Aug 13, 2008 / 3:56pm / in Eastern Europe, General, Interest Rates, News Releases, Western Europe, Forex News
It is not easy for many to admit that they made an error. It seems the President Trichet might finally be starting to embark on that difficult path. After raising rates in the Euro-Zone over the protests of many top figures within that continent, Trichet finally admitted what the rest of the world had realized some time ago: the Euro-Zone’s growth prospects are weak. This announcement/confession reflects that the ECB is starting to question if it did the right thing in raising rates.
Jul 16, 2008 / 5:18pm / in Eastern Europe, General, Western Europe, Forex News
One of the interesting aspects about today’s country in the Random Country Report is its youth; the country abandoned communism less than twenty years ago. Hungary, like many of neighbors, is a relatively young republic, and while many countries have had centuries to adapt to capitalism, Hungary has had about eighteen years to acclimate to a free market. Considering that with the fall of communism, Hungary lost — seemingly overnight — access to about ¾ of its export market, one has to be impressed with the strides that the country’s economy has taken.
Jun 30, 2008 / 4:11pm / in Eastern Europe, Fundamental, General, Interest Rates, Western Europe, Forex News
With this week’s ECB’s decision all but official, a more important question looms: what’s next? The ECB is a bank whose primary focus — witnessed in both its charter and its past actions — is price stability. Despite poor economic performance in recent months, the ECB essentially has to raise rates this week, as the Euro-Zone’s current inflation level is double the target of 2%. While President Trichet and his peers may pray that a single, small hike will be enough to curb rising inflation, the more likely scenario is that the policy move will not have a huge effect.
Jun 23, 2008 / 9:28am / in Fundamental, General, Interest Rates, United States Dollar, Western Europe, Forex News
In some weeks, the news highlight in the FOREX world is an Italian report on car sales. Other weeks, the major headline is that Nigerian workers are striking against the oil companies. However, this week, there’s plenty to be excited about, especially the most important gathering since the meeting of the Five Families: the U.S. Federal Reserve Open Market Committee Meeting.
Ladies and Gentlemen, start your engines.
Aug 10, 2007 / 6:52am / in Americas, Interest Rates, United States Dollar, Western Europe, Forex News
The European Central Bank and the United States Federal Reserve are bailing out the financial markets right now. BNP Paribas declared that they are suspending withdrawals from three of their investment funds, and the market reacted pretty poorly. The overnight lending rate for euros shot up to 4.7%, leading the ECB to distribute over 155 billion euros over the past two days. The Fed, which has seen two straight days with the LIBOR rate above the benchmark rate of 5.25%, has added $43
Aug 9, 2007 / 6:52am / in Americas, Carry Trading, Japanese Yen, United States Dollar, Western Europe, Forex News
The carry trade is not back. At all. Stay away for right now. The Dow rallied to close 150 points higher yesterday, and yen crosses followed that stock market rally. The high-yielding currencies, especially, made back a lot of their losses. But the upward movement is likely to be temporary because the current market is not conducive to the carry trade.
Aug 6, 2007 / 6:54am / in Americas, Carry Trading, Interest Rates, United States Dollar, Western Europe, Forex News
The state of the US economy is not dire, but it certainly does not bode well for the US dollar. Job creation was at its lowest level since February, with the NFP printing at an abysmal 92K. But even worse for the dollar is the fact that job numbers are not the cause of growth or decline in the economy. Payrolls are a reflection of demand; as house prices depreciate and take personal income down with them, that creates less of an incentive for businesses to grow. In recessionary times, businesses are always slow to cut jobs, as the fall in labor always lags behind the fall in production.
Aug 3, 2007 / 6:20am / in Economics, Interest Rates, United States Dollar, Western Europe, Forex News
The US Non-Farm Payrolls report disappointed the forex market this morning, listing only 92K new jobs. We should have expected this based on the dreadful ADP survey, but ADP has a history of missing the mark on Non-Farm Payrolls. And so economists were actually expecting 127K new jobs, and the US labor market did not deliver. With less than 100K new jobs, the NFP puts the Fed on track to cut interest rates in early 2008, which may benefit the equities market when it happens but
Jul 31, 2007 / 6:26am / in Economics, Interest Rates, United States Dollar, Western Europe, Forex News
In the past week, EURUSD has lost more than 200 pips from its record highs. But recent evidence shows signs of a retracing, with support for the euro regaining strength. But it’s not like currency traders have fallen back in love with the euro. Most of the movement in the currency pair in recent days has to do with softness in the US dollar, rather than any inherent strength in the European currency.
Jul 24, 2007 / 6:43am / in Eastern Europe, Economics, Fundamental, Interest Rates, United States Dollar, Western Europe, Forex News
EUR/USD has been establishing fresh highs almost daily for the past two weeks. The upward movement in the currency pair is due to a variety of factors pointing to both euro strength and dollar weakness. Economic growth within the Eurozone is forecast to be 2.6% in 2007, putting the 13-country region at a pace behind only Great Britain among the industrialized world. Also, most currency analysts expect at least one more rate hike this year, probably in October. Money follows yield in the forex market, and that is ce