http://www.moneyhowto.com/ ru MoneyHowTo.com Global Investors Community. Making Money Instructions DataLife Engine http://www.moneyhowto.com/2008/09/04/dollar_hits_08_high_vs_euro_as_europe_struggles.html http://www.moneyhowto.com/2008/09/04/dollar_hits_08_high_vs_euro_as_europe_struggles.html NEW YORK (AP) -- The dollar rose to a 2008 high against the euro and a fresh 28-month high against the pound Thursday after the European Central Bank held its interest rate steady and cut growth forecasts for the euro zone.

The 15-nation currency dropped to $1.4331 from $1.4493 late in New York Wednesday after earlier touching a new 2008 low of $1.4319.

The ECB held its interest rate at 4.25 percent, as expected, as it struggles to balance accelerating inflation with slowing economic expansion. But the central bank cut its growth forecasts for 2008 and 2009 as it raised its inflation outlook. It said GDP growth in the euro zone would be from 1.1 percent to 1.7 percent in 2008, and from 0.6 percent to 1.8 percent in 2009, lower than previous estimates.

The British pound dropped to $1.7690 from $1.7759 after glancing off a fresh 28-month low of $1.7625. While the Bank of England also kept its key interest rate steady, at 5 percent, rate cuts are expected amid a housing crisis and economic stagnation in England, wrote Ashraf Laidi, chief currency strategist at CMC Markets US in New York, in a research note.

Higher interest rates can support a currency as investors transfer funds to where they can get better yields, while also helping to tamp down inflation. Cutting rates can weaken a currency while spurring economic growth.

"The euro zone is headed to recession," said Win Thin, currency strategist at Brown Brothers Harriman]]> gdz Thu, 04 Sep 2008 19:39:34 -0500 http://www.moneyhowto.com/2008/08/29/6_facts_that_give_forex_traders_an_edge.html http://www.moneyhowto.com/2008/08/29/6_facts_that_give_forex_traders_an_edge.html Over the past few years, FX markets have exploded in popularity amongst retail traders. Hard to say if that was due to heavy promotional efforts from the industry itself, or whether the continual pumping of FX trading is a result of increased interest and demand. In any event, there are a lot of misconceptions and mistruths floating out there that need to be addressed. Most of the myths involve spot currency aka "FX" markets but some include currency futures, too.

Currency Markets Are Totally Random

Not at all... nothing could be further from the truth. An individual's stock price movement can be pushed up, down or sideways by an endless procession of factors. Part may be economic, part fundamentals to specific company, industry or sector. Another part of stock market action is pure emotion. Someone makes or sells a widget with perceived value higher than what turns out to be economic reality. Doesn't matter... stock prices can remain pumped on pure emotion longer than rational people can comprehend.

Currency markets aren't like that. They are purely supply and demand, a commodity if you will. Each currency is weighted on economic conditions for that specific denomination versus any or all others in the marketplace. Price value of currencies is nothing more than a reflection of where that denomination's economy ranks as weak or strong relative to others. There is no sentimental or emotional impact on a currency. No one buys the British Pound to unreasonable heights because they like the color scheme of those bills. No one sells the USD/CHF because that country has great skiing in the winter; therefore it's a "play" to profit from guesswork of increased tourism. If the Swiss economy is weak or strong, it'll be amply]]> gdz Fri, 29 Aug 2008 19:30:49 -0500 http://www.moneyhowto.com/2008/08/27/euro_higher_against_dollar.html http://www.moneyhowto.com/2008/08/27/euro_higher_against_dollar.html BERLIN (AP) -- The euro recovered some ground against the U.S. dollar on Wednesday after hitting a six-month low the previous day.

The euro bought $1.4692 in morning European trading, up from $1.4650 in New York late Tuesday and well above the $1.4569 it bought earlier in Tuesday's session.

The British pound, which on Tuesday hit a 25-month low, rose to $1.8420 from $1.8389. The dollar also gave up ground against the Japanese currency, declining to 109.22 yen from 109.63 yen.

The dollar slipped as oil prices rose in Asia on concerns that Tropical Storm Gustav may disrupt operations in the Gulf of Mexico, home to a quarter of U.S. crude production.

The dollar had risen sharply on Tuesday as two U.S. economic reports came in better than expected, while surveys showed business and consumer confidence dropping in Germany, the 15-nation euro zone's biggest economy.

In addition, the Federal Reserve released notes from its Aug. 5 meeting indicating that the next move for U.S. interest rates would be upward. Higher interest rates can boost a currency as investors transfer]]> gdz Wed, 27 Aug 2008 05:15:25 -0500 http://www.moneyhowto.com/2008/08/20/dollar_strengthens_against_euro_pound.html http://www.moneyhowto.com/2008/08/20/dollar_strengthens_against_euro_pound.html NEW YORK (AP) -- With oil prices seesawing, the dollar bounced back against the euro and the pound Wednesday after a two-day drop.

The 15-nation euro slipped to $1.4741 in late New York trading from $1.4768 Tuesday, while the British pound fell to $1.8615 from $1.8660.

The U.S. Energy Department said Wednesday a big gain in imports drove crude inventories up by a hefty 9.4 million barrels in the week ended Aug. 15, a figure much higher than analysts expected.

Light, sweet crude for September delivery rose near $115 a barrel on the New York Mercantile Exchange. Earlier in the session, it climbed as high as $117.03 before the inventory data was released, then fell as low as $112.61, only to rebound again.

Investing in oil futures has been a hedge against a sliding dollar, but oil's weekslong drop has helped support the dollar. The prices of the two have tended to move in opposite directions.

Meanwhile, shares of mortgage giants Fannie Mae and Freddie Mac continued to sink Wednesday on worries that the government-chartered companies will need a bailout from the Treasury Department, a move that could wipe out shareholders' equity.

The dollar dropped earlier in the week as crude futures surged, the financial sector worried Wall Street and the U.S. government said wholesale prices jumped higher in July.]]> gdz Wed, 20 Aug 2008 19:08:55 -0500 http://www.moneyhowto.com/2008/08/15/dollars_prospects_may_be_brighter_after_long_drop.html http://www.moneyhowto.com/2008/08/15/dollars_prospects_may_be_brighter_after_long_drop.html LONDON -- The buck may be turning into a bull.

The U.S. dollar extended its recent rally against major currencies on Friday as commodities fell and European and Japanese economies faltered. After sliding for years, the dollar may finally be on the way back up, some analysts argue.

The currency rose against the pound for the 11th straight day on Friday, to $1.85 -- its longest winning streak in 37 years. As recently as July, one pound would buy two dollars. At the same time, the dollar climbed to its strongest level in almost six months against the euro, which fell to $1.47, and to near a seven-month high versus the yen.

So far, the trend has helped push oil prices lower. Long term, a stronger dollar has a range of consequences. It makes imports cheaper for Americans, and makes it more expensive for foreign companies to buy U.S. assets such as Anheuser-Busch Cos., which is being sold to Belgian-based brewer InBev for $52 billion.

A stronger dollar would probably come as a relief to many European businesses, too, since it makes their exports to the key U.S. market more price-competitive.

The dollar reached an all time low on July 15 of $1.60 to the euro, down from a peak of 82 cents to the euro in 2000. The dollar's decline is blamed on the large U.S. trade and budget deficits, investment flows out of the United States, and lately by interest rate cuts by the Federal Reserve.

Some think it's only up from here. The dollar is now benefiting from the widespread sense that prices for]]> gdz Fri, 15 Aug 2008 19:15:08 -0500 http://www.moneyhowto.com/2008/06/18/china_yuan_hits_new_high_against_us_dollar.html http://www.moneyhowto.com/2008/06/18/china_yuan_hits_new_high_against_us_dollar.html SHANGHAI, China (AP) -- The Chinese yuan gained against the U.S. dollar on Wednesday, hitting a fresh high as American and Chinese officials resumed talks centering on trade and other strategic issues.

Washington wants Beijing to loosen controls on currency trading and allow the yuan's rate to set by market forces. U.S. manufacturers contend that the restrictions keep the yuan's value artificially low, giving Chinese exporters an unfair advantage and boosting China's trade surplus.

The yuan has gained about 20 percent against the U.S. dollar since Beijing revamped its foreign exchange trading system in July 2005, revaluing the currency by 2.1 percent to 8.11 yuan to one dollar.

On Wednesday, the yuan began trading at a 6.8823 to the dollar, continuing a steady advance against the dollar that has taken it to record highs in recent weeks. It was trading at 6.8827 by Wednesday afternoon on the over-the-counter market, stronger than Tuesday's close of 6.8914.

China has pledged to loosen currency controls, but has not given any timetable, saying that sudden change would expose the country's shaky financial system to excessive risks from outside speculators.

During the talks in Annapolis, Md., China's central bank governor, Zhou Xiaochuan, alluded to such risks by asking about the regulatory mistakes that may have helped precipitate recent U.S. financial troubles.

"China always hopes to draw lessons from the U.S. experience in macroeconomic management and market]]> gdz Wed, 18 Jun 2008 19:00:18 -0500 http://www.moneyhowto.com/2008/05/23/the_vulnerabilities_of_the_us_dollar.html http://www.moneyhowto.com/2008/05/23/the_vulnerabilities_of_the_us_dollar.html The US dollar weakened significantly this past week as rising oil prices revealed the vulnerabilities of the US economy. Companies are beginning to struggle and have been forced to come up with more creative ways to deal with the energy crisis. With crude oil prices hitting $135 a barrel and gasoline in many states topping $4 a gallon, US companies are making cuts across the board. Ford Motors Co for example plans on reducing production while American Airlines will be lowering capacity by 15 percent and adding bag charges. According to the futures market, some traders even expect gas prices to hit $7 to $8 a gallon. However the US is not alone in having to deal with the oil crisis which is one of the major reasons why the dollar has weakened. Over the past few weeks, the market had been slowly pricing in a pause from the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to cut interest rates. The surge in oil prices and hawkish comments from the European Central Bank, the Bank of England and the Reserve Bank of Australia dramatically altered the outlook for these central banks. With strict inflation targets, traders came to realize that interest rates for these 3 countries will remain unchanged for the foreseeable future and as a result, currency rates adjusted for these expectations. In the coming week, the vulnerabilities of the US economy may become even more apparent. The US markets are closed for Memorial Day on Monday, but we still have a busy week ahead of us with consumer confidence, new home sales, durable goods, first quarter GDP, personal income, personal spending and Chicago PMI due for release. We expect most of these numbers to be dollar]]> gdz Fri, 23 May 2008 18:52:48 -0500 http://www.moneyhowto.com/2008/05/03/us_dollar_on_the_road_to_recovery.html http://www.moneyhowto.com/2008/05/03/us_dollar_on_the_road_to_recovery.html The US dollar continued on its road to recovery as it advanced against most of the major currencies, and soaked in the biggest gains against the low yielding Swiss franc and Yen as investors moved into higher yielding assets. As a result, the New Zealand and Australian dollar were the only currencies to advance against the greenback, while the Canadian dollar failed to follow its currency partners amid a rise in commodity prices. The US dollar also rallied against the European currencies as the euro dipped to 1.541, while the British Pound inched lower to trade in the 1.973 range.

Fresh economic data supported the US dollar rally as labor conditions marked a surprising improvement, with growth prospects improving as export demands remain resilient. The Non-Farm Payroll index came in much better than what the markets had expected as it was released at -20K against forecasts for a -75K reading due to heightened growth in the services sector. As a result, the Unemployment Rate dropped to 5.0 percent from 5.1 percent, with Manufacturing Payrolls also reflecting an improvement as it rose to -46K from -48K. The Factory Orders index added to the improved outlook as the index surged to 1.4 percent from minus 0.9 percent due to a rise in export demands.

Improved economic data fostered early morning gains in the securities market, but failed to hold its ground as investors sold off their securities to round up profits. As a result, the DJIA picked up 48.20 points to hold off at 13,058.20 points after rising above 13,100 early on in the session, with 22 of the 30 components advancing. Among the broader indices, the S&P500 rose 4.56 points to 1,413.90, with 148]]> gdz Sat, 03 May 2008 08:36:25 -0500 http://www.moneyhowto.com/2008/03/04/more_weakness_ahead_for_dollar.html http://www.moneyhowto.com/2008/03/04/more_weakness_ahead_for_dollar.html Despite all the pain the U.S. dollar has endured in recent days, the greenback may still have further to fall before seeing any sort of relief, according to currency experts.

Driving much of the dollar's decline this week were tepid remarks about the U.S. economy by Federal Reserve Chairman Ben Bernanke, who hinted that the central bank would cut interest rates once again at the Fed's March meeting.

Those comments, combined with a number of troubling signs about the strength of the U.S. economy, helped send the dollar tumbling to multi-year lows against a host of currencies including the Swiss franc, the Malaysian ringgit and Japanese yen.

"It all points towards a weaker U.S. economy and currency traders don't want to be exposed to that kind of risk," said Gareth Sylvester, senior currency strategist and self-described "dollar bear" at HFIX Plc in San Francisco.

But perhaps the most notable move of the week was the dollar hitting successive all-time lows against the euro, breaking the key psychological barrier of $1.50 for the first time since the 15-nation currency was launched in 1999.

Currency experts, however, argue that the dollar will remain under pressure at least through the next]]> gdz Tue, 04 Mar 2008 03:30:38 -0600 http://www.moneyhowto.com/2008/02/29/dollar_falls_again_euro_zone_divided.html http://www.moneyhowto.com/2008/02/29/dollar_falls_again_euro_zone_divided.html BERLIN (AP) -- The dollar kept spiraling down Friday, hitting another low against the euro and dropping to a three-year record against the yen, as worries about the U.S. economy depress the currency and raise thorny issues in Europe about how to cope with the growing gap.

The euro flew past its previous high to hit $1.5238, before subsiding to $1.5194 late in New York. The euro topped $1.50 this week for the first time since being introduced in 1999 at $1.17, then surged above $1.51 after markets took comments from Fed Chairman Ben Bernanke as a sign that yet more U.S. rate cuts are on the way.

"The dollar looks set to finish the month with yet more downside pressure being heaped upon it," said Gary Thomson of CMC Markets in London.

The dollar also slumped to 103.96 Japanese yen on Friday from 105.36 yen in New York the night before. The dollar has not been below 104 yen since March 2005.

The dollar also fell to 1.0433 Swiss francs from 1.0503 Swiss francs, hitting a record low of 1.0410 francs, according to Dow Jones' Interbank foreign exchange rates.

The two "carry-trade currencies" tend to trade inversely to the market. The Dow Jones industrial average dropped more than 300 points in late trading in New York.

Carry trader borrow currencies from countries with low interest rates and investing the funds in higher]]> gdz Fri, 29 Feb 2008 18:24:26 -0600 http://www.moneyhowto.com/2008/02/22/what_to_expect_for_the_us_dollar.html http://www.moneyhowto.com/2008/02/22/what_to_expect_for_the_us_dollar.html The dollar has weakened this past week, but the question on everyone’s mind is how bad is the US economy really doing? Hopefully next week’s heavy data calendar and testimony by Federal Reserve Chairman Ben Bernanke will shed more light on the state of the US economy and monetary policy. With the exception of producer prices, we expect more dollar bearish news and would actually be surprised if Bernanke had anything positive to say about the US economy. The Federal Reserve has cut interest rates by 225bp since August and it will be interesting to see if this has helped existing or new home sales in the month of January. According to the NAHB housing market index, bottom fishers are slowly beginning to sniff out the inventory, but just because they are sniffing do not mean that they are buying. Durable goods, fourth quarter GDP, personal income, personal spending and the Chicago PMI reports are also expected to be released, which means that a volatile week is in store for the currency market. There is a good chance that another round of weak US economic data could drive the US dollar to a record low against the Euro. We continue to believe that the next 2 months of retail sales and non-farm payrolls data will be particularly weak because the last time that we have seen service sector ISM fall to the levels that it did back in January was in 2001 and at that time, non-farm payrolls dropped 300k. In some ways, the latest crisis to the US economy is worse than 2001 which means that the 17k job loss that was reported by the Labor Department in January could pale in comparison to the losses that we could see in February]]> gdz Fri, 22 Feb 2008 19:46:43 -0600 http://www.moneyhowto.com/2008/01/23/dollar_mixed_in_currency_trading.html http://www.moneyhowto.com/2008/01/23/dollar_mixed_in_currency_trading.html NEW YORK (AP) -- The dollar gained ground against the euro and the pound but fell against the yen Wednesday, a day after the U.S. Federal Reserve's decision to slash its key interest rate.

The 15-nation euro fell to $1.4593 in late New York trading, down from $1.4612 Tuesday. It had climbed as high as $1.4684 in Wednesday's session before falling back, even though the U.S. Congressional Budget Office forecast a higher deficit.

Britain's pound sank to $1.9526 from $1.9625.

The dollar fell against the Japanese currency, however, falling to 105.75 yen from 106.48 yen. Early in the Asian session, the dollar briefly rose to 107.38 yen as regional stock markets rallied. But it reversed course when Asian stocks fell back from morning gains.

"Pessimism about global stocks remains deeply rooted in markets," said Akio Shimizu, head of foreign exchange trading at Mitsubishi UFJ Trust and Banking. "Unless clear signs of a global stock rally appear, investors won't buy back the dollar actively" versus the yen.

Dealers said the U.S. currency could fall to 105 yen if U.S. and European stock markets remain sluggish.

The yen has tended to trade inversely with equity markets. When the Dow rises, investors are more likely]]> gdz Wed, 23 Jan 2008 18:50:33 -0600 http://www.moneyhowto.com/2008/01/09/us_dollar_strengthens_against_euro_yen_and_pound.html http://www.moneyhowto.com/2008/01/09/us_dollar_strengthens_against_euro_yen_and_pound.html It was another day of mixed trading in the US dollar. The greenback rallied against the Euro, British pound, Japanese Yen and Canadian dollar but lost ground against the Australian and New Zealand dollars.

The lack of economic data this week has given traders and economists the opportunity to think about how bad the US economy will fare in 2008. Since the disturbingly weak non-farm payrolls number released on Friday, there has no been economic data to confirm or deny that the US economy is headed for a recession. As a result, most traders have braced for the worst as rate cut expectations continued to edge higher. According to Fed fund futures, the probability that the Federal Reserve will lower interest rates by 50bp at the end of the month is now 74 percent compared to 68 percent yesterday and 24 percent a week ago. The current debate in the market is 25 versus 50, but lets take a look at what economists are expecting beyond the January meeting. Assuming the Fed cuts by only 25bp, we could see as much as 150bp of further easing.

Goldman Sachs and BNP Paribas expect interest rates to be at 2.50 percent by the end of the year, while Merrill Lynch is calling for rates to hit 2 percent in early 2009. On the other side of the spectrum, RBS Greenwich and Bear Stearns only believe that another 25bp is needed before the easing cycle comes to an end. At DailyFX, expect another 75 to 100bp of further easing before the cycle is over and we believe]]> gdz Wed, 09 Jan 2008 19:00:11 -0600 http://www.moneyhowto.com/2007/12/26/is_the_dollar_rally_over.html http://www.moneyhowto.com/2007/12/26/is_the_dollar_rally_over.html After holding onto its gains for the past week, the US dollar finally came under pressure today, It fell against the Euro, the Japanese Yen, the Australian, New Zealand and Canadian dollars. The only currency it did not drop against was the Japanese Yen, which benefitted from overall carry trade demand. Does this mean that the rally in the dollar over? Probably not. Despite the rebound in the EUR/USD today, the currency pair still remains within its 1.43 to 1.45 trading range. Even the AUD/USD and NZD/USD are capped below resistance. Next week, trading should be exceptionally quiet which means that a break of these resistance levels is unlikely.

According to the latest reports from the Commerce Department, the US consumer spent more than they had made during the month of November, with personal spending rising by 1.1 percent and personal income rising by only 0.4 percent. This caused personal savings to dip into negative territory for the first time in 15 months as disposable income fell to -0.5 percent. Lowered savings and increased spending is not a promising recovery strategy for a country which already has huge government deficits, but the Commerce Department stated that the increase in spending was a much-needed boost for the dragging economy. US consumers are on a spending frenzy with the savings rate hitting its lowest level since Hurricane Katrina in August of 2005. The core inflation rate is also growing by 2.2 percent year-over]]> gdz Wed, 26 Dec 2007 19:12:22 -0600 http://www.moneyhowto.com/2007/12/23/dollars_slide_adds_to_rise_in_prices.html http://www.moneyhowto.com/2007/12/23/dollars_slide_adds_to_rise_in_prices.html NEW YORK (AP) -- Consumers grousing about soaring gas prices often focus on the big oil companies and anyone else who might profit when it costs more at the pump. But one culprit that doesn't always get fingered when prices rise -- a weak dollar -- could draw more attention in the coming year.

The dollar's slide against other major currencies in recent years has helped drive up prices for energy and food and in turn contributed to the economic hardship some consumers face. A further drop in the dollar in 2008 could spell more trouble.

Dave Minucci listens to the chatter on Wall Street about the flagging dollar but doesn't have to look far to cast his own assessment. A recent home heating bill was $120 higher than at the same time last year. But Minucci doesn't blame lower temperatures; the chill he feels is from higher energy prices and a weaker dollar.

He sees what many Americans may not realize: With commodities from oil to natural gas to grain to meat priced in dollars and becoming more expensive as the greenback falls, consumers have to take more out of their wallets to simply buy the same amount of goods. And a lower dollar can also raise the cost of imported goods -- with the increase often passed along to consumers.

"I think we're in trouble with the weak dollar," said Minucci, who works in the Capital Markets Finance]]> gdz Sun, 23 Dec 2007 05:06:13 -0600