Bank of Japan governor, Toshihiko Fukui, has expressed a desire to keep credit rates low in Japan. His aspiration to stabilize interest rates has had a positive effect on the US Dollar in Japan, reports from Tokyo are showing. While many global markets are reeling from the subprime credit problems in the US, Japan is remaining calm and forgoing a reactionary rate hike. Forbes reports:
'I understand that global credit markets are now in the process of re-pricing risk, and we need to see if the current re-pricing proceeds in an orderly fashion, or if it develops in a disorderly manner,' Fukui said.
Friday, August 31, 2007
Promising Survey Strengthens Pound
Although the British pound suffered earlier in the week from a large Bank of England loan, the currency has been lifted due to a survey taken by UK manufacturers. The results of the survey, which inquired about their order books, showed that manufacturers were more successful this month than they've been in over a decade. Analysts did not expect such a promising report, as it proved that the UK is handling global credit problems better than most countries. According to Forbes:
The Confederation of British Industry revealed that a balance of +9 pct of firms polled reported that their order books were above normal in August - the highest level for more than 12 years.
The Confederation of British Industry revealed that a balance of +9 pct of firms polled reported that their order books were above normal in August - the highest level for more than 12 years.
Monday, August 27, 2007
forex
There are three bases, which can be extremely handy for currency traders and are easy to implement. They are listed below and you can take advantage of these 3 bases to maximize your advantage.
The first base states that it is quite useful for some Forex traders to trade with a currency pair everyday at the same time. The reason behind this is that the other traders involved in selling or buying the same currency pair might also end up trading at the same time, everyday. This is a proven technique that is useful for those Forex traders who are able to understand and capitalize on various technical analysis of the currency market. Another probable reason would be that this sets a standardization process for trading conditions if the trader does the trading everyday at the same time. This kind of standardization can also yield profit. But never forget that the currency or Forex market is extremely volatile and can change rapidly.
The second base deals with particular currencies trading with a particular volatile situation of the market at a particular time. After you have outgrown the demo account where you have practices all your skills, you can take the dip into high waters. When you are investing your own capital there can be two scenarios. You would want to minimize the liquidity amount and the volatility to decrease your risk. The second scenario is that you can increase your risk and thus increase the changes of earning a huge profit.
The foreign exchange market revolves around the sun but follows a different path from the actual sun. Instead of the sunrise happening in the east, the Forex market opens in the west. It starts from the United States and takes the Pacific route to Australia and then to Far East and Europe and comes back a full circle to the United States. The total foreign currency trading volume is determined by the opening figure of the market and the various overlaps caused during the time the market was open. Although the Forex trading market works 24 hours a day but there are certain peak hours of trading when the volumes are relatively high. This time according to GMT is between 1 pm and 4 pm. Hence if you trade at a certain time in the day then you will be able to minimize or maximize the risk involved for a particular currency pair.
The third base deals with the volume of activity involved with a particular currency or currency pair. It is always a sound theory to capture the different levels of volatility for the particular currency pairs and thus capitalize on your profits. One of the popular tools used by technical analysts is the Bollinger bands and they help in quantifying volatility. These Bollinger bands can compare volatility with reference to their relative price over a pre-determined period of time. But it really depends what your trading manager wants to use because there are certain Forex trading managers who don’t find this as a utility tool while others swear by it. It also depends on whether the Bollinger bands are favorable for use in your situation.
Understanding Forex Better
Forex trading can be a harmonious affair and at the next moment it can turn chaotic. It can be similar to watching the movement of a herd of deer. When the herd is attacked by a predator, they seem to move in all directions. Now if you were to place a bet on whether they will run to their left or right, would you feel confident about it? Not really because it is absolutely unpredictable.
Three Bases of Being a Smart Forex Trader
There are three bases, which can be extremely handy for currency traders and are easy to implement. They are listed below and you can take advantage of these 3 bases to maximize your advantage.
The first base states that it is quite useful for some Forex traders to trade with a currency pair everyday at the same time. The reason behind this is that the other traders involved in selling or buying the same currency pair might also end up trading at the same time, everyday. This is a proven technique that is useful for those Forex traders who are able to understand and capitalize on various technical analysis of the currency market. Another probable reason would be that this sets a standardization process for trading conditions if the trader does the trading everyday at the same time. This kind of standardization can also yield profit. But never forget that the currency or Forex market is extremely volatile and can change rapidly.
The second base deals with particular currencies trading with a particular volatile situation of the market at a particular time. After you have outgrown the demo account where you have practices all your skills, you can take the dip into high waters. When you are investing your own capital there can be two scenarios. You would want to minimize the liquidity amount and the volatility to decrease your risk. The second scenario is that you can increase your risk and thus increase the changes of earning a huge profit.
The foreign exchange market revolves around the sun but follows a different path from the actual sun. Instead of the sunrise happening in the east, the Forex market opens in the west. It starts from the United States and takes the Pacific route to Australia and then to Far East and Europe and comes back a full circle to the United States. The total foreign currency trading volume is determined by the opening figure of the market and the various overlaps caused during the time the market was open. Although the Forex trading market works 24 hours a day but there are certain peak hours of trading when the volumes are relatively high. This time according to GMT is between 1 pm and 4 pm. Hence if you trade at a certain time in the day then you will be able to minimize or maximize the risk involved for a particular currency pair.
The third base deals with the volume of activity involved with a particular currency or currency pair. It is always a sound theory to capture the different levels of volatility for the particular currency pairs and thus capitalize on your profits. One of the popular tools used by technical analysts is the Bollinger bands and they help in quantifying volatility. These Bollinger bands can compare volatility with reference to their relative price over a pre-determined period of time. But it really depends what your trading manager wants to use because there are certain Forex trading managers who don’t find this as a utility tool while others swear by it. It also depends on whether the Bollinger bands are favorable for use in your situation.
Forex Strategy
Whether we are talking of a business or about Forex trading, a sound strategy is a must. Forex trading may look simple but that’s not the reality. To be successful in trading, you will need to gain in-depth information and knowledge regarding the Forex market. You need to follow the market through its ups and downs, and determine the underlying causes for the rise and fall in rates. You can make a lot of money in Forex trading but sometimes you will also incur losses.
When talking about trading in such a volatile market, you need to continuously monitor the changes. Gather data and information regarding various changes that has taken place in the Forex market in a couple of years. This will strengthen your knowledge and help you to formulate a strategy. A successful trading is one that is based on an informed decision depending on the market sentiment and expectation. Your decision needs to be well timed and the difference can make you a winner or loser.
Here are a few tips that can help you become a successful investor.
Money: Always trade with only that amount of money, whose loss would not impact deeply into your day-to-day life. Forex trading is a speculative activity and one mistake can bring you down. The best thing to do is invest wisely.
Market Situation: Before you start to invest in the Forex trading, try to get a grip on the prevailing market situation. Is the market going up or is it going down? Is the trading strong or weak? Once you get a clear picture, it will be easier to start trading.
Time Frame: Many investors and traders enter the market with the sole objective of earning quick money but that’s not what Forex trading is all about. This is a volatile market and movements can change the entire situation in matter of minutes. It is always good to observe the market for some time and know the various time frames when the market behaves sluggishly or when it is at an all time high. For example: 1pm in the US, the market is absolutely packed with investors, buyers and sellers. Everything seems to be happening then. So this is the appropriate time to go for it. It is also important for you to decide whether you are going to do it short-term or for long-term. For short-term time frames, you need to analyze the market carefully and go through all the statistical graphs.
Right Move: Timing your trade is very important because one wrong move can take you down. There could be an upward movement in the market but take time out to understand and analyze whether it is going to remain for some time or is it just another illusion. The trade timing is two fold and an expected market figure like CPI or a decision from the Federal Reserve can consolidate any Forex market movement whatsoever. A good timing means that you need to take into account all possibilities. If you are doubtful, then don’t take an unnecessary risk, stay out of it.
How To Be A Winning Trader
Forex trading can seem to be tough at the first instance to a new investor but once you have understood the grooves then it is all about making the right decision and earning a handsome profit. The first taste of profit can be scintillating and gives a great feeling. But on the downslide, a loss will cause enough pain. It is a consistent and self running pattern. With every new generation of traders hitting the market, this pattern keeps repeating itself. The pattern is strong enough to pull you down or earn higher.
It is imperative for a trader to learn, understand, and master this pattern. Of course it cannot be mastered because it can change anytime and is volatile in nature. To be on the top of this pattern, a trader needs to ask the right questions, do an analysis, understand the forces behind it and backed by a keen observation, he/she can draw upon a logical conclusion. The patterns might be similar and recurring but observing them closely means that as a trader you may get to know what makes them tick.
There are various conclusions that can be drawn from observations of this pattern. Let try and understand some of them because this is the thin line between failure and success.
The highest number of traders who have suffered a loss can be found in the short-term and intraday group. Although traders do blame the result on time, but this is not the case. It is more because of a lack of preparation and formulation of a strategy and game plan. If a trader is trading in a precariously balanced time frame where the smallest of errors can be damaging, the lack of a strategy or plan can raise the volume of the loss. It has been observed that trading in selected time frames like the mid-term and long-term time frames can offer a higher success rate.
It has been seen that many traders use complex systems or tools and even rely on black boxes and this has led to recurring losses. On the other hand, traders with winning streaks have been found to use some of the simplest techniques. Actually, most people try to confuse complex with better. That is certainly not the case. The more complex the system is, the more difficult it will be to understand and as a result might create confusion or error in understanding the data. And from a logical point of view, the simplest approaches are less prone to incorrect interpretations.
Traders who have lost money generally spend a lot of time forecasting the next day’s market situation. On the other hand winning traders spend most of their time strategizing keeping in mind the current market scenario. A successful trader is the one who can predict what kind of a behavioral reaction the crowd will have to a certain change in the market. Since the market is always volatile hence a rational thought for the irrational buying and selling behavior can be the benchmark for success.
The Inter-Relationship Of Business With Forex
Any business is a continuous process. In a business, you sell a service or product and the money earned goes back into the market in the form of employees, labor, infrastructure, banking etc. It is a complex world where everything is influenced by the demand and supply curve. The more the demand, the more the supply and if the equilibrium is not reached then it leads to black marketing. Money through business is transferred throughout the world from one country to another. For example, a business is situated in Chicago, US and has offices in Venice, Brisbane, Moscow, and Delhi. Then there will be daily money transactions involving multiple currencies belonging to each of these countries. Everyday Indian Rupee, Australian Dollar, and Italian Lira is going to be converted in to US Dollar. This is where the Foreign exchange department plays an important role. The Italian Lira gets converted at the selling rate to Dollars and the dollars are then sent to the US Office who buys it on the buying rate. Forex basically means conversion of one currency form to another and this facilitates transfer of money from one country to another.
The birth of foreign exchange happened due to different countries having different currencies. There is a difference in the denomination of these currencies and the currency of Italy cannot be used in Australia for buying any product or for paying hotel bills etc. The foreign exchange buys the Italian currency, converts it into its applicable amount in Australian Dollars and gives it to you so that you can use it. The use of foreign exchange is very popular when it comes to trading, traveling or business purposes that entail the transfer of different currencies. It is important for any business to convert their currency to that of the local market. This enables businesses to run smoothly and they can purchase their raw materials from the local market. If a business had to purchase from their home market, which is thousands of miles away then that would lead to incurring losses due to high costs. The Forex just makes it easier by providing the required raw material in the local markets through currency conversion. In brief, the business will actually be able to avoid the losses and make profits.
The price of the Forex also fluctuates from time to time depending on the demand and the supply. It is similar to the stock exchange yet much different. The foreign exchange rates are generally published in all daily newspapers and on various financial websites. The rates are provided on a day-to-day basis. The foreign exchange rates also vary depending on the position of the two countries in question in the competitive market scenario. For example, if the two countries in question are Saudi Arabia and US then it is a known fact that the US buys oil from Saudi Arabia. Hence the Forex for Saudi Arabia will be significantly higher than that of the US. Oil is one of the many products, which influences the Forex of a particular country. Other commodities are gold, and export items.
Online Forex Trading
It has been seen that Forex trading has changed considerably in the last decade and one technology responsible for this is the Internet. Real-time streaming technologies combined with efficient PC’s and Laptops, FX trading can be done at the click of a button. There are quite a few benefits of online Forex trading and with the continuous advancement of technology; things are only going to get better.
If you are new to online Forex trading then the suggestion here is to take up an online FOREX trading class. More and more investors and Forex traders have started using the online system to their benefit. One of the popular courses is by Peter Bain and it is a very good course for a beginner like you. Apart from this there are various foreign exchange websites that offer help in understanding the ways of online Forex trading. You can also check for articles in web libraries, which provide detailed information about trading Forex online.
Alternatively you can learn from free trial offers or reports. There are many software’s or investment companies who have developed software specific to Forex trading. The software can be used for trading purposes and updating databases. The software companies can let you download their forex trading software for a limited time period free of cost. It will help you understand forex trading in a better light because through these software’s, you will get to do paper trading. You have nothing to loose. This way you will learn about Forex trading and what to do when the market shifts. So when you actually go for the kill, you will know exactly where to invest and what to expect. This is not a completely foolproof way because the Forex trading market can also be volatile and changes can happen suddenly. But this surely is the easiest way to learn and probably the best shortcut that you can take.
The learning curve can take longer time than expected but then you need to spend as much time as possible, so that when you actually start trading, you will be confident. There are some traders and investors who get scared at the first instance of market volatility. This will not happen with you because you are mentally prepared. Practice makes one perfect and this applies with Forex trading. Paper trading is probably the next best thing to learn and master before risking your money on Forex trading. Paper trading is also known as simulation trading. Here you are allowed to experiment as much as possible. You can trade as if you were a real investor with $5000. You can get involved in various activities, which are a part of Forex trading like asking for price, setting up a bid etc.
Once you have gone through the software, it is important to get information about how the market has been behaving in the recent times. If you can get the technical data dating back to a couple of years then you will be able to spot many trends. These trends can guide you towards making a sound investment decision.
The Impact of Fear on Forex Traders
Fear is probably the most common cause that leads to inaction. Just because we fear that the results might be bad, we don’t try. So is it good to have fear or is it a disadvantage? Let us take a walk through the various facets of fear and what it stands for in Forex trading.
Forex trading is one of the most profitable business occupations in the world and more and more people are getting into the world of Forex trading. There are new traders and new investors entering this ever-changing circle of Forex trading. Since Forex trading is open 24 hours a day, many people find it a convenient way of making money. For those who are tired of the fixed working hours can make this a regular earning mode.
The first thing that a new trader requires is a reliable contact in Wall Street. This will help a trader to carve a place amongst the very best. The second most important thing required is a starting capital. The capital can be as low as $100 but if the investment amount is between $4000 and $10,000 then it can be quite an exhilarating experience. The buying and selling takes place on a trading platform, which is provided by a Forex broker.
There is a lot of difference between Forex trading and becoming a successful Forex trader. To be a profitable Forex trader, a trader has to understand the various technical aspects of the market. He/she will have to acquire accurate knowledge of the various aspects of the trading market and be able to interpret the technical indicators and the various changes that take place in the market.
A good understanding of concepts like Fibonacci levels and Bollinger Bands can be extremely useful. Once the money is on the line, the entire process becomes tricky and that is where the fear starts to invade. In spite of all the knowledge, fear will lead to irrational decisions and things can get murkier. The result is that an inexperienced trader can incur losses.
Fear is a natural human instinct and at times cannot be controlled. After all who would want to see a loss of $10,000? It can be heart breaking and can lead to stress related problems. Fear has always been the unseen enemy who is difficult to conquer. But to become a successful trader one has to let go off the fear.
The fear has to be shoved aside and the trader should carry on with his/her activities as if nothing has happened. Another way to avoid the outbreak of fear is by playing safe. When playing safe, the traders will be assured of a minimum loss. The second method of fighting the fear is by making a strong strategy. If there is a plan in place or a backup plans then the chances is that the backup plan can be applied to minimize the loss and thereby driving away the fear.
Why Start Forex Trading?
Foreign exchange trading can be quite interesting, and nerve wracking. Yet each day witnesses new entrants into this puzzling world of Forex trading. There are new investors, new buyers, new sellers and new traders who are ready to try their luck at striking gold. The money making potential is extremely high and the losses incurred can also be quite similar. The Forex trading is even bigger than the US stock market the value of the daily Forex trading is higher than all the stock markets combined. The daily trading is worth $9 trillion. Now, do you really want to be a part of this mega business? If you are still confused or scared of taking the dive, then let us offer you a few hot tips of why you should start Forex trading.
1. Easy: Unlike the stock market, Forex trading is relatively easier. If you have been involved in selling or buying of stocks then you will know how nightmarish it can be. Sometimes even some of the best stockbrokers are not informed regarding the best stock options available. In a stock market, brokers specialize in selling a particular type of stock. On the other hand, trading in Forex is far different. It is much simpler and is something that you can also do on your own. There are three primary currencies and they are the U.S. dollar, the Japanese yen, and the British pound.
2. Flexibility: There are two types of flexibility offered by Forex trading. The first one is time and the second one is convenience. Forex trading is open 24 hours a day, so you can enter anytime and sell or buy currencies. Secondly, you can do it from the comforts of your home. You can just sit at home, finish your dinner and then log on to the Internet, and start trading.
3. Tools: The basic tool required for Forex trading is a computer with an Internet connection. The other important tool is knowledge. You can take some time out and learn more about the Forex market understand the various indicators and go through statistical data and graphs. All this will provide you with an insight into the world of foreign exchange. If you check the technical data of previous year then you will be able to identify the various trouble periods and the high periods. Accordingly, you can then start trading or you can try and avoid those periods or that particular time.
4. Investment: There is no fixed investment in Forex unlike stocks. There are trading options that can start from as low as $100 also. This will allow you to understand the risk involved and accordingly work out your future plans. Even if you are unable to make a profit, at least you will not end up loosing a high amount.
5. Profits: All you need to make profit is knowledge of foreign exchange, understanding of how the system works and a little bit of luck. There are some traders who make large sum of money although the profit is directly proportional to the investment.
Investors and market makers in Forex
The investor is the person who runs the show; he is the heart of the Forex market. No investor, no Forex market. The investor knows that in the currency market he/she can buy a pair of currencies and sell them at a short notice. The entire transaction takes place within minutes and the trading is normally carried on by a professional trading manager or a trading company. It sounds quite easy but the reality is much different. You may have a pair of currencies but if there is no buyer at the other end then who will you sell it to? So there is the need of a buyer who can buy your currencies and maybe sell them again to another buyer. A vicious circle isn’t it?
It is not necessary that you as an investor might be able to find a buyer all the time. Although, the market works 24 hours a day but sometimes finding a buyer can be tough. You will be very lucky if you find a buyer who is ready to buy the currencies at the same rate that you bought them for. The probability of finding a person who may be interested in buying and selling the same currencies for the same amount, at the same time is almost negligible. This leads to a question. How can you as a Forex investor buy and sell at the same time or anytime? This is where the Forex market traders come in.
The Forex market maker can be a brokerage company or a trading association. The market maker can be an individual or a financial organization. They can be a bank with adedicated trading account managers. These individuals or companies are always ready for any outcome. Their job is to speculate and make trading possible so that you can reap the benefits. They negotiate the price for various currencies and sell it to a buyer from whom they can earn profits. The market maker is the lifeline for an investor because he can buy the currencies from you whenever you want to sell them. After buying, the market maker will go ahead and sell a pair of currencies to another buyer. This is good news for you because you don’t have to take the pain of finding a good buyer. Again, as an investor, you can always buy a pair of currencies from the market maker.
In other words, the market maker works both ways and helps in creating the Forex market even if there are less number of buyers and sellers. The Forex market makers keep the market in circulation or flowing all the time. They always update their prices every thirty seconds so that any buyer or seller can be well informed. Even if the market turns volatile, the market makers in Forex will continue with their job of buying and selling the currency. At times, they can even incur losses but that has no consequence on them and the process continues. Some of the famous Forex market makers are Forex Capital Markets (FXCM), Saxo Bank, and Gain Capital etc.
Forex Trading System
The world of foreign exchange is big and marked with technical jargons that can sound quite incomprehensible to a layman. Let’s start by understanding what a Forex trading system really is. It is a method of trading where we use objective entry and exit criteria. This criterion is based on definite parameters, which can be validated through historical testing of quantifiable data. The Forex trading system doesn’t work on any predefined guidelines but it does help a trader to make important and timely decisions while trading. It’s like a protective security jacket that strengthens the trader, provides the necessary confidence, and helps them to take the necessary decisions.
The orders placed by different traders are generally governed by an established set of rules, which are based on the movement of the market or the action in the market. Like most trading systems, the Forex trading system is no different and it is based on the principle of risk vs. reward. Let us simplify it a little further, and define it as the amount of capital that you would be ready to invest or risk for a certain amount of return. This is always the top priority and you can’t really take unnecessary risks in the Forex trading market. The other important facets to be considered are costs, trading activity and pre-investment market scenario. The Forex trading system is a self-running program and can be mastered through practice and application of science. There are various rules and principles, which govern the market and the trading. If you follow the rules and the principles and acquire enough knowledge of the trading system, then with the help of technology, you can make important decisions.
Forex trading systems also consist of a mechanical trading system, which enhances your decision-making ability. All you are required to do is feed it with the trading data and the system will produce a response that can help you take evasive action. Depending on the formula used by the system, you can buy or sell stocks. It is like having a mechanical stockbroker who knows everything and guides you through the puzzling yet simple world of Forex trading. There are various versions of the mechanical trading systems available in the market today. The recent version comes packed with a black box operation. Just because they are mechanical and are not living doesn’t mean that they lack intelligence. Somewhere this reminds one of what is also known as artificial intelligence. Although that is far different but then any system that makes your work much easier has to be intelligent. All you need to do is start the computer and the system will automatically detect and update your database. It will also generate various trading options that best suit you and help in placing orders straight to a broker.
Keeping in stride with the technological advancements, the Forex trading system is a state of the art and highly effective way of Forex trading. It’s all about speed, the faster you are, the more distance you will cover!
US Dollar Steady in Japan
Bank of Japan governor, Toshihiko Fukui, has expressed a desire to keep credit rates low in Japan. His aspiration to stabilize interest rates has had a positive effect on the US Dollar in Japan, reports from Tokyo are showing. While many global markets are reeling from the subprime credit problems in the US, Japan is remaining calm and forgoing a reactionary rate hike. Forbes reports:
'I understand that global credit markets are now in the process of re-pricing risk, and we need to see if the current re-pricing proceeds in an orderly fashion, or if it develops in a disorderly manner,' Fukui said.
Promising Survey Strengthens Pound
Although the British pound suffered earlier in the week from a large Bank of England loan, the currency has been lifted due to a survey taken by UK manufacturers. The results of the survey, which inquired about their order books, showed that manufacturers were more successful this month than they've been in over a decade. Analysts did not expect such a promising report, as it proved that the UK is handling global credit problems better than most countries. According to Forbes:
The Confederation of British Industry revealed that a balance of +9 pct of firms polled reported that their order books were above normal in August - the highest level for more than 12 years.
Yen Suffers as Carry Trading Resumes
Following a tumultuous period that stemmed from mortgage problems in the US, the global markets are finally calming down. While this is good news for most, the Japanese yen is weakening as a result. Why the change? Investors are feeling more confident about high-yielding ventures once again, leading them to pull out of the yen and continue with high-risk carry trading. Reuters reports:
While confidence in global credit markets has by no means been fully restored and fears remain that short-term liquidity could dry up, investors across a range of asset classes felt bold enough to shun safe-havens and seek higher returns.
Pound Weakened After Large BoE Loan
Although it is not known whether the Bank of England loaned £314 million to one borrower or many yesterday, the effects were still the same. A one-day loan of such magnitude weakened the domestic currency, if only temporarily. As experts point out, this isn't entirely unusual and the economy has survived much larger Bank of England loans. Reports Forbes:
Significantly more than 314 mln stg this [sic] has been borrowed in one day in the recent past -- for example nearly 4 bln stg on June 29 and 2 bln on July 2, he [George Buckley] added.
Forex Becoming Popular in Jamaica
A huge turnout at the recent "Jamaica Forex Expo" shows that foreign exchange trading is becoming a widespread practice in Jamaica. This expo was organized by the Market Traders Institute (MTI), which has reportedly trained nearly 1500 Jamaicans thus far. It would seem that citizens of this impoverished nation have found a new hope for their future with the help of forex trading. According to Jamaica Gleaner News:
"Trading on the forex has been my path to financial independence," proclaimed one patron who was in attendance at the expo.
"Trading on the forex has been my path to financial independence," proclaimed one patron who was in attendance at the expo.
Singapore Market Steady Despite Global Turmoil
Although recent credit problems in the US have led to a global market crisis, Singapore remains largely unaffected. The Singapore dollar was weakened briefly on Thursday, only to bounce back again by Friday. As for the foreign exchange markets, Singapore has been watching the unfolding drama with close observation. This is, perhaps, the reason for the city-state's stable economy. Reports Forbes:
The MAS [Monetary Authority of Singapore] said it 'has not needed to conduct any extraordinary operations in the markets. However, we stand ready to act if the situation warrants.'
The MAS [Monetary Authority of Singapore] said it 'has not needed to conduct any extraordinary operations in the markets. However, we stand ready to act if the situation warrants.'
Dollar and Yen Continue to Strengthen
Despite the effects of US subprime mortgage troubles on the rest of the world, investors have scaled back risky ventures and increased the value of both dollar and yen. While this result may be inadvertent, it is much appreciated by those who have lost major funds in the stock market recently. The future doesn't look any brighter for US mortgage, either. According to Hemscott:
Housing starts sank 6.1 pct in July to a 1.381 million unit annual rate, the lowest since January, while building permits -- a more forward-looking indicator -- fell 2.8 pct to a 1.373 million rate, the lowest since October of 1996.
Housing starts sank 6.1 pct in July to a 1.381 million unit annual rate, the lowest since January, while building permits -- a more forward-looking indicator -- fell 2.8 pct to a 1.373 million rate, the lowest since October of 1996.
Forex - Calm Before the Friday Storm?
EUR/USD today continued going flat below 1.3700 mark unsure if Euro has enough power and U.S. economy has more holes to stop Bernanke from raising the rates before the Autumn comes. This day didn't bring a lot of macroeconomic surprise to traders, but it had its important data.
Initial jobless claims for the previous week in United States increased by as little as 4k and came out at 307k - still lower than 310k predicted - that is, the employment market remains one of the steadiest part of the U.S. economy.
Factory orders in June rose by 0.6% which is far better than the May's number of -0.5% decline, but slightly lower than predicted growth of 1.0%. I think that this indicator will just be a little slower second half of the 2007, staying positive to provide better total GDP numbers.
Initial jobless claims for the previous week in United States increased by as little as 4k and came out at 307k - still lower than 310k predicted - that is, the employment market remains one of the steadiest part of the U.S. economy.
Factory orders in June rose by 0.6% which is far better than the May's number of -0.5% decline, but slightly lower than predicted growth of 1.0%. I think that this indicator will just be a little slower second half of the 2007, staying positive to provide better total GDP numbers.
Dollar Struggling Below 1.3700
Another day marked by U.S. dollar's struggle to hold below the 1.3700 mark and get out of the bearish trend. EUR/USD is waiting for more bull power before turning back to rising or is just being corrected by some good yesterday's economical news from United States.
ISM reported on Manufacturing PMI in July disappointed many dollar bullish traders as it came out at 53.8%, below the 55.5% expected, showing some possible problems in the manufacturing sector of the U.S. economics.
Previous week's oil inventories report showed a great decline of 6.5 million barrels of crude oil, while commercial petroleum inventories fell by 0.7 million barrels. But total present volumes of inventories remain satisfactional.
Today's news are less encouraging than usually - but one day doesn't mean a lot in the economics. Further news releases will tell us what to expect from U.S. economy and USD.
ISM reported on Manufacturing PMI in July disappointed many dollar bullish traders as it came out at 53.8%, below the 55.5% expected, showing some possible problems in the manufacturing sector of the U.S. economics.
Previous week's oil inventories report showed a great decline of 6.5 million barrels of crude oil, while commercial petroleum inventories fell by 0.7 million barrels. But total present volumes of inventories remain satisfactional.
Today's news are less encouraging than usually - but one day doesn't mean a lot in the economics. Further news releases will tell us what to expect from U.S. economy and USD.
Carnival of Forex Trading - August 1, 2007
Welcome to the August 1, 2007 edition of carnival of Forex trading:
Jimmy Atkinson presents 13 Socially Responsible Careers in Finance posted at Forex Blog.
Gerald Njuguna presents 7 Tips to Weed Out Fake Forex Brokers posted at Online Forex Trading Systems.
The Smart Trader presents Do You Need Trading Rules? posted at Smart Trading For Profits, saying, "Trading Rules"
Jimmy Atkinson presents 13 Socially Responsible Careers in Finance posted at Forex Blog.
Gerald Njuguna presents 7 Tips to Weed Out Fake Forex Brokers posted at Online Forex Trading Systems.
The Smart Trader presents Do You Need Trading Rules? posted at Smart Trading For Profits, saying, "Trading Rules"
Monday, August 13, 2007
DATA SNAP: US Jun Inventories Rise At Rate Expected
DATA SNAP: US Jun Inventories Rise At Rate Expected
=============================================================
Business Inventories ! !
Jun May ! Inventories: !
Total Inventories +0.4% +0.5% ! Consensus: +0.4% !
Inv/Sales Ratio 1.27 1.26 ! Actual: +0.4% !
=============================================================
U.S. businesses accumulated inventories during June at the rate Wall Street expected, with stockpiles rising at car dealers, furniture stores, and food retailers.
Inventories increased by 0.4% to a seasonally adjusted $1.412 trillion, after rising in May an unrevised 0.5%, the Commerce Department said Monday.
Wall Street was looking for stockpiles to move 0.4% higher during June.
Business sales decreased by 0.3% during June, going down to $1.111 trillion. Sales rose in May by an unrevised 1.3%.
The inventory-to-sales ratio rose to 1.27 in June from an unrevised 1.26 in May, Commerce said. The gauge indicates how well firms are matching supply with demand. It measures how long in months a firm could sell all current inventory.
Year over year, inventories grew by 3.6% since June 2006; sales climbed 3.3%.
June manufacturing sector stockpiles of goods rose 0.3% after increasing 0.4% in May. U.S. wholesalers' inventories rose 0.5% after increasing 0.5% in May.
Retailers' stocks of goods rose 0.5% after increasing 0.7% in May. Auto dealer inventories rose 1.0% after increasing 0.6% in May.
Excluding the auto component in Monday's inventory report, other retail stocks rose 0.2% in June after increasing 0.7% in May. Inventories rose by 0.2% at general merchandise stores; 0.6% at food and beverage stores; 0.6% at furniture outlets; and 0.2% at building materials, garden equipment and supplies stores. Stockpiles fell by 0.2% at clothing stores.
=============================================================
Business Inventories ! !
Jun May ! Inventories: !
Total Inventories +0.4% +0.5% ! Consensus: +0.4% !
Inv/Sales Ratio 1.27 1.26 ! Actual: +0.4% !
=============================================================
U.S. businesses accumulated inventories during June at the rate Wall Street expected, with stockpiles rising at car dealers, furniture stores, and food retailers.
Inventories increased by 0.4% to a seasonally adjusted $1.412 trillion, after rising in May an unrevised 0.5%, the Commerce Department said Monday.
Wall Street was looking for stockpiles to move 0.4% higher during June.
Business sales decreased by 0.3% during June, going down to $1.111 trillion. Sales rose in May by an unrevised 1.3%.
The inventory-to-sales ratio rose to 1.27 in June from an unrevised 1.26 in May, Commerce said. The gauge indicates how well firms are matching supply with demand. It measures how long in months a firm could sell all current inventory.
Year over year, inventories grew by 3.6% since June 2006; sales climbed 3.3%.
June manufacturing sector stockpiles of goods rose 0.3% after increasing 0.4% in May. U.S. wholesalers' inventories rose 0.5% after increasing 0.5% in May.
Retailers' stocks of goods rose 0.5% after increasing 0.7% in May. Auto dealer inventories rose 1.0% after increasing 0.6% in May.
Excluding the auto component in Monday's inventory report, other retail stocks rose 0.2% in June after increasing 0.7% in May. Inventories rose by 0.2% at general merchandise stores; 0.6% at food and beverage stores; 0.6% at furniture outlets; and 0.2% at building materials, garden equipment and supplies stores. Stockpiles fell by 0.2% at clothing stores.
Table Of Data On Inventories From Commerce
Table Of Data On Inventories From Commerce
Dollar figures in billions, seasonally adjusted.
June May
Business Inventories, 1412.36 1406.61
Percent Change 0.4 0.5
Manufacturers Inventories 516.93 515.36
Retailers Inventories 496.94 494.65
Wholesalers Inventories 398.49 396.60
Inventories, Unadjusted 1403.39 1404.49
Percent Change -0.1 -0.1
Sales 1111.24 1114.77
Percent Change -0.3 1.3
Inventory-to-Sales 1.27 1.26
Ratio in Months
Dollar figures in billions, seasonally adjusted.
June May
Business Inventories, 1412.36 1406.61
Percent Change 0.4 0.5
Manufacturers Inventories 516.93 515.36
Retailers Inventories 496.94 494.65
Wholesalers Inventories 398.49 396.60
Inventories, Unadjusted 1403.39 1404.49
Percent Change -0.1 -0.1
Sales 1111.24 1114.77
Percent Change -0.3 1.3
Inventory-to-Sales 1.27 1.26
Ratio in Months
ECB Calls For Bids In Main Refinancing Tender
The European Central Bank Monday called for tenders in its weekly refinancing operation.
The reverse transactions, conducted by means of a variable-rate tender using the multiple rate, or U.S. method of allotment will have a maturity of seven days.
This will be the first scheduled tender after the ECB held three unscheduled fine-tuning operations to ease liquidity constraints on euro-zone money markets.
"In this main refinancing operation, the ECB aims to ensure the continued normalization of money market conditions," the ECB said in a statement. "The allotment amount will be consistent with this aim and will not be bound by the published benchmark allotment amount."
The ECB has set a minimum bid rate of 4.00% for the operation.
The ECB said the banking system's expected daily liquidity needs stemming from autonomous liquidity factors are EUR244.0 billion for the Aug. 13-21 period.
The benchmark allotment, based on those liquidity forecasts, is EUR237.5 billion, the ECB said.
Financial institutions are now invited to place bids with the ECB through national central banks. Bids are due at 0730 GMT Tuesday.
The ECB will then compile the bids and announce the allotment results at around 0915 GMT.
The reverse transactions, conducted by means of a variable-rate tender using the multiple rate, or U.S. method of allotment will have a maturity of seven days.
This will be the first scheduled tender after the ECB held three unscheduled fine-tuning operations to ease liquidity constraints on euro-zone money markets.
"In this main refinancing operation, the ECB aims to ensure the continued normalization of money market conditions," the ECB said in a statement. "The allotment amount will be consistent with this aim and will not be bound by the published benchmark allotment amount."
The ECB has set a minimum bid rate of 4.00% for the operation.
The ECB said the banking system's expected daily liquidity needs stemming from autonomous liquidity factors are EUR244.0 billion for the Aug. 13-21 period.
The benchmark allotment, based on those liquidity forecasts, is EUR237.5 billion, the ECB said.
Financial institutions are now invited to place bids with the ECB through national central banks. Bids are due at 0730 GMT Tuesday.
The ECB will then compile the bids and announce the allotment results at around 0915 GMT.
Fed injecting reserves Monday
The Federal Reserve injected an unspecified amount of money into financial markets Monday, following Friday's three injections totaling 38 bln usd.
BoE points out it has existing standby credit facility
The Bank of England pointed out today that it has an existing standing credit facility to help banks out if the need arises.
The privilege comes at a price, however. First, banks will have to pledge eligible collateral, and secondly, the facility is only available at a penalty rate of interest.
"Together with other features of the framework, these facilities were designed to help the system cope with stressed market conditions," the central bank said.
At 14.12 pm BST the overnight LIBOR rate was at 6.50 pct, well up from 5.85 pct on Thursday last week amid global fears of a credit crunch.
The BoE's benchmark refi rate is currently at 5.75 pct after the last quarter point hike in July.
The privilege comes at a price, however. First, banks will have to pledge eligible collateral, and secondly, the facility is only available at a penalty rate of interest.
"Together with other features of the framework, these facilities were designed to help the system cope with stressed market conditions," the central bank said.
At 14.12 pm BST the overnight LIBOR rate was at 6.50 pct, well up from 5.85 pct on Thursday last week amid global fears of a credit crunch.
The BoE's benchmark refi rate is currently at 5.75 pct after the last quarter point hike in July.
Metals - Copper climbs in line with resurgent equity markets
Copper climbed in line with resurgent equity markets today, as short-term credit risk concerns appear to have eased following cash injections from the central banks.
Base metals slid across the complex last week as the fallout from the US subprime mortgage debacle dented investor confidence, and saw funds liquidate their positions to cover losses in equity stocks.
After central banks pushed cash into the markets to help liquidity last week, markets have stabilised and recover some of the losses from last week.
"Markets are at the mercy of risk indicators currently with the modest improvement in these measures of market liquidity and risk appetite this morning seeing most of the base metals trade higher," said JP Morgan analyst, Michael Jansen.
At 2.09 pm LME copper for three-month delivery rose to 7,520 usd against 7,455 usd at the close Friday.
Copper had lost around 3 pct since the end of July prior to today's gains.
A 200-tonne copper stock fall in warehouses worldwide, as reported by the LME this morning in a daily report, also helped the red metal rise.
"Copper and lead in particular have found renewed confidence, especially after stocks showed a net outflow," said analysts at RBC Capital Markets.
Copper prices were also supported by ongoing strikes at three Grupo Mexico mines, raising market player's fears of a tightening supply picture.
Reports that a man was killed during fights between two groups of workers close to the La Caridad mine is likely to heighten tensions.
Unions and management at Grupo Mexico's giant Cananea mine are waiting for a court decision on the legality of the strikes, which is due shortly.
Elsewhere, nickel was steady at lower levels. The grey metal has lost nearly 50 pct since striking an all time record of around 52,000 usd earlier this year, on a combination of demand destruction at higher prices and falling usage.
Again this morning, the LME in its daily report said stocks rose, bringing the inventory level in LME-certified warehouses up to 19,224 tonnes.
"Rising stocks are evidence of falling stainless demand and we believe the headline figure should easily top 20,000 tonnes over the near term, further pressuring prices," said Bank of America analyst Anatol Feygin.
By 2.09 pm nickel was trading at 26,600 from 26,650 at the close Friday.
In other base metals, aluminium was up at 2,600 usd from 2,590 usd, zinc was up at 3,345 usd from 3,330 usd and tin was lower at 15,600 usd from 15,800 usd. Meanwhile, lead was up at 2,990 usd from 2,915 usd at the close Friday, supported by a decline in LME monitored stockpiles.
Base metals slid across the complex last week as the fallout from the US subprime mortgage debacle dented investor confidence, and saw funds liquidate their positions to cover losses in equity stocks.
After central banks pushed cash into the markets to help liquidity last week, markets have stabilised and recover some of the losses from last week.
"Markets are at the mercy of risk indicators currently with the modest improvement in these measures of market liquidity and risk appetite this morning seeing most of the base metals trade higher," said JP Morgan analyst, Michael Jansen.
At 2.09 pm LME copper for three-month delivery rose to 7,520 usd against 7,455 usd at the close Friday.
Copper had lost around 3 pct since the end of July prior to today's gains.
A 200-tonne copper stock fall in warehouses worldwide, as reported by the LME this morning in a daily report, also helped the red metal rise.
"Copper and lead in particular have found renewed confidence, especially after stocks showed a net outflow," said analysts at RBC Capital Markets.
Copper prices were also supported by ongoing strikes at three Grupo Mexico mines, raising market player's fears of a tightening supply picture.
Reports that a man was killed during fights between two groups of workers close to the La Caridad mine is likely to heighten tensions.
Unions and management at Grupo Mexico's giant Cananea mine are waiting for a court decision on the legality of the strikes, which is due shortly.
Elsewhere, nickel was steady at lower levels. The grey metal has lost nearly 50 pct since striking an all time record of around 52,000 usd earlier this year, on a combination of demand destruction at higher prices and falling usage.
Again this morning, the LME in its daily report said stocks rose, bringing the inventory level in LME-certified warehouses up to 19,224 tonnes.
"Rising stocks are evidence of falling stainless demand and we believe the headline figure should easily top 20,000 tonnes over the near term, further pressuring prices," said Bank of America analyst Anatol Feygin.
By 2.09 pm nickel was trading at 26,600 from 26,650 at the close Friday.
In other base metals, aluminium was up at 2,600 usd from 2,590 usd, zinc was up at 3,345 usd from 3,330 usd and tin was lower at 15,600 usd from 15,800 usd. Meanwhile, lead was up at 2,990 usd from 2,915 usd at the close Friday, supported by a decline in LME monitored stockpiles.
SendPrintAdd To Colombia's Car Sales Rise 39% In July On Yr To 21,979 Cars
Colombia's Car Sales Rise 39% In July On Yr To 21,979 Cars
BOGOTA (Dow Jones)--Colombian vehicle sales at the wholesale level totaled 21,979 units in July, up 39% from the same month last year, according to data released late Friday by industry group Comite Automotor.
Vehicle sales jumped 42% to 145,389 units in the first seven months of the year from the same period in 2006.
Higher personal income and the strengthening of the peso are propelling the auto sector in Colombia.
The Colombian peso has risen 12% against the U.S. dollar so far this year boosted by rising foreign direct investment, foreign portfolio investment and remittances.
The Colombian peso rose 2% last year and 21% between 2004 and 2005.
General Motors Corp. (GM) topped the sales rankings in July with 8,007 units, up 20% from the same month last year.
French car maker Renault (13190.FR) took the No. 2 spot, with 3,156 units, up 60% from the same month a year ago when 1,978 cars were sold.
Korean Hyundai Motor Co (005380.SE) sold 2,536 units in July, up 40% from the same month a year ago.
Comite Automotor's statistics cover more than 90% of the vehicles sold in Colombia, including buses, private vehicles, taxis and trucks.
BOGOTA (Dow Jones)--Colombian vehicle sales at the wholesale level totaled 21,979 units in July, up 39% from the same month last year, according to data released late Friday by industry group Comite Automotor.
Vehicle sales jumped 42% to 145,389 units in the first seven months of the year from the same period in 2006.
Higher personal income and the strengthening of the peso are propelling the auto sector in Colombia.
The Colombian peso has risen 12% against the U.S. dollar so far this year boosted by rising foreign direct investment, foreign portfolio investment and remittances.
The Colombian peso rose 2% last year and 21% between 2004 and 2005.
General Motors Corp. (GM) topped the sales rankings in July with 8,007 units, up 20% from the same month last year.
French car maker Renault (13190.FR) took the No. 2 spot, with 3,156 units, up 60% from the same month a year ago when 1,978 cars were sold.
Korean Hyundai Motor Co (005380.SE) sold 2,536 units in July, up 40% from the same month a year ago.
Comite Automotor's statistics cover more than 90% of the vehicles sold in Colombia, including buses, private vehicles, taxis and trucks.
SendPrintAdd To New York Fed to 'evaluate' need for open market operations
The New York Federal Reserve Bank said that its open market operations desk will consider whether to add additional cash to the financial markets at 9.30 am.
In a statement, the NY Fed said, "The Desk will evaluate whether it needs to conduct operations at its normal operating time of 9:30 am. In addition, the Desk stands ready to conduct additional operations later in the day as needed."
In a statement, the NY Fed said, "The Desk will evaluate whether it needs to conduct operations at its normal operating time of 9:30 am. In addition, the Desk stands ready to conduct additional operations later in the day as needed."
AceTrader: Daily Outlook
Pair : EUR/USD
Update Time : 13 Aug 2007 08:00
Next Update : 00:30GMT
Rate : 1.3667
Euro's retreat after meeting selling interest at 1.3709 suggests the recovery from last Friday's low at 1.3642 has ended there and re-test of this support is envisaged, below would extend marginal weakness but broad outlook is consolidative and reckon 1.3609 would contain downside.
Only above 1.3730/35 would prolong choppy trading inside the range of 1.3609-1.3840 and bring rebound to 1.3770 later
Update Time : 13 Aug 2007 08:00
Next Update : 00:30GMT
Rate : 1.3667
Euro's retreat after meeting selling interest at 1.3709 suggests the recovery from last Friday's low at 1.3642 has ended there and re-test of this support is envisaged, below would extend marginal weakness but broad outlook is consolidative and reckon 1.3609 would contain downside.
Only above 1.3730/35 would prolong choppy trading inside the range of 1.3609-1.3840 and bring rebound to 1.3770 later
FX Treads Cautiously
At 4:30 AM UK July core PPI m/m (exp 0.2%, prev 0.2%)
UK July core PPI y/y (exp 2.2%, prev 2.1%)
At 8:30 AM US July Retail Sales (exp 0.2%, prev –0.9%)
US July Retail Sales x-autos (exp 0.4%, prev –0.4%)
At 10:00 AM US June Business Inventories (exp 0.4%, prev 0.5%)
The currency market kicks off the week on a quiet tone, with the major pairs confined to a narrow range in early Tokyo trading. Global central banks stepped in last week to calm fears of an imminent credit crunch, thereby alleviating some of the volatility experienced by the markets. The heightened risk aversion has continued to benefit the yen as trader wariness has prompted heavy unwinding in the carry trades. The inverse relationship between equities and the yen is expected to remain and will likely keep the Japanese currency locked in choppy, volatile trading against the majors as traders closely monitor developments in the money markets.
The coming week will also see several key reports from the US including July retail sales, business inventories, PPI, trade balance, CPI, NY Fed manufacturing survey, TICS, capacity utilization, industrial production, housing starts, Philadelphia Fed survey, and the University of Michigan sentiment survey. Traders will closely scrutinize the US inflation reports for any hints of easing pressure that would enable the Fed to cut rates over the coming months. Further, it is possible that the Fed will again inject money into the economy as well as engage in a currency swap with the ECB to alleviate European banks’ demands to meet short-term loan obligations. Markets will likely become less volatile this week in the event that either action will materialize
UK July core PPI y/y (exp 2.2%, prev 2.1%)
At 8:30 AM US July Retail Sales (exp 0.2%, prev –0.9%)
US July Retail Sales x-autos (exp 0.4%, prev –0.4%)
At 10:00 AM US June Business Inventories (exp 0.4%, prev 0.5%)
The currency market kicks off the week on a quiet tone, with the major pairs confined to a narrow range in early Tokyo trading. Global central banks stepped in last week to calm fears of an imminent credit crunch, thereby alleviating some of the volatility experienced by the markets. The heightened risk aversion has continued to benefit the yen as trader wariness has prompted heavy unwinding in the carry trades. The inverse relationship between equities and the yen is expected to remain and will likely keep the Japanese currency locked in choppy, volatile trading against the majors as traders closely monitor developments in the money markets.
The coming week will also see several key reports from the US including July retail sales, business inventories, PPI, trade balance, CPI, NY Fed manufacturing survey, TICS, capacity utilization, industrial production, housing starts, Philadelphia Fed survey, and the University of Michigan sentiment survey. Traders will closely scrutinize the US inflation reports for any hints of easing pressure that would enable the Fed to cut rates over the coming months. Further, it is possible that the Fed will again inject money into the economy as well as engage in a currency swap with the ECB to alleviate European banks’ demands to meet short-term loan obligations. Markets will likely become less volatile this week in the event that either action will materialize
Volatility Forces Central Banks` Hands
The currency market experienced large swings in the morning amid sharp volatility prompted by heightened risk aversion to fears of a widespread credit crunch. The yen continued to benefit from such wariness, rallying across the board to 117.24 against the dollar and 160 versus the euro. Those gains were short-lived as the Fed announced that it would intervene by injecting funds “to facilitate the orderly function of financial markets”. The Fed’s decision follows similar liquidity injections from the ECB, initiated yesterday and several Asian central banks including the Bank of Japan.
The Fed intervened three times today, amounting to nearly $38 billion in fund injections -- its largest since September 14, 2001, and said it would provide reserves as necessary. The Fed’s move momentarily quelled fears of a credit crunch as markets stemmed earlier losses and the yen reversed its gains against the majors. Currency traders will continue to focus on developments with the subprime debacle and exhibit greater wariness to carry trade volatility.
The dollar rallied against the euro, sterling and Aussie in the Friday session, with carry trade unwinding benefiting the greenback. Although the outlook for the dollar remains bearish in light of US fundamentals, the market continues to be dictated by credit concerns and will likely trade under choppy volatile conditions over the coming weeks.
The Fed intervened three times today, amounting to nearly $38 billion in fund injections -- its largest since September 14, 2001, and said it would provide reserves as necessary. The Fed’s move momentarily quelled fears of a credit crunch as markets stemmed earlier losses and the yen reversed its gains against the majors. Currency traders will continue to focus on developments with the subprime debacle and exhibit greater wariness to carry trade volatility.
The dollar rallied against the euro, sterling and Aussie in the Friday session, with carry trade unwinding benefiting the greenback. Although the outlook for the dollar remains bearish in light of US fundamentals, the market continues to be dictated by credit concerns and will likely trade under choppy volatile conditions over the coming weeks.
Yen Rallied after BNP Froze Funds
The yen rose sharply BNP Paribas, France’s biggest bank, froze three investment funds worth 1.6 billion euros, raising concern the US subprime mortgage sector woes is spreading worldwide. The ECB today injected 94.8 billion euros into the region’s banking market to meet the sudden liquidity demand. The US subprime worries prompted investors to unwind carry trades, driving the yen higher against high-yielding currencies.
The euro slumped from 165 to 161.55 versus the yen, while the sterling slid from 244 to test the 239 level. The yen strengthened from 119.75 to as low as 118.20 versus the dollar.
As a safe haven currency, the dollar also benefited from anti-risk trades. The euro fell off the 1.38 handle and was supported by the 1.3650 level versus the dollar. The sterling dipped from 2.04 to as low as 2.0212.
The euro slumped from 165 to 161.55 versus the yen, while the sterling slid from 244 to test the 239 level. The yen strengthened from 119.75 to as low as 118.20 versus the dollar.
As a safe haven currency, the dollar also benefited from anti-risk trades. The euro fell off the 1.38 handle and was supported by the 1.3650 level versus the dollar. The sterling dipped from 2.04 to as low as 2.0212.
Rate Sentiment Drives FX
The dollar was mixed in the Wednesday session amid a dearth of fresh US economic news, climbing higher against the yen but falling sharply versus the sterling. The data release was limited to June wholesale inventories, which was slightly higher than expected at 0.5%, unchanged from the previous month. Interest rate expectations continue to play a key role in the FX market, with the Aussie and sterling regaining its footing on hawkish sentiment from both respective central banks.
Sterling Shines
The sterling rallied sharply against the dollar and yen overnight, climbing just shy of the 2.04-level and slightly above 244, respectively. The strength was predominantly triggered the Bank of England’s Quarterly Inflation Report, which revealed expectations for CPI inflation to be slightly above the 2% target in two years with market rates, and clearly above target based on constant rates. The BoE said that risks to inflation remained skewed to the upside but with growth now forecasted to be softer over the next two years
Sterling Shines
The sterling rallied sharply against the dollar and yen overnight, climbing just shy of the 2.04-level and slightly above 244, respectively. The strength was predominantly triggered the Bank of England’s Quarterly Inflation Report, which revealed expectations for CPI inflation to be slightly above the 2% target in two years with market rates, and clearly above target based on constant rates. The BoE said that risks to inflation remained skewed to the upside but with growth now forecasted to be softer over the next two years
Dollar Slipped after FOMC
The Fed kept interest rates at 5.25% unchanged as widely expected. The Fed acknowledged tightening credit conditions and slowing economy, but maintained its bias against inflationary pressure for fear that inflation may not moderate as expected. The dollar fell slightly against the euro and sterling after the post-meeting statement.
The euro will face resistance at 1.3750, followed by 1.3780 and 1.38. Additional gains will target 1.3830 and 1.3850. Meanwhile, on the downside the pair will encounter support at 1.3720 followed by 1.37 and 1.3680. Subsequent floors will emerge at 1.3650, backed by 1.3620 and 1.36.
The euro will face resistance at 1.3750, followed by 1.3780 and 1.38. Additional gains will target 1.3830 and 1.3850. Meanwhile, on the downside the pair will encounter support at 1.3720 followed by 1.37 and 1.3680. Subsequent floors will emerge at 1.3650, backed by 1.3620 and 1.36.
Markets Await FOMC
The dollar recovered its earlier losses against the sterling and euro by the US afternoon to hover around 2.03 and 1.38, respectively. In overnight trading, the greenback slipped toward record lows versus the euro at 1.3838 but pared its losses heading into Tuesday’s FOMC policy announcement. With the exception of the Fed rate decision tomorrow, the US economic calendar this week is light thus shifting the focus to the accompanying FOMC statement.
The Fed is largely anticipated to leave policy unchanged at 5.25% when it announces its decision tomorrow at 2:15 PM. The key point of focus will be the accompanying statement from the FOMC, in which we expect minor changes to acknowledge further slowdown in the housing market stemming from the continued unfolding of the subprime debacle. However, we believe any reference to the subprime market will assure markets that the issue will likely remain contained and have limited impact on global financial markets. We expect the Fed will maintain its bias against inflationary pressure, adding that it sees inflation moderating over time.
The trade-weighted dollar index remains under pressure, hovering around the psychologically key 80-level. It briefly fell below it last Friday following the weaker than expected non-farm payrolls number. We expect the greenback to trade on weak footing against the euro and sterling as fears of a credit crunch linger on traders’ psyches. It will be important to closely monitor performance of US equities, treasuries and oil this week given the dearth of US reports.
The Fed is largely anticipated to leave policy unchanged at 5.25% when it announces its decision tomorrow at 2:15 PM. The key point of focus will be the accompanying statement from the FOMC, in which we expect minor changes to acknowledge further slowdown in the housing market stemming from the continued unfolding of the subprime debacle. However, we believe any reference to the subprime market will assure markets that the issue will likely remain contained and have limited impact on global financial markets. We expect the Fed will maintain its bias against inflationary pressure, adding that it sees inflation moderating over time.
The trade-weighted dollar index remains under pressure, hovering around the psychologically key 80-level. It briefly fell below it last Friday following the weaker than expected non-farm payrolls number. We expect the greenback to trade on weak footing against the euro and sterling as fears of a credit crunch linger on traders’ psyches. It will be important to closely monitor performance of US equities, treasuries and oil this week given the dearth of US reports.
Dollar Down Slightly, Awaits US Payrolls
The dollar fell slightly against the euro and sterling as traders adjusted positions to wait for tomorrow’s US non-farm payrolls report, which will be a major market mover. The euro climbed 50 pips to test 1.37 level against the dollar, and the sterling rose from 2.0300 to as high as 2.0377 versus the dollar.
The euro and sterling was little changed after the European Central Bank and the Bank of England left interest rates on hold as expected at 4.00% and 5.75% respectively. ECB President Trichet said at the post-meeting press conference that “strong vigilance” is needed to contain inflation, signaling a possible rate hike in September.
The dollar was flat after Today’s data as traders keep cautious before Friday morning’s key job report. US jobless claims for the week ended on July 28 came out at 307k, in line with the expectation of 310k. Factory orders rose 0.6% in June, reversing a 0.5% decline in the earlier month but below the estimate of 1.0%. Durable goods orders came out at 1.3%, slightly below the forecast and the previous reading of 1.4%.
The euro and sterling was little changed after the European Central Bank and the Bank of England left interest rates on hold as expected at 4.00% and 5.75% respectively. ECB President Trichet said at the post-meeting press conference that “strong vigilance” is needed to contain inflation, signaling a possible rate hike in September.
The dollar was flat after Today’s data as traders keep cautious before Friday morning’s key job report. US jobless claims for the week ended on July 28 came out at 307k, in line with the expectation of 310k. Factory orders rose 0.6% in June, reversing a 0.5% decline in the earlier month but below the estimate of 1.0%. Durable goods orders came out at 1.3%, slightly below the forecast and the previous reading of 1.4%.
Fed adds 2.0 bln usd to financial markets
The US Federal Reserve injected 2.0 bln usd into financial markets this morning.
Analysts said the smaller-than-expected 2.0 bln usd signals that there is ample liquidity after the 38.0 bln usd injected on Friday.
The Fed has now added 64.0 bln usd of liquidity to the markets over the last three business days.
Analysts said the smaller-than-expected 2.0 bln usd signals that there is ample liquidity after the 38.0 bln usd injected on Friday.
The Fed has now added 64.0 bln usd of liquidity to the markets over the last three business days.
Yen at 5 Week High - Look for Extension
• Euro to Challenge 1.3608
• Japanese Yen Challenging 117.00
• British Pound Towards 2.0000
• Swiss Franc Little Changed
• Canadian Dollar Consolidates
• Australian Dollar End of Correction?
• New Zealand Dollar Terminal Thrust Complete?
Commentary: We wrote yesterday that “the decline from 1.3838 is wave C in a larger A-B-C correction from 1.3852. Price is likely to continue lower towards the 100% of 1.3852-1.3608/1.3838 at 1.3595. The next bearish target is the 161.8% extension at 1.3445.” This count remains on track so we are sticking with it. Near term, the decline from 1.3825 is in 5 waves but a correction back to 1.3714 is possible before the next leg lower. Still, favor the downside.
Commentary: We wrote yesterday that “the USDJPY has reversed after the high made yesterday at 119.83. Price is likely to continue lower (below 117.18). This decline may be a 5th wave so be wary of being too aggressive on a break below 117.18.” The strength of the decline from 118.25 suggests that the USDJPY is in a 3rd wave from 118.25. If this is correct, then the pair should continue lower until 116.29 before any kind of sizeable bounce takes place. This view is favored as long as price is below 118.25
Strategy: Remain bearish, move risk to 118.25 (from 119.83) targets 116.25
Commentary: No change to the USDCHF as the pair has not moved much. “The structure is bearish as long as price is below 1.2165. But rally from 1.1815 is in 5 waves, which sets the stage for additional gains. Additional strength towards the 61.8% of 1.2165-1.1815 at 1.2032 may be needed before the next leg down. Remember that we are looking for a decline towards the measured objective at 1.1364 (the 161.8% extension of 1.2468-1.1960/1.2165).”
Strategy: Remain Bearish against 1.2165, target 1.1400
Commentary: We maintain that the USDCAD is in a rally leg that will push through 1.0699 (likely next week). Target are 1.0821 (100% extension of 1.0340-1.0699/1.0462) and 1.1043 (161.8% extension). The rally from 1.0462 is either larger wave C or 3. This view is favored as long as price is above 1.0462.
Strategy: Remain Bullish, move risk to 1.0462 (from 1.0340), targets 1.0821 and 1.1043
Commentary: We wrote yesterday to “look for a decline below .8443 towards the 100% extension of .8870-.8458/.8661 at .8249.” The leg lower is under way right now. Near term, coming under .8398 may complete an initial 5 wave decline from .8661 and give way to a larger corrective setback. It is also possible that this completes the entire A-B-C correction from .8870 (which is a larger 4th wave). In this case, a significant low will be put in place. There is obviously no evidence of that yet but it is possible.
Strategy: Move to flat (from bearish)
Commentary: We wrote yesterday that “weakness this morning (as in yesterday) gives scope to the thrust lower from the triangle. Look for a decline below .7531 towards chart support at .7452 (6/13 low).” Kiwi traded to .7399 this morning and the decline from the triangle is in 5 waves, indicating that the entire bear wave from .8108 is complete. As with Aussie though, there is obviously no evidence that the pair put in a bottom so we are watching for developments.
Strategy: Flat
*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.
• Japanese Yen Challenging 117.00
• British Pound Towards 2.0000
• Swiss Franc Little Changed
• Canadian Dollar Consolidates
• Australian Dollar End of Correction?
• New Zealand Dollar Terminal Thrust Complete?
Commentary: We wrote yesterday that “the decline from 1.3838 is wave C in a larger A-B-C correction from 1.3852. Price is likely to continue lower towards the 100% of 1.3852-1.3608/1.3838 at 1.3595. The next bearish target is the 161.8% extension at 1.3445.” This count remains on track so we are sticking with it. Near term, the decline from 1.3825 is in 5 waves but a correction back to 1.3714 is possible before the next leg lower. Still, favor the downside.
Commentary: We wrote yesterday that “the USDJPY has reversed after the high made yesterday at 119.83. Price is likely to continue lower (below 117.18). This decline may be a 5th wave so be wary of being too aggressive on a break below 117.18.” The strength of the decline from 118.25 suggests that the USDJPY is in a 3rd wave from 118.25. If this is correct, then the pair should continue lower until 116.29 before any kind of sizeable bounce takes place. This view is favored as long as price is below 118.25
Strategy: Remain bearish, move risk to 118.25 (from 119.83) targets 116.25
Commentary: No change to the USDCHF as the pair has not moved much. “The structure is bearish as long as price is below 1.2165. But rally from 1.1815 is in 5 waves, which sets the stage for additional gains. Additional strength towards the 61.8% of 1.2165-1.1815 at 1.2032 may be needed before the next leg down. Remember that we are looking for a decline towards the measured objective at 1.1364 (the 161.8% extension of 1.2468-1.1960/1.2165).”
Strategy: Remain Bearish against 1.2165, target 1.1400
Commentary: We maintain that the USDCAD is in a rally leg that will push through 1.0699 (likely next week). Target are 1.0821 (100% extension of 1.0340-1.0699/1.0462) and 1.1043 (161.8% extension). The rally from 1.0462 is either larger wave C or 3. This view is favored as long as price is above 1.0462.
Strategy: Remain Bullish, move risk to 1.0462 (from 1.0340), targets 1.0821 and 1.1043
Commentary: We wrote yesterday to “look for a decline below .8443 towards the 100% extension of .8870-.8458/.8661 at .8249.” The leg lower is under way right now. Near term, coming under .8398 may complete an initial 5 wave decline from .8661 and give way to a larger corrective setback. It is also possible that this completes the entire A-B-C correction from .8870 (which is a larger 4th wave). In this case, a significant low will be put in place. There is obviously no evidence of that yet but it is possible.
Strategy: Move to flat (from bearish)
Commentary: We wrote yesterday that “weakness this morning (as in yesterday) gives scope to the thrust lower from the triangle. Look for a decline below .7531 towards chart support at .7452 (6/13 low).” Kiwi traded to .7399 this morning and the decline from the triangle is in 5 waves, indicating that the entire bear wave from .8108 is complete. As with Aussie though, there is obviously no evidence that the pair put in a bottom so we are watching for developments.
Strategy: Flat
*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.
Chinese Yuan Appreciates On Wider Trade Balance
Chinese Yuan Appreciates On Wider Trade Balance
Appreciating during the session, the Chinese yuan was boosted by speculation that Chinese officials will be more flexible when it comes to the currently rigid exchange rate regime. Against the US dollar, the Chinese yuan gained to 7.5723 in the overnight session while advancing to 15.2812 against the British pound. Supportive of the advance was news that China’s trade surplus had widened to the second highest on record, surging 67 percent against figures a year ago. According to the General Administration of Customs today, the surplus widened to $24.4 billion compared to $14.6 billion this time last year. Exports jumped at the fastest pace in five months by 34.2 percent as imports gained 26.9 percent. Notably, oil imports additionally saw a gain of 39 percent, a record high. The figure will more than add to growing tensions with policy makers in the US Congress, calling for more flexibility and further legislation in order to curb the effects of a fixed currency. Subsequently, many in the market are already expecting an appreciation of 6.2 percent over the next 12 months.
All Eyes Turn To China Consumer Prices, As Producer Prices Slow
Surprising analysts and the market, producer prices rose the smallest in almost 14 months as metal prices didn’t support as high of a move for the month of July. According to the National Bureau of Statistics, prices at the producer level rose 2.4 percent in the month from a year ago, following a gain of 2.5 percent in the previous month. Incidentally, it was the third straight month, and lends to the possibility that consumer prices may not be as lofty as some forecast. Current expectations run counter to the theory as estimates are looking for record increases in consumer prices of 4.6 percent for the month. Should prices rise to the that level, market participants may be expecting another rate increase as soon as next week.
Money Supply Accelerates To One Year High
Growth in money supply accelerated at the fastest pace in a year as loose lending practices and improved trade flows helped to boost the overall number. The M2 component advanced at an alarming 18.5 percent for the month of July compared to last year’s figures according to the People’s Bank of China today. Incidentally, the figure beat consensus estimates of 17 percent, and lends to further speculation that increases in the band that restrict the Chinese yuan will have to be widened. In this case an appreciating currency will help to alleviate inflationary pressures as prices continue to rise. In addition, sentiment is expecting more interest rate increases in the near term along with numerous other inventive solutions by the country’s central bank in order to curb liquidity.
Economic Growth Accelerates In Singapore
Singapore’s economy expanded at the fastest pace in two years as a growing financial services sector helped to boost construction and real estate development. For the second quarter, gross domestic product expanded at an annualized 14.4 percent, jumping over revised figures of 8.8 percent in the first quarter. Incidentally, the figures come in line with positive expectations following upgrades in second half growth by Prime Minister Lee Hsien Loong earlier this week.
Appreciating during the session, the Chinese yuan was boosted by speculation that Chinese officials will be more flexible when it comes to the currently rigid exchange rate regime. Against the US dollar, the Chinese yuan gained to 7.5723 in the overnight session while advancing to 15.2812 against the British pound. Supportive of the advance was news that China’s trade surplus had widened to the second highest on record, surging 67 percent against figures a year ago. According to the General Administration of Customs today, the surplus widened to $24.4 billion compared to $14.6 billion this time last year. Exports jumped at the fastest pace in five months by 34.2 percent as imports gained 26.9 percent. Notably, oil imports additionally saw a gain of 39 percent, a record high. The figure will more than add to growing tensions with policy makers in the US Congress, calling for more flexibility and further legislation in order to curb the effects of a fixed currency. Subsequently, many in the market are already expecting an appreciation of 6.2 percent over the next 12 months.
All Eyes Turn To China Consumer Prices, As Producer Prices Slow
Surprising analysts and the market, producer prices rose the smallest in almost 14 months as metal prices didn’t support as high of a move for the month of July. According to the National Bureau of Statistics, prices at the producer level rose 2.4 percent in the month from a year ago, following a gain of 2.5 percent in the previous month. Incidentally, it was the third straight month, and lends to the possibility that consumer prices may not be as lofty as some forecast. Current expectations run counter to the theory as estimates are looking for record increases in consumer prices of 4.6 percent for the month. Should prices rise to the that level, market participants may be expecting another rate increase as soon as next week.
Money Supply Accelerates To One Year High
Growth in money supply accelerated at the fastest pace in a year as loose lending practices and improved trade flows helped to boost the overall number. The M2 component advanced at an alarming 18.5 percent for the month of July compared to last year’s figures according to the People’s Bank of China today. Incidentally, the figure beat consensus estimates of 17 percent, and lends to further speculation that increases in the band that restrict the Chinese yuan will have to be widened. In this case an appreciating currency will help to alleviate inflationary pressures as prices continue to rise. In addition, sentiment is expecting more interest rate increases in the near term along with numerous other inventive solutions by the country’s central bank in order to curb liquidity.
Economic Growth Accelerates In Singapore
Singapore’s economy expanded at the fastest pace in two years as a growing financial services sector helped to boost construction and real estate development. For the second quarter, gross domestic product expanded at an annualized 14.4 percent, jumping over revised figures of 8.8 percent in the first quarter. Incidentally, the figures come in line with positive expectations following upgrades in second half growth by Prime Minister Lee Hsien Loong earlier this week.
More Market Turmoil, Fed To The Rescue
• Amongst Credit Crisis, Japanese Yen Continues To Gain
• Pound Bidders Look To Next Week In Hopes For Sterling
More Market Turmoil, Fed To The Rescue
It was another rocky session for the equity markets, which meant further volatility for the US dollar in the foreign exchange realm. Falling against the Euro, the greenback made headway against the British pound, Japanese yen and Canadian dollar, after it was all said and done. For the record, the Dow Industrials dropped through the 13,100 figure only to rebound as high as 13,306 at midday in New York and looking to close just down 31 points ahead of the weekend. Notably on the day, and helping to stem further losses in the session, the Federal Reserve provided $38 billion in reserves to curb current credit crunch concerns that seem bent on not disappearing any time soon. The move was in coordination with the Bank of Japan and Reserve Bank of Australia, both of which lent their own markets some liquidity as it has become more than apparent that the subprime losses from a couple of days ago have turned into a contagion effect. Now, given the current negativity in the markets, dollar weakness is likely to persist even as traders have pared back expectations of a rate cut in the near term. Previously pricing in a 100 percent chance of a 25 basis point rate cut in next month’s decision, sentiment is still overweight on the possibility, pricing in an 80 percent shot of an interest rate reduction in the last 48 hours. Incidentally, next week’s economic calendar will all but confirm the notion of further weakness in the US currency. Although retail sales figures are expected to remain positive for the month, consumer price inflation, trade balance and net foreign securities data are all expected to show declines. Without much to go on in the coming week, it may ultimately be a rough one for dollar proponents with expectations of further losses to be announced in the next five sessions.
Amongst Credit Crisis, Japanese Yen Continues To Gain
With risk being controlled through liquidation of carry trades, the Japanese yen has appreciated against the majors notably higher yielders in the last 36-48 hours. The appreciation has been so rapid that the Bank of Japan, in tandem with efforts by central banks around the world added 1 trillion yen, or $8.5 billion, to the financial system in efforts to stem a formidably hard landing. Although the gesture is more than is needed, it may all be set aside as further gains are expected for the underlying currency, especially given continued speculation on interest rate changes by the country’s central bank. As a result of the developments over the past couple of days, sentiment has shifted extraordinarily as the market now anticipates at least one rate hike before September. Economic fundamentals in the overnight continue to purport such a move by policy makers with both consumer confidence and industrial production figures supported in their monthly assessment. As a result, markets may received a breather in yen buying should next week’s GDP figure come in less than expected. Already consensus estimates are to the downside, pitting a second quarter preliminary assessment of 0.9 percent growth. The figure pales in comparison to 3.3 percent growth forecasted previously.
Euro Remains Supported Throughout Session Despite Lackluster Data
Setting aside the credit crunch and recent attempts to stem concerns through liquidity offerings, the Euro remained relatively supported against the US dollar in the New York session. Surprisingly, gains were seen in the single currency despite lackluster data in the Eurozone. Manufacturing and industrial production were negative for the French economy as Italian growth was below estimates. Expecting to grow by 2.1 percent in the quarterly evaluation, expansion was limited to 1.8 percent in the second quarter for the economy. Both figures should feed sentiment heading into next week’s consumer price report, which is expected to show continually mild results. Estimates are showing forecasts of a dip in consumer prices for the month of July. However, the decline shouldn’t deter the central bank from raising rates as policy makers remain bent on future price elevation.
Pound Bidders Look To Next Week In Hopes For Sterling
With no economic data for pound enthusiasts scheduled for the session, it seemed that sterling cross declines fed into the major, helping it to decline through and remain below the 2.0300 figure throughout the 24 hour session. As a result, proponents for the major currency are looking to next week’s docket of data in offering some respite from this week’s blood bath. Mainly, in question will be both the consumer price and retail sales figures. Although the market has confirmed a rate hike of 25 basis points in the near term for the UK interest rate, this week’s set of data may jeopardize market estimates of a rate past six percent in the next 6-8 months. Incidentally, both reports are expected to show declines for the month, which may show that interest rate hikes are finally working their way through the market. As a result, mounting focus will also be placed on the midweek release of the Bank of England minutes. Should dissenters be heard, pound sterling is likely to have a rough one before the end is over.
Commodity Currencies Continue To Be Pressured
Aside from the Canadian dollar, both the New Zealand and Australian dollars continued to remain under pressure throughout the session. The AUDUSD fell below the 0.8600 support as the NZDUSD currency pair slipped below the 0.7600 support figure. Further carry trade reduction bolstered declines in both major pairs, setting aside any economic data that was posted in the overnight. However, helping the Canadian dollar remain afloat was a report on employment in the New York morning. Although the net change in employment was far less than expected at 11.3K, the employment rate dropped to lowest in 33 years. Incidentally, the survey results give some indications that the labor market continues to remain tight, bolstering speculation of a rate hike in the commodity economy.
• Pound Bidders Look To Next Week In Hopes For Sterling
More Market Turmoil, Fed To The Rescue
It was another rocky session for the equity markets, which meant further volatility for the US dollar in the foreign exchange realm. Falling against the Euro, the greenback made headway against the British pound, Japanese yen and Canadian dollar, after it was all said and done. For the record, the Dow Industrials dropped through the 13,100 figure only to rebound as high as 13,306 at midday in New York and looking to close just down 31 points ahead of the weekend. Notably on the day, and helping to stem further losses in the session, the Federal Reserve provided $38 billion in reserves to curb current credit crunch concerns that seem bent on not disappearing any time soon. The move was in coordination with the Bank of Japan and Reserve Bank of Australia, both of which lent their own markets some liquidity as it has become more than apparent that the subprime losses from a couple of days ago have turned into a contagion effect. Now, given the current negativity in the markets, dollar weakness is likely to persist even as traders have pared back expectations of a rate cut in the near term. Previously pricing in a 100 percent chance of a 25 basis point rate cut in next month’s decision, sentiment is still overweight on the possibility, pricing in an 80 percent shot of an interest rate reduction in the last 48 hours. Incidentally, next week’s economic calendar will all but confirm the notion of further weakness in the US currency. Although retail sales figures are expected to remain positive for the month, consumer price inflation, trade balance and net foreign securities data are all expected to show declines. Without much to go on in the coming week, it may ultimately be a rough one for dollar proponents with expectations of further losses to be announced in the next five sessions.
Amongst Credit Crisis, Japanese Yen Continues To Gain
With risk being controlled through liquidation of carry trades, the Japanese yen has appreciated against the majors notably higher yielders in the last 36-48 hours. The appreciation has been so rapid that the Bank of Japan, in tandem with efforts by central banks around the world added 1 trillion yen, or $8.5 billion, to the financial system in efforts to stem a formidably hard landing. Although the gesture is more than is needed, it may all be set aside as further gains are expected for the underlying currency, especially given continued speculation on interest rate changes by the country’s central bank. As a result of the developments over the past couple of days, sentiment has shifted extraordinarily as the market now anticipates at least one rate hike before September. Economic fundamentals in the overnight continue to purport such a move by policy makers with both consumer confidence and industrial production figures supported in their monthly assessment. As a result, markets may received a breather in yen buying should next week’s GDP figure come in less than expected. Already consensus estimates are to the downside, pitting a second quarter preliminary assessment of 0.9 percent growth. The figure pales in comparison to 3.3 percent growth forecasted previously.
Euro Remains Supported Throughout Session Despite Lackluster Data
Setting aside the credit crunch and recent attempts to stem concerns through liquidity offerings, the Euro remained relatively supported against the US dollar in the New York session. Surprisingly, gains were seen in the single currency despite lackluster data in the Eurozone. Manufacturing and industrial production were negative for the French economy as Italian growth was below estimates. Expecting to grow by 2.1 percent in the quarterly evaluation, expansion was limited to 1.8 percent in the second quarter for the economy. Both figures should feed sentiment heading into next week’s consumer price report, which is expected to show continually mild results. Estimates are showing forecasts of a dip in consumer prices for the month of July. However, the decline shouldn’t deter the central bank from raising rates as policy makers remain bent on future price elevation.
Pound Bidders Look To Next Week In Hopes For Sterling
With no economic data for pound enthusiasts scheduled for the session, it seemed that sterling cross declines fed into the major, helping it to decline through and remain below the 2.0300 figure throughout the 24 hour session. As a result, proponents for the major currency are looking to next week’s docket of data in offering some respite from this week’s blood bath. Mainly, in question will be both the consumer price and retail sales figures. Although the market has confirmed a rate hike of 25 basis points in the near term for the UK interest rate, this week’s set of data may jeopardize market estimates of a rate past six percent in the next 6-8 months. Incidentally, both reports are expected to show declines for the month, which may show that interest rate hikes are finally working their way through the market. As a result, mounting focus will also be placed on the midweek release of the Bank of England minutes. Should dissenters be heard, pound sterling is likely to have a rough one before the end is over.
Commodity Currencies Continue To Be Pressured
Aside from the Canadian dollar, both the New Zealand and Australian dollars continued to remain under pressure throughout the session. The AUDUSD fell below the 0.8600 support as the NZDUSD currency pair slipped below the 0.7600 support figure. Further carry trade reduction bolstered declines in both major pairs, setting aside any economic data that was posted in the overnight. However, helping the Canadian dollar remain afloat was a report on employment in the New York morning. Although the net change in employment was far less than expected at 11.3K, the employment rate dropped to lowest in 33 years. Incidentally, the survey results give some indications that the labor market continues to remain tight, bolstering speculation of a rate hike in the commodity economy.
US Dollar Could Find Its Footing On Monday's Retail Sales Report
AUG 13
Advance Retail Sales (JUL) (08:30 EST; 12:30 GMT)
Retail Sales ex. Autos (JUL) (08:30 EST; 12:30 GMT)
Expected: 0.2%
Expected: 0.3%
Previous: -0.9%
Previous: -0.4%
How Will The Markets React?
Retail sales growth slowed significantly during the month of June, unexpectedly slumping 0.9 percent from the month prior as purchases of motor vehicles, gasoline, furniture, building materials and clothing took a hit. The softness was not surprising given the fact that gas was still above $3/gallon on average, consumers invested less in their homes, and retailers such as Macy’s and Kohl’s reported disappointing apparel sales. What may be surprising, however, is if we see retail sales pick up during the month of July in line with expectations, as there is evidence that we will see another weak showing. First, both the ICSC same-store sales report and the SpendingPulse index showed a sharp slowdown in apparel purchases. Furthermore, with softness in the housing sector still clearly an issue, spending on furniture and building materials isn’t likely to see gains. On the other hand, discounters such as Wal-Mart and Target both reported improved same-store sales for the month, but at the same time, this likely only came as a result of heavy discounting which will only squeeze profit margins. However, the wealthy could come to the rescue, as ICSC and SpendingPulse also reported that sales of luxury goods jumped more than 10 percent from a year ago. Forex markets may be the only one to respond to the retail sales report, as fixed income and equity markets remain focused on the fears surrounding evidence of a pronounced liquidity crunch.
Bonds – 10-Year Treasury Note Futures
Fibonacci resistance at 108-05 may have put an end to the recent rally for 10-year Treasury note futures, as prices have since eased back to form the beginning of what could be a downtrending channel. However, given the choppy price action and spike in market volatility seen in recent days, Treasuries could easily resume their march higher. Though this week’s CPI report will likely make the biggest impact on US government bonds this week, a surprising retail sales report could shake things up. Spending is estimated to have increased in July, which could lead 10 year notes lower. However, if the figure is unexpectedly weak for the second month in a row, prices could push towards 108-05 once again as the news would hurt prospects for economic growth in the third quarter.
Since hitting record highs of 1.3852, the EUR/USD has remained contained to a 200+ point range over the past few weeks as the oversold US dollar has attempted multiple comebacks. Fortunately for greenback bulls, fixed income market expectations that the Federal Reserve will cut rates in September have had little impact on the currency. However, data due out this week could ring a different tune for EUR/USD, as retail sales and CPI are both scheduled to be released. While CPI on Wednesday will be the biggest market mover, traders should beware retail sales on Monday, as a surprising reading could spark volatile price action for the pair. Spending is anticipated to pick up 0.2 percent in July after plunging 0.9 percent the month prior, which would support the Fed’s forecasts that the economy will expand at a “moderate pace in coming quarters,” and could help push EUR/USD to break trendline support to target 1.3600. On the other hand, a second month of dismal consumption data may stoke fears that the economic slowdown in the US will only worsen throughout the year as the problems linked to subprime mortgages spread into other sectors. As a result, the US dollar could soften enough to push EUR/USD back up to 1.3800.
It’s no secret that volatility has spiked in recent days, as liquidity concerns led to massive sell-offs in the US equity markets. Nevertheless, the 38.2% fib of 1,224.94 – 1,555.90 at 1,429.32 has served as sturdy support for the S&P 500, as price action has not managed to break below that level. Furthermore, if Monday’s retail sales report improves in line with expectations, the equity index could begin to recover. However, this will depend more upon risk aversion trends, as more news of a possible liquidity crunch could leave traders selling stocks amidst flight to quality.
US Dollar Bull Wave Underway
• Euro Continues to Slip
• Japanese Yen 119.83 Determines Bias
• British Pound Bearish Below 2.0269
• Swiss Franc Nears Reversal Point
• Canadian Dollar Correction Should End Soon
• Australian Dollar Two Possible Scenarios
• New Zealand Dollar Continues Lower in Wave C
US Dollar Stays Firm Following Friday Market Trouble
Despite the problems affecting currencies worldwide on Friday, the dollar is holding strong against the yen, franc and pound sterling. Although last week's struggle affected Europe and Australia the most, the Australian dollar is expected to rally with the US dollar. Today may prove less promising for the US once things settle down. For now, however, it is considered stable for traders. Forbes reports:
...each day will be a test for the US dollar although the greenback has gained some support on demand for US Treasuries as a safe haven investment due to their triple-A rating and high liquidity.
Read more: Dollar slightly firmer in Asian afternoon trade, awaiting fresh leads
...each day will be a test for the US dollar although the greenback has gained some support on demand for US Treasuries as a safe haven investment due to their triple-A rating and high liquidity.
Read more: Dollar slightly firmer in Asian afternoon trade, awaiting fresh leads
Forex Currency Trading – What’s It All About?
These days we hear all kinds of buzz words when it comes to working at home opportunities. But Forex currency trading is definitely a buzz you need to pay attention to. So what’s it all about?
There are many reasons that Forex currency trading an excellent way to enter the capital markets. Thanks to the internet Forex has become very accessible, and because the cost of transactions is low and there are no commissions anyone can get involved in this great opportunity to make money.
As with anything there are good and bad so you need to look for a good Forex broker because they will provide you with a trading account that offers what we just talked about. Some even offer what’s called Mini Forex Traders in which you can begin trading with only $250 capital. Now you have no excuse why not to give it a try?
When you are trading in the Forex markets online there’s no need to concern yourself with any of the usual broker fees and there’s no NFA or SEC fees.
Wondering how the Forex brokers can make money when they are not charging any fees when you trade? They make their money on the bid/ask spread. Good for them and good for you.
Once you decide to learn how to trade on the Forex currency trading market. Like with anything the more practice the better you will become and before long you will be a real Forex trading pro enjoying those profits.
But no one wants to practice and learn by playing with their own money which is why there are many several creative Forex trading simulations online. Just like the real thing with one thing missing – your real money.
When you’re confident in your skill level flip to the real Forex currency trading and enjoy that adrenaline rush when you reap those big profits.
There are many reasons that Forex currency trading an excellent way to enter the capital markets. Thanks to the internet Forex has become very accessible, and because the cost of transactions is low and there are no commissions anyone can get involved in this great opportunity to make money.
As with anything there are good and bad so you need to look for a good Forex broker because they will provide you with a trading account that offers what we just talked about. Some even offer what’s called Mini Forex Traders in which you can begin trading with only $250 capital. Now you have no excuse why not to give it a try?
When you are trading in the Forex markets online there’s no need to concern yourself with any of the usual broker fees and there’s no NFA or SEC fees.
Wondering how the Forex brokers can make money when they are not charging any fees when you trade? They make their money on the bid/ask spread. Good for them and good for you.
Once you decide to learn how to trade on the Forex currency trading market. Like with anything the more practice the better you will become and before long you will be a real Forex trading pro enjoying those profits.
But no one wants to practice and learn by playing with their own money which is why there are many several creative Forex trading simulations online. Just like the real thing with one thing missing – your real money.
When you’re confident in your skill level flip to the real Forex currency trading and enjoy that adrenaline rush when you reap those big profits.
How To Choose The Right Forex Trading System For You
When it comes to trading systems that you can use to trade on the Forex market you have plenty of options but it’s very important to choose the right Forex trading system for you.
Some may find fundamental factors easier to take while others will do better with technical indicators. Everyone is different and which system isn’t important – what is important is matching individual to system. So how do you find the right system?
Well it starts with you understanding the methods of analysis that are used when you are trading on the Forex currency market. When you know what the tools are and how to use them you can analyze what is best for you.
Some of the most popular technical analysis tools include pivot points, Fibonacci retraces, chart patterns, candlestick patterns, trade balances, interest rates, and GDP which stands for gross domestic product.
You will need to determine the profitability of the Forex trading system you are considering choosing. Use a real time demo to determine how profitable a trading system is. This lets you begin to understand what the system’s capabilities are and it also let’s you become familiar with the trading platform.
Next you need to have a look at the expectancy which tells you what type of profits you expect to make over a period of time. You calculate expectancy using this simple formula:
(Probability of winning × average win) – (Probability of losing × average loss) = the average profit per trade. If this number is a negative number you need to look at a different Forex trading system. Of course the higher the number the better the profits you can expect.
You should also examine the opportunity factor which is just how often you can expect to trade using the trading system. You multiply your expectancy figure with the opportunity factor and it tells you how much you can expect to profit during a specific time period. The more opportunity the more profit you can expect to put in your pocket.
Now that you know how to choose the right Forex trading system for you to reap the most profitability.
Some may find fundamental factors easier to take while others will do better with technical indicators. Everyone is different and which system isn’t important – what is important is matching individual to system. So how do you find the right system?
Well it starts with you understanding the methods of analysis that are used when you are trading on the Forex currency market. When you know what the tools are and how to use them you can analyze what is best for you.
Some of the most popular technical analysis tools include pivot points, Fibonacci retraces, chart patterns, candlestick patterns, trade balances, interest rates, and GDP which stands for gross domestic product.
You will need to determine the profitability of the Forex trading system you are considering choosing. Use a real time demo to determine how profitable a trading system is. This lets you begin to understand what the system’s capabilities are and it also let’s you become familiar with the trading platform.
Next you need to have a look at the expectancy which tells you what type of profits you expect to make over a period of time. You calculate expectancy using this simple formula:
(Probability of winning × average win) – (Probability of losing × average loss) = the average profit per trade. If this number is a negative number you need to look at a different Forex trading system. Of course the higher the number the better the profits you can expect.
You should also examine the opportunity factor which is just how often you can expect to trade using the trading system. You multiply your expectancy figure with the opportunity factor and it tells you how much you can expect to profit during a specific time period. The more opportunity the more profit you can expect to put in your pocket.
Now that you know how to choose the right Forex trading system for you to reap the most profitability.
Choosing Forex Trading Software
If you’ve invested in the stock market you know what a rush it can be when you come out with profits. The currency markets are much different than the stock market but the rush is even bigger. You’ll want to understand the Forex trading market to help you ensure success.
Forex is short for the Foreign Currency Exchange Market which is also referred to as FX. It is by far the largest market on the planet turning over more than a trillion US dollars a day. That’s thirty times more than the entire volume of all the equity markets in the United States.
What makes the Forex trading market so unique is that it does not have an actual physical location, nor does it have a central exchange. An over the counter market services banks, investors, corporations, and individuals whether they are buying or selling. This is a great example of a true 24 hour market.
Each morning in Sydney the Forex trading market begins, moving around the planet as the business day opens in each of the financial centers – First it goes to Tokyo, then on to London, and then New York.
When dealing on the Forex trading market you can analyze the currency market using either the technical analysis approach or the fundamental analysis.
The technical analysis is used when one wishes to attempt to predict what the future movement is going to be on a specific currency based on past performance. It entails studying specific factors that can influence a currency. These factors cold be changes in a Government, a war, a crisis, or several specifics that influence supply and demand which is reflected in the market price.
Fundamental analysis is also referred to as current accounts. They measure the net of imports and exports in any one country and the records the subsequent impact on the currency flows.
When it comes to currency trading there is no doubt that Forex or FX is the largest market in the world. Just about every industry is somehow involved in currency trading – banks, multinational corporations, central banks, governments, financial institutes, retail traders, and a variety of institutions all in one way or another directly or indirectly play in the currency market.
Thanks to technology an individual can now set up a Forex trading account and begin to trade without any involvement with a bank or trading institute. There are several excellent online forex trading sites where you can get involved with the Forex trading market and begin trading on your own. The big question is are you ready for the rush when you sell high?
Forex is short for the Foreign Currency Exchange Market which is also referred to as FX. It is by far the largest market on the planet turning over more than a trillion US dollars a day. That’s thirty times more than the entire volume of all the equity markets in the United States.
What makes the Forex trading market so unique is that it does not have an actual physical location, nor does it have a central exchange. An over the counter market services banks, investors, corporations, and individuals whether they are buying or selling. This is a great example of a true 24 hour market.
Each morning in Sydney the Forex trading market begins, moving around the planet as the business day opens in each of the financial centers – First it goes to Tokyo, then on to London, and then New York.
When dealing on the Forex trading market you can analyze the currency market using either the technical analysis approach or the fundamental analysis.
The technical analysis is used when one wishes to attempt to predict what the future movement is going to be on a specific currency based on past performance. It entails studying specific factors that can influence a currency. These factors cold be changes in a Government, a war, a crisis, or several specifics that influence supply and demand which is reflected in the market price.
Fundamental analysis is also referred to as current accounts. They measure the net of imports and exports in any one country and the records the subsequent impact on the currency flows.
When it comes to currency trading there is no doubt that Forex or FX is the largest market in the world. Just about every industry is somehow involved in currency trading – banks, multinational corporations, central banks, governments, financial institutes, retail traders, and a variety of institutions all in one way or another directly or indirectly play in the currency market.
Thanks to technology an individual can now set up a Forex trading account and begin to trade without any involvement with a bank or trading institute. There are several excellent online forex trading sites where you can get involved with the Forex trading market and begin trading on your own. The big question is are you ready for the rush when you sell high?
Tips For Global Forex Trading
You’ve decided to become a trader on the Forex market but since you’ve never played on the currency market you aren’t sure where to start. Not to worry – we’ve got some great tips for global Forex trading,
Forex is the foreign exchange market where currencies are bought and sold. It began back in the 1970’s with the introduction of free exchange rates and floating currencies. Thanks to the internet more and more people are able to reap the profits of the currency market with global Forex trading.
This is a market that trades as over US$1 trillion a day. It trades more than any other market. There are some distinct differences in the currency market compared to the stock market. Money moves much faster so no single investor has the ability to actually affect market price and trades are able to open and close within seconds which is not possible on the stock market.
To start your global Forex trading you need to open a Forex account. Just fill in the application and the sign the margin agreement which let’s the broker intervene at any time. That makes sense since it’s the broker’s money that just makes sense.
You need to choose a trading strategy that works for you. Different strategies work for different traders to don’t try to makes something work, instead find the right trading strategy for you.
It’s important to understand that trends move prices so a smart investor will make trends their friend and even go so far as to examine historical trends.
The top five currency pairs are USD/Yen, Euro/Yen, Swiss franc/USD, Pound USD/ and the Euro/USD. Make sure you know and understand them.
Examine the charts at 1 hour, 4 hour, and daily. This will give you the daily trends and plenty of opportunity to trade. Sure you can trade every 15 minutes if you like but that’s not really practical.
Now that you’ve got all your global Forex trading tips you’re ready to see some profits.
Forex is the foreign exchange market where currencies are bought and sold. It began back in the 1970’s with the introduction of free exchange rates and floating currencies. Thanks to the internet more and more people are able to reap the profits of the currency market with global Forex trading.
This is a market that trades as over US$1 trillion a day. It trades more than any other market. There are some distinct differences in the currency market compared to the stock market. Money moves much faster so no single investor has the ability to actually affect market price and trades are able to open and close within seconds which is not possible on the stock market.
To start your global Forex trading you need to open a Forex account. Just fill in the application and the sign the margin agreement which let’s the broker intervene at any time. That makes sense since it’s the broker’s money that just makes sense.
You need to choose a trading strategy that works for you. Different strategies work for different traders to don’t try to makes something work, instead find the right trading strategy for you.
It’s important to understand that trends move prices so a smart investor will make trends their friend and even go so far as to examine historical trends.
The top five currency pairs are USD/Yen, Euro/Yen, Swiss franc/USD, Pound USD/ and the Euro/USD. Make sure you know and understand them.
Examine the charts at 1 hour, 4 hour, and daily. This will give you the daily trends and plenty of opportunity to trade. Sure you can trade every 15 minutes if you like but that’s not really practical.
Now that you’ve got all your global Forex trading tips you’re ready to see some profits.
Friday, August 3, 2007
Contravention And Penalties
Penalties
13. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation.—For the purposes of this sub-section, "property" in respect of which contravention has taken place, shall include—
(a) deposits in a bank, where the said property is converted into such deposits;
(b) Indian currency, where the said property is converted into that currency; and
(c) any other property which has resulted out of the conversion of that property.
Enforcement of the orders of Adjudicating Authority.
14. (1) Subject to the provisions of sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section.
(2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied—
(a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred concealed, or removed any part of his property, or
(b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.
(3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority.
(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the Adjudicating Authority may issue a warrant for the arrest of the defaulter.
(5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section
(4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found.
(6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey):
Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him.
Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.
(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison.
(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required.
(9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest:
Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied.
(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he shall, if the defaulter is under arrest, direct his release.
(11) Every person detained in the civil prison in execution of the certificate may be so detained,—
(a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and
(b) in any other case, up to six months:
Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison.
(12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison.
(13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).
Power to compound contravention.
15. (1) Any contravention under section 13 may, on an application made by theperson committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and Officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed.
(2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.
13. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation.—For the purposes of this sub-section, "property" in respect of which contravention has taken place, shall include—
(a) deposits in a bank, where the said property is converted into such deposits;
(b) Indian currency, where the said property is converted into that currency; and
(c) any other property which has resulted out of the conversion of that property.
Enforcement of the orders of Adjudicating Authority.
14. (1) Subject to the provisions of sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section.
(2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied—
(a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred concealed, or removed any part of his property, or
(b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.
(3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority.
(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the Adjudicating Authority may issue a warrant for the arrest of the defaulter.
(5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section
(4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found.
(6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey):
Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him.
Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.
(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison.
(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required.
(9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest:
Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied.
(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he shall, if the defaulter is under arrest, direct his release.
(11) Every person detained in the civil prison in execution of the certificate may be so detained,—
(a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and
(b) in any other case, up to six months:
Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison.
(12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison.
(13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).
Power to compound contravention.
15. (1) Any contravention under section 13 may, on an application made by theperson committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and Officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed.
(2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.
Authorised Person
10. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit.
(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein.
(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that—
(a) it is in public interest so to do; or
(b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter.
(4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section.
(5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.
(6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction or order made thereunder shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section.
Reserve Bank’s powers to issue directions to authorised person.
11. (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.
(2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to furnish such information, in such manner, as it deems fit.
(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues.
Power of Reserve Bank to inspect authorised person.
12. (1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary or expedient for the purpose of—
(a) verifying the correctness of any statement, information or particulars furnished to the Reserve Bank;
(b) obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so;
(c) securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder.
(2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub-section (1), such books, accounts and other documents in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct.
Acts & Regulations »
Customs Act, 1962 | Customs Tariff Act, 1975 | FERA, 1993 | FEMA, 2000 | COFEPOSA, 19
(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein.
(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that—
(a) it is in public interest so to do; or
(b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter.
(4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section.
(5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.
(6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction or order made thereunder shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section.
Reserve Bank’s powers to issue directions to authorised person.
11. (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.
(2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to furnish such information, in such manner, as it deems fit.
(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues.
Power of Reserve Bank to inspect authorised person.
12. (1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary or expedient for the purpose of—
(a) verifying the correctness of any statement, information or particulars furnished to the Reserve Bank;
(b) obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so;
(c) securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder.
(2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub-section (1), such books, accounts and other documents in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct.
Acts & Regulations »
Customs Act, 1962 | Customs Tariff Act, 1975 | FERA, 1993 | FEMA, 2000 | COFEPOSA, 19
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