednesday USD trade
USD Forex Index left the market stunned trading at fifteen-month low and broke all the technical market records without getting any support from the equity trade.
Yesterday trade placed the USD at the low resistance area of 74.20 and is the lowliest traded value since August 2008.
USD fell poorly against the newly emerging currencies like Ruble and Czech Koruna. The reasons of this decline in the USD trade are considered the double trade deficit experienced by the US market and the important decision of Fed to keep the interest rates low until the economy revert back.
If the US market sustained to bear the risk in the long and short-term trade, this drop in USD value would continue.
As soon as USD pushed up on Wednesday, traders started shorting off USD and longing other asset because of the fear of hike in interest rates by the Federal Reserve endeavoring support to USD at the market.
The belief of economic recovery strengthen due to improved results of US consumer spending and home sales data are far more better than the expectation.
The jobless claims ratio dropped to its lowest level since September 2008. S&P 500 increased 4.98 to around 1,110.63.
EUR/USD hit the market as soon as it found the necessary momentum and pushed to the level of 1.50 and it traded higher through out the day that happens very rarely, at the level of 1.5140.
GBP/USD earned hundred and fifty pips from the beginning of the European session and after this, it failed to cross that level even after the fall of USD trade index, at the level of 1.6720.
USD/JPY moving ahead firmly in the area of 87.00, it is the lowest trading area of the market after 1995 and it closed at the rate of 87.30. There are increased chances that BOJ will soon intervene with the currencies at the Forex market, as the strength of JPY is the major factor for devaluing the Japanese exports.
However, by seeing the value of USD at yesterday’s market the hopes of economic got some support and the experts believe that this is the good sign for economic recovery and opens the new growth horizons for the Forex.
NABE Opinion about USD and world economy
NABE, National Association of Business Economics showed positive attitude regarding the global financial stability in 2010 but they expressed doubt regarding the USD trade growth in 2010.
They have highly boosted hopes with respect to the performance of the long-term trade at the global market. After announcing their point of view about the recession saying that the recessive phase was over, NABE is now having increased expectation of the growth.
The GDP growth rate of 2009 Q4 is now heading with 3% and the 2010 expected profit is around 3.2%. The two years trade growth is expected to be just one and half of the percentage that is just the percent greater than the October expectation.
The economic growth rate is expected to surpass its own trend move at which it is moving presently. The members of NABE are expecting to have the growth rate estimate around 2.7% in the coming five quarters.
The real GDP growth should have competence enough to improve the losses occurred due to recession and get the revised Forex output by the end of 2010.
Housing sector would yet take more time to lead ahead with the walk of the overall economic forward moving steps. The last trade losses and originally inactive service conditions are expected to have outcome in uninspiring buyer spending interests in the coming year will be definitely affected.
After the striking vehicle sales lower of around 10.2 million in 2009 as calculated approximately, the next year estimated vehicle sales is around 11.6 million although screening decent gain over year and year would present long-lasting challenges for the automobile business.
NABE expected to view persistent bumped up economy. The personal saving rate is expected to be at the average of 4 percent in 2010, which is similar to the nine-months of this year but no further supported by the stimulus plans, if this would be the saving rate, then it will be the highest rate since 1998.
USD would face the weak currency position at the market in 2010 although it will be more stabilize against the current strong currency EUR. The fundamental analysis disclosed that USD is undervalued but the majority of survey reports expressed that USD will be the major reserve currency in 2015.
Even though the currency is having weak financial position, still the trade deficit is anticipated to broaden because the trade terms are deteriorating like the import prices go up comparative to the export prices. The foreign trade will stay neutral against the overall economic growth in 2010.
NABE anticipation and estimation will hold its authenticity in the coming Forex hours or not is another matter but yes, it made it every one to re-consider their opinions about the trade. The survey conducted by the NABE panel and the outcomes reveal something unexpected things regarding the market prospects.
No change in interest rates: BOJ
BOJ kept the interest rate unchanged at 0.1% today for the continuous eleventh time in order to meet the expectation of the market. The decision of BOJ is of utmost importance because it affects the Forex trading and the market.
They agreed that, as the economy is no more in the worst condition so the bank assessment proceedings will upgraded.
BOJ gave the credit of this progressive economy to the stimulus plan, quantitative easing and the government support to manage the economic issues properly.
They also added that financial position of the nation is improving but the domestic spending and the consumption rate is yet fragile.
Few signs of improvement are observed in consumption rate due to increase in imports and the industrial production showed upward movement due to lower inventories that supported industries to continue production.
The consistency in the overall economic situation laid its effect on the Japanese financial strength particularly seeing that overseas sell demand initiate to alleviate.
The figures of durable goods consumption are showing positive response indicating the rising consumer confidence in the economy of the nation. The improved consumption tells about the improved purchasing power of the citizens.
This will be helpful to stimulate the monetary policy to ease put the credit procedures and encourage lending of finance. The initial signals of stability are coming into view even though the drop in income is continuing and job losses are still on.
The analysis of market indicates that the volatility of food and energy consumption is still low as compared to the last year’s price index. The inflation rate has direct proportion with the low demand and submissive financial growth.
The BOJ is expecting medium to long-term price stability and fall in prices will freeze out and will stabilize soon due to rising commodity prices.
It is very clear to all that the economic recovery phase will take time and continue to be sluggish in the first half of the coming year.
The noticeable improvement in the export level will sustain domestic spending rate and that will slowly improve the growth rate of the economy. The bank assured to continue the economic assistance and provided the required measures to stabilize the market position at international Forex trading platform.
The statements of the BOJ reflect their concern about the economy and their intention regarding extending the stimulus plans and provision of government support to bring financial stability. Forex trading is the platform where the value of currency fluctuates easily with the changes in the government plans and announcement regarding any national matter.