Wednesday, May 04, 2005


Greenback Loses Ground while Yen Remains Afloat

Clearly the Federal Reserve on Tuesday was not as aggressive in raising interest rates as most traders were expecting. The greenback dropped against the yen hitting a six-week low at around 50 pips shy of 105 yen. This may be a result of yuan speculation to some extent as well. Three-month yuan non-deliverable forwards in the offshore forward market in Europe hit record prices recently and those not able, or willing, to invest in such exotics probably scooped up yen as a proxy bet. Still, at 104.50 yen, the dollar may have gained 25 pips soon after China's Finance Minister, Jin Renqing, announced that speculation on China's yuan revaluation may be making progress difficult. The euro rose to 135.55 yen from 134.98.

Dollar longs may be unwinding as the Fed believes inflation will be kept in check throughout the coming weeks. If inflation remains low, the Fed would have little reason to increase the federal funds rate, thereby keeping investors in the greenback unhappy. Greenbulls tend to favor high interest rates as they make the dollar more attractive to other investors. This may have been a good sign for investors dealing with precious metals though. If economic growth continues to dip downward, as we've seen recently from a few indicators, interest rates may not be raised any further.

article continued here

Tuesday, May 03, 2005


Federal Reserve Expected to Raise Rate

The Federal reserve is expected to raise the interest rate by 25 basis points to 3 percent. Quarter-point increment increases have taken place throughout each of the FOMC's last seven meetings since June of 2005. Whether the Fed will continue to raise rates to 4 percent is still undetermined. There is chatter amongst analysts and commentators about rising inflation, but one could potentially quantify inflation by looking at the P/E ratios of the equity components in the Dow Jones Industrial Average or the S&P 500 to get a better idea. P/E ratios are notoriously low during periods of inflation. Furthermore, the Fed typically looks to keep inflation in check by raising rates. Higher interest rates may lead to a rise in the value of the dollar against other currencies since high rates make the greenback attractive to foreign investors.

The greenback is hovering around $1.2871 against the euro. Against the yen, the dollar is trading at 105.10 yen. Meanwhile, the euro is keeping caution above a three-month low of below 135 at 135.23 yen. Most activity you'll see in the USD/JPY and EUR/JPY currency pairs may result from US and euro zone activity since Japan will be on holiday from Tuesday to Thursday. Euro zone uemployment claims took a rise in March to 8.9 percent while recession may be looming for the euro zone on warnings of a tightening in manufacturing for the first time in 20 months. This may not bode well for the euro.

More here

Monday, May 02, 2005


Yen retreating against the yen and the euro?

Mon May 2 05:40:36 2005 - Yen Retreat on North Korean Missile Test

The greenback rose against the yen at 105.31 on reports that North Korea could have performed missile testing recently. Currency traders have been lifting the yen as a proxy bet for the yuan against other currencies. Speculation remains that China could soon revalue its currency.

Reports from China that reforms were in place for revaluation to take place also lifted the yen against the euro to record levels, but the missile test may have raised the euro recently. Also, profit-taking may have brought the yen down against the euro since the Japanese currency may have been overbought. In April, euro zone manufacturing dipped for the first time within the last 20 months. The euro remained firm on the news at $1.2859. Such a dip in manufacturing may be due to higher oil prices. Nevertheless, they are making a retreat. Sweet crude hit below $50 a barrel resulting from higher stocks of oil in the US and abroad.

Currency traders and investors are waiting for economic data from the US and the euro zone as well as results from the upcoming Federal Reserve policy meeting this Tuesday. The Fed might raise the fed funds rate by 25 basis points to 3 percent. Rates in the eurozone and Japan are 2 percent and zero, respectively.

More here

Sunday, May 01, 2005


Forex mini accounts - a new trend?

Why should one open a FOREX mini account?

It is now possible to open a forex mini account with as little as $250 with some Forex firms. In a forex mini account, you can learn, by your own experience, when to enter and exit a currency trade, in addition to proper capital management. Mini accounts have many features that could potentially benefit the novice currency trader, as well as the seasoned, foreign exchange currency trader. Only with proper discipline can one begin to become a seasoned currency trader.

Although it is possible to learn proper discipline and proper entry and exit strategies in the forex market by using a demo forex account, daytraders who have played with demo forex accounts, and want to get their feet wet, yet do not have enough capital to make trades with regular accounts consisting of contract sizes of 100,000 can take advantage of contract sizes of 10,000 and substantially reduced margin requirements compared to the $2,000 per contract required in regular forex accounts.

Small currency traders will still be able to trade currencies using the same state-of-the-art trading platform that regular forex traders use, only certain variables will be different. These variables include the lot sizes, the margin, and the equity in the account, of course. Although you may open an account with as little as $250 in some cases, it is highly recommended to make a minimum investment into your mini forex account of $1,000 since there is very high leverage and the foreign exchange market is extremely volatile.

Continued at: Opening a mini forex account

Warren Buffett said he maintained a more than $21 billion bet against the U.S. dollar recently.

Buffett is betting against the dollar on the concern that widening U.S. trade and budget deficits will melt its value over time.

The USD index, which measures the greenback against six other currencies, fell 7.5 percent in the fourth quarter, leading to a $1.63 billion gain for Buffet. Forward contracts are agreements to purchase foreign currencies on a future date at the current price.

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Saturday, April 30, 2005



This blog will be dedicated to discussing currency trading and several key events taking
place around the world that may have an effect on particular currency pairs...
we'll see how this works out, as I may be too busy to update this blog
as often as I'd like to.
Hopefully it'll serve other currency traders well.

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