News and opinion from the ground
This report has been deactivated

0

0
Bernanke's Bleak Outlook Could Pressure Dollar To Further Record Lows Against Euro
Wed, Jul 16 2008, 10:10 GMT
by Grace Cheng
GraceCheng.com
Indeed, Fed chief Bernanke’s testimony before the US Senate Banking Committee today has sparked off big moves in forex and stock markets, as I’ve warned yesterday. Unlike previous testimonies, Bernanke didn’t mince his words that much this time, saying that there are “significant downside risks to the outlook for growth” and “upside risks to the inflation outlook have intensified.” His much-anticipated speech came hot on the heels of the aid given by the US government and the Fed to Freddie Mac and Fannie Mae. Bernanke also said that “helping the financial markets return to more normal functioning will continue to be a top priority of the Federal Reserve.” He attributed the increased economic downside risks to “the possibility of higher energy prices, tighter credit conditions, and a still-deeper contraction in housing markets”.
Yes, it is a starkly gloomy picture of what is going on with the US, the world’s biggest economy. All in all, very bearish comments; one can sense that he has shifted from plainly reassuring the financial markets to giving a realistic overview of what could be tipping the US into recession.
Bernanke said that although the weak dollar has “contributed somewhat to the increase in oil prices”, the latter is mainly driven by basic supply and demand. When asked whether he is comfortable with the current weak dollar levels, he didn’t answer directly, but instead said that he expects the economy to strengthen next year and in doing so support a stronger USD ahead.
Will people buy that? When all we see is one financial failure after another? Can he truly expect that to happen in such a short period of time?
The Fed is not likely to raise interest rates higher this year in the midst of such a negative outlook. In fact, traders are now pricing in a 36% chance of the Fed raising rates in December, down from 60% initially.
US Retail Spending Down
US data released today was mixed but generally on the weaker end. US retail sales increased by 0.1% in June, far worse than the 0.5% increase expected by most. The numbers are disappointing because it means that there has been little positive effect spilled over into retail spending even though Americans were given tax rebate checks since late April. According to the Treasury Department, $91.83 billion in payments were given out between April 28 through July 11.
Shakeup In Forex Markets
We could see the beginning of another phase of fresh US dollar weakness in the forex markets. It may be better to sell into USD rallies and ride on the bearish USD momentum.USD/CHF fell to a near three-month low, breaking sharply below the triangle on the chart to an intraday low around 1.0010. If 1.0000 is broken, the currency pair may target 0.9960, 0.9930, and then towards 0.9890. Selling pressure may step in around 1.0100-20.
Euro will emerge the winner against the dollar, but it is still a question as to how high it can rally, given objections of a strong Euro by European ministers and a weaker-than-forecast ZEW survey. Even so, a high Euro can do some good in mitigating the effects of high oil prices in the Euro area. EUR/USD rose to a record high today, rallying to an intraday high of 1.6040. Nearest support is around 1.5840.
GBP/USD hit a near 4-month high today, rising more than 200 pips to 2.0155.
Economic Calendar For Wednesday:
- German CPI 0600 GMT
- Swiss retail sales 0715 GMT
- UK claimant count 0830 GMT
- Eurozone CPI 0900 GMT
- US CPI 1230 GMT
- US TICS 1300 GMT
- US industrial production 1315 GMT
- Bernanke Gives Semiannual Monetary Policy Testimony at House 1400 GMT
- US FOMC minutes of Jun 24/25 meeting 1800 GMT
Published on
Wed, Jul 16 2008, 10:12 GMT
Archive
- Dollar Rally Likely To Stall Ahead Of US GDP Data
Published On Thu, Jul 31 2008, 08:39 GMT
- Near-Term Rally Of Dollar A Possibility As Fed's Plosser Voices Out Rate Hike Urgency
Published On Wed, Jul 23 2008, 07:21 GMT
- Stay Profitable In These Volatile Market Conditions By Making Quick Trades
Published On Mon, Jul 21 2008, 09:35 GMT
- Bernanke's Bleak Outlook Could Pressure Dollar To Further Record Lows Against Euro
Published On Wed, Jul 16 2008, 10:10 GMT
- US Dollar On The Defensive Ahead Of Bernanke's Testimony And Retail Sales Data
Published On Tue, Jul 15 2008, 09:14 GMT
[ View All ]
Grace Cheng Media Inc.
| 14 Wall Street, 20th Floor - New York NY 10005
http://www.gracecheng.com/ | gracecheng@gracecheng.com
Legal disclaimer and risk disclosure
Important Risk Disclaimer
Trading and/or investing of any security, product, asset or derivatives involves risk, and there is always the potential for loss. You understand that discussions of any product, asset or security published on the Site will not contain a list or description of relevant risk factors.
No content published on this Site constitutes a recommendation that any particular product, security, portfolio of securities, transaction or investment or trading strategy is suitable for any specific person. You understand that none of the bloggers, information providers or their affiliates are advising you personally concerning the nature, potential, value or suitability of any particular product, asset, security, portfolio of securities, transaction, investment or trading strategy or other matter.
As markets change continuously, previously published information and data may not be current and should not be relied upon. All content on the Site is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.
You understand and agree that, although we require all employees to disclose every stock in which they, their immediate family, or any entity under their control, have a personal interest, if such stock is mentioned in a blog, post, or content which they write, outside bloggers or other content contributors or their affiliates may write about securities in which they or their firms have a position, and that they may trade for their own account, and that they may or may not be subject to a disclosure policy.
No representation is being made that the PowerFX Course, and any associated advice or training, will guarantee profits, or not result in losses from trading. Your trading results may vary. Neither the products, any explanation or demonstration of their operation, nor any training held in conjunction therewith, including, without limitation, through online chat, in conjunction with any advertising and promotional campaigns, during in-person seminars or otherwise, should be construed as providing a trade recommendation or the giving of investment advice.
The Site is not intended to provide tax, legal, insurance or investment advice, and nothing on the Site should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product, asset or security by Grace Cheng Media Inc or Grace Cheng or any third party. You alone are solely responsible for determining whether any investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation.
Grace Cheng Media Inc and Grace Cheng assume no responsibility for anything posted on the forex forum. Authors of posts will be individually responsible. All external links and advertisements are for information purposes only and neither Grace Cheng Media Inc or Grace Cheng will assume any responsibility for their contents.
The TOU and the relationship between you and Grace Cheng Media Inc are governed by and construed in accordance with the laws of the State of New York, without regard to its principles of conflict of laws. You and Grace Cheng Media Inc agree to submit to the personal and exclusive jurisdiction of the federal and state courts located within New York County, New York, and waive any jurisdictional, venue, or inconvenient forum objections to such courts. If any provision of the TOU is found to be unlawful, void, or for any reason unenforceable, then that provision shall be deemed severable from the TOU and shall not affect the validity and enforceability of any remaining provisions. No waiver by either party of any breach or default hereunder shall be deemed to be a waiver of any preceding or subsequent breach or default.