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[Darika]

Federal Reserve Lowers Its Forecast For Economic Activity In 2009

Members of the Federal Reserve have downwardly revised their outlook for economic activity in the first half of 2009, according to the minutes of the latest Fed meeting, with the downward revision reflecting weaker than anticipated economic data.

With the weaker than expected data offsetting an upward revision to the assumption of the amount of forthcoming fiscal stimulus, the Fed now expects real gross domestic product to decline 0.5 percent to 1.3 percent in 2009.

In October, the Fed had predicted real GDP for 2009 in a range between 1.1 percent growth and a 0.2 percent decline.

At the same time, estimates for real GDP growth in 2010 were upwardly revised, reflecting greater monetary and fiscal stimulus as well as the effects of more moderate oil prices and long-term interest rates.

The forecast for real GDP growth in 2010 was revised up to 2.5 to 3.3 percent from the previous forecast for growth of 2.3 percent to 3.2 percent.

However, the Fed's expectations for unemployment were upwardly revised for both 2009 and 2010, with the staff expecting unemployment to rise substantially through the beginning of 2010 before edging down over the remainder of that year.

Forecasts for core and overall consumer price inflation in 2009 and 2010 were little changed, with growth in both core and overall consumer prices expected to be unusually low

The minutes of the meeting also showed that the members of the Federal Open Market Committee agreed to keep the target range for the federal funds rate at 0 to 0.25 percent.

The committee members also agreed to continue using liquidity and asset-purchase programs to support the functioning of financial markets and stimulate the economy.

However, while the members agreed that it may be necessary to expand these programs, they had somewhat different views about the best way of doing so.

Most members agreed that it would be appropriate to continue the program of purchasing agency debt and mortgage-backed securities, with several expressing willingness to expand the size and duration of those purchases in the near future.

However, Richmond Federal Reserve Bank President Jeffrey Lacker preferred to expand the monetary base by purchasing U.S. Treasury securities rather than through targeted credit programs.

Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

[pinalli]

Buy US Only” Stipulation

I want to take today to talk about a looming problem which could affect, and probably will affect the currency markets moving forward. Last week, when the US was mulling over its 800 Billion Dollar stimulus bill, there was a clause in the bill which called for a “buy US only” stipulation for companies receiving the funds. This specifically was related to the infrastructure part of the bill, repairing roads, bridges, building and such – and that all the steel, copper, tin, aluminum used needed to be manufactured in the US. The clause was put in under pressure from many labor unions and interest groups that work within the mining and manufacturing industries. Now, Forex traders know very well that idea like this, also known as protectionist clauses, do not help the economy of the country that has it or the countries that conducts trade with it.

Anyway, President Obama had said last Monday that this clause will be taken out as it is not “good for international relations and is exclusionary”. Needless to say, the bill passed with the clause in it and many people missed that – partly because in the 1100 page document that no one read it was stuck on page 964 all the way on the bottom, and partly because everyone thought President Obama was good for his word. Well, after a week of reading through this, Canada had realized that it was still in and used threatening language to let the US know that this was unacceptable. At the G7 last week, the same concerns were thrown towards Timothy Geithner, the US Treasury Secretary and in Asia, there was much talk about instituting their own protectionist clauses.

Brokers trading the Forex understand how this can destroy economies and history can tell us how it prolonged economic turmoil. In 1930, at the start of the Great Depression, the US enacted a bill by Congressmen Smoot and Holley that called for the exact same thing. Smoot-Holley as it is known today is attributed by many economists as being the one single factor that kept the Depression going up until World War II.

In a global economy the success always is reliant upon free and fair trade – yet when you begin to restrict trade by denying countries import access of their goods, you end up hindering growth. President Obama must not have read the Bill he signed on Tuesday in Denver – or he must have forgotten the promise he made to take out the clause. His staff now says that “there will be measures in play to ensure that the protectionist clauses are not enacted” – then why put it in? Those investing and trading the Forex have seen a rise in the dollar – and as I have been saying for a while, this will change. It will change once the printing presses that are on 24/7 in the US are heard around the world – it will change once Japan and China say NO to lending the US any more money, primarily because they don’t have the money the US is spending, and it will change once the new Smoot-Holley is put into play.

President Obama is spending today in Canada to try and ease the concerns of the US’s Northern neighbor. Watch the dollar today – it might be giving off signs that it the traders are starting to wise up.

[Darika]

The US dollar extended its recent rally against the Japanese currency in early trading on Wednesday. The greenback soared to near a 6-week high of 92.83 versus the yen by 7:15 am Eastern Time, up from an Asian session low of 92.11. On the upside, the dollar-yen pair is likely to target near the 93.6 level. The pair that closed Tuesday at 92.42 is currently trading at 92.81.

Investors chewed a final report from the Economic and Social Research Institute showing the Japanese leading index stood at 80 in December, revised up from the initial estimate of 79.8. In November, the reading was 81.8. Meanwhile, the coincident index for December was upwardly revised to 92.4 from 92.3. However, the reading was below November's 94.9.

Also, the Bank of Japan began its two-day policy meeting today. Analysts expect the central bank to leave its interest rate unchanged at 0.10% at the end of the meeting tomorrow.

Traders now likely to focus on the New York session, in which the US import and export price indexes, housing starts and the industrial production reports-all for the month of January have been slated for release.

News are provided by InstaForex in partnership with RTT.

[Darika]

Crude oil edged to the downside again on Wednesday as traders await the release of the Energy Information Administration's weekly data, that is expected to show another build in inventories.

Light sweet crude for March settlement fell to $34.54, down 39 cents on the session. Prices touched as low as $34.13 for the session.

The Energy Information Administration's weekly inventory report will be made public at 11 a.m. ET Thursday, a day later than usual because of President's Day on Monday. Experts are looking for an increase of about 3 million barrels for the week ended Feb. 13, which would be the 11th straight weekly build and 19th in 21 weeks.

Oil finished lower for the seventh time in eight sessions and has lost nearly $14 in 2009.

In economic news, President Obama unveiled details of his administration's plan to stem the tide of foreclosures Wednesday, offering a plan that is aimed to help as many as 9 million homeowners restructure or refinance their mortgages and ease the rapid collapse of the housing market.

Earlier, the U.S. Commerce Department said import prices fell 1.1 percent for January. This followed a string of sharper declines in the previous several months, including a revised 5 percent drop in December and a 7.3 percent fall in November.

Meanwhile, a separate Commerce Department report showed housing starts fell 16.8 percent to an annual rate of 466,000 in January from the revised December estimate of 560,000. Economists had expected starts to fall to 530,000 from the 550,000 originally reported for the previous month.

Also, a Federal Reserve report showed that industrial production fell by 1.8 percent in January following a revised 2.4 percent decrease in December. Economists had expected production to decrease by 1.5 percent compared to the 2.0 percent decrease originally reported for the previous month.

Meanwhile, the Federal Reserve has downwardly revised its outlook for economic activity in the first half of 2009, according to the minutes of the latest Fed meeting, with the downward revision reflecting weaker than anticipated economic data.

Crude oil prices plunged $2.59 and moved below $35 an ounce in Tuesday's trading as traders feared increasing global economic troubles will further reduce energy demand.

News are provided by InstaForex in partnership with RTT.

[Darika]

Chicago Federal Reserve Bank President Charles Evans said Wednesday that the economy will continue to slow, falling "markedly in the first half of 2009" before a modest recovery begins. Speaking to the Rockford Chamber of Commerce in Illinois, Evans addressed actions taken by the Federal Reserve to ease the credit crisis, noting that the nation's central bank "will be expanding existing programs."

"We likely are in for a protracted period of poor economic performance," Evans said in prepared remarks. "But the policy actions taken by the Fed and other governmental agencies over the course of the financial crisis, and the efforts of the private sector to work through its difficulties, will eventually help support a recovery in economic growth."

He compared the current recession to those from the mid-1970s and early 1980s, far deeper and more severe than the recessions in the early 1990s and 2000s.

In addition, Evans warned that there is a risk of disinflation, hinting at deflation. He predicted both overall and core inflation to remain around 2 percent, although he added there is a "notable risk that inflation will remain a good deal below this range in the medium term."

In order to ward of the risk of deflation, Evans urged the Federal Reserve to endorse an inflation anchor, helping avoid a possible deflationary period.

"In this vein, at a time when near-term inflation is likely to be lower than usual, endorsing an explicit numerical objective for inflation could help keep inflation expectations from falling very far," Evans. "Such an anchor on inflation expectations would help preserve low real inflation-adjusted interest rates."

The Fed President added that policy actions in conjunction with the private sector will work to reassess risks and "shore up balance sheets will help move us toward a new benchmark and more stable financial conditions."

Stabilizing financial markets could take time and will not be an easy process, Evans warned.

Until markets are stable, however, "we will continue to experience some drag on activity in the nonfinancial sectors of the economy."

The impact of the credit crisis on nonfinancial sectors of the economy is evident when looking at GDP. Evans predicted that the preliminary 3.8 percent decline in the fourth quarter will be revised to show an even bigger decline.

Looking forward, he predicted that GDP "will fall markedly in the first half of 2009."

"I am currently projecting that GDP will begin to expand later in 2009, but not enough to offset the declines in the first half of the year," he said.

He predicted that the new financial stimulus package will boost output, although the full impact of Obama's $787 billion economic recovery package is "still unclear."

"Looking out a bit further, I expect the pace of GDP growth to move back up in the neighborhood of potential as we move through 2010," Evans said. "However, I do not see growth as being strong enough to make much progress in closing resource gaps over this period. Indeed, the unemployment rate-the main resource gap measure in the labor market-is likely to rise into 2010."

News are provided by InstaForex in partnership with RTT.

[Darika]

Australia's economy is expected to weather global economic crisis more than its international counterparts as it has a better financial system compared to other economies, Reserve Bank of Australia's Assistant Governor of Economics, Malcolm Edey said Wednesday. But, he agreed that Australia will be operating in a difficult international environment this year.

"There are reasons to expect that the Australian economy can continue to perform better than its international counterparts in the difficult period that lies ahead," Edey said in a speech in Sydney.

Edey noted that Australia had more momentum than most comparable economies in the period leading into the crisis. He said the economy's financial system remains in a much better shape than its international counterparts and it helped gain much more traction from cuts in official interest rates.

He said the central bank's rate cuts have been passed through to end borrowers, especially for housing loans, since it started lowering rates in September. He noted that this was in marked contrast to other countries, where banks were hit hard by financial crisis and the degree of pass-through was limited.

Since September 2008, the RBA had cut its key cash rate by a total of 4 percentage points to a record low of 3.25%. In addition, Malcolm Edey said the depreciation of the exchange rate is also insulating the domestic economy.

Further, Edey said while major industrial countries were slowing due to crisis, China and the other developing economies in Asia and elsewhere were growing at a good pace until the September quarter. But, he said 2009 is shaping up as a very difficult year for the world economy.

Growth in virtually all of Australia's trading partners will be well below trend this year. "This would also mean that the current cycle is more highly synchronized than the three previous international recessions, in the early 80s, the early 90s and in 2001," Edey said.

Official forecasts, including those of the IMF, imply that output in the major industrial economies will contract further in the first half of this year, but start to pick up later in the year and into 2010. "The situation is still very uncertain but, for the reasons I've been outlining, that seems like a reasonable expectation."

Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.

[Darika]

India may not achieve the $200 billion trade target fixed for the current fiscal, reported the PTI quoting the Minister of State for Industry, Ashwani Kumar in Lok Sabha. He said that the government and the Reserve Bank of India are closely watching both domestic and international economic developments. He also said that the RBI has already taken various measures to reduce the cost of credit and improve liquidity for trade and industry.

Kumar said that the downtrend in exports is witnessed particularly in sectors like gems and jewellery, textiles and garments, handicrafts, automobiles, leather and leather products, marine products and plastic and linoleum and said employment in these sectors are also impacted. He added that the government is taking steps to create new jobs to solve the problem.


Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.

[pinalli]

Hi,

USD
The dollar rose Friday against many of the majors as new data released showed a marked contraction in the U.S. economy over the past few months. The US stock markets also fell to a 12 year low, and a revised bailout for US Bank Citigroup fueled safe-haven purchase of the greenback. GDP reports released in the US showed a 6.2% decline in the fourth quarter, a revised number that was worse than expected and worse than originally broadcast. Also, the US agreed to take up to a 36% stake in Citigroup, one of the nation’s largest banks, amid fears of what insolvency and bankruptcy of the bank would do to further the economic damage in the US.
The Dollar closed up ½% to the Euro to 1.2669, up 1 ¾% to the Canadian Dollar to 1.2757, up 1 ¼% to the AUD to close at .6384, and 1 ½% the NZD at .5007.

[Darika]

The US dollar pared its Wednesday's early Asian session gains against the European currency, the British pound and the Swiss franc. The dollar thus eased from a 12-day high against the euro. On the other hand, the greenback showed strength against the Japanese yen.

Against the European currency, the US dollar lost ground after hitting a 12-day high of 1.2540 during early Asian deals on Tuesday. At 10:55 pm ET, the dollar touched a low of 1.2640 against the euro, compared to 1.2579 hit late New York Monday. The euro-dollar pair is currently trading at 1.2621 with 1.29 seen as the next target level.

The US dollar that closed Monday's North American session at 1.4057 against the British pound, climbed to 1.3996 during Tuesday's early Asian deals. Thereafter, the dollar reversed its direction and was quoted at 1.4091 against the pound at 11:45 pm ET. The next downside target level for the greenback is seen around 1.43.

Against the Swiss franc, the US dollar touched 1.1720 at 10:55 pm ET, moving down from an early Asian session high of 1.1784. If the dollar-franc pair falls further, 1.159 is seen as the next target level. The pair that closed Monday's New York deals at 1.1755 is currently quoted at 1.1731.

The US dollar traded higher against the Japanese yen during today's early deals. At 11:05 pm ET, the dollar-yen pair reached a high of 97.62, compared to Monday's closing value of 97.49. On the upside, 99.1 is seen as the next target level for the dollar.

Japan's monetary base was up 6.4 percent on year in February, the Bank of Japan said today, standing at 93.653 trillion yen. That follows a 3.9 percent annual advance in January to 93.504 trillion yen.

Switzerland's fourth quarter GDP and the UK February construction PMI reports are expected in the European session today.

Turning to the US, Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to speak about the U.S. economy on a panel in Tampa, Florida at 8 AM ET.

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET. The index is likely to show a 3% decline for January.

The pending home sales index rose 6.3% to 87.7 in December compared to November. On a year-over-year basis, the index was up 2%.


Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.

[Darika]

Thursday, the European Central Bank is expected to cut its key interest rate by 50 basis points to a record low of 1.5% as leading economic indicators increasingly point downwards. In the UK, the Bank of England is also expected to cut interest rates to near zero and announce non-conventional measures to improve liquidity.

At the end of two day rate setting meeting, the Monetary Policy Committee of the central bank is widely expected to reduce the Bank Rate by another half a percent to a historic low of 0.5% to kick start the British economy that is falling into deeper recession.

Further, the Treasury is expected to give authority to the central bank to print money and provide funds through purchase of assets. At 2.00am ET, the Federal Statistical Office is scheduled to release the German retail sales report for January. Retail sales are expected to grow 0.2% month-on-month in January, after rising 0.1% in December.

Thereafter, the French ILO jobless rate is due at 2.45am ET. The French unemployment rate is seen at 7.9% in the fourth quarter, up from 7.7% in the prior quarter.

At 2.50am ET, the French statistical office INSEE is slated to issue producer prices results for the month of January. On a yearly basis, producer prices are forecast to fall 0.4%, after remaining flat in December.

Spanish industrial production and Hungarian trade balance are due at 3.00am ET. Spanish industrial production is forecast to fall 20.2% year-on-year in January.

At 5.00am ET, the Eurozone GDP data is expected from the Eurostat. According to the flash estimate, Eurozone GDP contracted 1.5% sequentially in the fourth quarter, larger than the 0.2% decline seen in the second and third quarters of 2008. Compared with the same quarter of the previous year, seasonally adjusted GDP decreased 1.2% in the fourth quarter.

The statistical office is expected to confirm the GDP estimate released on February 13.


Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.

[jeff15]

China's consumer price index (CPI), a main measure of price rises, fell to minus 1.6% in February, according to the NBS (National Bureau of Statistics) on Tuesday. This was the initial journal of downbeat from the month of December 2002 when CPI was offbeat to minus 0.4%.
According to NBS’s that the February outline did not characterize a depreciation dilemma in China, as the currency delivery was sufficient since the proactive financial strategy and the comparatively easy financial strategy. "We do face price downward pressure, but that cannot be translated into a deflation problem," said Zhang Xiaoji, a researcher with the Development Research Center of the State Council, a government think tank.
Again according to NSB’s statement about falling global commodity prices, led by the worldwide fiscal crisis, contributed to the household price plunge. It is not strange to observe a value rise in February. Last February adage the unparalleled snow tragedy, and the Spring Festival shopping spree, which helped shove up the price rises index to a 12 year high of 8.7 %. NBS supposed the CPI in February was the almost identical as that in January. The CPI in the initial two months fell 0.3% from the same phase last year.
“It is not astonishing if the indexes persist to vary in the off-putting range in forthcoming months, as both household and abroad demands have been falling from the late of last year”, said by “Wang Xiaoguang”, an economist of National Development and Reform Commission.
Lastly, there was a market fizz in the goods price rise in early of year 2008. Food prices, which are an explanation for about one third of CPI, fell down 1.9%, whereas non-food goods prices sank 1.2%. China has put a full-year price rises target of 4% for the year 2009.



Source- Forex Snapshots

[Darika]

The world is witnessing the deepest economic downturn since World War II, Jurgen Stark, Member of the Executive Board of the ECB said in a speech in Luxembourg, Monday. The current crisis could not be solved by the Central banks alone. "The onus is now on governments, supervisory and regulatory authorities and the financial industry itself, to cooperate to act resolutely to restructure, recapitalize and consolidate the banking system," Jurgen Stark said. To help ease the financial crisis the ECB had cut its policy rates by 275 basis points since October 2008.

The year 2009 will be a very difficult one, he said. It will be the year of adjustments in the balance sheets of banks, firms and private households. The present economic crisis started in 2007, triggered by losses in the U.S. sub-prime mortgage market, according to the ECB member. However, the crisis deteriorated into global economic downturn after the collapse of Lehman Brothers in September 2008. Since then, global trade too had fallen sharply, impacted by the financial crisis.

Advanced economies were witnessing weakening house prices and plummeting financial markets leading to a collapse of business and consumer confidence. The need to restructure was curbing private consumption and investment, the ECB Board member pointed out. "In emerging economies, nose diving global trade and the unwinding of both internal and external imbalances accrued in past years have led to a sharp decline or even negative GDP growth rates," Jurgen Stark said.

World GDP growth would be negative in 2009, according to the IMF. Advanced economies were forecast to shrink 2%, while developing economies were anticipated to grow 3.3%, just half the pace of growth witnessed in 2008. The global economy was expected to recover in 2010, even though the outlook on the downside risks regarding the depth and length of the downturn would depend on the unwinding of the financial crisis, Stark said.

Economic activity in the euro area decreased 1.5% on a sequential basis in the fourth quarter, after declining moderately in the second and third quarters. The euro area economy grew just 0.8% in 2008, the lowest since the early Nineties. All signs pointed to a further sharp decline in 2009, according to the ECB Board member. The year would see further slowdown in investments, private consumption and employment even while the financial markets remained tight. The process of adjusting to these hard conditions would lay the basis for future growth, Jurgen Stark pointed out. However it was not realistic to expect financial markets to function the same way as they were doing prior to the crisis.

Inflation in the euro area had decreased quickly, pulled down by the fall in global commodity prices. Euro area HICP inflation was 1.2% in February 2009, compared to the 4% inflation registered in July 2008. HICP inflation was likely to decline further in the months ahead, leading to a period of disinflation due to 'base year' effects, Stark said. Prices now are low, compared to the very high prices especially commodity prices in the same period of the previous year. Yet, this would mark only a trough in inflation and the very factors that were pulling inflation down in the first half of 2009, would act to push up inflation in the second half.

The ECB had supported the banking sector by extending unlimited funds at maturities of up to six months against an expanded range of eligible collateral. Further, the ECB would do whatever was deemed necessary and appropriate to maintain price stability and contribute to the preservation of financial stability. Central banks can alleviate liquidity risks, but they cannot address the perceived solvency problems that impair the financial system, Jurgen stark pointed out. Further measures could include taking over some of the credit risk on commercial paper held by banks or even by buying corporate debt outright. Again, the ECB would not shy away from cutting rates further if circumstances warranted such a cut.

A downside to such robust intervention was that the Eurosystem's consolidated balance sheet had grown from 13% of euro area GDP in 2007 to 20% of GDP today. "At the ECB we have demonstrated a willingness and capacity to react rapidly to exceptional circumstances," the ECB Board member said. "Most importantly, we will remain faithful to our mandate and provide an anchor of confidence and stability in difficult times," Jurgen Stark said.

Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.

[Darika]

German exports dropped for the fourth straight month in January as global demand weakened amidst economic slowdown.

Data released by the Federal Statistical Office showed that calendar and seasonally adjusted shipments fell 4.4% month-on-month in January to EUR 66.6 billion after falling 4% in December. Exports declined quicker than the expected 4% fall. On an annual basis, overseas sales plunged 20.7%, much sharper than a 7.9% drop in December.

In January 2009, Germany dispatched commodities to the value of EUR 43.9 billion to the Member States of the European Union, which marked a decrease of 18.7% over the previous year. Exports to euro area countries dropped 17.4% to EUR 30.3 billion. Commodities to the value of EUR 13.6 billion were dispatched to EU countries not belonging to the euro area, a fall of 21.4%. Exports of commodities to countries outside the European Union decreased 24.5%.

Imports also slid for the fourth consecutive month in January, but the pace of decline moderated. According to the official data, imports dropped 0.8% month-on-month after a relatively quicker decline of 4.8% in January, while the consensus forecast was for a 3.5% drop. On an annual basis, imports plunged 12.9% following a 4.1% contraction in the previous month. Value of imports was EUR 58.1 billion in January.

The foreign trade balance showed a surplus of EUR 8.5 billion in January, up from December's revised surplus of EUR 7.3 billion, but down from EUR 17.3 billion surplus recorded in January 2008. Upon calendar and seasonal adjustment, the foreign trade balance recorded a surplus of EUR 8.3 billion in January, the statistical office said.

Commerzbank analyst Simon Junker said, "The economy is being hugely impacted also in the first quarter of 2009 by the global recession especially though foreign trade."

"Weak foreign trade is one of the decisive factors why Germany's economy has most probably contracted by 1.5% in the first quarter," Junker said.

The largest Eurozone economy experienced the biggest sequential contraction since the reunification in 1990 on plunging exports in the final quarter of 2008. Gross domestic product fell 2.1% in the fourth quarter, after contracting 0.5% each in the second and third quarters of 2008. The International Monetary Fund projects a 2.5% decline in German output this year.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 4.2 billion in January 2009, which included EUR1.5 billion service deficit, a surplus of EUR 2.8 billion in net income, EUR 4.3 billion shortfall in current transfers and EUR 1.2 billion deficit in supplementary trade items. In January 2008, the German current account showed a surplus of EUR 15.6 billion.

Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.

[pinalli]

Watch Daily FX Market Closely - Uncertainties are on the Road

Tuesday saw the US stock markets rally 5.5% when everyone was expecting them to dip further. The cry on the street is that the crisis is nearing an end – don’t believe it. Citigroup, the mammoth US bank that the government is taking a 40% stake in to help them make their debt payments posted a profit for the first two months of the 2009 season, and it was this that rallied the markets – coupled with US Fed chair Ben Bernanke announcing that the recession will end in 2009 – wishful thinking. After Citigroup (once a 100+ US Dollar a share company, now holding firm at $1.35) announces their undeclared exposure to bad debt, and actually puts this huge weight on their books, you will see the euphoria subside.

Forex traders were not fooled, as the currency markets seem to have a better finger on the pulse of reality. While the dollar has been pumped up after the Yen lost its safe-haven appeal and the Euro and Pound deal with political and economic woes in their back yard, the dollar pretty much gave back some of those gains to almost every currency out there yesterday. Some argue that this is profit taking and yet some, like me, attribute this to more of a protest against what the Forex street sees as double-talk and balance-sheet economics. Fed chair Bernanke does not know that this recession will be over in 2009 – in fact no one does, and the data being released across the globe each day says everything to the contrary. Citigroup posting a profit without putting their “toxic assets” on the books is also foolish – because it will eventually have to declare them and once they do they will see how the markets react then.

The Eurozone is being plagued by the same kind of issues. Central Bank governors coming out in interviews declaring new and aggressive policies towards fighting economic turmoil in the region without having a quorum in the ECB body and without mentioning specifics, is giving false hope. Many Forex online blogs I have read are looking for specifics from Juergen Stark and Jean-Claude Trichet and company – but only smiles and waves are what they are getting. The EU is in a bind, because its Eastern members are in trouble and are not being helped by the ECB while the PIGS (Portugal, Italy, Greece and Spain) are also having issues and rest assured, no one expects the EU to let them fail. Social unrest is the key here – and you can see it each day in the newspapers.

Strikes, riots and disorderly conduct are plaguing the EU right now – banks are falling and being nationalized, the currencies are in flux and the stocks are dead and the EU does not know what to do – so they state in interviews and in public speeches that they have a plan – things will be great – and the Forex traders and online Forex writers ask “how”?

Don’t be fooled – read the numbers for yourself – look at the geo-political situations and make your investment and trading decisions based on your own knowledge and instinct. Public officials have a job to make the citizenry feel safe and secure – and sometimes this is done by not letting on to the fact that they are just as scared as the street is.

The good Forex brokers have been telling their clients this for a while – and as Online Forex participants, I am telling you this now as well. Educate yourself – use your gut instinct and you will be ok.

[Darika]

The European currency rose against its Swiss, Japanese and US counterparts during Monday's early Asian trading. But the single currency traded lower against the pound, as the latter gained across the board as house prices in UK improved in March.

The euro that closed Friday's North American session at 0.9240 against the UK currency edged lower to 0.9199 in early Asian deals on Monday. The next downside target level for the single currency is seen around 0.897.

The average asking price for a home in Great Britain moved up 0.9 percent to ?218,081 in March compared to the previous month, property Web site Rightmove said today. That marked the second month in a row of increase following the 1.2 percent gain in February.

Against the yen, the euro bounced back after trading lower during Monday's early Asian trading. The euro thus strengthened from 125.57 to 127.16 by about 9:55 pm ET. The pair that was worth 126.69 at Friday's New York session close is now trading at 126.62.

The euro rose from a 4-day low of 1.2836 against the US dollar during Monday's early Asian trading. The euro hit a high of 1.2923 against the buck by about 9:55 pm ET, compared to 1.2929 hit late Friday in New York.

Across the Atlantic, the US empire manufacturing survey for March, net long-term TIC flows for January, NAHB housing market index, industrial production and capacity Utilization for February are due out in the New York session.

The common currency reached 1.5351 against the Swiss franc by about 1.5352 by about 10:55 pm ET Sunday, climbing from its early low of 1.5290. The euro-franc pair that rose to a new multi-month high of 1.5403 on Friday closed the day's deals at 1.5326.

German import price index, Italian February CPI, Euro-zone fourth quarter employment and February month CPI report are the major economic releases scheduled for the upcoming session.

Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved

News are provided by InstaForex in partnership with RTT.