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Weekly Analysis

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RBS says Sell the USD/CAD as the bank of Canada may increase the rate

Tue, Oct 13 2009, 10:02 GMT
by Benny Menashe

Investors should sell the dollar against its Canadian counterpart on prospects the Bank of Canada will increase interest rates sooner than the Federal Reserve, RBC Capital Markets said. “It will become increasingly clear that the Bank of Canada will raise interest rates well ahead of the Fed and once it embarks on the normalization path, rate hikes will likely be more aggressive than the Fed,” Sue Trinh, a senior currency strategist in Sydney, wrote today in a report. “The market is not yet priced for such a scenario and we recommend entering a strategic short dollar-Canadian dollar position to take advantage of this mispricing.”

The pound must climb above $1.62 for a new strengthening trend to emerge, UniCredit SpA said. “Sterling bulls cannot cry victory yet, as a return above $1.62 at least is needed to restart a bull trend,” analysts including Roberto Mialich, a senior global currency strategist at UniCredit Markets & Investment Banking in Milan, wrote today in a report. “Likewise, a break below 90.85” pence per euro is needed, “to regard the recent euro-pound strength as almost ended,” the analysts said.

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades. “Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

Today's Economic Events


Time	Event	Currency/Country	Period	Previous	Forecast	Significance	Actual
23:50	Domestic CGPI (Y-o-Y)	Japan	Yearly	-8.5	-7.9	3
21:45	Food Prices (M-o-M)	New Zealand	Monthly	-0.9	0.1%	2	0.1%
21:00	ABC News Consumer Confidence Index	United States		-45		4
12:30	International Securities Transactions	CAD/Canada		-1.4		3
12:00	New Housing Price Index (M-o-M)	Canada	Monthly	0.3		3	0.1
9:00	ZEW Survey (Econ. Sentiment)	Germany		57.7	58.8	2	56
9:00	ZEW Survey (Current Situation)	Germany		-74	-69	2	-72.2
9:00	ZEW Survey (Econ. Sentiment)	Eurozone		59.6	61.2	2	56.9
9:00	ZEW Survey (Current Situation)	Eurozone		-77.9		2
8:30	CPI (M-o-M)	UK	Monthly	0.4		2
8:30	CPI (Y-o-Y)	UK	Yearly	1.8		2
8:30	Core CPI (Y-o-Y)	UK	Yearly	1.8		3
8:30	PPI Input (M-o-M)	UK	Monthly	2.2		3
8:30	PPI Output (M-o-M)	UK	Monthly	0.2		2
8:30	Retail Price Index (Y-o-Y)	UK	Yearly	-1.3	-1.5	4
8:30	DCLG UK House Prices (Y-o-Y)	UK	Yearly	-8.3	-4.9	4	-5.6
8:30	Retail Price Index (M-o-M)	UK	Monthly	0.5		3
7:15	Producer & Import Prices (M-o-M)	Switzerland	Monthly	0.1		2
7:15	Producer & Import Prices (Y-o-Y)	Switzerland	Yearly	-5.5	-4.9	2
6:00	Monetary Policy Meeting Minutes	United States				2
4:00	Monetary Policy Meeting	Japan				2
4:00	IBD/TIPP Economic Optimism	United States		52.5	52.5	3	48.7
1:30	NAB Business Confidence	Australia		18		3
1:30	NAB Business Conditions	Australia		4		3

Published on Tue, Oct 13 2009, 10:02 GMT

Shares set to rebound this week as good market news seen on the horizon

Tue, Oct 6 2009, 08:49 GMT
by Benny Menashe

Finotec Group Inc.

European shares are set to rebound this week from a four-week closing low, aided by steadier crude prices and as a survey showed British finance firms had their first spell of growth in two years in the last quarter. A survey from the Confederation of British Industry showed nearly a third of 89 UK firms reported a rise in business volumes in the three months to Sept. 2, against 24 percent reporting a decline, giving a balance of 7 percent. The Standard & Poor’s 500 Index increased 1.5 percent after Goldman Sachs raised its view on banks including Wells Fargo & Co., JPMorgan Chase & Co. and Bank of America Corp. to “attractive” from “neutral” and a report showed U.S. service industries expanded in September for the first time in a year.

Canada’s dollar strengthened for a second day against its U.S. counterpart amid gains in stocks and commodities as investors sought higher-yielding assets tied to global economic growth. Over the past several months, the loonie has tended to strengthen on positive U.S. economic data as investors left the safety of the greenback for commodity-linked currencies that traditionally benefit when global growth rebounds. The loonie earlier gained as Group of Seven finance officials refrained from calling for measures to stem the slide in the greenback after a meeting in Istanbul on Oct. 3 and reiterated that “excessive volatility and disorderly movements” in exchange rates threaten economic growth. The statement came at the end of a week in which global policy makers said a falling dollar risks impeding their recoveries from the recession.

The euro’s prospects are likely to be driven by any comments about its strength from European Central Bank President Jean-Claude Trichet following this week’s interest-rate meeting on Oct. 8, according to RBC Capital Markets. “No change in policy is expected at Thursday’s ECB announcement, but the key for foreign-exchange markets will be any mention of euro strength as a cause for concern in either the prepared statement or the question and answer session in Trichet’s press conference,” Adam Cole, head of global currency strategy in London, wrote today in a report.

Today's Economic Events


Time	Event	Currency/Country	Period	Previous	Forecast	Significance	Actual
23:50	Loans & Discounts Corp (Y-o-Y)	Japan	Yearly	2.4		2
21:00	NBNZ Business Confidence	New Zealand		-25		2
14:00	ISM Non-Manufacturing Survey	United States		48.4	50	2	50.9
9:00	Retail Sales (M-o-M)	Eurozone	Monthly	-0.2	-0.4	2
9:00	Retail Sales (Y-o-Y)	Eurozone	Yearly	-1.8		3
8:30	Official Foreign Reserves	USD/UK		64.2		3
8:30	PMI Services	UK		54.1	54.1	3	55.3
8:30	Sentix Investor Confidence	Eurozone		-14.6		2
8:00	PMI Services	Eurozone		49.9	50.6	3	50.9
8:00	PMI Composite	Eurozone		50.4		2
7:55	PMI Services	Germany		53.8	52.2	3	52.1
3:00	ANZ Commodity Price	New Zealand		4.3		3
1:30	ANZ Job Advertisements (M-o-M)	Australia	Monthly	4.1		3

Published on Tue, Oct 6 2009, 08:49 GMT

The British Pound edges upwards as the GDP figures come out slightly better than

Fri, Aug 28 2009, 14:25 GMT
by Benny Menashe

Finotec Group Inc.

Sterling gained on Friday after figures showed the UK economy contracted at a slightly slower rate in the second quarter than initial estimates.
Data on Friday showed that Britain's economy shrank by a quarterly rate of 0.7 percent in the second quarter. This was slightly better than an initial print of -0.8 percent, but it took the annual drop up to 5.5 percent, still the sharpest fall since records began in 1955. "The data was slightly stronger than expected and had a slight effect on sterling," said Paul Robinson, sterling strategist at Barclays Capital in London. But he added: "While -0.7 percent is better than -0.8 percent, it's not much better, so it's not having a huge impact on sterling." The GBP/USD is currently trading at $1.6360 as of 2:35pm, London Time.

The euro will extend this month’s gains against the pound as a “bullish reversal” shows the currency’s decline since December may be over, BNP Paribas SA said, citing trading patterns. The 16-nation currency has risen for eight days versus the pound, its longest run of gains since the December slide began, and has closed above so-called resistance at 87.85 pence, a sign it will make further gains, according to a team of analysts led by Hans-Guenter Redeker, head of currency strategy at BNP Paribas in London. “Weekly momentum is not overbought but accelerating and rising at the briskest pace since the February to March advance,” the analysts wrote in a note to clients yesterday. “All these bullish factors suggest the March decline is complete, and maybe the entire December decline.” The EUR/GBP is currently trading at 0.8790 as of 2:40pm, London Time.

Oil rose to around $73 a barrel on Friday, lifted by slightly better GDP and jobs data out of the United States, although still range-bound over the week. Some analysts said stronger economic data in the short-term could not overcome a gloomier long-term outlook. "Despite our confidence in the recovery process over the next six months, there is precious little indication from the energy side that industrial activity in the U.S. is recovering," analysts at J.P. Morgan wrote in their Oil Markets Weekly note. Crude Oil is currently trading at $73.20 as of 2:46pm, London Time.

Today's Economic Events


Time	Event	Currency/Country	Period	Previous	Forecast	Significance	Actual
13:55	Univ. of Mich. Consumer Confidence Index	United States		63.2	64.5	2	65.7
12:30	Current Account Balance - BoP	CAD/Canada		-9.1		2
12:30	Industrial Product Price (M-o-M)	Canada	Monthly	0.5	-0.5	4	-0.5
12:30	Raw Materials Price Index (M-o-M)	Canada	Monthly	6.2		3
12:30	Personal Income (M-o-M)	United States	Monthly	-1.1	0.1	2	0
12:30	Personal Spending (M-o-M)	United States	Monthly	0.6	0.2	2	0.2
12:30	Personal Consumption Expenditure Deflator (Y-o-Y)	Japan	Yearly	-0.4		3
12:30	Core Personal Consumption Expenditure (M-o-M)	United States	Monthly	0.2	0.1	2	0.1
12:30	Core Personal Consumption Expenditure (Y-o-Y)	United States	Yearly	1.5	1.3	3	1.4
9:30	KOF Swiss Leading Indicator	Switzerland		-0.85	-0.6	2	-0.04
9:00	Services Confidence Index	Eurozone		-18	-17	2	-11
9:00	Industrial Confidence Index	Eurozone		-30	-28	2	-26
9:00	Business Climate Indicator	Eurozone		-2.71		2
9:00	Consumer Confidence Index	Eurozone		-23	-21	2	-22
9:00	Economic Confidence Index	Eurozone		76	78	3	80.6
8:30	Index of Services (3M-o-3M)	UK		-1		3
8:30	GDP (Q-o-Q)	UK	Quarterly	-0.8	-0.8	2
8:30	GDP (Y-o-Y)	UK	Yearly	-5.6	-5.6	3
8:30	Government Spending	UK		0.3		3
8:30	Gross Fixed Capital Formation	UK		-7.5	-3.8	4
8:30	Exports	UK		-6.1	-1.6	3
8:30	Imports	UK		-5.9	-2.6	3
8:00	M3 Money Supply (3M)	Eurozone		4.1		3
8:00	M3 Money Supply (Y-o-Y)	Eurozone	Yearly	3.5		3
3:00	M3 Money Supply (Y-o-Y)	New Zealand	Yearly	2.7		3

Published on Fri, Aug 28 2009, 14:25 GMT

The Dollar falls to $1.40 against the Euro for the first time since January

Wed, May 27 2009, 06:58 GMT
by Benny Menashe

Finotec Group Inc.

The dollar declined beyond $1.40 against the euro for the first time in four months on speculation U.S. creditworthiness deteriorated and near-zero borrowing costs made U.S. assets less attractive to investors. The yen rose to a nine-week high versus the dollar after Japan’s Finance Minister Kaoru Yosano said the government won’t intervene in the currency market and the Bank of Japan raised its economic assessment. The dollar may be on the “threshold of broad-based” weakness in the medium term, according to Citigroup Inc. “In addition to a close on the week above $1.3739 solidifying this development, a weekly close above $1.3722 would be a bullish” sign, Citigroup analysts Tom Fitzpatrick in New York and Shyam Devani in London, wrote in research yesterday.

The euro may keep rising against the yen after the 50-day moving average for the currency pair climbed through the 200-day moving average. “The euro-yen story is tied up in one’s view of the green- shoots story, meaning whether one believes that the improvement in survey-based leading indicators will translate into a sustainable recovery,” said David Powell, a currency strategist in London at Bank of America-Merrill Lynch. Technical indicators “suggest some short-term gains. The euro-yen could also benefit from the euro-dollar rise.” The Bank of Japan raised its view of the economy for the first time in almost three years today on signs that a record contraction in the first quarter represented the worst of the recession.

The European Central Bank’s Governing Council discussed a package of asset purchases worth about 125 billion euros ($170 billion) this month, more than twice the amount finally agreed upon, people briefed on the talks said. The package proposed at the May 7 council meeting included buying commercial paper and corporate bonds, said the people, who declined to be identified because the discussions were private. After the meeting, President Jean-Claude Trichet announced plans to acquire 60 billion euros of covered bonds, low-risk securities backed by mortgages and public-sector loans. An ECB spokeswoman declined to comment.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
18:00	Fed Chairman Bernanke Speaks	USD				4
12:30	Core Retail Sales m/m	CAD	Mar	0.60%	-0.20%	3	-0.20%
12:30	Retail Sales m/m	CAD	Mar	0.20%	0.50%	2	0.30%
8:30	GDP q/q	GBP	Quarterly	-1.90%	-1.90%	3	-1.90%
8:00	Retail Sales m/m	EUR	Mar	-0.70%	-0.10%	1	0.10%
0:00	Interest Rate Statement	JPY	May	0.10%	0.10%	3	0.10%

Published on Wed, May 27 2009, 06:58 GMT

Investors should avoid betting the dollar will keep falling

Tue, May 12 2009, 06:36 GMT
by Benny Menashe

Finotec Group Inc.

The U.K. pound declined against the euro and the dollar amid speculation the recession is worsening as the Bank of England extends its asset-buying program. The U.K. currency breached 90 pence per euro for the first time since April 29 as the nation’s FTSE 350 Banks Index declined by the most in two weeks. Reports tomorrow will show house prices and manufacturing production declined, according to Bloomberg News surveys. The central bank said last week it will spend an extra 50 billion pounds ($76 billion) of newly printed money to spur economic growth. “The Bank of England’s aggressive stance with regard to quantitative easing is adding to concern about the economy and that is negative for sterling,” said Ulrich Leuchtmann, head of currency strategy in Frankfurt at Commerzbank AG, Germany’s second-largest bank. “We’ve seen a relatively strong upward trend in the euro against sterling.”

The current contraction may so far be following the economic law named for Victor Zarnowitz, the late expert on business cycles: Deep recessions are almost always followed by rapid rebounds. Consumer confidence rose by the most in more than two years in April as surging stock prices and falling mortgage rates boosted optimism. A gauge of U.S. manufacturing activity had its biggest bounce since 2005 as companies eased up on efforts to slash inventories. Even the crippled housing market has shown signs of stabilizing. In southern California, one of the hardest hit areas, prices have begun to stabilize, according to KB Home Chief Executive Officer Jeffrey Mezger. “We’re seeing a floor,” he said in a May 4 call with analysts. That’s giving the Los Angeles-based company an opening to sell newly built homes.

Investors should avoid betting the dollar will keep falling, according to UBS AG, the world’s second-biggest foreign-exchange trader. “The U.S. dollar has weakened on the back of improved risk sentiment, but we do question the sustainability of that trend,” Gareth Berry, a currency analyst in Zurich, wrote today in a note. “We would not recommend buying into U.S. dollar weakness at current levels.”

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
23:30	Fed Chairman Bernanke Speaks	USD				4
12:30	National Home Price Index	CAD	Mar	-0.70%	-0.50%	1	-0.5%
8:00	Industrial Production m/m	EUR	Mar	-3.50%	-1.80%	2	-4.60%
6:45	Industrial Production m/m	EUR	Mar	-0.50%	-0.40%	2	-1.40%

Published on Tue, May 12 2009, 06:36 GMT

The Federal Reserve is postponing the release of stress tests on the biggest U.S. banks

Fri, May 1 2009, 12:52 GMT
by Benny Menashe

Finotec Group Inc.

The swine flu reached 11 countries, as governments closed schools, planned for vaccine production and tapped emergency stockpiles of antiviral medicine. Genetic tests have confirmed more than 331 people have the strain originally labeled swine flu, according to the World Health Organization’s. A phase 5 warning is “a strong signal that a pandemic is imminent” with little time left for preparation, according to the UN’s agency. At the moment, the World Health Organisation has decided to place a phase 5 warning which means “a strong signal that a pandemic is imminent” with little time left for preparation. The peso strengthened against the dollar after the Inter-American Development Bank said it will lend Mexico $3 billion to combat the swine flu outbreak, while hog futures rose, paring a 9.3 percent decline this week.

The one company which gathered most of the public interest this week was company born 84 years ago in Walter P Chrysler’s reorganization of the Maxwell Motor Co. The bankruptcy filing on Thursday by the Auburn Hills, Michigan-based automaker is the company’s fourth near-death experience since 1979. But analysts reckon that Chrysler didn’t escape bankruptcy in its latest death- defying move, and the success of its marriage with Fiat isn’t a given.

In the world of Forex, The yen fell against the dollar and the euro as Japan’s unemployment rate rose to a four-year high and signs of economic recovery in China and the U.S. encouraged investors to seek higher-yielding currencies. The Japanese currency dropped for a third day against the dollar, losing 0.7 percent, and slid 1 percent against the euro, to a two-week low. The green note has strengthened towards the end of the week as high as 99.58 against the Japanese currency after trading on Tuesday as low as 95.62 USD/JPY.

The Federal Reserve postponed this week the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials. Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices. The S&P 500 which comprises 80 companies has gone up 30 percent in the past month as officials played down the prospect of nationalization and the economy showed signs of stability.

This week it was published that the American Treasury Secretary Timothy Geithner told U.S. lawmakers that there is no need for new bank bailout money as of now. Geithner has said that banks can add capital by a variety of ways, including converting government-held preferred shares dating from capital injections made last year, raising private funds or getting more taxpayer cash.

In the UK, it has been published that Lloyds, Northern Rock Make ‘Meaningless’ Loan Promises to the country while relying on public funds. It’s been discovered that Lloyds Banking Group and Northern Rock Plc’s government-brokered pledges to boost U.K. lending by 42 billion pounds ($62 billion) over two years may not increase the total supply of credit to businesses and homeowners. Parliament’s Treasury Committee, in a report released on Friday, said it remained concerned about the availability of loans. The government should publish a “clear overall strategy” on its programs to increase lending and progress toward meeting those goals, the report said. The U.K.’s benchmark FTSE 100 stock index was little changed at 4,238.76 following last month’s rally, the steepest since April 2003. Having said that the Pound has strengthened against the USD and managed to reach the heights of 1.4924 GBP/USD after trading on Monday as law as 1.4586.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
14:00	Manufacturing PMI	USD	Apr	36.3	38	3
14:00	Factory Orders m/m	USD	Mar	1.80%	-0.80%	2
14:00	ISM Manufacturing Prices	USD	Apr	31	33.5	1
8:30	Manufacturing PMI	GBP	Apr	39.1	40.3	3
8:30	Net Lending to Individuals m/m	GBP	Mar	1.3B	1.6B	2
8:30	Mortgage Approvals	GBP	Mar	38.0K	40.0K	2

Published on Fri, May 1 2009, 12:52 GMT

The Euro is gathering interest amid speculations that ECB will cut rates

Mon, Jan 12 2009, 12:03 GMT
by Benny Menashe

Finotec Group Inc.

The euro fell for a second day against the American currency as traders increased bets that the European Central Bank will cut interest rates on Thursday 15 January to the lowest since 2005 this week to help pull the European economy out of recession.

The currency has also dropped to a one-month low versus the yen as the International Monetary Fund’s Managing Director Dominique Strauss-Kahn said Europe is “underestimating the needs” of fiscal stimulus for the 16-nation region’s economy. Leading analysts believe now that the Euro may fall to $1.3385 and the US dollar may drop to 89.10 yen this week, after the ECB cut its main refinancing rate by 1.75 percentage points in the fourth quarter, while the Federal Reserve reduced its benchmark rate by 2 percentage points to as low as zero in the same period.

Sales at U.S. retailers declined 1.2 percent last month, capping the longest stretch of declines since records began in 1992 and investors are now holding their breath ahead of the Commerce Department’s report due on Wednesday 14 January and American unemployment figures the following day. Any losses in the dollar may be limited as U.S President-elect Barack Obama seems to be making “significant” changes to his economic stimulus program which might be pushing the dollar to $1.3300 per euro this week.

Japan’s currency gained for a fourth day against the Australian and New Zealand dollars before a U.S. government report this week that may show retail sales contracted for a fifth month in December, adding to signs a recession in the world’s largest economy is deepening. The markets now expect the Australian dollar to head lower against the dollar and the yen in line with weaker equity markets.

And finally, Ukraine agreed to sign a new version of an accord to authorize monitoring of natural gas flows, paving the way to resume Russian gas shipments through country to the rest of Europe. If a deal will be reached, this could ease up the pressure onto oil prices after energy companies in the Balkans which had switched overnight to alternatives fuels will resort back to the old status quo.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
23:50	Current Account	JPY	Nov	1.11T	0.62T	1
13:30	New Housing Price Index m/m	CAD	Nov	-0.40%		2
7:00	ECB President Trichet Speaks	EUR				2

Published on Mon, Jan 12 2009, 12:03 GMT

US Dollar is weakening further amid political concerns in the Middle East

Tue, Dec 30 2008, 06:20 GMT
by Benny Menashe

Finotec Group Inc.

Last week the US Dollar continued its decline against the Euro, pinning down at 1.4060 amid glooming prospects to the American economy. US figures re GDP 3Q, -0.5% has proved to be consistent with the shrinking number of jobs, and a growing number of unemployed (586,000 which is 34,000 higher than previously expected).

The US Fed is trying its utmost to fight a likely recession but it remains to be seen if cutting down its interest rate to 0-0.25% will make much of a difference in the immediate future. Analysts believe that the American currency is likely to weaken further against the Euro since the ECB is unlikely to cut its interest rates below the current 2.5%, but technically-speaking lower volumes in the markets are likely to maintain EUR/USD at 1.4170 and the possibly 1.4270 even before New Year’s Eve.

Markets investors enter the final week of the 2008 battered and bruised and any bounce in the next few days will do little to repair tattered portfolios. Nevertheless the main issue is whether the miraculous “January Effect” will be able to lift both stocks and moods in the markets , a most-welcoming move at this point of time.

On the economic front, markets have few data points to watch in the coming week. Consumer confidence for December is reported Tuesday followed by ISM manufacturing data which is due out on Friday. Both are likely to highlight the recession towards which the US is sliding, and causing a further weakening of the US Dollar. Whilst crude was supported on Monday, the American currency lost over 2 percent against the Euro, its biggest decline in more than a week, bolstering the appeal of dollar-priced assets used to hedge against inflation, such as gold and oil.

Israeli warplanes pounded the Hamas-ruled Gaza Strip for a third consecutive day on Monday and prepared for a possible invasion after killing 307 Palestinians in the air raids. World oil prices rose as much as $2 to over $40 a barrel on Monday and one ought to remember the geographical risk to crude supplies from the Middle East. Oil prices soared to a then-record $78.40 a barrel in July 2006 after Israel attacked Iranian-backed Hezbollah forced in Lebanon.

This week, markets will also mark the beginning of the New Year, and one should expects lower volume and volatility due to many investors going on holiday and praying for a better year (and yields) to come.

Published on Tue, Dec 30 2008, 06:20 GMT

Santa Claus is coming to town – Will the figures shine and sparkle?

Mon, Dec 22 2008, 11:26 GMT
by Benny Menashe

Finotec Group Inc.

As the financial world is embracing the worst economic figures it has seen for decades, it is yet to be seen whether post-Christmas and the New Year’s sales will bring any smiles onto traders’ faces. On Tuesday, the UK’s GDP and current account data will be released allowing investors a closer look at the British economy. According to the preliminary reading of the third GDP, recent dismal manufacturing data, and weak services survey, analysts predict a risk of a downward revision although some do gun for no change. The UK’s current account recorded a deficit of about 11 billion pounds in the second quarter and this deficit is forecast to have widened further in Q3 with the investment income component likely to have taken a hit from a drop in earnings from the country’s overseas assets.

On Tuesday, figures will be published referring to sales of existing and new homes in the US. The mortgage industry efforts to stem foreclosures aims to double the numbers of borrowers getting help next year, as Democrats call for using taxpayers money to address the crisis. Previous date suggested that last month there were 4.98m existing homes sales and 433k new homes compare to the current forecast of 4.90m and 417K accordingly for the current month. These leading indicators of economic health suggest that there is no substantial ripple effect allowing the economy to move forward at a faster pace. However it remains to be seen the steps which will be taken by The Hope Now, a group set up at the behest of US treasury secretary which expects to modify about 2m mortgages next year, as part of the Bush administration main initiative on mortgages.

US unemployment figures will be revealed on Wednesday, being the nation’s earliest economic data ahead of the the New Year. Analysts predicts the level of unemployment will remain at a similar level (550K compare with 554K last week), providing an alarming signal of overall a poor economic health as consumers are reluctant to spend their money and chains such Sharper Image has already closed down and Circuit City is filing for bankruptcy. With such poor figures, it remains to be seen whether Santa will be the next one to visit the Jobs Centre..

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
21:45	GDP q/q	NZD	Quarterly	-0.20%		3
5:00	BOJ Report	JPY	Dec			2
5:00	BOJ Governor Shirakawa Speaks	JPY				3

Published on Mon, Dec 22 2008, 11:26 GMT

Obama warns Economy will worsen before we see improvements

Mon, Dec 8 2008, 11:45 GMT
by Benny Menashe

Finotec Group Inc.

President-elect Barack Obama said the U.S. recession will worsen before a recovery takes hold and that he will offer an economic stimulus plan “equal to the task” without worrying about a short-term widening of the budget deficit. Dealing with the loss of jobs, frozen credit markets, falling home prices and other signs of economic turmoil is “my number one priority,” Obama said on NBC today. Later at a Chicago news conference he said “more aggressive steps” are needed to cope with the housing crisis. Even with the prospect of a federal budget shortfall approaching $1 trillion, “we can’t worry, short term, about the deficit,” he said on NBC’s “Meet the Press” program. “We’ve got to make sure that the economic stimulus plan is large enough to get the economy moving.”

U.K. factories cut prices for a fourth month in November as the cost of petroleum products fell the most in more than two decades and the recession defused inflation pressures. Producer prices fell 0.7 percent, after declining 1 percent in October, the Office for National Statistics said in London today. The Bank of England cut the benchmark interest rate last week to 2 percent, the lowest level since 1951, as policy makers battled to prevent deflation from taking hold. Recessions in Britain and around the world have blunted manufacturers’ ability to push through price increases as factory production shrinks. The slump in Britain’s housing market is also deepening. Home values fell, HBOS Plc said on Dec. 4. Home repossessions by banks rose 12 percent in the third quarter as higher unemployment and a contraction in the economy left more Britons unable to pay their debts.

Federal Reserve Chairman Ben S. Bernanke urged using more taxpayer funds for new efforts to prevent home foreclosures, saying the private sector is incapable of coping with the crisis on its own. The Fed chief outlined four possible options, including buying delinquent mortgages and providing bigger incentives for refinancing loans. He called for addressing the “apparent market failure” where lenders aren’t modifying mortgages even in cases where it’s in their own economic interest to do so. “More needs to be done,” Bernanke said in a speech to a Fed research conference on housing and mortgage markets in Washington today. “Policy initiatives to reduce the number of preventable foreclosures should be high on the agenda.”

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
23:50	GDP q/q	JPY	Quarterly	-0.10%	-0.20%	2
18:45	FOMC Member Fisher Speaks	USD				2
13:15	Housing Starts	CAD	Nov	211.8K		3
13:00	ECB President Trichet Speaks	EUR				4
9:30	PPI Input m/m	GBP	Nov	-5.60%	-3.00%	3
9:30	PPI Output m/m	GBP	Nov	-1.00%	-0.70%	2

Published on Mon, Dec 8 2008, 11:45 GMT

Renewed of Selling Pressure on the Dollar

Tue, Nov 25 2008, 08:10 GMT
by Benny Menashe

Finotec Group Inc.

The US dollar fell against the majors as global equities pushed higher overnight. Futures on the Chicago Board of Trade show 18 percent odds policy makers will lower the 1 percent target rate for overnight lending between banks to 0.25 percent at their next meeting on Dec. 16, compared with zero odds a week ago. The rate was reduced by a percentage point in October.

Citigroup, once the biggest U.S. bank by market value, will have $306 billion of troubled mortgages and other assets guaranteed by the U.S. government under a federal plan to stabilize the lender after its stock fell 60 percent last week. The bank will also get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program.
On the unemployment front, President Bush announced new legislation today to extend unemployment insurance benefits nationwide. We have to keep an eye on the unemployment claims on Wednesday 26 November in order to find out the various possibilities to U.S. dollar direction.

The euro rose against both the dollar and yen despite the fact that data released showing that the European service and manufacturing sectors contracted in November. The flash purchasing managers' indices fell to 43.3 to a record low and below expectations for a reading of 45.2. The news could increase the pace at which the European Central Bank (ECB) will cut interest rates as there is a growing consensus that the ECB may cut rates by as much as 75 basis points at its next meeting on December 4.

The British pound strengthened across the board after European stock markets rose. Minutes released from the Bank of England stated that at its last policy meeting there was some talk of an even more aggressive rate cut by over 150 basis points. Look for the pound’s rally to remain short lived as the market expects further rate cuts form the Bank of England this year with a 100 basis point cut as early as December.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
15:00	Existing Home Sales	USD	Oct	5.18M	5.02M	3
10:00	Industrial New Orders m/m	EUR	Sep	-1.20%	-2.90%	2
9:00	Ifo Business Climate Index	USD	Nov	90.2	88.8	3
9:00	Current Account	USD	Nov	-8.4B	-7.4B	2	-10.6B

Published on Tue, Nov 25 2008, 08:10 GMT

The forecast for the U.S economy looks bleak

Mon, Oct 20 2008, 13:03 GMT
by Benny Menashe

Finotec Group Inc.

The forecast looks bleak for the U.S economy despite the recent $700 billion bailout for banks. The dollar fell for the first time in four days against the euro and declined versus the pound on speculation a U.S. housing slump and a seizure in credit markets will tip the world's largest economy into recession.
Eyes will be on Federal Reserve Chairman Ben S. Bernanke who will testify at the House Budget Committee on the state of the economy in Washington today. The expectation is that he will confirm that the US is heading towards recession. Last week he stated that a rebound in growth won't happen right away as the government tries to unfreeze credit markets. ``Pessimistic comments on the economy could knock the dollar lower,'' said the general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. ``There's a good chance the U.S. is in a recession.''
At 2.00pm GMT on Monday the index of U.S. leading economic indicators will be released. The likelihood is that the index fell in September for a third month, led by declines in manufacturing, housing, and stocks that may weaken growth into 2009.
An increase of house foreclosures and rising job losses caused a record fall in consumer sentiment this month and may bring the economic expansion to a halt. Still, inflation is cooling as the economy weakens, giving Federal Reserve policy makers scope to cut interest rates at their meeting next week.
In the UK there is also sentiment that the economy is moving into recession. A government report this week is expected to show that gross domestic product contracted 0.2 percent in the third quarter. The economy stalled in the second quarter, after the longest period of growth in over a hundred years.
In addition, a survey out on Monday by Ernst & Young's ITEM Club, which uses the same forecasting model as the U.K. Treasury, confirmed that recession in Britain is likely. It expects the economy will shrink by 1% next year before growing 1% in 2010. However there are signs that inflation is reducing, enabling the Bank of England to cut rates in the future.
Meanwhile Crude broke below $69 a barrel last week before climbing higher Monday on the back of speculation that OPEC will cut production at a meeting on Friday. The cartel, a supplier of about 40 % of the world's oil, may pare output by 2 million barrels a day in stages to stabilize prices.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
21:45	CPI q/q	NZD		1.60%	1.50%	3
14:00	Fed Chairman Bernanke Testifies	USD				3
14:00	Leading Indicators m/m	USD	Sep	-0.50%	-0.30%	1
12:30	Wholesale Sales m/m	CAD	Aug	1.20%		2
6:00	PPI m/m	EUR	Sep	-0.60%	-0.50%	2
0:30	PPI q/q	AUD		1.00%		3

Published on Mon, Oct 20 2008, 13:03 GMT

Will dollar continue to strengthen as europe decends into crisis?

Mon, Oct 6 2008, 12:07 GMT
by Benny Menashe

Finotec Group Inc.

Last week saw turbulence in the financial markets as talks were held to approve a $700 billion bailout package for banks. Both the senate on Tuesday, and the House of Representatives on Friday, voted to pass the bill, which was subsequently signed into law by President Bush.
However the passing of the bill failed to promote gains on Wall Street. US stocks fell sharply as uncertainty remained as to whether to rescue package would be enough to support the economy.

Last week the dollar strengthened against a number of major currencies including sterling and the euro. The greenback was up as concern that the financial crisis was spreading to the euro zone took hold. The market was disappointed with the outcome of a European Credit Crisis Summit on Saturday attended by European heads of State including Britain, Germany and France. It failed to announce any plan similar to the U.S rescue package. ``It appears that European governments are failing to grasp the real problem and are taking reactive measures instead of dealing with the underlying situation,'' said a London-based currency strategist from BNP Paribas SA.” Traders will be taking note of key data releases this week to determine whether there will be more upside for the U.S currency.

This week on the economic calendar particular attention will be paid to the Bank of England interest rate decision. The expectation is that there will be a quarter point cut to 4.75% on Thursday. Although the rate shift is normally priced into the market, investors will be eyeing the monetary policy committee statement following it with interest. This statement is normally focused on the future and the market tends to move on speculation over future rate changes. In addition, data on manufacturing production in the UK is released this week. The forecast is that the data will show that the British economy is continuing to struggle.

Stateside, the U.S will be posting its trade balance figures at the end of the week. Analysts are predicting a narrowing of the balance but still far more goods are imported into the States than exported. On Thursday 9th October, the Group of Seven Finance Ministers and Central Bankers will be meeting in Washington DC to discuss global economic issues. Topics such as world currencies and exchange rates are usually discussed which can have an impact on the markets.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
21:00	Business Confidence	NZD		-64		3
17:30	FOMC Member Fisher Speaks	USD				2
14:00	Ivey PMI	CAD	Sep	51.5		3
12:30	Building Permits	CAD	Sep	1.80%		3
8:30	Sentix Index	EUR	Oct	-20.2		2

Published on Mon, Oct 6 2008, 12:07 GMT

Is the storm over for the US economy?

Tue, Sep 23 2008, 13:47 GMT
by Benny Menashe

Finotec Group Inc.

We saw a storm sweep across financial markets last week as stocks moved from one extreme to the other. Last Monday the struggling US investment bank Lehman Brothers filed for bankruptcy and equity prices began spiralling downward. Worldwide panic ensued with billions wiped off the value of stocks. Shares in UK bank HBOS lost over half its value and prompted a merger with Lloyds TSB. However relief was in sight at the end of the week when the US Government announced a proposal with a group of central banks to provide a liquidity injection of $180 billion into world markets, and a decision to mop up so called toxic assets from the balance sheets of US financial companies. In addition, the Financial Services Authority in the UK and the Securities and Exchange Commission in the US imposed a temporary ban on short selling of certain financial shares. In response we saw global stock markets surge last Friday with the FTSE 100 in particular posting its biggest one day gain on record.

Eyes will be on the US meeting this week involving Fed Chairman Bernanke, Treasury Secretary Paulson and SEC Chairman Cox where more perspective will be gleaned on the government takeover of Fannie Mae and Freddie Mac. These three will testify before the Senate Banking, Housing and Urban Affairs Committee regarding last week’s market turmoil and the way forward for the US economy. With US durable goods orders and unemployment claims out later in the week, investors will be looking to see whether there will be upside for the dollar.

In Monday trading there has been downward pressure on the greenback on speculation that the US governments rescue package will not be enough to prevent economic slowdown. ``Even with a plan, the likelihood there will be a very severe slowdown in the U.S. and elsewhere has increased,'' said Simon Derrick, chief currency strategist in London at Bank of New York Mellon Corp. ``I don't think people will return to the same old risk-taking world.'' The USD was down against most of the majors as there was growing sentiment that the Fed’s proposal to buy $700 billion of toxic assets from banks will only worsen the States already swollen budget deficit. If this sentiment continues and the US employment and manufacturing data comes out worse than expected, we could see the dollar continue to weaken. At 8.23am GMT the EUR/USD was trading at $1.4591 and USD/JPY was at 106.00.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
12:30	Core Retail Sales m/m	CAD	Jul	1.40%	0.40%	4	0.40%
12:30	Retail Sales m/m	CAD	Jul	0.50%	0.20%	3	0.10%
7:15	ECB President Trichet Speaks	EUR				2
1:30	New Motor Vehical Sales m/m	AUD		-4.00%		1	-3.50%

Published on Tue, Sep 23 2008, 13:47 GMT

Takeover of Freddie and Fannie will leave the next government to decide on the future

Tue, Sep 9 2008, 08:06 GMT
by Benny Menashe

Finotec Group Inc.

The U.S. Treasury's takeover of Fannie Mae and Freddie Mac is aimed at keeping the companies going into 2009, while leaving the next president and his cabinet to decide their long-term structure. Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart yesterday placed the two firms in a government-operated conservatorship, ousting their chief executives and eliminating their dividends. The Treasury may purchase up to $200 billion of stock in the firms to keep them solvent.

The nationalization of Fannie Mae and Freddie Mac shows that the U.S. is "more communist than China right now" but its brand of socialism is meant only for the rich, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday. "America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions," Rogers said.

Hurricane Ike weakened on Monday as it tore through Cuba, and is currently on a path towards the U.S. oil hub in the Gulf of Mexico. Oil prices rose $1.50 to above $108 a barrel on concerns that Ike would further disrupt energy output from the Gulf, which produces a quarter of U.S. oil and 15 percent of its natural gas. Much of that production was shut down by Hurricane Gustav's strike on the Louisiana coast last Monday.

The USD/JPY rose more than 1 percent to 109.08, with the Japanese currency also falling against higher-yielding currencies as traders returned to riskier trades, dumping the low-yielding currency for assets in higher-yielding ones. Sterling reversed earlier gains versus the dollar after UK manufacturing output prices suggested that factory gate inflation might have peaked. The pound traded at $1.7622, down 0.2 percent on the day.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
19:00	Consumer Credit	USD	Jul	14.3B	8.25B	2
12:30	Building Permits	CAD	Jul	-5.30%	-1.00%	3	1.80%
8:30	Manufacturing Production m/m	GBP				3
8:30	PPI Input m/m	GBP	Sep	-1.40%	-1.20%	2	-2.00%
8:30	PPI Output m/m	GBP	Sep	0.50%	0.10%	2	-0.60%
5:45	Unemployment Rate	CHF	Aug	2.50%	2.50%	2	2.50%
5:00	Eco Watchers Survey	JPY	Aug	29.3	29.7	1	28.3

Published on Tue, Sep 9 2008, 08:06 GMT

Eye on Storm and Central Banks

Tue, Sep 2 2008, 06:04 GMT
by Benny Menashe

Finotec Group Inc.

This week we have some crucial data releases in the States and Europe that will impact the markets. Eyes will be on the European Central Bank and the Bank of England as they reveal whether they will change or keep rates on hold. We will finish the week with US nonfarm payrolls and employment figures. These results, and the growing threat of Hurricane Gustav, make this a potentially dynamic week in world markets.
The dollar strengthen last week on better than expected core durable goods orders and surprisingly strong preliminary GDP results. More support was given to the greenback on growing sentiment that poor economic growth will not only be confined to the US. However many will be eager to see whether the Dollars month long rally will be challenged by Gustav and US employment data. The dollar may struggle at the end of the week depending on key indications from Trichet, President of the ECB. Although analysts expect the interest rate in the euro zone to be held at 4.25%, Trichets comments afterwards will be instrumental in fuelling speculation concerning future rate movements.
Last week Sterling continued its sharp decline against all the majors, pushed down by new figures on falling house prices and a continued pessimistic outlook. Further downside was provided on Saturday as The Chancellor of the Exchequer stated the UK economy had hit the worst slump in 60 years. With the prediction of zero growth for the next year and inflation standing at 4.4%, there is little the BOE can do.
Expectations are that rates will remain unchanged at 5% but the question investors will be asking is whether Mervyn King will cut rates to stimulate a dwindling economy. If this happens this will add downward pressure to the pound.
Crude pushed higher after the sharp fall of the last month as the most severe storm since Hurricane Katrina threatens to halt oil and gas supplies in the Gulf of Mexico. Energy companies in the region closed and braced themselves for the worst. Offshore oil production is down by 96% and 8 refineries have been shut with the effect of a 1.56 million barrel a day reduction of output. If Gustav continues to halt production and worsen, Crude prices could soar.
Gold was pushed higher last week as the rising price of oil increased the metals attractiveness as a hedge against inflation. The precious metal is being support by rising consumer prices and the strong US currency. ‘Gold is still in a consolidatory phase and will continue to take cues from oil and the dollar,’ said the head of research at a futures company. If crude continues to rise, we will see significant upside for this precious metal.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
13:30	FOMC Meeting Minutes	USD	Sep			2
12:00	Holiday: Memorial Day	CAD	Sep			1
12:00	Holiday: Memorial Day	USD	Sep			1
8:30	Manufacturing PMI	GBP	Aug	44.3		4
8:30	Mortgage Approvals	GBP	Aug	36K		1
8:30	Net Lending to Individuals m/m	GBP	Aug	4.0B		1
8:00	Manufacturing PMI	EUR	Aug	47.5		1
7:30	PMI -SVME	CHF	Aug	54.1		2
6:30	Commodity Prices y/y	AUD	Quarterly	41.10%		2
5:45	GDP q/q	CHF	Aug	0.30%		2
1:30	Current Account	AUD	Aug	-19.5B		2
1:30	Private New Capital Expenditure q/q	AUD	Quarterly	2.20%		1
1:30	Average Earnings Index +Bonus q/y	JPY	Aug	-0.60%		2
1:30	Average Earnings Index +Bonus q/y	JPY	Aug	-0.60%		2
1:00	BOJ Governor Shirakawa Speaks	JPY	Sep			2
0:00	Manufacturing PMI	AUD	Aug	46.9		1
0:00	Monetary Base y/y	JPY	Aug	-0.70%		1

Published on Tue, Sep 2 2008, 06:04 GMT

Weekly data, currencies and crude

Mon, Aug 25 2008, 11:21 GMT
by Benny Menashe

Finotec Group Inc.

This week there will be some very important data that will move the currency markets, on Monday the 25th we will have the U.S Existing Home sales which will impact the price of the Dollar. On Wednesday the 27th we will have the U.S Core Durable goods which will measure the state of the American economy also Crude Oil inventories will be important measuring supply and demand. On Thursday the 28th we will have the UK’s Nationwide HPI which will affect the Sterling also the U.S Prelim GDP expecting a positive number.

Last week Crude oil rose to $121 a barrel on tensions between Russia and the U.S after the conflict in Georgia, an estimated 1.5 million barrel are exported from the Caspian Sea which were under threat last week. Also today Crude oil rose after Russian lawmakers voted to recognize the independence of two breakaway Georgian regions, raising fears of new tensions in the area. The Russian Parliament's Upper House voted unanimously to recognize the independence of South Ossetia and Abkhazia, the two regions that sparked Russia's first foreign incursion since the Soviet era. ``This may lead to new tensions between Russia and the West over Georgia, and may lead to more oil supply disruptions,'' said Carsten Fritsch, analyst at Commerzbank AG in Frankfurt. ``The market was hoping that supply was returning to normal but this new development, including an explosion on a Georgian train carrying oil over the weekend, is a reminder that things are not over.''

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
14:00	Existing Home Sales	USD	Jul	4.86M		4
12:00	Holiday: Memorial Day	GBP	Aug			1
6:00	Import Price Index m/m	EUR	Jul	1.50%		1
6:00	BOJ Governor Shirakawa Speaks	JPY	Aug			2

Published on Mon, Aug 25 2008, 11:21 GMT

This Week Uncertain for the Dollar after Strong Gains

Thu, Aug 21 2008, 06:32 GMT
by Benny Menashe

Finotec Group Inc.

Last week saw the Dollar make large gains against the majors. It achieved a near 6 month high against the Euro on speculation U.S. consumer spending would keep the world's biggest economy out of recession. Data last week revealed that Euro zone growth slowed in Q2 making future rate hikes unlikely. Tuesday’s economic statement in Germany will give helpful indicators regarding the Euro economy.

Meanwhile Sterling traded near a two year low against the Dollar on the back of weak employment figures and tumbling property prices. Negative UK economic data fuelled speculation that there would be an imminent interest rate cut.The pound fell almost 3 percent against the dollar last week, after Bank of England Governor Marvin King said the housing market faced ``a significant adjustment'' and banks limited loans for homebuyers.

The strong dollar also pushed commodities lower. Last week Gold traded at the lowest level since Oct.26th at $772.98 an ounce. Crude, as high as $147.27 on July 11 has declined 22% as the slowing world economy has curbed demand.

This week the Dollar is showing initial signs of weakness. With US inflation and Government housing results out this week, speculation is growing that the Fed will refrain from raising rates. If these results are confirmed we could well see more downside for the Dollar. Gold, typically an alternative investment against the falling dollar could go higher. In addition, Storm Fay in the Gulf of Mexico is causing a recovery of Crude prices after last week’s dismal showing.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
14:00	BOJ Governor Fukui Speaks	JPY				4
14:00	FOMC Meeting Minutes	USD				3
12:30	Wholesale Sales m/m	CAD	Jul	1.60%		1
12:30	Building Permits	USD	Jul	1.14M		4
12:30	PPI m/m	USD	Jul	1.80%		4
12:30	Core CPI	USD	Jul	0.20%		2
12:30	Housing Starts	USD	Jul	1.07M		2
9:00	German ZEW Economic Sentiment	EUR	Jul	-63.9	-62	4
6:00	PPI m/m	EUR	Jul	0.90%	0.70%	2
1:30	RBA Governor Stevens Speaks	AUD	Quarterly			3

Published on Thu, Aug 21 2008, 06:32 GMT

Forex weekly news and data

Mon, Aug 11 2008, 12:38 GMT
by Benny Menashe

Finotec Group Inc.

This week we will have various economic data realises that will move the market, starting on Monday the 11th we will have the Australian RBA Monetary Policy statement, the UK’s PPI Input and the Canadian Housing Starts. On Tuesday the 12th we will have the UK’s CPI, the Canadian Trade Balance and the U.S’s Trade Balance. On Wednesday the 13th we have Japan’s Prelim GDP, UK’s Claimant Count Change and BOE Inflation Report and the U.S’s Core retail sales/Retail sales. On the Thursday the 14th we will have the EUR’s German Prelim GDP and CPI, the U.S’s Core CPI, Canadian BOC Summer Review and New Zeeland’s Core Retail Sales/Retail Sales. On Friday the 15th we will have the U.S’s TIC Net-Long-Transactions and the Prelim UoM Consumer Sentiment.

European retail sales dropped by the most in at least 13 years in June, the European Union said on Aug. 5. Consumer confidence slid in July by the most since the Sept. 11, 2001, terrorist attacks, the European Commission said July 30. Traders pared bets the ECB will lift rates a second time this year after increasing its main rate by a quarter-point to 4.25 percent last month. The implied yield on the December interest rate futures, an indication of expectations, has retreated 19 basis points from the previous meeting, to 4.96 percent today. ``We do not expect a significant recovery in the euro from current levels,'' Ashley Davies, a currency strategist in Singapore at UBS AG, the world's second-largest foreign-exchange trader, wrote in a research note today. ``Trichet delivered fairly standard comments, which were interpreted in a dovish fashion.''

Japanese foreign-exchange margin trading accounts rose 92 percent in the fiscal year that ended March, exceeding 1 million for the first time, according to Tokyo-based Yano Research Institute Ltd. Japanese individuals had opened 1.23 million accounts at brokerages that lend money for currency bets, almost double the number from a year ago, Yano Research, publisher of an annual report on the business, said in a press release yesterday. Funds in the accounts totaled 696 billion yen ($6.3 billion), up 13.5 percent from a year earlier, the institute said. The increase shows the popularity of currency investment among Japanese individuals, said Koji Fukaya, senior foreign- exchange strategist at the Tokyo unit of Deutsche Bank AG, the world's largest currency trader. ``Margin trading markets are still growing,'' said Fukaya. ``It is contributing to the yen carry trade,'' in which investors borrow Japan's currency and invest in higher-yielding overseas assets.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
12:30	New Housing Price Index m/m	CAD	Jun	0.00%		1
12:15	Housing Starts	CAD	Jul	218K		3
8:30	PPI Input m/m	GBP	Jul	2.10%	1.00%	3
8:30	Trade Balance	GBP	Jul	-7.5B		2
6:45	Industrial Production m/m	EUR	Jun	-2.60%	0.30%	2
6:00	WPI m/m	EUR	Jul	0.90%	0.50%	1
6:00	Machine Tool Orders y/y	JPY	Jul	-2.50%		1
1:30	RBA Governor Stevens Speaks	AUD	Aug			2

Published on Mon, Aug 11 2008, 12:38 GMT

Weekly Analysis

Tue, Aug 5 2008, 07:35 GMT
by Benny Menashe

Finotec Group Inc.

This week we will have various economic data releases that will affect the market. On Tuesday the 5th we will have the Australian Cash Rate and RBA Statement, From the UK we will have the Halifax HPI, Manufacturing Production and service PMI. From the U.S there will be the ISM Non-Manufacturing Composite, FOMC Statement and Federal Funds Rates. On Wednesday the 6th we will have the Australian Home Loans, Canadian Ivey PMI and New zelands Employment Change and Unemployment rate. On Thursday the 7th we will have the Australian Employment Change and Unemployment Rate, the UK’s MPC Rate Statement and Official Bank Rate, the Euro’s Minimum Bid Rate and ECB Press Conference, the Canadian Building Permits and U.S Pending Home sales. On Friday the 8th we will have the Canadian Employment Change and Unemployment Rate.

In other news the dollar fell from a one-month high against the euro as stocks declined amid concern losses in U.S. credit markets may widen. ``The dollar is very fragile for now,'' said Hidetoshi Yanagihara, senior currency trader at Mizuho Corporate Bank in New York. ``Stocks are falling and there's some bad news from the financial sector.'' U.S. consumer spending rose 0.6 percent in June following a 0.8 percent increase in May, the Commerce Department said in Washington today. The British currency declined to its lowest level versus the euro in almost a week after an index based on a survey of purchasing managers at building companies dropped in July to its lowest level since the series began in April 1997. Construction accounts for 6 percent of the economy. ``The data show that the economy is very weak and it means that interest rates are not going to stay at this level forever,'' said Hans-Guenter Redeker, the London-based global head of currency at BNP Paribas SA, France's biggest bank.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
14:00	Factory Orders m/m	USD	Jun	0.60%	0.70%	2	1.70%
12:30	Core PCE Price Index m/m	USD	Jun	0.20%	0.20%	2	0.30%
12:30	Personal Spending m/m	USD	Jun	0.80%	0.50%	2	0.60%
12:30	Personal income	USD	Jun	1.80%	-0.10%	1	0.10%
09:00	PPI m/m	EUR	Jul	1.20%	0.80%	1	0.90%
08:30	Sentix Index	EUR	Jul	-9.3	-10	1	-15.3
08:30	Construction PMI	GBP	Jul	38.8	37.6	2	36.7
07:30	PMI -SVME	CHF	Jul	54.9	53.4	2	54.1
01:30	Household Confidence	AUD	Jul	0.40%	-1.10%	1	-0.30%

Published on Tue, Aug 5 2008, 07:35 GMT

Dollar to weaken on worse than expected credit crunch

Tue, Jul 29 2008, 06:19 GMT
by Benny Menashe

Finotec Group Inc.

The dollar declined from near a three-week high against the euro and the strongest in a month versus the yen on concern U.S. financial losses will widen and as crude-oil prices increased. The currency dropped for a second day against the euro after Federal Reserve Bank of Minneapolis President Gary Stern told the Financial Times the U.S. credit crunch will get worse. The pound fell against all of the other major currencies as U.K. house values dropped in July the most in at least seven years. ``The financial sector is far from being healthy,'' said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. ``The Fed won't be able to raise rates any time soon given what's happening in the credit market. It's very difficult for the dollar to have a sustained rally.''

The dollar fell 0.3 percent to $1.5758 per euro at 8:41 a.m. in New York, from $1.5709 on July 25. It touched $1.5629 on July 24, the strongest since July 7. The dollar will trade in a range of $1.5650 to $1.5950 in the next few weeks, Serebriakov said. The U.S. currency dropped 0.2 percent to 107.61 yen, from 107.84, after earlier reaching 108.07, the highest since June 26. The euro traded at 169.55 yen, compared with 169.40. It touched the all-time high of 169.96 on July 23.

The pound fell against the euro and the dollar and gilts rose after U.K. house values dropped in July by the most in at least seven years, increasing concern the economy is headed toward a recession. The average cost of a residential property in England and Wales slipped 4.4 percent from a year earlier, Hometrack Ltd., a London-based research company, said today in a statement. That's the biggest annual drop since the index started seven years ago. Prices fell 1.2 percent from June. ``This is more bad news coming out of the housing market and adds to the growing sense the economy is slowing,'' said Grant Lewis, the London-based head of fixed-income research at Daiwa Securities SMBC Europe Ltd. ``That puts a bit of downward pressure on sterling given the expectation of rate cuts.''

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
16:00	FOMC Meeting Minutes	USD	Jun			2
06:00	Consumer Confidence	EUR	Jul	3.9	3.5	3
02:30	NAB Business Confidence	AUD	Quarterly	-4		1
01:00	Leading Index m/m	AUD	Jul	0.30%		1

Published on Tue, Jul 29 2008, 06:19 GMT

Dollar rallies at the end of the week

Mon, Jul 21 2008, 08:36 GMT
by Benny Menashe

Finotec Group Inc.

The U.S. currency rose versus the yen today after Citigroup Inc. the biggest U.S. bank, reported better-than-expected earnings. The pound fell on speculation the U.K. government will boost borrowing as Chancellor of the Exchequer Alistair Darling introduces new spending guidelines. The dollar traded at $1.5844 per euro at 10:01 a.m. in New York, compared with $1.5863 yesterday and $1.5938 at the end of last week. It dropped to an all-time low of $1.6038 on July 15. The currency climbed to 106.60 yen from 106.28 yen yesterday. The Japanese currency traded at 168.88 per euro, from 168.58 yesterday and 169.46 on July 11.

JPMorgan, the largest bank by market value, and Wells Fargo & Co. this week reported second-quarter earnings which beat analysts' estimates. Merrill Lynch & Co., the third-biggest U.S. securities firm, fell after it yesterday reported a fourth straight quarterly loss. But sterling fell sharply after the Financial Times reported that the UK Treasury is working on plans to change its fiscal rules. This could effectively give it more leeway to increase borrowing as a way of mitigating the effects of anticipated economic slowdown.

The dollar surged against the yen on Thursday and erased earlier losses versus the euro as oil prices plunged amid concerns about global growth. The dollar rose to 106.96 yen, a session peak and 1.8 percent above its level late on Wednesday. Oil dove below $130 a barrel CLc1, its lowest level in more than five weeks, on concern about global demand and higher crude and product inventory. Still, dollar sentiment is by no means solid, given concern over the U.S. financial system and bleak growth prospects due to the slumping housing market. Data on Thursday showing a contraction in July factory activity in the U.S. Mid-Atlantic region was the latest evidence of the economic problems there.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
12:30	Wholesale Sales m/m	CAD	May	1.40%	0.50%	3
12:30	Leading Indicators m/m	CAD	Jun	0.20%	0.10%	2
9:00	Trade Balance	EUR	Jun	2.2B	0.9B	2	-1.5B
6:00	PPI m/m	EUR	Jun	1.00%	0.70%	2	0.90%

Published on Mon, Jul 21 2008, 08:36 GMT

U.S bails out mortgages lenders with 12 trillion at stake

Tue, Jul 15 2008, 06:25 GMT
by Benny Menashe

Finotec Group Inc.

Treasury Secretary Henry Paulson put the weight of the federal government behind Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost half of the $12 trillion of U.S. mortgages. Paulson, speaking on the steps of the Treasury facing the White House, asked Congress for authority to buy unlimited stakes in and lend to the companies, aiming to stem a collapse in confidence. The Federal Reserve separately authorized the firms to borrow directly from the central bank. Fannie and Freddie shares gained in Frankfurt trading. The steps would bring the U.S. closer to giving an explicit guarantee for the debt sold by the shareholder-owned, federally chartered companies. That reflects a need for the government to bail out an economy that's been rocked by the worst housing recession in 25 years, the credit crisis, and soaring energy costs.

U.S. stock-index futures rose after Treasury Secretary Henry Paulson said he would seek approval from Congress to shore up Fannie Mae and Freddie Mac and investors speculated takeovers will increase. Lehman Brothers Holdings Inc., once the biggest U.S. underwriter of mortgage bonds, gained 62 cents to $15.05. Lehman on July 11 fell the most since Bear Stearns Cos. collapsed in March on speculation Freddie Mac and Fannie Mae might fail.

The Australian dollar rose on speculation the economy will withstand widening losses among U.S. financial institutions. The New Zealand dollar was little changed as retail sales dropped by the most in four years. Australia's currency approached a 25-year high as concerns that the U.S. subprime-mortgage crisis may deepen prompted investors to seek higher-yielding assets in the South Pacific nation. New Zealand's currency snapped a three-day advance on prospects its economy may have entered a recession, backing the case for the central bank to lower interest rates. ``We actually think the Australian dollar could achieve parity within two to three weeks if the markets start to cave in on the U.S. dollar due to renewed financial markets turmoil,'' said Clifford Bennett, chief economist at Sonray Capital Markets Ltd. in Sydney, in a research note today.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
10:45	CPI q/q	NZD		0.70%	1.40%	3
09:00	Industrial Production m/m	EUR	May	0.90%	-2.30%	2
08:30	PPI Input m/m	GBP	Jun	3.80%	2.50%	3	2.10%
08:30	PPI Output m/m	GBP	Jun	1.60%	1.20%	2	0.90%

Published on Tue, Jul 15 2008, 06:25 GMT

The dollar's decline and the widening deficit

Tue, Jul 1 2008, 05:50 GMT
by Benny Menashe

Finotec Group Inc.

A disorderly decline in the dollar remains a possibility as losses on U.S. assets pile up and the current-account deficit triggers ``a sudden rush for the exits,'' the Bank for International Settlements said. ``Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency,'' the BIS said. ``While unlikely, indeed highly improbable for public-sector investors, a sudden rush for the exits cannot be ruled out completely.''

The U.S. current-account deficit, the broadest measure of trade in goods, services and investment income, widened in the first quarter to $176.4 billion, the Commerce Department said on June 17. The U.S. needs to attract $1.9 billion a day from overseas to fund the gap. Foreign buying of U.S. assets rose in April to an 11-month high as total holdings of equities, notes and bonds increased by a net $115.1 billion, the Treasury Department said June 16.

The Japanese currency has appreciated 6.3 percent versus the dollar this year. It has weakened 1.9 percent against the euro. The Japanese currency is forecast to rise to 100 per dollar and 148 against the euro within a year, according to the median of analysts' estimates compiled by Bloomberg. The world's second-largest economy shrank at an annual 0.4 percent pace in the second quarter.

For all his talk of consensus, European Central Bank President Jean-Claude Trichet is having to acknowledge he can't please all of the people all of the time. A rare public division on his 21-member governing council is forcing Trichet to take sides, backing those who want to raise interest rates this week to curb inflation. Doing so may open an ever bigger rift by easing price pressures in Germany, Europe's biggest economy, at the expense of weaker neighbors.

The risk for Trichet is that a strike against inflation now delivers a crippling blow to the euro zone's more fragile economies. Reports last week showed manufacturing and services industries in the region unexpectedly shrank in June, confidence among consumers and businesses fell more than economists forecast and retail sales plunged.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
23:50	Tankan Large Manufacturers Index	JPY		11		3
13:45	Chicago PMI	USD		49.1		2
12:30	GDP	CAD		-0.20%		3
08:30	Mortgage Approvals	GBP		58K	51K	1	42K
03:00	Business Confidence	NZD	Jun	-49.7		3	-38.7

Published on Tue, Jul 1 2008, 05:50 GMT

The Dollar may decline further this week on Fed decision

Tue, Jun 24 2008, 06:10 GMT
by Benny Menashe

Finotec Group Inc.

The dollar fell broadly on Friday as fears of further write-downs in the U.S. financial sector raised speculation the Federal Reserve would not signal a shift toward tighter monetary policy when it meets next week. Rising oil prices, more inflation-busting talk from a European Central Bank official and an unexpected surge in German producer prices in May to a near two-year high added to selling pressures on the greenback. These developments were seen as confirmation that the European Central Bank would deliver an interest rate hike next month, flagged at the bank's last policy meeting. A hike would further enhance the euro's yield appeal against the dollar.

The dollar may fall to 105.72 yen, based on charts traders use to predict price movements, according to Tomoko Fujii, head of economics and strategy for Japan at Bank of America Corp. The currency has stayed below its 200-day moving average after rising above it from June 13 to June 18 for the first time since August, signaling further losses. The dollar may now fall to the next level of so-called support around 105.72 yen, where an ascending trend-line, connecting a low of 95.76 yen on March 17 and a low of 102.74 on May 22, extends to, she said.

The pound snapped a three-day gain against the dollar after a report showed U.K. house prices fell in June by the most this year. The pound also dropped against 12 of the 16 most-active currencies as traders reduced bets the Bank of England will raise interest rates to curb inflation. The U.K. currency declined against the euro last week after central bank Deputy Governor John Gieve said property values ``have further to fall'' and the ``shock to expectations appears to be having a wider impact on confidence.'' The U.K. currency fell to $1.9643 by 9:19 a.m. in London, from $1.9761 on June 20. It was little changed at 78.94 pence per euro, after earlier dropping to 79.10 pence.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
08:30	Ifo Business Expectations Index	EUR	Jun	97.3	96.5	2	94.7
08:30	Services PMI	EUR	Jun	50.6	50.4	1	49.5
08:00	Ifo Business Climate Index	EUR	Jun	103.5	102.3	3	101.3
08:00	Manufacturing PMI	EUR	Jun	50.6	50.2	2	49.1
07:30	Manufacturing PMI	EUR	Jun	53.6	53.2	2	52.3
07:30	Services PMI German	EUR	Jun	53.8	53.2	1	53.3

Published on Tue, Jun 24 2008, 06:10 GMT

Dollar finally gaining traction against the majors

Fri, Jun 20 2008, 05:51 GMT
by Benny Menashe

Finotec Group Inc.

Currency forecasters are betting that the dollar rally is just getting started as the Federal Reserve's shift to fighting inflation makes it likely to raise interest rates more aggressively than the European Central Bank. The currency could strengthen 2.1 percent to $1.51 per euro by year-end. Economists anticipate that the ECB will raise rates a quarter-percentage point by September and then cut borrowing costs by yearend. Fed Chairman Ben S. Bernanke, who said he's ``attentive'' to the U.S. currency, could boost rates three-quarters of a percentage point by the end of the third quarter of 2009.
The dollar had its biggest weekly gain in three years against the European and Japanese currencies. It strengthened 3.1 percent versus the yen last week and reached a four-month high of to 108.61 today.

The dollar climbed 2.5 percent against the euro in the week and was little changed at $1.5439 today. The Fed's commitment to price stability and maximum employment ``will be key factors ensuring that the dollar remains a strong and stable currency,'' Bernanke said June 3. The remarks were a ``change of rhetoric'' that showed the dollar ``has bottomed,'' said Stephen Jen, chief currency economist at Morgan Stanley in London, who used to work at the Fed. On the other hand dollar bulls are still in the minority, in part because ECB President Jean-Claude Trichet has also said inflation is a concern and the ECB rate is double the Fed's.

Bank of England Governor Mervyn King may be forced to keep interest rates as they are or even hike them which may result in a recession. Inflation reached 3.2 percent in May, the most since the measure's inception in 1997. A rate that high requires King by law to write a letter of explanation to the Treasury. The statistics office will publish the data tomorrow at 9:30 a.m. in London. At 5 percent, Britain's interest rate is the highest in the Group of Seven industrialized nations. U.K. inflation is also lower, at 3 percent in April, compared with 3.9 percent in the U.S. and 3.6 percent in May for the euro region. The Sterling is currently trading at 1.9588 against the greenback.

The yen fell against the euro, approaching a seven-month low, as gains in Asian stocks encouraged investors to add to holdings of higher-yielding assets funded in the Japanese currency. ``The yen is grinding lower,'' said Osao Iizuka, head of foreign-exchange trading in Tokyo at Sumitomo Trust & Banking Co., Japan's seventh-largest lender. ``Stocks are stabilizing and that's a sign of improvement in risk appetite.'' The yen fell to 166.94 per euro at 8:00 a.m. GMT from 166.35 late in New York on June 13. It earlier touched 166.94, close to the lowest level since Nov. 7. The currency slid to 108.58 per dollar, the lowest since Feb. 14, before trading at 108.43, from 108.19.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
23:50	Tertiary Industry Activity Index m/m	JPY		0.30%	0.50%	2	1.80%
17:00	NAHB Housing Market Index	USD		19	19	1	18
13:00	TIC Net Long-Term Transactions	USD		80.4B	63.0B	3	115.1B
12:30	New Motor Vehical Sales m/m	CAD		-0.50%	0.00%	2	-2.60%
12:30	Empire State Business Conditions Index	USD		-3.2	-1.5	3	-8.7
9:00	Core CPI y/y	EUR		1.60%	1.80%	3	1.70%
9:00	CPI y/y	EUR		3.30%	3.60%	2	3.70%
7:15	Retail Sales y/y	CHF		9.70%	4.10%	2	-9.40%

Published on Fri, Jun 20 2008, 05:51 GMT

Dollar falls drastically against the Euro as U.S unemployment soars

Tue, Jun 10 2008, 05:58 GMT
by Benny Menashe

Finotec Group Inc.

The dollar fell the most against the euro in two months as the U.S. unemployment rate posted its biggest increase in two decades and the European Central Bank signaled it may raise interest rates in July which are currently at 4%. The U.S. jobless rate increased to 5.5 percent last month from 5 percent in April, the biggest jump since February 1986 over 20 years ago, the Labor Department reported yesterday. The forecast was for an increase to 5.1 percent. U.S. payrolls have shrunk every month this year, dropping 49,000 in May,in turn the ECB President Jean Claude Trichet said policy makers are in a state of ``heightened alertness'' over inflation. His remarks pushed the dollar down from a four-week high after Fed Chairman Ben Bernanke said the central bank is ``attentive'' to the implications of the weakened currency.

The dollar fell 1.4 percent to $1.5778 per euro this week, from $1.5554 on May 30. The dollar decreased 0.6 percent this week to 104.93 yen, from 105.52. The euro increased 0.9 percent to 165.54 yen, from 164.15 a week earlier. It touched 166.16 yesterday, the strongest level since Dec. 28.The dollar's decline against the euro was the biggest since the week ended, March 28. It touched a four-week high of $1.5365 on June the 5th, before Trichet's remarks that day, compared with the all-time low of $1.6019 reached April 22nd. ``The labor market is deteriorating,'' said David Powell, currency strategist in New York at Bank of America Corp. ``The interest-rate differential is moving in favor of the euro and against the dollar. We're going to retest $1.60.''

Sterling slipped against the euro on Friday, extending losses a day after the European Central Bank said an interest rate rise was possible next month, while Bank of England rates are expected to fall later in the year. Despite its losses against the euro, the pound jumped against the dollar, pulling away from a two-week low after a jump in the U.S. unemployment rate triggered a broad sell off in the U.S. currency. Analysts said that while sterling had received an initial boost from weakness in the dollar, continuing evidence of a struggling UK economy would continue to keep the pound on the back foot. "Sterling is very much in the high-risk camp, which means that it will continue to perform on any negative UK news," said Lena Komileva, G7 market economist at Tullett Prebon. "Dollar weakness is not a reason for optimism about the UK economy, as it's very clear that the UK economic cycle is tracking the U.S. one." Sterling rose 0.3 percent to $1.9648, recovering from an earlier slide to $1.9538 after the U.S. unemployment rate came in at 5.5 percent in May, jumping from 5 percent the previous month and stirring concerns that a grim jobs market may further weaken the economy.

Crude oil increased to a record high of $139.12 a barrel yesterday as demand grew for a hedge against a weakened dollar. The U.S. currency has lost 11 percent against the euro since the Fed started to lower interest rates from 5.25 percent in mid- September, pushing the price of oil, gold and corn higher.

Published on Tue, Jun 10 2008, 05:58 GMT

Dollar dependent on oil trend

Tue, May 27 2008, 08:03 GMT
by Benny Menashe

Finotec Group Inc.

After recovered from record lows against the Euro in the end of last month, the Dollar slumped last week as good economic data for the Euro zone supported investors’ speculation that the European Central Bank will keep interest rates on hold at 4%, to fight inflation. The Dollar slumped to 1.9796 against the Euro on last Thursday, last week’s record low. Also on Thursday, oil prices corrected from the sharply gains registered in the beginning of the week, when it reached $134.75 per barrel; crude oil and the Dollar prices traditional reveal an inverse relation. Analysts believe that the EUR/USD this week will be determined by price action in oil; investors’ speculate that a correction lower is close for oil prices, which would push the currency pair down. If oil appreciates up to $140 a barrel, the EUR/USD will register more gains.

The Australian Dollar held near a 25-year high against the Dollar on the early trading this Monday, after the rising trend in the commodities prices, improving the outlook for Australia’s exporters. Also, Australian economy is expected to expand this year and the central bank to maintain a tightening monetary policy bias with inflation still at 17-year highs. The Aussie registered a high of $0.9653 last Wednesday, a level not seen since the Aussie was floated in December 1983. Any correction on oil prices will lead the Dollar to strength and signal that the Aussie strength has come to an end, at least in the short term.

The New Zealand Dollar was steady near a three-week high against the Dollar on this Monday early trade, supported by demand for its high yield, as investors look ahead to the central bank policy statement due next week. At 4:55am GMT the kiwi traded at $0.7871. The strong rebound from the May low around 0.7540 implicated greater losses to investors, due to many short New Zealand Dollar positions. Nevertheless, analysts remain bearish; investors are looking for a negative trend for the next week or consolidation at least.

During this week, investors will be focused on number of economic data from the global arena. On Monday (26.5), most of attention will go to Reserve Bank of New Zealand that will reveal Inflation Expectations q/q, which is expected to rise, having a positive impact in the kiwi. US, New Home Sales will be announced on Tuesday (27.5) and are expected to drop, pushing the Dollar down. On Wednesday, Core Durable Goods Orders m/m in the US will lead the markets, which are expected to pressure the Dollar down, as are forecasted to come negative, worse than in April. On Thursday (29.5), the investors will be concentrated on Nationwide House prices in the UK, which are expected to push the Pound up, as are forecasted to come better than in April; Preliminary GDP q/q in the US that is predicted to increase from April, boosting the Dollar; and Building Consents m/m in New Zealand, which are expected to push the kiwi up, as they increase since last month. To finish, Canadian GDP m/m will be the main data on Friday (30.5), forecasted to increase from April, having a positive impact on the nation’s currency.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
00:00	CPI m/m	EUR		-0.20%		2
00:00	Holiday: Memorial Day	USD				1

Published on Tue, May 27 2008, 08:03 GMT

Dollar depend on data

Tue, Apr 29 2008, 10:13 GMT
by Benny Menashe

Finotec Group Inc.

This week economists and traders will focus on the following important economic data in-order to assess their positions trades. Late Sunday night 27th of April Japanese retail sales figures will be released, this will have an impact on the USD/JPY. Monday the 28th of April the Japanese market will be on holiday, the main focus will be the release of German consumer confidence index which will move the EUR/USD. On Tuesday the 29th of April German retail sales and UK monthly consumer credit data will be announced in Europe. In the USA, the consumer confidence survey data will be published.

The US Fed interest rate decision and Bank of Japan interest rate announcement are expected on Wednesday the 30th of April. In addition, Unemployment Data and consumer sentiment in Europe and the ADP employment survey results in the USA will be released. On Thursday the 1st of May the EU market will be on holiday. The manufacturing PMI index will be released in the UK, the weekly jobless claims and ISM manufacturing data will also be released in the USA. Finally, on Friday the 2nd of May the US Non Farm Payrolls will be the main economic indicator of the day.

Bank of America believes that the Federal Reserve will continue to cut interest rates to as low as 1.5 percent, while the ECB should keep them on hold at least until October. Therefore, the financial institutions recommend investors to buy the Euro at $1.5630 with a target of $1.6250 and sell the currency if the market goes in the opposite direction, closing at $1.5342. “We expect U.S. economic indicators such as jobs data will remain weak and do not think the Fed will be done on rate reduction” said Tomoko Fujii, head of economics and strategy for Japan at the bank. Also, the American government deficit is forecasted to expand to a record of $500 billion for the year ending in September 30. The US depends on foreign investors to finance the deficit, whom are losing value on its treasuries due to the slumping Dollar.

The pound fell against the euro after an industry report showed U.K. house prices dropped the most in more than three years in April, adding to speculation the Bank of England has room to cut interest rates. The U.K. currency snapped two days of gains, dropping the most in a week, after Hometrack Ltd. said the average cost of a home in England and Wales slipped 0.6 percent, the most since December 2004, as surging borrowing costs deterred buyers. Nationwide Building Society will this week say house prices dropped for a sixth month, according to the median forecast of 13 economists in a Bloomberg News survey. The pound fell as much as 0.5 percent to 79.06 pence per euro, and was at 78.87 by 10:31 a.m. in London, from 78.67 pence on April 25. It was at $1.9873, from $1.9858. The U.K. currency may fall to 80 pence per euro this week

Published on Tue, Apr 29 2008, 10:13 GMT

Dollar weakening Expected

Tue, Apr 8 2008, 06:04 GMT
by Benny Menashe

Finotec Group Inc.

We have seen some big moves in the currency market this past week, important data releases were also a factor, such as the non-farm payrolls that came in at -80 from a previous -63, U.S central bank chairman Ben Bernanke conceded for the first time last Thursday that the American economy may slip into a recession. “Recession is possible”, Mr Bernanke said. “Our estimates are that we are slightly growing at the moment”. But there’s a chance that, for the first half as a whole, there might be a slight contraction. The weak jobs figures support the general view that the Fed will be forced to continue cutting interest rates to prevent the recession from becoming a severe one.

The fluctuations in the financial market last week should pale in comparison to the action that we expect to see in the next couple of days, as there will be a lot of economic data due for release from countries around the world, economic data such as the GCC Meeting where Finance officials and central bank governors from the six members of the Gulf Co-operation Council (GCC) will meet in Doha, Qatar to discuss the timetable for monetary union and other matters. There may be a press conference or comments from officials during the day. Comments from the GCC will be monitored closely as speculation over a possible move to break currency links with the US dollar has been important for US dollar sentiment. American Consumer Credit figures will also play a role in the currency market as traders observe the effects it will have on the greenback. Consumer Credit figures Measure the total value of outstanding consumer installment debt, such as credit cards and auto loans. A rising trend has a positive effect on the nation's currency because historically consumer borrowing and spending have a high degree of correlation.

The yen slumped this week as manufacturers' confidence dropped to a four-year low aimed weak consumer confidence in the U.S. ``Easing concern over credit-market losses are making it easy to buy the dollar,'' said Hideki Hayashi, chief economist at Shinko Securities Co. in Tokyo, an affiliate of Japan's third-largest bank. The yen traded at 102.82 against the dollar as of 8:00 GMT 4th of April from 101.85, when it reached 102.16, the lowest since March 12. Bank of America maintains its estimate for the yen to decline to 103 by the end of September and to 108 by year-end, Fujii said, head of economics and strategy for Japan at Bank of America in Tokyo.

The euro fell against the dollar on speculation the slowing U.S. economy will drag down growth in Europe, leading to a reduction in interest rates. ``The euro is poised to fall significantly,'' said Akira Takei, who helps oversee the equivalent of $32.9 billion as general manager of international fixed-income investment at Mizuho Asset Management Co. in Tokyo. ``A slowdown in the U.S. will eventually filter through to Europe. The ECB will be forced to cut.'' The Eur/usd currently stands at 1.5666. 8:00 GMT. Traders will be glued to their screens on Thursday 10th of April 12:45 GMT when the ECB will announce whether or not to cut the interest rate. A rising trend in interest rates has a positive effect on the nation's currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best "risk-free" return on their money, which can dramatically increases demand for the nation's currency.

While it’s difficult to predict the shorter-term swings in today's volatile markets with any degree of accuracy long-term we remain bullish on gold and Crude, as always when markets are bearish and economic turbulence is in the air investors embrace commodities especially the precious metal. Economists believe that the gold rush has started again and could hit the all time high of $1034 oz and beyond especially up and till June of this year. ``We still think the outlook for gold is outstanding,'' Gavin Wendt, analyst at Fat Prophets, said by phone from Sydney today. Bullish factors such as ``economic uncertainties and the U.S. dollar weakness won't change overnight,'' he added. Oil prices were steady on Tuesday the 1st after jumping more than $3 a barrel in the previous session after the U.S. government reported a larger than expected decline in gasoline stockpiles. Traders brushed aside a large increase in crude oil inventories reported by the U.S. Energy Department Wednesday the 2nd, focusing instead on the third straight week that gasoline inventories fell.


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
19:00	Consumer Credit	USD	Feb	6.9B	6.0B	2	5.2B
12:30	Building Permits	CAD	Feb	-2.90%	1.00%	4	-1.00%
10:00	Industrial Production m/m	EUR	Feb	1.80%	-0.50%	3	0.40%
08:30	Sentix Index	EUR	Apr	0.4	-1.3	2	4.1
06:45	Trade Balance	EUR	Feb	-3.4B	-3.4B	2	-2.8B
05:45	Unemployment Rate	CHF	Mar	2.50%	2.50%	2	2.50%
05:00	Leading Index m/m	JPY	Feb	36.4		2	50

Published on Tue, Apr 8 2008, 06:04 GMT

Cable faces negative sentiment

Mon, Mar 31 2008, 11:29 GMT
by Benny Menashe

Finotec Group Inc.

The financial markets were a little calmer last week as the dust settled in the US. Markets started the week positively with JP Morgan increasing its bid for Bear Stearns from $2 to $10 a share, and better than expected growth in US existing home sales. Although a free fall in housing prices led to a large decline in consumer confidence and the lowest since 1973.

US durable goods fell in February with benefits to exports from a weak US dollar could be overwhelmed by domestic debt disruptions. The dollar showed some recovery towards the end of the week on views liquidity conditions for banks were not as bad as initially thought. Analysts believe investors are pausing before buying the euro to all time highs. Stronger than expected jobless claims had no real effect on the dollar

The euro reached highs near 1.5861 while the cable struggles below the 2.00 level. Analysts are concerned about the dire housing market in the UK, which could mirror the struggle in the US, brought consumer confidence to its lowest levels since 1993. Japanese yen is flirting with the 100 mark after rebounding from 95.74 two weeks ago.

As the dollar fell, gold saw bargain buying following last week’s sharp correction. Gold gained $35, recovering more than a third of the previous weeks losses to be trading under $950 an ounce. Geopolitical concerns have supported oil prices as fighting between Shi’ite and Iraqi security forces continue in Basra. But the weak US dollar against rival currencies underpinned the long positions for crude.

Ahead this week we expect the drip feed of data from the US to support further interest rate cuts with ISM manufacturing and non-manufacturing composites to come in lower than expected. The Reserve Bank of Australia will leave rates unchanged while the Bank of England are expected to cut borrowing rates in the coming months.

Published on Mon, Mar 31 2008, 11:29 GMT

Has the green back changed direction up?

Tue, Mar 25 2008, 06:00 GMT
by Benny Menashe

Finotec Group Inc.

The dollar edged up broadly on the last trading day in previous week. Investors took profits from oil, gold and other commodity positions, turning their cash into the U.S. currency ahead of the Easter break. U.S Existing Home Sales data released above the expectations and supported the green back.

However analysts said it was too early to call an end to the rout which has taken the dollar to record lows versus the euro, the Swiss franc and a basket of major currencies this week as well as 13-year troughs against the yen. The euro was down against the green back on Monday and also gained more than 1 percent via yen, and rose back above parity versus the Swiss franc.

But with interest rates of just 2.25 percent the second lowest among major economies -- and set to fall further, the U.S. currency remained under pressure versus the high-yielding Australian and New Zealand dollars.

Markets are pricing in an around 80 percent chance of a 50 basis point cut at the Federal Reserve's April meeting, adding to 200 basis points of easing administered so far this year.

"The Fed has left the door open for further rate cuts, despite their increased level of concern about inflation. The fall in U.S. real yields remains negative for the dollar," CBA said in a research note.

However it added the next bout of dollar weakness may not come until after March non-farm payrolls on April 4 and the meeting of the Group of Seven major economies on April 11-12. Worries about the health of the banking sector also remained on investors' radar after Credit Suisse said it believed it might not have been profitable in the first quarter of 2008, announced valuation reductions for the last quarter of 2007 and said it would restructure some trading operations.

The week's news is fairly light. US housing data are probably the most significant information Wednesday but GDP in NZD and a round of econ reports for the GBP on Friday may have some impact on the market. If anything it may make the unexpected news all that more important.

Published on Tue, Mar 25 2008, 06:00 GMT

FOMC meeting to set agenda for dollar

Mon, Mar 17 2008, 12:25 GMT
by Benny Menashe

Finotec Group Inc.

Credit market losses triggered the Federal Reserve to cut discount rates to 3.25% after an emergency meeting during the weekend. Speculation among traders spread as they increased bets the Federal Reserve will lower interest rates by a further 75 basis points on fears the US economy will meet a recession. The dollar fell to as low as 95.76 yen, the weakest in twelve years and $1.59 versus the euro. Analysts predict the dollar may fall to 95 yen this week.

The euro looked overbought against the dollar, rising over 3% last week. Eurozone industrial production was stronger than expected with the monthly increase coming in at 0.9% versus expectations near 0.4%. ZEW consumer sentiment for Germany was not as negative in March, assisting the dollar’s slide against the euro.

Investors have shown no confidence in the dollar, spiking gold prices above $1000 in a flight to safety. Oil prices surged as OPEC reiterated production quotas will not be increased in a bid to dampen prices. The Organisation of Petrol Exporting Countries has blamed speculators as prices ignored fundamentals of supply and demand. Traders said the ailing US dollar also has fuelled a spike in world oil prices because crude is priced in dollars and has become cheaper to buy for purchasers holding stronger currencies Crude prices were last seen flirting with the $111 mark on Monday.

Investor confidence fell, sending the US sharemarkets lower for a third straight week. Market analysts say that a combined effort by all central banks to buy the dollar back up is likely. Inflation came in at flat for both the headline and core; restrained by cheaper cars, gasoline, food and clothing. US treasury prices rose in response to the tame CPI result.

News regarding the sale of Bear Stearns Co’s to JP Morgan Chase & Co has made headlines Monday morning. The Federal Reserve and JP Morgan coordinated a liquidity injection for Bear Stearns, the fifth largest investment bank in the US. The takeover bid placed further downward pressure on the dollar. JP Morgan agreed to buy Bear Stearns for $240 million, about 90 percent less than its value last week.

This week we expect the dollar to bounce around with the major releases for the week. US Federal Reserve is expected to cut borrowing rates by 50 basis points, although they could opt for a 75 basis point cut to prevent housing problems getting worse. UK CPI is forecasted to come in at 1.4%, slightly ahead of the 1.3% anticipated. This should strengthen the sterling against the dollar this week after the Bank of England offered to inject £5b into the money markets on Monday.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
17:00	NAHB Housing Market Index	USD	Mar	20		2
13:15	Industrial Production m/m	USD	Feb	0.10%		2
13:15	Capacity Utilization Rate	USD	Feb	81.50%		2
13:00	TIC Net Long-Term Transactions	USD	Jan	56.5B		3
12:30	Manufacturing Shipments m/m	CAD	Jan	-3.40%		2
12:30	New Motor Vehical Sales m/m	CAD	Jan	4.80%		1
12:30	Current Account	USD	Jan	-179B		2
10:00	Employment Change	EUR	Quarterly	0.30%		1
08:15	Retail Sales y/y	CHF	Jan	1.20%		2

Published on Mon, Mar 17 2008, 12:25 GMT

Greenback waits for strong retail sales

Mon, Mar 10 2008, 12:16 GMT
by Benny Menashe

Finotec Group Inc.

The dollar continued its slide last week as the European Central Bank left interest rates at 4% to tackle inflation. Speculation among traders spread as they increased bets the Federal Reserve will lower interest rates by 75 basis points on fears the US economy will meet a recession. Central banks in the United Kingdom and Japan also left monetary policy on hold at 5.25% and 0.5% respectively.

News that US home foreclosures rose to record highs in quarter four also added to bearish investor sentiment towards the dollar, helping to push it to historic lows versus a basket of currencies. Euro dollar jumped to $1.5396, its highest since its launch in 1999. The dollar also slumped to an eight year low versus the yen at 102.16 and record lows against the Swiss at 1.0213.

Investors have shown no confidence in the dollar, spiking gold prices above $990 in a flight to safety. Oil prices surged as OPEC announced production quotas will not be increased in a bid to dampen prices. Oil shot up a dramatic 19 percent last month as the falling dollar prompted speculators and other investors to shift cash to crude and other commodities as a hedge. Crude prices were last seen flirting with the $106 mark on Monday.

The US Labour Department reported non-farm payrolls fell by 63k in February on Friday, the largest drop since March 2003. The employment data fell far short of the 25k new jobs expected to be added. Job losses were widespread. Some 52k jobs were lost at factories, the largest decline since July 2003 when 92k jobs were cut.

US unemployment rate fell to 4.8% from 4.9%, versus forecasts for a rise to 5%. But the drop was result of less people being in the workforce. Average hourly earnings, the report’s inflation component, rose 0.3% as expected. Also on Friday, the Fed issued data showing consumers were still borrowing heavily to spend in January. Consumer credit outstanding climbed 6.9 billion, nearly double December’s $3.7 billion gain.

This week we expect the dollar to bounce around with the major releases for the week. The trade deficit in the US is expected to widen due to price gains but that’s shouldn’t affect retail sales. We here at the Finotec dealing desk expect a rise near 0.3% in consumer spending. Inflation is expected to be on the up near 0.3% as energy prices are expected to play a favourable role.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
14:00	Wholesale Inventories m/m	USD	Jan	1.10%	0.40%	2
12:15	Housing Starts	CAD	Feb	222.7K		2
09:30	Sentix Index	EUR	Mar	4.3		2
09:30	Industrial Production m/m	GBP		-0.10%	0.10%	3
09:30	PPI Input m/m	GBP	Feb	2.60%	1.50%	3
09:30	Manufacturing Production m/m	GBP	Jan	-0.20%	20.00%	3
09:30	PPI Output m/m	GBP	Feb	1.00%		2
09:00	Industrial Production m/m	EUR	Jan	-0.50%	0.40%	2
07:45	Industrial Production m/m	EUR	Jan	0.70%	0.20%	2
07:45	Trade Balance	EUR	Jan	-4.28b	-4.0b	2
07:00	Trade Balance	EUR	Jan	15.6b	16.4b	2
05:00	Economic Watch	JPY	Feb	31.8		2

Published on Mon, Mar 10 2008, 12:16 GMT

Non−farm payrolls will set the tone for the weak dollar

Tue, Mar 4 2008, 06:03 GMT
by Benny Menashe

Finotec Group Inc.

Soft U.S. economic reports in the past week and comments by Federal Reserve Chairman Ben Bernanke highlighted the central bank's concerns with growth and boosted investors' expectations for further interest rate cuts. The U.S. dollar will likely extend its string of record lows against the euro in the week ahead with the slew of economic data on deck expected to keep investors focused on the possibility of a U.S. recession.

The negative sentiment this week triggered a sell-off in the greenback, pushing it to its lowest level against the European currency since its inception on Jan. 1999. With signs the economy is on the brink of a recession, investors will be alert to more weakness in the job market as they peruse the February payrolls data on Friday. The focus on Bernanke will resume as well when he speaks on Tuesday.

Other U.S. economic gauges next week include readings on productivity, durable goods, manufacturing and services indexes and the monthly non-farm payrolls. In Europe, the European Central Bank will hold a rate-setting meeting on Thursday.

On Monday, the euro reached its highest level at $1.5277 before the ISM Manufacturing PMI data released at 48.3 points. But readings below 50 in the index indicate economic contraction that why we can see only a correction down on the euro/dollar.

The European currency surged nearly 5 percent in about three weeks, still analysts say the currency may gain further ahead of the Fed's next rate-setting meeting on March 18. The Fed has cut its benchmark overnight lending rates by 2.25 percentage points since mid-September to 3 percent, while the European Central Bank has kept its main rate at 4 percent.

Bernanke signaled further rate cuts to avert recession during his Congressional testimony this week, making clear that the U.S. central bank is more worried about risks to growth than inflation. Lower interest rates provide less incentive to buy dollars, particularly with central banks in Europe and Australia either holding rates steady or raising them to fend off inflation.

The ECB meets on Thursday and is largely expected to leave benchmark rates unchanged at the present 4 percent. Investors will be paying attention to remarks by the bank's president Jean-Claude Trichet following the decision, which may help determine the economic outlook for the region.

A private report on February employment, an ISM non-manufacturing index and the Fed's reading on regional economic conditions, the Beige Book, follow on Wednesday.

Pending home sales and weekly jobless claims figures are slated for Thursday, and the widely tracked monthly government payrolls report is scheduled for Friday. The expectation is that U.S. economy to add 25,000 jobs in February, after a 17,000 contraction in the prior month.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
23:50	Monetary Base y/y	JPY	Feb	-0.10%		1
15:00	ISM Manufacturing Index	USD	Feb	50.7	48	3	48.3
15:00	ISM Manufacturing Prices	USD	Feb	76		2	75.5
15:00	Construction Spending m/m	USD	Jan	-1.10%	-0.70%	2	-1.70%
13:30	GDP	CAD	Dec	0.10%	-0.20%	3	-0.70%
10:00	CPI y/y	EUR	Feb	3.20%	3.20%	2	3.20%
09:30	Manufacturing PMI	GBP	Feb	50.6	51	3	51.3
08:55	Manufacturing PMI -German	EUR	Feb	54.4	54	2	54.3
08:30	PMI -SVME	CHF	Feb	61.6	60.4	2	60.5

Published on Tue, Mar 4 2008, 06:03 GMT

Sterling up on weak USD

Tue, Feb 26 2008, 05:46 GMT
by Benny Menashe

Finotec Group Inc.

The Bank of England published its February monetary policy committee minutes last Wednesday, which showed an 8-1 vote to cut interest rates by 25 basis points. Minutes also showed it might be necessary to slow growth by reducing pressure on capacity to ‘return inflation on target in the medium term.’ This suggests that the BOE are likely to cut interest rates to 4.5% from 5.25%, which was also supported by the futures markets.

UK bank, Northern Rock’s, nationalization announcement saw the sterling drop sharply early last Monday morning. The sterling dipped below 1.9500, as it faced tougher downward pressure last week. This decline was offset by Thursday's stronger than expected retail sales of 0.8%, which saw the GBP jump over 100 points in the morning session alone.

The greenback is expected to trade at its lowest levels in two weeks against the Euro. Analysts are awaiting existing home sales reports which indicate the US housing recession is intensifying. Bernanke and his team are expected to cut interest rates by twenty five basis points when they meet during March. The dollar traded between $1.4650 and $1.4750 last week but broke lower to over $1.48 on the back of weak economic data.

Downside risks to the housing and labor market suggest the FOMC will be keeping one eye on inflation. Financial markets have already started pricing in a rate easing for March. Minutes from the January 29/30 meeting published last week, showed aggressive rate cuts were necessary in light of a deteriorating economy. The Fed have lowered its forecast for GDP growth in 2008 by about 0.5%, and expect growth to be weaker than initially estimated in October.

Of all the economic data released this week, all eyes will be focused on Wednesdays speech by Fed chairman Bernanke, followed by US crude inventories and new home sales. Oil prices were trading over $100 a barrel last week, another strong stockpiles report could limit prices below $99.00.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
15:00	Home Sales Existing	USD	Jan	4.89m		3
09:00	Retail Sales m/m	EUR	Dec	-0.30%		2	0.10%

Published on Tue, Feb 26 2008, 05:46 GMT

Sterling faces uphill battle this week

Tue, Feb 19 2008, 06:02 GMT
by Benny Menashe

Finotec Group Inc.

The Bank of England published its February inflation report last Wednesday. GDP growth is expected to slow down in the short term and then expected to recover later in the year. The report indicates that there will be rate cuts throughout the year, although not as abrasive as the market expects. These comments saw the sterling rise against the dollar past $1.96. But on the other hand, UK bank Northern Rock’s, nationalization has seen the sterling drop sharply early Monday morning. The sterling dipped below 1.9500 Monday 11:00GMT as it faces tough further downward pressure this week.

The greenback is expected to trade at its lowest levels in two weeks against the Euro. Analysts are awaiting industry and government reports which indicate that the US housing recession is intensifying. Bernanke and his team are expected to cut interest rates by seventy five basis points when they meet in March. ``The dollar is likely to grind lower this week,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co., Japan's fifth-largest broker by revenue. ``Everyone is trying to gauge how far and how quickly the Fed will cut rates.''

Downside risks to the housing and labor market suggests that the FOMC will be keeping one eye on inflation. Financial markets have already started pricing in a Fed rate easing for March. Minutes from the January 29/30 meeting will be published this week, together with its latest projections for inflation and economic growth.

Japans economy continues to expand at a moderate rate. GDP for the final quarter of 2007 came in at 0.9% versus expectations of 0.4%. Strong levels of exports and private business investment offset sluggish consumer sentiment. Strong momentum carried the Dollar Yen towards 108.00 and the trend is expected to continue if it stays above 107.97.

Of all the economic data released this week, all eyes will be focused on Wednesdays FOMC minutes, followed by consumer prices and housing starts. Canadian CPI remains well above the Bank of Canada’s 2% target range at 2.4%. Market analysts are expecting a small decline of 0.1% on Tuesday. The Reserve Bank of Australia also releases its minutes from their monetary policy early Tuesday morning. The report focusing on the RBA’s inflationary concerns should spike the Aussie against the greenback.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
09:30	BOC Governor Carney Speaks	CAD				4
08:15	Retail Sales m/m	CHF	Dec	2.90%		3

Published on Tue, Feb 19 2008, 06:02 GMT

Greenback awaits heavy week of critical data

Tue, Feb 12 2008, 05:20 GMT
by Benny Menashe

Finotec Group Inc.

THE Aussie dollar traded higher after the Reserve Bank of Australia (RBA) signaled that interest rates might rise further to combat inflation. The Australian dollar moved back above $US0.9000 following Monday mornings quarterly statement on monetary policy, when the central bank raised its inflation forecasts for 2008. The RBA warned interest rates were likely to rise further unless there was a significant slowdown in domestic spending.

Last week, the US dollar lifted against the Euro and commodity currencies but fell against the Japanese yen as investors again became risk averse. After the poor ISM data, markets became volatile and investors retreated to safer less yielding assets such as bonds. US treasury prices rose sharply with traders now pricing in a 50 basis point fall in borrowing rates for March. Essentially, fixed interest investors and those who took profits in USD bought the greenback up. The US dollar index rose 1.6% over the last week, the biggest weekly gain since June 2006. FOMC representatives believe that US economic growth will be slow, even ‘sluggish,’ but will avoid a recession.

Wednesdays US Retail sales are expected to be soft for January, with particular weakness to come from the auto sector. Data from the Fed indicates that household credit standards have become more strict while demand for credit has fallen. The weakness in the stockmarkets and labour market is also weighing heavily on consumers. The market is expecting retail sales figures to come in at -0.2%.

US Trade balance is expected to come in at -61.8B as the trade deficit widened in recent months. Imports surged on the back of rising oil prices while export growth was soft. High oil prices should widen the trade gap but the benefits to exporters from the weaker US dollar should narrow the trade balance. Concerns over the health of the global economy , highlighted at the weekend meeting of Group of Seven, boosted the Yen and the Euro against the dollar. These persistent qualms are expected to weaken the greenback in the medium term.

On Friday the busy week is expected to continue for the greenback. The US Industrial Production month on month is expected at 0.1%. This flat to mildly positive result in January is offset by weakness in utilities. The lift in the January ISM to back above 50 suggests the outlook for the manufacturing sector is relatively more positive than for the service sector, as it benefits from the healthy external economy and a depreciating USD.

Michigan consumer confidence surprised onlookers with an upside result in January. The market is expecting a figure of 77 for February; despite pessimistic factors such as falling house prices, equity market weakness and high petrol prices. January confidence was 78.4, and with all the factors listed above, it is hard to see that the US market will maintain the recovery, with confidence falling to below 77.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
09:30	PPI core	GBP	Jan	0.40%		3
09:30	PPI Input m/m	GBP	Jan	0.50%		2
09:30	PPI Output m/m	GBP	Jan	0.50%		2
09:30	Trade Balance	GBP	Dec	-7.377b		3
07:45	Industrial Production m/m	EUR	Dec	-1.50%		2

Published on Tue, Feb 12 2008, 05:20 GMT

Beware of the Aussie

Tue, Feb 5 2008, 06:14 GMT
by Benny Menashe

Finotec Group Inc.

Investors are sitting back and taking a wait and see approach with respect to the greenback and gold. Tomorrow we have the non-manufacturing ISM business activity index. The data is expected to slip further in January to 53.0 from a revised 53.9, reinforcing that US GDP growth will continue to slow in early 2008 and further weakening the fragile greenback.

Also in the US, we have Thursdays pending home sales. US housing activity data has looked ugly in recent weeks. New home sales in December were particularly brittle, and indeed another soft week is expected for pending home sales. Falls in housing construction and prices which have resulted in oversupply of properties, still failed to encourage buyers back into the market. This sector will continue to make a substantial negative contribution to US economic growth through 2008. Investors will retreat to the safe haven of gold, as all major currencies will strengthen against US dollar.

Canadian housing starts should rebound in January. The very weak outcome in December was at least due to bad weather. While January is probably too early to start seeing the impact, the recent rate cuts from the Bank of Canada should inject some stimulus into housing activity in the coming months. The market is pricing in a figure of -1.5% change for December, compared with the -9.9% for the previous month.

Wednesdays Ivey Purchasing Managers Index measures the activity of all purchasing managers from all industries. Data is expected to be 47.0 indicating an expanding economy, which is great news for the CAD. On Friday Unemployment and housing starts is forecasted at 6.00% and +20k respectively. This supports the slightly bullish outlook on the Canadian dollar and economy. The Reserve Bank of Australia (RBA) meets tomorrow, where a further rate tightening is on the cards. Widening interest rate differential and USD weakness has seen the Aussie spike past 0.9000, where it reached highs of 0.9082 11.00GMT . This is great news for Australian importers, where the value of goods imports increased by 0.3% in December and expected to rise further in January.

Investors are favouring higher yielding currencies such as the AUD, which enjoys a cash rate of 6.75% and widely expected to tighten to 7.00% when the Reserve Bank of Australia makes its monetary policy announcement on Wednesday. The currency touched 0.9082 11.00 GMT and has room to move up with the prospect of an increasing interest rate differential.

This week also produces solid data from Canada. A further rate cut is expected from the Bank of Canada in quarter one to 4.0%, but severe capacity constraints mean the BOC should be wary about easing too far. It could be an opportune time to buy up gold while its recovering at $904.00

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
21:45	Labor Cost Index q/q	NZD		0.90%		3
15:00	Durable Goods Orders m/m	USD	Dec	5.20%		2
15:00	Factory Orders m/m	USD	Dec	1.50%	0.50%	2
12:30	Trade Balance	AUD	Jan	-2.3B	-2.0B	3	-1.9B
10:00	PPI m/m	EUR	Dec	0.80%	0.10%	2	0.10%

Published on Tue, Feb 5 2008, 06:14 GMT

The US Currency is Vulnerable vs. Majors

Mon, Jan 28 2008, 05:48 GMT
by Benny Menashe

Finotec Group Inc.

The dollar is likely to remain under pressure in the week ahead. The FED is wide expected to cut the interest rate by 0.5% on Wednesday. After the biggest interest rate reduction in almost 18 years by the Federal Reserve wasn't enough to convince traders the world's biggest economy will avoid a recession.

Drop in U.S. stocks led investors to sell high-yielding assets and pay back low-cost loans from Japan. “The Fed easing or not, the economy is in deep trouble,'' Reported Finotec’s dealing desk. “The negative trend for the dollar still remains.''Added. While the Dollar generally benefits from safe haven flows when equity markets are falling, the reverse is thru when equity markets globally are rising, with some investors selling the dollar to buy assets in other currencies.

The Fed's cut in the federal funds target was the biggest single reduction since the Fed began using the rate as the principal tool of monetary policy in 1990. It came just over a week before policy makers' scheduled meeting on Jan. 30.

The dollar lost 1.5 percent against the euro since the Fed unexpectedly cut its target rate for overnight lending by three- quarters of percentage point to 3.5 percent this week. The U.S. currency fell against the euro as traders increased bets that the Fed has more cuts to make. Futures on the Chicago Board of Trade showed a 72 percent chance the Fed will cut its target rate by a half-percentage point next week to 3 percent, compared with zero chance a week ago. There's a 68 percent chance of a reduction to 2.75 percent at the March 18 meeting of policy makers.

Let’s take a deep look at the economic calendar for the week ahead. It start with U.S. new home sales for December on Monday, economists forecasting an annualized rate of 0.64 million units for the month. The U.S. December durable goods report follows on Tuesday. Economists forecast a 1.5 percent gain. Investors will pay more attention to the publication of the U.S. fourth quarter gross domestic product on Wednesday, and economists expect 1.2 percent growth comparing to 4.9% on the third quarter. Friday, the week concludes with January's jobs report with economists forecasting a rise of 48,000 non-farm jobs.

Published on Mon, Jan 28 2008, 05:48 GMT

Sterling Drops to one year low against the Dollar

Tue, Jan 22 2008, 06:23 GMT
by Benny Menashe

Finotec Group Inc.

The pound opened the week with dropping to its lowest in nearly a year against the dollar, pressured by a spike in global risk appetite and further evidence that the UK housing market is heading for a sharp downturn. The pound which has the highest interest rates in the Group of Seven industrialised nations has benefitted from the carry trade where investors borrow low yielding currencies to fund purchases of higher yielding assets. However the market expectations are for cutting 1.0% in the interest rate, from 5.5% today to 4.5% in a few months.The pound fell 0.25 percent versus the dollar, to around $1.9480, its lowest level since March. It fell 1 percent versus the yen, to as low as 206.68, its lowest since May 2006. Fears that economic woes are spreading beyond the United States sent high-yielding currencies lower. Annual house price inflation in England and Wales fell to its lowest since December 2005, backing the view that the UK housing market is heading for a sharp downturn.

The yen is back on track

Higher demand for safe haven pushes the Yen up against the majors. The low-yielding yen continues to rising broadly, hitting a 2-1/2 year peak against the dollar and five-month highs against the euro as investors avoid risky trades amid a sell-off in global stocks.
European stocks slid nearly 4 percent to levels last seen in July 2006, mirroring a 3.9 percent drop in Japan's benchmark Nikkei average. This came on the back of further declines on Wall Street last Friday. "For now, if we continue to see stock market weakness, the yen will be under a strong buying pressure," Reported by Finotec dealing desk. Everyone had been selling dollars and buying emerging markets currencies. But with emerging markets weakening as well now, you're finding investors are unwinding those positions and that's leading to dollar demand.

Investors pulling out of the Euro

The euro extended losses from last week, when a European Central Bank official said economic growth in the region could slow more than expected this year. Futures markets are now discounting more than 50 basis points of easing from the ECB this year, compared with expectations at the start of the month of the bank staying on hold at 4 percent all year. Currently, the dollar is getting some benefit from the view other economies and currencies will only weaken in the coming months.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
09:30	Public Sector Net Borrowing	GBP	Dec	11.2b		2
08:15	PPI m/m	CHF		0.30%		2
07:00	PPI m/m	EUR	Dec	0.80%		2

Published on Tue, Jan 22 2008, 06:23 GMT

The BoE left the interest rate unchanged bu the market expect a cut on Feb

Tue, Jan 15 2008, 05:57 GMT
by Benny Menashe

Finotec Group Inc.

Last week, the BOE left the interest rate at 5.5%. But there are very strong market expectations that the Bank of England will cut interest rates at the February MPC meeting, these expectations could still be disrupted by the inflation data. The bank is certainly still uneasy over inflation trends and a higher than expected figure would make it more difficult for the bank to cut rates. The latest consumer inflation data on Tuesday will, therefore, be very important for both the Bank of England and the markets.

Producer price inflation was at a 16-year high in data released on Monday and an elevated reading for consumer inflation would keep the central bank on alert. There will certainly be conflicting pressures on the December inflation rate. There is likely to have been heavy retail price discounting on weakening consumer demand and this will tend to push the inflation rate lower. This will be offset by upward pressure on food and energy prices while a key feature is likely to be a wide spread between the different sectors.

Overall, Sterling is likely to jump high on any combination of a headline rate above 2.1% and a core figure above 1.6%. In contrast, any drop in the inflation rate would tend to put the UK currency under sharp selling pressure. It is likely that the MPC will have seen the figures before last week’s interest rate decision and this will raise some speculation over a higher than expected figure given that the bank decided against cutting interest rates.

The best short-term strategy still appears to be to look for a swift reversal of any short-term move following the data, especially if Sterling sees initial gains on a higher than expected figure. Also, the investors will be focusing on U.S. data this week and the U.S corporate earnings such as City Group on Tuesday.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
23:50	Current Account	JPY	Nov	45.70%	6.50%	2
13:55	Redbook m/m	USD	Weekly			2
13:30	PPI m/m	USD	Dec	3.20%	0.40%	3
13:30	Core PPI m/m	USD	Dec	0.40%	0.20%	3
13:30	Core Retail Sales m/m	USD	Dec	1.80%	0.10%	3
13:30	Retail Sales m/m	USD	Dec	1.20%	0.10%	2
09:30	CPI m/m	GBP	Dec	0.30%	0.50%	3
09:30	CPI y/y	GBP	Dec	2.10%	2.10%	2
09:00	CPI m/m	EUR	Dec	0.40%	0.30%	2
07:45	HICP mm	EUR	Dec	0.60%	0.30%	2
07:00	GDP	EUR		2.50%	2.50%	2

Published on Tue, Jan 15 2008, 05:57 GMT

The dollar recovers from deep drop to a six week low against the yen

Mon, Jan 7 2008, 11:46 GMT
by Benny Menashe

Finotec Group Inc.

The dollar recovers from deep drop to a six week low against the yen after a sharp stinging pain on Friday`s U.S. weak job data the increase the certainty for an aggressive Fed rate cut from the 4.25%. The continuing decline in market interest rates should provide some reassurance over short-term liquidity trends and, with hopes for lower official rates, is likely to trigger a corrective recovery in equity markets and also help support carry trades. Sentiment will still be very fragile following the weak US data last week and carry trades will find it difficult to regain much ground.

Fears of a credit contraction and deterioration in global growth prospects continue, but offset expectations that central banks will lower interest rates will be an important combat between these two forces which will certainly spill over into the currency markets.

This week investors will be focused at the ECB and BOE interest rate decisions due to announce their decisions on Thursday. European central bank rate stands at 4.0% and the outlook is to be unchanged but most of the analysts forecast for another cut of a quarter percent in England central bank rate. Sharp decrease in BOE rate will hit strongly on sterling that can go much deeper than 1.9600 vs. dollar.

Fed Chairman Bernanke is due to speak on Thursday with comments throughout the week from other Fed officials. Bernanke can provide clues for the markets and hints over a 0.50% rate cut would tend to undermine the dollar. Also on Friday is the release of the US budget, which is expected to have increased in December to 50.0$ billion from 42.0$ billion in November.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
10:00	PPI m/m	EUR	Nov	0.60%		2
10:00	PPI y/y	EUR	Nov	3.30%		2
10:00	Unemployment Rate	EUR	Nov	7.20%	7.20%	3
10:00	Consumer Sentiment	EUR	Dec	-8	-7	2
09:30	Sentix Index	EUR	Jan	11.9		2
06:45	Unemployment Rate	CHF	Dec	2.60%	2.60%	2

Published on Mon, Jan 7 2008, 11:46 GMT

The Dollar Is beaten Again

Wed, Jan 2 2008, 05:54 GMT
by Benny Menashe

Finotec Group Inc.

The dollar lost most of his latest gains vs. the majors, toward the end of last week as weak data from the US speared back speculation for further Fed rate cuts into 2008. The biggest fall of new home sales in the last 12 years and an unexpected drop in durable good order gave a wakeup call after investor sank into yearend optimism. The existing home sales are expected to show that the housing market is still looking for a bottom. Rising foreclosures are adding to the increase of unsold homes, pulling down home prices and dragging down consumer spending. A strong signal for the comeback of the negative sentiment toward the greenback was when the market ignored comforting data showing a surprising rise in consumers’ confidence. The fed fund futures are showing a 90% chance of a fed rate cut in the coming meeting next month.
Investor will anticipate the publication of the FOMC minutes in the coming week. Much importance will be given to the prediction for the future US economic progress and the evaluation of the impact made by the slumping housing market and the credit crunch on the broader economy. The US payrolls will trigger a lot of attention from investors and are predicted to show a down trend in job creation during November.
The commodities are boiling again. Strikes made by the Turkish air force against Kurdish guerrilla fighters on Iraq northern border speared supply concerns toward the peak of the winter season. The fall in inventories for sixth week in a raw emphasize this concerns and the crude oil crossed the 97$ a barrel level. The rise in energy price speared back strong inflation concerns that led to a bullish trend on the precious metal. The bullish trend was backed up by a weakening dollar and rising uncertainty after the assassination of Former Pakistani Prime Minister Benazir Bhutto. The gold is considered a safe haven during time of uncertainty.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
15:00	Existing Home Sales	USD	Nov	4.97m	5.0m	2

Published on Wed, Jan 2 2008, 05:54 GMT

Merrill lynch positive reports support American economy

Wed, Dec 26 2007, 07:18 GMT
by Benny Menashe

Finotec Group Inc.

Merrill Lynch reports pushed the equity market higher and provide some confidence to investors in the financial sector, this after a big drop earlier due to the credit crunch. Euro currency straightened a little against the green back on Friday. The main reason for EUR/USD lifts up look like traders took a profit before the holidays.

Last week, published consumer sentiment in U.S, the data was 0.5 points above the forecast by that giving a positive view that can encourage traders to open a buy positions on American dollar in the short term. This week the main focus will be on the second part of the week, U.S will provide data’s such as new durable goods, consumer confidence, PMI m/m and new home sales.

Technical analysis on the pair EUR/USD:

Analysis according to the primary trend

The pair broke the support level of the middle standard error channel and moving downward. In addition, Fibonacci 23.6% line was breached down. We can see the oscillator MACD after a bearish crossover and bellow the zero line. Also, moving averages of 20 and 50 days are close to a bearish cross of the shorter line. Thus, in the long term we notice that the pair can continue to pull down.

The point 1.4008 will be a Take Profit due to the strong support level at the lower standard error channel and Fibonacci 38.2% line.

The Stop Loss will be at 1.4550 due to the strong previous resistance.

Analysis according to the secondary trend

The secondary tendency is last 3 month. The selling point will be at 1.4257 on break of the Fibonacci 61.8% support line and breakthrough of the lower standard error channel line down. We notice that the oscillator RSI also support the bearish tendency and directing to overbought area. In addition, momentum oscillator on bearish trend bellow the zero line and can determine more decline in the pair.

Take profit point stands at 1.4120 due to the strong support level at the previous lower level.

Stop loss point stands at 1.4405 due to the strong resistance level of the middle standard error channel line.

Analysis according to the minory trend

We notice that the pair is traded on the range between the levels of 1.4320 to 1.4410.

The sell point will be at 1.4350 on breaking the middle standard error channel line down.

Take profit point will be at 1.4316 due to the previous lower level.

Stop loss point will be at 1.4370 due to the previous highest level.

The Hourly charts on the pair are bearish at the moment. Daily graphs are indicating for bearish trend coming back. RSI tendency is going down to the oversold area. Two EMAs of the oscillator MACD are still above the zero line but after a bearish crossover. Momentum oscillator bellows the zero line and the index tendency is bearish. Technical indicators show us possibility for more declines on the pair for the short term.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
23:50 GMT	CSPI y/y	JPY	Nov			2

Published on Wed, Dec 26 2007, 07:18 GMT

U.S. Dollar Rallies for two month high, will it continue?

Mon, Dec 24 2007, 06:41 GMT
by Benny Menashe

Finotec Group Inc.

The dollar fell half a cent versus the euro on last Friday as investors took profits on the U.S. currency's rally to two-month highs and thin end-of-year trading conditions exacerbated market volatility. " Its technical profit taking, closing the books ahead of the end of the year in very thin markets. There are almost no more market participants at the moment ahead of the Christmas holidays," Reported from the Finotec dealing desk. “Many traders still have concerns about the impact of financial sector woes on real activity figures.” added.

Worries about the health of the U.S. financial sector were reignited by a Wall Street Journal report that U.S. investment bank Merrill Lynch & Co Inc may get a capital infusion of up to $5 billion from Singapore state investor Temasek Holdings .U.S. data also took a slight turn for the worse on Thursday, with the Philadelphia Fed's survey showing that factory activity in the U.S. mid-Atlantic region plunged to its weakest in over four years -- potentially giving another excuse to lock in profits on the dollar's gains from earlier in the week.

But some said the market reaction may not be necessarily one-way because fund injections to investment banks can be seen as relief rather than a cause of worries, because they offset losses that had been incurred.

High Yielders Gain

The New Zealand dollar rallied 0.6 percent against the dollar to $0.7639, helped by a slightly stronger than expected growth figure for the third quarter. This, together with a strong performance on equity markets, helped prop up fellow high-yielder the Australian dollar. The low-yielding yen -- often used a source of cheap funding for carry trade bets in currencies like the Aussie and kiwi -- stayed on the back foot, under a selling pressure.

Sterling falls towards all time low vs euro

The pound homed in on an all-time low versus the euro on Friday as expectations of an interest rate cut on the back of a slowing economy led investors to sell the currency. The pound held at its lowest in more than a year and a half on a trade-weighted basis as news on Wednesday that the Bank of England's Monetary Policy Committee was unanimous on this month's rate cut firmed investor conviction that more monetary easing is imminent. The (MPC) minutes are the most persuasive drivers this week. They voted decisively for a rate cut and the accompanying statement was also on the dovish side.

The BoE cut rates to 5.50 percent in December and further monetary easing is expected following a string of soft economic data with the current account deficit hitting a record 20 billion pounds. Cyclical and structural factors supporting the pound are eroding and a medium term decline for the pound looks likely.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance	Actual
15:30 GMT	ECRI	USD	Weekly	N/A	N/A	1
15:00 GMT	Consumer Sentiment	USD	Dec	74.5	N/A	2
13:30 GMT	Core PCE Price Index m/m	USD	Nov	0.20%	0.20%	3	0.20%
13:30 GMT	Personal income	USD	Nov	0.20%	0.50%	2	0.40%
13:30 GMT	GDP	CAD	Oct	0.10%	0.10%	3	0.20%
13:30 GMT	Retail Sales m/m	CAD	Oct	-0.20%	-0.20%	2	0.10%
13:30 GMT	Core Retail Sales m/m	CAD	Oct	0.10%	0.10%	3	0.00%
10:00 GMT	Industrial New Orders m/m	EUR	Oct	-1.60%	2.00%	2	2.50%
09:30 GMT	Retail Sales m/m	GBP	Nov	-0.10%	0.20%	3	0.40%
09:00 GMT	Current Account	EUR	Oct	0.6B	1.4B	2	1.3B
07:50 GMT	Construction Spending m/m	EUR	Nov	-1.10%	0.60%	2	-0.10%

Published on Mon, Dec 24 2007, 06:41 GMT

Investors are looking very closely into U.S economic data

Tue, Dec 18 2007, 05:50 GMT
by Benny Menashe

Finotec Group Inc.

U.S dollar opens higher this week as result of straight affect from recent positive U.S data run and fall-out from Friday’s strong inflation numbers. A gradual turnaround brought fresh EUR/USD losses and a drop to new lows around 1.4329. The pair EUR/USD can drop more cause of the option expiry today.

Economic data from U.S run continues with third-quarter current account numbers for October and appreciates positively to the market after decrease in deficit.

This week, Liquidity and credit issues will be extremely important influences on the currency markets. Market liquidity will gradually fade on seasonal grounds, especially over the second half, as this is the last full trading week of 2007.

The impact will be particularly important this year given the pressure on banks and institutions to bolster liquidity ahead of the year-end book closing. The credit markets will also have a key influence and the shrinking of credit will tend to intensify the pressure of weaker liquidity. Wall Street trends will be very important while quarterly earnings reports from the banks will also be watched closely.

There is likely to be heavier than usual adjustment of positions given that capital levels are under close scrutiny while there will also be increasing pressure to cut loss-making positions before the end of 2007. In this environment, there is the risk that market volatility will be very high. Overall, carry trades are also likely to be on the defensive for the week as a whole.

In U.S the housing data on Wednesday will still be watched closely. The consumer inflation data on Tuesday and retail sales data on Friday will provide important evidence on the balance between growth and inflation pressures. The most likely outcome is a combination of faltering growth and increased headline inflation which will increase stagflation fears.

Concerns over a slowdown in the Euro-zone has been weighing on the Euro and the German IFO index will be important on Wednesday as it will give an important insight into the degree of a slowdown in the German economy.

The forthcoming week will be important for Sterling will a series of key releases which will shape Bank of England interest rate expectations early in 2008. The Bank of England minutes will be released on Wednesday and the vote split, allied with the general remarks from the MPC members will influences January rate expectations.

In the end, the domestic data will also be important for the Canadian currency. The latest consumer inflation data will be released on Tuesday while the GDP and inflation data will be announced on Friday.

Today's Economic Events


Time	Event	Currency	Period	Previous	Forecast	Significance
18:00 GMT	NAHB Housing Market Index	USD	Dec	19		2
13:30 GMT	Current Account	USD	Quarterly	-190.79B		2
13:30 GMT	Securities	CAD	Oct	4.51B		2
13:30 GMT	Securities	CAD	Oct	-5.21B		2
08:15 GMT	Orders	CHF	Quarterly	11.7		1

Published on Tue, Dec 18 2007, 05:50 GMT

The market awaits Fed rate decision

Mon, Dec 10 2007, 09:42 GMT
by Benny Menashe

Finotec Group Inc.

After two winning weeks on Wall Street, investors find out Tuesday if their wish for an interest rate cut. This is the main reason that support the indexes gain profits.

Federal Reserve officials in recent weeks have indicated a willingness to cut rates further, so it's almost a foregone conclusion that the target federal funds rate is headed lower. The Fed has already dropped rates twice since the credit markets froze up over the summer due to surging mortgage defaults, and the only point of contention in the market seems to be the size of the next cut.

But there are three more weeks left in this rocky year, so investors aren't sighing with relief just yet. Wall Street remains uncertain if the Fed will keep lowering rates into the new year; at the central bank's last meeting on Oct. 31, policy makers said 'the upside risks to inflation roughly balance the downside risks to growth.'

Fed Chairman Ben Bernanke and others appear to have shifted their stance in light of recent market turbulence, but investors want to see it in writing. Furthermore, many are skeptical that rate cuts are enough to bring demand back into the worrisome areas of the credit markets, which has been seeing securities downgraded on practically a daily basis.

Wall Street has posted robust gains recently as investors grew more confident in the Fed's openness to loosening its policy again. They have also been relieved that some credit-loss estimates for banks have been milder than feared.

Whether the Fed lowers rates in 2008 will depend not only on how the financial and housing industries weather ongoing mortgage problems, but also on inflation. Any higher-than-anticipated readings for November from the Labor Department's producer price index and consumer price index, scheduled to be released Thursday and Friday, respectively could worry investors.

The forex has already priced in the effects for a rate cut as well. Clearly, if we get a surprise and the Fed holds, we will likely see some solid volatility in the FX.

The first half of the week will certainly be dominated by the Federal Reserve interest rate decision, especially as the decision is not clear cut. Three key aspects will be under scrutiny at the Tuesday meeting for the short-term dollar reaction. Given the cuts priced in, the dollar should be able to resist heavy selling ahead of the FOMC announcement.

Markets will need to look at the headline Fed funds decision as well the discount rate decision as there may be a different outcome for the two rates. The statement from the Fed will also be watched very closely for evidence on future policy while the vote split will also be important as there is the potential for dissenting votes at the meeting.

As far as the US data releases are concerned, there will be a series of important releases over the week. The most important data is likely to be the retail sales data on Thursday as the outlook for consumer spending will remain crucial for the US economy. The pending home sales on Monday will also be watched closely

Inflation indicators will also be important, especially after the large than expected earnings increase reported on Friday. The consumer inflation data on Friday will be watched closely to assess whether the Fed can afford to concentrate on growth risks or whether it will need to be more cautious on the inflation front.

In addition, the trade data on Wednesday will be important for underlying dollar sentiment. The Middle East currency policies will also need to be watched closely as there will be speculation over at least a limited revaluation which would tend to unsettle the dollar slightly in an immediate reaction.

Underlying credit-related stresses will continue to be watched very closely. Over the past week, stock markets have generally rallied at the same time as underlying credit stresses have appeared to increase. This reflects market hopes that prompt action on interest rates by global central banks and measures to ease the increase in sub-prime mortgage payments will help stabilise conditions and prevent more serious economic damage.

The forthcoming week could be very important in determining whether there is a sustained improvement in optimism or whether there is return to fear mode as financial conditions tighten with a suspicion that the banks will not be able to stave off an economic downturn. The net risks suggest that markets have priced in a substantial amount of optimism which will make it difficult to secure further gains and will tend to undermine carry trades.

Within the UK, most attention is likely to be focussed on the housing evidence, together with the extent of market stresses which will be illustrated by Libor rates. The latest RICS data due on Thursday at midnight local time. Further weakness would continue to fuel expectations of further Bank of England interest rate cuts which would tend to keep Sterling on the defensive.

The UK trade data will be important on Tuesday following a record deficit reported last month and any further widening of the deficit would risk destabilising the currency.

The Japanese Tankan survey will be watched closely on Thursday while the National Bank interest rate decision also on Thursday will also be very important for the Swiss currency.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
05:00 GMT	Eco Watchers Survey	JPY	Nov	41.5		2
07:00 GMT	Trade Balance	EUR	Oct	18.1B		2
07:40 GMT	Current Account	EUR	Oct	15.4B		2
07:45 GMT	Industrial Production m/m	EUR	Oct	-1.10%		2
09:00 GMT	Industrial Production m/m	EUR	Oct	-1.00%		2
09:30 GMT	PPI Input m/m	GBP	Nov	1.80%		2
09:30 GMT	PPI Output m/m	GBP	Nov	0.60%		2
13:15 GMT	Housing Starts	CAD	Nov	219.5K		3
13:30 GMT	Leading Index m/m	GBP	Oct	-0.10%		2
15:00 GMT	Pending Home Sales m/m	USD	Oct	0.20%	-1.00%	3
21:45 GMT	Merchandise Terms of Trade q/q	NZD	Nov	0.60%		2

Published on Mon, Dec 10 2007, 09:42 GMT

Will the Dollar Continue Forward?

Tue, Dec 4 2007, 06:04 GMT
by Benny Menashe

Finotec Group Inc.

The dollar rallied into the closing on Friday to tow week high vs. the Euro and a basket of currencies. The strong move by the dollar was partly due to corporation cutting short position on the dollar toward year end. The traders reacted opposite to weak fundamental data published in the last few days showing a continuing housing slump and a slow down in the real economy. Core durable goods went well below expectation followed by a lower then expected personal spending and income.

The relatively high PCE data indicating rising inflation pressure might dim speculation for further rate cut by the Fed down the road. Analyst predict the fed will cut the rate at the up coming meeting on December 11 but, signals of rising inflation that may lead to a hawkish statement by the fed, indicating no further cut in the near future, might give strong support to the greenback

The markets are expected to fluctuate in the up coming week as five central banks are meeting for a rate decision. The Bank of Canada, Reserve Banks of Australia and New Zealand, the European Central bank and the Bank of England are expect to hold rates unchanged but, investors will pay much attention to the rhetoric in which the banks will back their decisions.

OPEC meeting on December 5 will be eyed carefully as traders are pricing in speculation for an increase in the production. The Crude Oil traded beneath the 89$ a barrel for the first time last week since October 31. The gold dipped below 800$ an ounce following the downtrend in the energy prices and as the dollar gained vs. the Euro.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance	Actual
00:30 GMT	Trade Balance	AUD		-1.9B	-1.8B	3	-3.0B
01:30 GMT	Average Earnings Index +Bonus q/q	USD		-0.60%	0.00%	2	0.00%
08:30 GMT	PMI -SVME	CHF	Nov	60.7	59.5	2	63.4
08:55 GMT	Manufacturing PMI -German	EUR	Nov	51.7	52.8	2	53.7
09:00 GMT	Manufacturing PMI	EUR	Nov	52.6	52.6	2	52.8
09:30 GMT	Manufacturing PMI	GBP	Nov	52.8	52.5	2	54.4
10:00 GMT	Unemployment Rate	EUR	Oct	7.30%	7.30%	2	7.20%
15:00 GMT	ISM Manufacturing Index	USD	Nov	50.9	50.5	3	50.8
15:00 GMT	ISM Manufacturing Prices	USD	Nov	63	65.5	2	67.5

Published on Tue, Dec 4 2007, 06:04 GMT

The Dollar Ended Another Week of Record Lows Vs. the Euro

Mon, Nov 26 2007, 10:45 GMT
by Benny Menashe

Finotec Group Inc.

The dollar ended another week of breaking new record lows against the Euro when reaching to 1.4967 on Friday. The fed lower the growth expectation to 1.8% -2.5% for 2008 from 2.5% to 2.75%. The downgrade of the economic outlook released by the Fed, emphasized the vulnerability of the world biggest economy. The sub prime crises the deepening recession in the housing market and the credit crunch are expected to stall the world biggest economy. Fears from recession are prompting speculation that the fed will cut the rate in the coming meeting by 0.25%. Citi bank US biggest bank forecast the rate to be at 3.5% until March 2008 and Meryll Lynch predicted it to be at 2% by June 2008.

The US leading indexes closed a third negative week when the European peers closed lower the strait forth week. The negative sentiment in the equity market and the growing concerns and uncertainty about the credit crunch and its affects on the world growth initiated some risk aversion by the investors. The unwinding of the carry trade causes some big loses upon the NZ dollar and the Aussie against the yen. If the positive ending on Friday will continue into next week we might see a slow come back of the higher yielding currencies vs. the Yen.

This week contains some market moving data: consumer confidence, durable goods, existing and new home sales, the Beige Book report, US GDP, personal income, personal spending, Chicago PMI and housing sells. Euro zone and German CPI are due for release next week. They could be particularly market moving because high numbers will indicate that the ECB aims correctly while weaker numbers might raise question whether they are putting their focus in the wrong places. We are also expecting the German IFO report, retail sales, unemployment and Euro zone Retail PMI.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
00:00 GMT	Nationwide House Prices m/m GB	GBP	Nov	1.10%		3
23:50 GMT	CSPI y/y	JPY	Oct	0.74		2

Published on Mon, Nov 26 2007, 10:45 GMT

Investor Awaits The Meetings of the central Banks in US and GB

Tue, Nov 20 2007, 06:31 GMT
by Benny Menashe

Finotec Group Inc.

Growing concerns about the impact of the credit crunch, caused mainly by sub prime mortgage problems, on the broader economy increased speculation the fed may cut interest rate again not later than the end of March. Interest-rate futures traded on the Chicago Board of Trade show a 90 percent chance the Fed will lower its benchmark rate a quarter-percentage point to 4.25 percent on Dec. 11. The weak data realist at the end of last week showing the slowest rate of industrial production since the month of January and a lower than expect net foreign investment in US assets, supported this concerns.

On the meeting of the G-20, Group of 20 finance ministers and central bank governors, commence where made that too much volatility and erratic currency movements were unwelcome, and stressed the need to correct global economic imbalances in the face of rising risks to growth and inflation. The diplomatic phrasing and well predicted tune of the comments where translated into a mute reaction by the markets.

The G-20 meeting also called for a faster depreciation of the Asian currencies. There's been a lot of international diplomacy in the past few weeks to see if officials can stabilize currency markets a bit,'' said Jim O'Neill, chief global economist at Goldman Sachs Group Inc. in London. ``You would expect Trichet to repeat what he's been saying, which is clearly a higher level of warning.

The housing sector in the US will continue to draw the investor attention this week so will the FOMC Meeting Minutes that will be published Tuesday. In GB the GDP and MPC Meeting Minutes will be in the front stage as GDP is expect to grow at a 0.8% (q)

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
13:30 GMT	Wholesale Sales m/m	CAD	Sep	-2.00%		2
18:00 GMT	NAHB Housing Market Index	USD	Nov	18	17	2

Published on Tue, Nov 20 2007, 06:31 GMT

Is the dollar downtrend will change due to the data this week?

Tue, Nov 6 2007, 09:05 GMT
by Benny Menashe

Finotec Group Inc.

Why the dollar weakened when the non-farm payroll jobs data was so strong, and such a positive surprise? The basic conclusion was the number is not always just the number, and we need to dive a little deeper. The released data in the past week such as ADP survey, annualized GDP q/q and the non farm payroll were good.

First ADP gave a glimpse of up and coming non-farm payroll with expected 60k, and actual coming in at a whopping 106k. Second, annualized GDP q/q with expected at 3.1, had actual coming in at 3.8 percent healthy growth and a surprise. Third, non-farm payroll expected 82k new jobs, and actual was 166k.

With all of this good news, we see the dollar still weaken. The reason is that the US economy appears to be slowing in spite of the above information, the housing market is collapsing and there is a significant credit crunch. Also, the last week gave us couple of additional numbers that were not encouraging at all.

Interest rates were cut to 4.5 as expected a big sign of slowing econo-credi-housing industry needing a boost. Personal spending expected 0.4 percent actual released 0.3 percent. And the Average hourly earnings were down 0.1 percent from the forecast of 0.3 percent. That is why the dollar still remains week.

This week there are many economic data that can give a good direction to the U.S currency. The investors will be focusing on the data such as ISM Non-Manufacturing Index on Monday, Fed chairman Bernanke speech during the week and consumer sentiment that will be release in the end of this week.

Also, this week will be very important to look closely at the interest rate announcement in Euro zone and the bank of England on Thursday.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
06:00 GMT	BOJ Governor Fukui Speaks	JPY	Nov			3
08:30 GMT	BOJ Governor Fukui Speaks	JPY	Nov			3
09:30 GMT	Industrial Production m/m	GBP	Sep	0.10%	0.20%	3
09:30 GMT	Manufacturing Production m/m	GBP	Sep	0.40%	0.10%	2
09:30 GMT	Services PMI	GBP	Oct	56.7	56.1	2
14:00 GMT	Fed Governor Mishkin Speaks	USD	Nov			2
15:00 GMT	ISM Non-Manufacturing Index	USD	Oct	54.8	54	3
18:00 GMT	Fed Governor Kroszner Speaks	USD	Nov			2

Published on Tue, Nov 6 2007, 09:05 GMT

WAITING FOR G7

Mon, Oct 15 2007, 12:27 GMT
by Benny Menashe

Finotec Group Inc.

The strong retail sales data on Friday didn’t hold for the dollar as he failed to make a sustainable and significant movement against the Euro.As of late U.S. trading on Friday, U.S. interest rate futures were implying a roughly 30 percent chance of a Fed rate cut in October, compared to virtually a toss-up a week ago. One of the main reasons for the dollar current weakness, albeit strong data in the last weeks, is that investors lost confidence in the greenback.

Market players are cautious about making active bets on currencies ahead of the G7 meeting, traders said. The focus may be on whether U.S. officials pay heed to European concerns about the euro's strength by making stronger statements in support of dollar strength at the G7 than before.

Amid the focus on the G7, European Central Bank President Jean-Claude Trichet told television station CNBC Europe that currency traders speculating on the yen and currencies in emerging markets should be aware of the risks they are taking. Markets should take into account that there is "good news" about the Japanese economy, leading to "two-way risks in this domain", Trichet said, according to a CNBC transcript from the interview, repeating a previous stance.The interview will be aired at 0620 GMT on Monday. Trichet's remarks seem similar to comments he made at a G7 meeting in Essen, Germany, in February and thus are unlikely to have much fresh impact on the market, said a trader for a major Japanese trading house.

The market will eye the BOC rate decision witch is expect to stay unchanged at the levels of 4.5%. Inflation data will be published in the coming week by several key countries (USA, Germany, GB) as CPI will be released.

The commodities are boiling as the geopolitical tension in the Middle East pushes crude oil above 84$ a barrel. The up side risk of inflation due to high energy price creates a buying pressure on the gold. The precious metal is often use to hedge investment against inflation. The weak dollar is also helping the up side trend in the commodities market.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
04:30 GMT	Capacity Utilization Rate	JPY	Aug	-1.30%	AN	2
06:00 GMT	CPI y/y	EUR	Sep	1.80%	1.90%	3
12:30 GMT	NY Fed Manufacturing	USD	Oct	14.7	13	3
12:30 GMT	Leading Index m/m	CAD	Sep	0.30%	0.30%	2
12:30 GMT	BOJ Governor Fukui Speaks	JPY	Oct	NA	NA	3
23:00 GMT	Fed Chairman Bernanke Speaks	USD	Oct	NA	NA	3

Published on Mon, Oct 15 2007, 12:27 GMT

US Dollar Sees Hope for Rebound Against Euro

Tue, Oct 9 2007, 07:54 GMT
by Benny Menashe

Finotec Group Inc.

Friday's figures showed the U.S. created 110,000 non-agricultural jobs in September, the most since May. The loss of jobs in August -- seen as the key reason behind the Federal Reserve's 50 basis point rate cut last month -- was reversed to a gain and July's numbers were also revised up. This encouraged investors to buy back dollars after a heavy sell-off fuelled by expectations of more Fed cuts.

The futures market reflected a 54 percent chance the Fed would hold rates steady when it meets on October 31, more than the roughly 31 percent implied probability of steady-rate verdict a week ago. A slightly brighter outlook for the U.S. economy helped boost risk appetite and also cheered prospects for countries which export to the United States.

The dollar ticked up versus the Euro and the yen on the beginning of the week, cheered by last Friday's stronger than expected U.S. jobs report which calmed fears about a recession in the world's biggest economy. The U.S. data helped the dollar recover from record lows versus the Euro set at the start of last week. "The payrolls numbers have reduced fears that the U.S. economy is heading into recession. So to see some kind of support for the dollar at a time when dollar short positions are very high is not very surprising," said Michael Klawitter, currency strategist at Dresdner Kleinwort in Frankfurt.

High-yielding commodity currencies have been the chief beneficiaries of the better than expected U.S. employment report, as the Canadian dollar hit a 31 year high against the U.S. dollar while the Australian dollar broke through the US$0.90 cents mark for the first time since 1984.In contrast, the low yielding Japanese yen -- which is often used as a funding currency in carry trade investments -- weakened versus the dollar and hit a 2-1/2 month low against the Euro. The Bank of Japan meets to decide on rates on Thursday but most economists expect that any rise in the overnight rate, now at 0.5 percent, will take place in 2008.

This week the key report will come on Friday as markets will focus on the Retail Sales data. If the consumer can remain resilient in the face of the housing fiasco and rising energy costs then the greenback may be able to finally to get stronger in a near term.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
00:00 GMT	Market Holidays	JPY	Oct			2
00:00 GMT	Market Holidays	USD	Oct			2
00:00 GMT	Market Holidays	CAD	Oct			2
08:30 GMT	Industrial Production m/m	GBP	Aug	-0.10%	0.30%	2
08:30 GMT	Industrial Production y/y	GBP	Aug	0.90%	0.90%	2
08:30 GMT	Manufacturing Production m/m	GBP	Aug	-0.30%	0.30%	2
08:30 GMT	Manufacturing Production y/y	GBP	Aug	0.50%	0.80%	2
08:30 GMT	PPI Output m/m	GBP	Sep	0.20%	0.20%	2
08:30 GMT	PPI Input m/m	GBP	Sep	-0.50%	1.30%	2
10:00 GMT	Industrial New Orders m/m	EUR	Aug	-7.10%	2.20%	2

Published on Tue, Oct 9 2007, 07:54 GMT

Sterling hitting two−month highs against the USD

Mon, Oct 1 2007, 10:44 GMT
by Benny Menashe

Finotec Group Inc.

The dollar edged up from earlier record lows against the euro and a basket of currencies as investors braced for a fresh batch of U.S. data for confirmation that more interest rate cuts are on the cards. The dollar index lost 3.8 percent in September, more than doubling its year-to-date fall, as a squeeze in credit markets and signs of slower growth prompted the Fed to slash rates by 50 basis points, fuelling expectations of more cuts to come.

On Friday, the Fed's favored inflation gauge such as personal consumption expenditure (PCE) that showed only a muted increase in consumer prices. Tame inflationary reassures give the Fed more room to cut rates if necessary to boost growth.

The Japanese currency was also knocked by risk appetite staying strong in foreign exchange, with investors putting on carry trade bets where purchases of high-yielders like the New Zealand dollar are funded with cheap borrowing like the yen. The New Zealand dollar gained more than 1 percent versus the U.S. dollar, while the Australian dollar, another high yielder, scaled an 18-year peak. Both also got an additional boost from high commodity prices.

However with equity markets falling on fresh concerns about the health of the banking sector after Swiss bank UBS said it would write down 4 billion Swiss francs due to credit woes.

Sterling gained broadly on Monday, hitting two-month highs against the dollar, drawing support from the greenback's downtrend that saw it plunge to yet another record low versus the euro for an eighth straight session. Analysts said the pound has been playing catch-up on other currencies such as the euro and Canadian dollar, which led gains against the U.S. dollar in the wake of a half-percentage point cut in U.S. interest rates on September 18 to 4.75 percent. The U.S. rate easing has diminished the allure of holding dollar-denominated assets. Further helping the pound's cause was a report on Sunday saying two U.S. hedge funds are interested in taking over the troubled British mortgage lender Northern Rock, analysts said.

Also helping ease nervousness surrounding Britain's financial sector were remarks by finance minister Alistair Darling on Monday, saying the government will raise depositors' protection on their savings to 35,000 pounds ($71,080), after the country suffered its first bank run in more than a century last month.

This week, from U.S. investors are awaiting the Institute for Supply Management's manufacturing index due later in the session for further clues on the health of the U.S. economy. The ISM's employment component may shed some light on the likely outcome of the keenly-watched non-farm payrolls report on Friday. Also this week Australian, Euro and Britain Central banks will announce the short term interest rate. For now analyst’s expectation are that the banks will leave the rates unchanged.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
07:30 GMT	PMI -SVME	CHF	Sep	65.1	63	2
07:55 GMT	Manufacturing PMI -German	EUR	Sep	56	55	2
08:00 GMT	Manufacturing PMI	EUR	Sep	54.3	53.2	2
08:30 GMT	Consumer Credit	GBP	Aug	1.095B	0.9B	3
08:30 GMT	Manufacturing PMI	GBP	Sep	56.3	55.6	2
08:30 GMT	Mortgage Approvals	GBP	Aug	115.0k	110..0k	2
14:00 GMT	ISM Manufacturing Index	USD	Sep	52.9	52.5	3
23:30 GMT	Manufacturing PMI	AUD	Sep	52.4	N/A	2

Published on Mon, Oct 1 2007, 10:44 GMT

Dollar Falls to Lifetime Low Vs. Euro

Mon, Sep 24 2007, 10:31 GMT
by Benny Menashe

Finotec Group Inc.

The dollar fell to a record low against the Euro for a third straight session on Monday, weighed down by expectations of further U.S. interest rate cuts, which are tarnishing the currency's appeal to global investors. Investors ignored more complaints from French officials about the euros’ strength versus the greenback, which again dropped to a 15-year low against a basket of major currencies.” Sentiment is still sluggish for the dollar and as long as a U.S. rate cut speculation is there, the dollar will continue to remain under pressure," said Antje Praefcke, currency strategist, at Commerzbank in Frankfurt.

Today's Economic Events


Date	Event	Country	Period	Previous	Forecast	Significance
00:00 GMT	Market Holidays	JPY	Sep			2
08:30 GMT	Public Sector Net Borrowing	GBP	Aug	-6.45B	6.6B	2
09:00 GMT	Industrial New Orders m/m	EUR	Jul	4.40%	-3.00%	3
17:00 GMT	Fed Chairman Bernanke Speaks	USD	Sep			3

Published on Mon, Sep 24 2007, 10:31 GMT

The Dollar Index Dips to a 15−yr Low on Job Cuts

Mon, Sep 10 2007, 06:57 GMT
by Benny Menashe

Finotec Group Inc.

The dollar fell to a 15-year low against major currencies on Friday as data showed U.S. payrolls fell last month for the first time in four years, raising recession fears and pressure for an interest-rate cut.

Traders dumped the dollar after the government said the United States shed 4,000 net jobs last month, the first contraction since August 2003. It also reduced estimated June and July job gains. The payrolls data followed a larger-than-expected decline in July pending home sales reported earlier this week -- more evidence that a credit crunch that began with losses on bonds tied to risky U.S. mortgages was starting to put the brakes on growth. "Today's employment report and the revisions are enough to justify several interest rate cuts by the Federal Reserve," said David Kotok, chief investment officer at Cumberland Advisors in Vineland, New Jersey. "It is clear from this report that the U.S. employment situation is worsening."

Markets are now pricing in a 74 percent chance that the Fed slashes its 5.25 percent benchmark interest rate by half a percentage point when it meets on Sept. 18. "The Fed cannot keep ignoring the fact that the sub prime and credit crisis has indeed hit the real economy," said Kathy Lien, senior currency strategist at DailyFX.com in New York. "Americans are feeling the pain and this will translate into weak consumer spending, which will drive speculation for a possible recession," she said.

The dollar index, which measures the greenback against a basket of major currencies, tumbled to a 15-year low. . The dollar also fell 1.1 percent to 1.1890 Swiss francs The Euro was up 0.6 percent at $1.3765, near a session peak of $1.3799, according to electronic trading platform EBS.

The low-yielding yen was the biggest beneficiary, at one point rising 1.8 percent to a three-week high of 113.28 yen per dollar as investors fled risky trades funded by borrowing the Japanese currency at low interest rates

In August, when rising defaults on subprime home loans, made to borrowers with poor credit, began causing market turmoil, the dollar initially benefited from safe-haven flows as investors fled risk for U.S. Treasuries and Americans repatriated funds. But the greenback has looked increasingly vulnerable this week as liquidity remained scarce and housing and employment data sagged. Analysts said a Fed rate cut could further weaken the dollar, and yields spreads have moved decisively in favor of the Euro in recent sessions.
ECB President Jean-Claude Trichet said in the last interest rate statement of the EZ that inflation remains a top concern, suggesting hikes may resume in the future.
With Fed rate cuts now firmly priced in, "expect the euro to retest highs near $1.3850 ahead of a rally to $1.40 and above in the coming months," said Nick Bennenbroek, chief currency strategist at Wells Fargo in New York.

Today's Economic Events


Date	Country	Event	Period	Previous	Forecast	Significance
10:45 GMT	NZD	PPI Input m/m		-1.60%	NA	3
10:45 GMT	NZD	PPI Output m/m		-0.20%	NA	2
23:50 GMT	JPY	GDP	Quarterl	0.50%	-0.70%	3
23:50 GMT	JPY	GDP Deflator	Quarterl	-0.30%	NA	3

Published on Mon, Sep 10 2007, 06:57 GMT

Sub prime mortgage crisis has sparked fears of global liquidity crunch

Thu, Aug 30 2007, 09:21 GMT
by Benny Menashe

Finotec Group Inc.

The market will open with Trichet’s speech and the clues regarding a September rate hike

Event risk on Monday will be contained to US housing data, and the release may only exacerbate current risk aversion trends. The National Association of Realtor’s measure of existing home sales during the month of July is anticipated to have fallen back 0.9 percent to a nearly five-year low of 5.70M. Such a weak figure will not come as much of a shock to the markets, as the dour status of the US housing sector is well known, especially when it comes to the sub prime mortgage crisis that has sparked fears of a global liquidity crunch.

While Friday’s significantly stronger-than-expected new home sales report for the same month spurred optimism that declining prices are finally bringing homes to a more affordable level, there are other factors to consider. First, new homes only represent a small portion of the housing market as whole, with existing home sales making up 87 percent. Also, this survey looks back to activity that is almost 2 months old, which was well before the current depths of the credit crunch and before standards for getting home financing became much tighter.

Lenders and many borrowers are under increasing strain as the fallout from the collapse of the sub prime mortgage market spreads. Mortgage applications fell 5.5 percent in the week ended Aug. 18, according to the Mortgage Bankers Association.

The sub prime crisis is compounding consumer concerns about falling home values and elevated energy costs. Sentiment among U.S. consumers dropped in August to the lowest level in a year, according to an Aug. 17 report from the University of Michigan.As a result, we are likely to see sales figures dip again in the coming months, increasing the risks for a disappointing existing home sales report.

The Fed cut the rate on direct loans to banks this month, trying to increase liquidity as investors avoid assets linked to sub prime mortgages. Fed officials left the benchmark federal funds rate unchanged at 5.25 percent. Interest-rate futures on Aug. 24 showed traders reduced bets that the Fed will lower its overnight lending rate between banks by a half-percentage point to 4.75 percent by its Sept. 18 meeting. Futures showed a 60 percent chance of a cut to 5 percent, compared with 40 percent odds a week earlier. Forty percent were betting on a cut to a 4.75 percent funds rate by then, down from 60 percent the prior week.

The Fed's view that downside risks had grown may have signaled a reversal from its Aug. 7 outlook that inflation was the greatest risk. Minutes of the Federal Open Market Committee's most recent meeting will be released on Aug. 28.

Interest-rate futures on Aug. 24 showed traders reduced bets that the Fed will lower its overnight lending rate between banks by a half-percentage point to 4.75 percent by its Sept. 18 meeting. Futures showed a 60 percent chance of a cut to 5 percent, compared with 40 percent odds a week earlier. Forty percent were betting on a cut to a 4.75 percent funds rate by then, down from 60 percent the prior week.

As for the opening Asian and European sessions there's every indication that we'll see those markets follow thru off Friday's housing and production numbers and that means carry trades will go right along with them as they always do although there is a bank holiday in the U.K. on Monday. Trichet's speech will be observed for clues regarding the September rate hike. No central banker wants to be viewed as altering real economy policy based on liquidity issues. A true quandry exisits here: raising rates at this time is a somewhat risky proposition, while leaving rates unchanged in September may indicate to market participants that the ECB see's things as being worse then they have let on up until now.

Published on Thu, Aug 30 2007, 09:21 GMT

Is The Dollar Rally Done?

Tue, Aug 21 2007, 06:20 GMT
by Benny Menashe

Finotec Group Inc.

Forex outlook:

The US stock market and carry trades took a beating this week. The US dollar on the other completely reversed its downtrend and came close to erasing all of its year to date losses against some of the majors. Central banks have pumped over $350 billion in liquidity into the markets with limited success, forcing the Federal Reserve to lower the discount rate from 6.25 to 5.75 percent on Friday in addition to injecting more liquidity into the financial system. Along with the cut, they issued a statement that was far more dovish than the one released at the August 7 FOMC meeting. This sent three messages to the market. The first is that the liquidity injections have not been enough. The second is that the sub prime, credit and liquidity debacle is indeed hitting the “real economy” .The interest curve is now pricing in 75 basis points of easing by the end of the year. In response to the discount rate cut, the dollar has given back its gains, carry trades have rebounded and the Dow ended the day in positive territory. The economic calendar is relatively light with only leading indicators, durable goods and new home sales due for release.

The probability of an ECB rate cut has dropped from 90 percent two weeks ago to 25 percent today. Many banks have shifted their outlook and are now not calling for a September rate increase. Today, ECB member Weber said that the central bank will do all that they can to ensure price stability and when asked whether the central bank still plans on raising interest rates or use strong vigilance on price risks, he declined to comment. This definitely suggests that the central bank could cancel its plans to raise rates next month. Economic data is showing signs of slowing alongside inflation. This morning’s German producer price data reflected a 0.1 percent monthly drop in July. ECB President Trichet has not shown any signs that he too is reconsidering the central bank’s earlier plans to cut rates. We will be watching his commentary closely in the next few weeks. Meanwhile, even though the German ZEW report is due for release next week along with GDP and Eurozone PMI, the data should take a backseat to the movements in the equity and bond markets. The Japanese Yen Crosses recovered most of their earlier losses after the Federal Reserve lowered the discount rate. At one point, all of the crosses were in the green for the day when the Dow opened up over 300 points. The Nikkei took a heavy beating last night with the index down 5.4 percent, which was the largest drop in 7 years. The announcement by the Fed today should help to stabilize some of the Asian markets. At this point, there is zero chance that the Bank of Japan will be raising interest rates next week.

Economic calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
CH	20.08.2007	07:15	PPI m/m	Jul	0.00%	0.30%	**
GB	20.08.2007	08:30	Public Sector Net Borrowing	Jul	7.4Bln	5.5Bln	**
GB	20.08.2007	08:30	M4 Money Supply m/m	Jul	0.70%	0.70%	**
US	20.08.2007	14:00	Leading Index m/m	Jul	-0.30%	0.30%	**
JP	20.08.2007	23:50	All Industries Activity Index m/m	Jun	-0.30%	0.30%	**
GER	21.08.2007	09:00	ZEW Economic Sentiment	Aug	10.4	-1	***
EZ	21.08.2007	09:00	Trade Balance	Jun	1.7Bln	3.5Bln	**
CA	21.08.2007	11:00	CPI m/m	Jul	-0.20%	0.10%	***
CA	21.08.2007	11:00	Core CPI m/m	Jul	0.00%	0.10%	***
CA	21.08.2007	11:00	CPI y/y	Nov	2.20%	2.20%	**
CA	21.08.2007	12:30	Retail Sales m/m	Jun	2.80%	-0.50%	***
CA	21.08.2007	12:30	Core Retail Sales m/m	Jun	2.30%	-0.30%	***
CA	21.08.2007	12:30	Leading Indicators m/m	Jul	0.20%	0.20%	**
JP	21.08.2007	23:50	Trade Balance	Jul	1227.1Bln	764.9Bln	**
EZ	22.08.2007	08:00	Current Account	Jun	-8.6Bln	-2.0Bln	**
EZ	22.08.2007	09:00	Industrial New Orders m/m	Jun	1.70%	1.90%	**
GB	22.08.2007	10:00	CBI Industrial Trends Orders	Aug	-6	-3	***
US	22.08.2007	14:30	Crude Oil Inventories	Weekly	-5.2Mln	NA	**
JP	23.08.2007	NA:NA	Interest Rate Announcement	Aug	0.50%	0.50%	****
US	23.08.2007	06:00	GDP q/q	Q2	0.30%	0.30%	***
CH	23.08.2007	06:15	BOJ Governor Fukui Speaks				***
CH	23.08.2007	07:15	Employment Level	Q2	3.708Mln	NA	**
GB	23.08.2007	08:00	Business Investment q/q	Q2	-0.60%	2.00%	***
CH	23.08.2007	09:00	ZEW Expectations	Aug	-2.1	NA	**
US	23.08.2007	12:30	Unemployment Claims	Weekly	322K	315K	**
NZ	23.08.2007	22:45	Trade Balance	Jul	0.52Bln	NA	***
JP	23.08.2007	23:50	Corporate Services Price Index	Jun	1.40%	NA	**
EZ	24.08.2007	08:00	Manufacturing PMI	Aug	54.9	54.5	**
EZ	24.08.2007	08:00	Services PMI	Aug	58.3	58	**
GB	24.08.2007	08:30	GDP q/q	Q2	0.80%	0.80%	***
US	24.08.2007	12:30	Durable Goods Orders m/m	Jul	1.30%	1.00%	**
US	24.08.2007	12:30	Core Durable Goods Orders m/m	Jul	-1.00%	0.60%	***
US	24.08.2007	14:00	New Home Sales	Jul	0.834Mln	0.82Mln	**

Published on Tue, Aug 21 2007, 06:20 GMT

Central Bank Around The Globe Act To Head Off Global Credit Crisis

Mon, Aug 13 2007, 11:00 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

Summer doldrums quickly disappeared as capital markets scrambled wildly to cope with the liquidity crisis unleashed by the BNP Paribas announcement that it’s was suspending redemptions in its asset backed funds. This was the third such move by a major financial player over the past few weeks, and while in the short term it may have been a prudent course of action for preservation of assets in the fund – the long term implications for capital markets of such arbitrary changes in policy could be disastrous. As one market participant noted in mid-week, “There is huge pressure on money rates due to an apparent sense of mistrust. Following BNP Paribas' statement, very few institutions appear willing to lend. If you kill off the inter-bank market and the asset- backed commercial paper market has effectively collapsed, then we look to be heading for a serious liquidity crunch.'” Indeed if investors lose confidence in their ability to redeem their capital, they will simply refuse to provide it and that could have a chilling effect on all risk taking operations.

As we noted on before, “Ironically enough, this doomsday scenario would likely benefit the US dollar – the epicenter of the sub-prime mess - as the greenback would become bid on safe haven flows. Tonight’s price action is a good example of this dynamic at work, as the buck strengthened across the board following the BNP news.”

While last week the markets priced in with near certainty the possibility of a rate hike to 4.25% from the ECB after Jean Claude Trichet used the keyword “vigilance”, this week such certitude no longer exists. After the BNP turmoil on Thursday, the ECB was forced to inject more than 130 Billion dollars into the system as European credit markets came to a grinding halt. Therefore, it is not unreasonable to speculate that the central bank may decide to hold off tightening monetary conditions given the very precarious nature of money markets in the 13 member region.

The safe haven theme may persist next week, especially if the markets continue to experience volatility, but eventually real economic issues will begin to weigh on the greenback. Unlike this week, next week’s calendar is chuck full of data and most estimates look for declines in everything from housing to consumer confidence. One possible boost for dollar bulls could come from the Retail Sales number on Monday. With expectations of a consumer slowdown so prevalent in the markets, any upside surprises in the July data would suggest that the US consumer remains relatively healthy despite the collapse in housing. If that remains the case, talk of a soft landing rather than a hard crash could improve market expectations of US growth going forward. In Europe next week the economic calendar offers little support to euro bulls. German GDP is expected to print lower dropping to 2.8% from 3.1% in Q1. This by the way will be the first time since the summer of 2006 that US GDP growth will exceed that of EZ biggest economic actor and while the overwhelming majority of analysts believe this to be a one off event, it bears watching. If against all market expectations EZ growth dips below US growth in H2 of 2007 the primary source of euros strength may be gone.

Economic calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
JP	12.08.2007	23:50	GDP q/q	Q2	0.80%	0.20%	****
JP	12.08.2007	23:50	GDP Deflator y/y	Q2	-0.30%	-0.40%	***
GB	13.08.2007	8:30	PPI Input m/m	Jul	0.60%	0.70%	***
GB	13.08.2007	8:30	PPI Output m/m	Jul	0.20%	0.30%	**
US	13.08.2007	12:30	Retail Sales m/m	Jul	-0.90%	0.30%	**
US	13.08.2007	12:30	Core Retail Sales m/m	Jul	-0.40%	0.40%	***
US	13.08.2007	12:30	Business Inventories m/m	Jun	0.50%	0.40%	**
NZ	13.08.2007	22:45	Retail Sales m/m	Jul	1.20%	0.40%	***
NZ	13.08.2007	22:45	Core Retail Sales m/m	Jul	0.80%	NA	**
GB	13.08.2007	23:01	House Price Balance	Jul	10.60%	8.80%
JP	13.08.2007	23:50	Tertiary Industry Activity Index m/m	Jun	-0.10%	-0.20%	**
GER	14.08.2007	6:00	GDP q/q	Q2	0.50%	0.40%	***
GB	14.08.2007	8:30	CPI m/m	Jul	0.20%	-0.20%	***
GB	14.08.2007	8:30	CPI y/y	Jul	2.40%	2.30%	***
GB	14.08.2007	8:30	RPI m/m	Jul	0.50%	-0.10%	**
GB	14.08.2007	8:30	RPI y/y	Jul	4.40%	4.30%	**
EZ	14.08.2007	9:00	GDP q/q	Q2	0.70%	0.60%	***
EZ	14.08.2007	9:00	Industrial Production m/m	Jun	0.90%	-0.10%	**
US	14.08.2007	12:30	PPI m/m	Jul	-0.20%	0.20%	***
US	14.08.2007	12:30	PPI y/y	Jul	3.30%	NA	**
US	14.08.2007	12:30	Core PPI m/m	Jul	0.30%	0.20%	***
US	14.08.2007	12:30	Core PPI y/y	Jul	1.80%	NA	**
US	14.08.2007	12:30	Trade Balance	Jun	-60.0Bln	-61.0Bln	***
CA	14.08.2007	12:30	Trade Balance	Jun	5.76%	5.60%	***
US	14.08.2007	12:55	redbook	Weekly	0.60%	NA	*
NZ	14.08.2007	22:45	PPI Input q/q	Q2	-1.60%	NA	***
JP	14.08.2007	23:50	Reuter Tankan	Aug	28	NA	***
CH	15.08.2007	7:15	Retail Sales y/y	Jun	3.10%	NA	**
GB	15.08.2007	8:30	MPC Meeting Minutes	Aug	6-Mar	Sep-00	***
GB	15.08.2007	8:30	Average Earnings Index	Jun	3.50%	3.50%	**
GB	15.08.2007	8:30	Claimant Count Change	Jul	-13.8K	-10.0K	**
GB	15.08.2007	8:30	Unemployment Rate	Jun	5.40%	5.40%	**
US	15.08.2007	12:30	CPI m/m	Jul	0.20%	0.20%	***
US	15.08.2007	12:30	Core CPI m/m	Jul	0.20%	0.20%	***
US	15.08.2007	12:30	Empire State Business Conditions Index	Aug	26.46	18.5	**
CA	15.08.2007	12:30	Manufacturing Shipments m/m	Jun	-0.10%	-0.20%	**
US	15.08.2007	13:00	TIC Net Long-Term Transactions	Jun	126.1Bln	64.0Bln	***
US	15.08.2007	13:15	Industrial Production m/m	Jul	0.50%	0.30%	**
US	15.08.2007	13:15	Capacity Utilization Rate	Jul	81.70%	81.80%	**
US	15.08.2007	14:30	Crude Oil Inventories	Jul	-4.1Mln	NA	**
GER	16.08.2007	6:00	CPI final m/m	Jul	0.10%	0.40%	**
GB	16.08.2007	8:30	Retail Sales m/m	Jul	0.20%	0.2	**
GB	16.08.2007	8:30	Retail Sales y/y	Jul	3.40%	3.40%	**
EZ	16.08.2007	9:00	CPI m/m	Jul	0.10%	-0.20%	**
US	16.08.2007	12:30	Housing Starts	Jul	1.47Mln	1.405Mln	**
US	16.08.2007	12:30	Building Permits	Jul	1.41Mln	1.4Mln	**
US	16.08.2007	12:30	Unemployment Claims	Jul	316K	313K	**
CA	16.08.2007	12:30	Foreign Securities Purchases	Jun	-5.69Bln	NA	**
US	16.08.2007	16:00	Philadelphia Fed Manufacturing Index	Aug	9.2	9	**
GER	17.08.2007	6:00	PPI m/m	Jul	0.20%	0.30%	**
CA	17.08.2007	12:30	Wholesale Sales m/m	Jun	0.60%	0.40%	**
US	17.08.2007	13:00	St. Louis Fed President Poole Speaks				**
US	17.08.2007	14:00	Consumer Sentiment	Aug	90.4	88	***

Published on Mon, Aug 13 2007, 11:00 GMT

Dollar hits 15−year low Vs basket of currencies on US Growth Concerns

Mon, Aug 6 2007, 12:33 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

The dollar fell to a 15-year low against a basket of currencies on Monday, as speculation mounted in financial markets that rising credit market risk and softening U.S. data will force a cut in U.S. interest rates.

For the first time since February, Non-Farm payrolls printed below 100K raising the specter of a serious slowdown in the US economy that may force the Fed to consider lowering rates before the end of the year. The spillover continued into the weekend as the President of Bear Stearns resigned, after the bank had said on Friday fixed income markets were going through their roughest patch in over 20 years.

This prompted not only broad-based dollar selling but also an unwind of so-called carry trades, where investors sell low-yielding currencies for riskier, higher-yielding units. The yen and Swiss franc rallied. "The Dow got an absolute crunching on Friday so ... the combination of that, Friday's U.S. data, ongoing credit concerns and headlines on Bear Stearns is showing risk aversion heightened once again," said Jeremy Stretch, strategist at Rabobank. "The result of that is investors are fighting shy of the dollar again and we're seeing the taking off of risk from the table”, he added.

"The dollars under pressure and carry's under pressure," said Laura Ambrose no, currency strategist at Morgan Stanley. "Investors are taking risk off the table," she said, adding that Morgan Stanley is recommending that its clients sell dollars for Japanese yen and Swiss francs.

While credit market jitters are the dominant drivers of financial markets, the Federal Reserve's policy meeting Tuesday will be closely watched for the accompanying statement. The Fed is widely expected to leave rates on hold at 5.25 percent. Analysts also generally expect it to reiterate that inflation remains its primary concern, but also to give a nod to the recent financial market volatility. But fed funds futures are now pricing in around a 40 percent chance of the Fed cutting rates by 50 basis points before the end of the year. A month ago, the Fed was seen on hold for the rest of the year. Fifty basis points of easing by the end of March are now almost fully priced in. A month ago, markets barely attached any likelihood to any rate cuts at all.

Economic calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
GB	06.08.2007	8:30	Industrial Production m/m	Jun	0.60%	0.10%	***
GB	06.08.2007	8:30	Manufacturing Production m/m	Jun	0.40%	0.20%	***
GER	06.08.2007	10:00	Factory Orders m/m	Jun	3.20%	-0.40%	**
GB	06.08.2007	23:01	BRC Retail Sales Monitor y/y	Jun	3.00%	NA	**
GER	07.08.2007	10:00	Industrial Production m/m	Jun	1.90%	0.60%	**
US	07.08.2007	12:30	Nonfarm Productivity q/q	Q2	1.00%	2.00%	***
US	07.08.2007	12:30	Unit Labor Costs q/q	Q2	1.80%	1.80%	***
US	07.08.2007	18:15	Interest Rate Statement	Aug	5.25%	5.25%	****
US	07.08.2007	19:00	Consumer Credit m/m	Jun	12.9Bln	5.5Bln	**
AU	07.08.2007	23:30	Interest Rate Statement	Aug	6.25%	6.50%	****
JP	07.08.2007	23:50	Core Machinery Orders m/m	Jun	5.90%	-1.90%	***
AU	08.08.2007	1:30	House Price Index q/q	Q2	1.10%	NA	**
JP	08.08.2007	5:00	Eco Watchers Survey	Jul	46	46	**
CH	08.08.2007	5:45	Unemployment Rate	Jul	2.70%	2.70%	**
GER	08.08.2007	6:00	Trade Balance	Jun	17.6Bln	17.2Bln	**
GB	08.08.2007	9:30	BOE Inflation Report				***
US	08.08.2007	14:00	Wholesale Inventories m/m	Jun	0.50%	0.40%	**
US	08.08.2007	14:30	Crude Oil Inventories	Weekly	-6.5Mln	NA	**
NZ	08.08.2007	22:45	Unemployment Rate	Jul	3.80%	3.70%	***
AU	09.08.2007	1:30	Employment Change	Jun	2.5K	24.5k	***
AU	09.08.2007	1:30	Unemployment Rate	Jun	4.30%	4.40%	***
CH	09.08.2007	5:45	Consumer Climate	Q3	20	22	**
GB	09.08.2007	8:30	Trade Balance	Jun	-6.291Bln	-6.5Bln	***
CA	09.08.2007	12:15	Housing Starts	Jul	225.5K	223K	**
US	09.08.2007	12:30	Unemployment Claims	Weekly	307K	310K	**
CA	09.08.2007	12:30	New Housing Price Index m/m	Jun	1.10%	0.60%	**
JP	09.08.2007	23:50	CGPI y/y	Jul	0.10%	0.60%	**
JP	10.08.2007	4:30	Industrial Production m/m	Jun	1.20%	1.20%	**
JP	10.08.2007	5:00	Household Confidence	Jul	45	45	**
CA	10.08.2007	11:00	Employment Change	Jul	34.8K	20.0K	***
CA	10.08.2007	11:00	Unemployment Rate	Jul	6.10%	6.10%	***
US	10.08.2007	12:30	Import Price Index m/m	Jul	1.00%	1.00%	**

Published on Mon, Aug 6 2007, 12:33 GMT

Dollar Rebounds From Record Low Versus Euro on Risk Aversion

Mon, Jul 30 2007, 05:50 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

The dollar advanced the most against the euro since January as subprime losses encouraged investors to avoid riskier assets and repatriate money. The U.S. currency increased more than 2 cents from a record low against the euro and rose from the weakest in 26 years versus the pound as investors sought refuge from a global rout of stocks and corporate bonds. The dollar's rally may sputter next week on a government report forecast by economists to show slowing job growth this month. The dollar benefited ``from liquidation of foreign equity positions by U.S. investors, a dynamic which has periodically boosted the dollar during times of equity market stress over the past several years,'' said Daniel Katzive, a senior currency strategist in Stamford, Connecticut, at UBS AG. ``We think this phenomenon has further to go.''

The U.S. currency rose 1.4 percent to $1.3636 per euro this week and 1.55 percent to $2.0242 per pound. It was the biggest weekly advance against the euro since January and the most versus the pound since September. The dollar rebounded after dropping on July 24 to $1.3852 per euro, a record low, and $2.0654 per pound, the weakest since May 1981. The dollar advanced against all 16 of the most actively traded currencies tracked by Bloomberg except the yen this week, rising 4 percent against the New Zealand dollar, 3.2 percent versus the Australian currency, 1.5 percent against the Canadian dollar and 0.6 percent versus the Swiss franc. ``The dollar is enjoying the safe-haven bid,'' said Stephen Malyon, co-head of currency strategies in Toronto at Scotia Capital Inc. ``We are seeing signs of spillovers from the housing slump.''

U.S. employers probably added 130,000 jobs in July, down from 132,000 a month earlier, according to the median forecast of economists surveyed. The jobless rate is forecast to stay at 4.5 percent. The payroll data is due from the Labor Department on Aug. 3. Federal Reserve policy makers have held the target rate for overnight lending between banks at 5.25 percent since an increase in June 2006. The benchmark compares with 4 percent in euro zone, 5.75 percent in the U.K. and 0.5 percent in Japan, the lowest among industrialized nations. Traders raised bets the Fed will cut rates to 5 percent by year-end. The yield on fed funds futures contracts due in December fell yesterday to 5.06 percent from 5.18 percent a week ago.

The yen advanced against the 16 most actively traded currencies this week as a global sell-off in stocks, credit bonds and emerging-market assets prompted investors to cut higher-yielding investments funded by loans in Japan, known as carry trades. U.S. stocks dropped, led by a 4.2 percent loss in the Dow Jones Industrial Average, the biggest weekly decline since March 2003. Treasuries rallied, with the benchmark 10-year notes posting the largest weekly gain since Septembenr as investors sought the safety of government debt.

The risk of owning U.S. and European corporate bonds advanced to record highs yesterday on concern banks and hedge funds face widening losses from subprime mortgages and leveraged buyouts. The yen rose this week 2.2 percent to 118.63 per dollar, 3.5 percent to 161.67 per euro and 3.7 percent to 240.11 per pound. The Japanese currency also rallied 6 percent against the New Zealand and 5.4 percent versus Australian dollars. ``This increase in risk aversion is forcing people to cut back on the carry trade, which has triggered the usual subsequent yen rally,'' said Robert Robis, an international fixed-income portfolio manager in New York at OppenheimerFunds Inc., which manages $250 billion.

The cost of options protecting against gains in the yen versus the dollar rose to a three-year high. The risk-reversal rate on one-month options reached negative 2.4 percent, the biggest premium for dollar puts since March 2004. A negative number indicates more demand for dollar puts relative to calls. Traders speculated this week that Prime Minister Shinzo Abe's failure to retain control of the upper house of parliament in tomorrow's election may jeopardize his plan to balance the budget. Abe said earlier this month that he hadn't ruled out raising the 5 percent national sales tax.

Economic Calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
GB	30.07.2007	08:30	consumer credit	Jun	0.842B	0.8B	**
CA	30.07.2007	12:30	PPI m/m	Jun	-0.50%	-0.60%	**
CA	30.07.2007	12:30	PPI y/y	Jun	3.00%	NA	**
JP	30.07.2007	23:30	Overall Household Spending y/y	Jun	0.40%	0.70%	**
JP	30.07.2007	23:30	Manufacturing PMI	Jul	50.4	NA	**
JP	30.07.2007	23:30	Unemployment Rate	Jun	3.80%	3.80%	**
AU	31.07.2007	01:30	Building Approvals m/m	Jun	-5.60%	1.80%	**
JP	31.07.2007	05:00	Housing Starts y/y	Jun	-10.70%	-3.20%	**
GER	31.07.2007	06:00	German Retail Sales m/m	Jun	-1.80%	1.00%	**
GER	31.07.2007	06:00	German Retail Sales y/y	Jun	-3.70%	-1.70%	**
GER	31.07.2007	08:00	German Unemployment Rate	Jul	9.10%	9.00%	**
EZ	31.07.2007	09:00	Business Climate	Jul	1.54	1.46	**
GB	31.07.2007	09:30	Consumer Confidence	Jul	-3	-4	**
GB	31.07.2007	10:00	CBI Distributive Trades Realized	Jul	17	15	**
US	31.07.2007	11:45	ICSC Chain	Weekly	-0.20%	NA	*
US	31.07.2007	12:30	Core PCE Price Index m/m	Jun	0.10%	0.20%	***
US	31.07.2007	12:30	Core PCE Price Index y/y	Jun	1.90%	NA	***
US	31.07.2007	12:30	PCE Price Index m/m	Jun	0.50%	NA	**
US	31.07.2007	12:30	PCE Price Index y/y	Jun	2.30%	NA	**
CA	31.07.2007	12:30	GDP m/m	May	0.30%	0.40%	****
US	31.07.2007	12:55	red book	Weekly	0.50%	NA	*
US	31.07.2007	13:45	Chicago PMI	Jul	60.2	58	***
US	31.07.2007	14:00	Consumer Confidence	Jul	103.9	105	**
AU	31.07.2007	23:30	Manufacturing PMI	Jul	53.1	NA	**
CH	01.08.2007	NA:NA	Market Holiday	Jul
AU	01.08.2007	01:30	Retail Sales m/m	Jul	-0.10%	1.00%	***
AU	01.08.2007	01:30	Trade Balance	Jun	-0.81B	-1.10B	****
GER	01.08.2007	07:55	Manufacturing PMI	Jul	57.3	56.8	**
EZ	01.08.2007	08:00	Manufacturing PMI	Jul	55.6	54.8	**
GB	01.08.2007	08:30	Manufacturing PMI	Jul	54.3	54	**
US	01.08.2007	12:15	ADP Nonfarm Employment Change	Jul	150K	100K	**
US	01.08.2007	14:00	ISM Manufacturing Index	Jul	56	55.5	***
US	01.08.2007	14:00	Pending Home Sales m/m	Jun	-3.50%	-0.60%	**
US	01.08.2007	14:30	Crude Oil Inventories	Weekly	-1.1M	NA	***
JP	01.08.2007	23:50	Monetary Base y/y	Jul	-4.10%	-3.50%	**
CH	02.08.2007	07:30	SVME PMI	Jul	62.8	62	**
EZ	02.08.2007	09:00	PPI m/m	Jun	0.30%	0.30%	**
EZ	02.08.2007	09:00	PPI y/y	Jun	2.30%	2.30%	**
GB	02.08.2007	10:00	Interest Rate Statement	Aug	5.75%	5.75%	****
EZ	02.08.2007	11:45	Interest Rate Statement	Aug	4.00%	4.00%	****
US	02.08.2007	12:30	Unemployment Claims	Weekly	301K	310K	**
EZ	02.08.2007	12:30	ECB President Trichet Speaks	Jul			****
US	02.08.2007	14:00	Durable Goods orders	Jun	1.40%	1.40%	***
US	02.08.2007	14:00	Factory Orders m/m	Jun	-0.50%	1.00%	***
CH	03.08.2007	05:45	CPI m/m	Jul	0.10%	-0.60%	***
CH	03.08.2007	05:45	CPI y/y	Jul	0.60%	0.60%	***
GER	03.08.2007	07:55	Services PMI	Jul	57.9	57.7	**
EZ	03.08.2007	08:00	Services PMI	Jul	58.3	58.1	**
GB	03.08.2007	08:30	Services PMI	Jul	57.7	57.5	**
EZ	03.08.2007	09:00	Retail Sales m/m	Jun	-0.50%	0.70%	**
EZ	03.08.2007	09:00	Retail Sales y/y	Jun	0.40%	1.40%	**
US	03.08.2007	12:30	ISM Non-Manufacturing Index	Jul	132K	130K	***
US	03.08.2007	12:30	Unemployment Rate	Jul	4.50%	4.50%	***
US	03.08.2007	12:30	Average Hourly Earnings m/m	Jul	0.30%	0.30%	**
CA	03.08.2007	12:30	Building Permits m/m	Jun	21.40%	-9.80%	**
US	03.08.2007	13:40	ECRI	Jul	-4.20%	NA	**
US	03.08.2007	14:00	ISM Non-Manufacturing Index	Jul	60.7	59	***
CA	03.08.2007	14:00	Ivey PMI	Jul	67.4	57	***

Published on Mon, Jul 30 2007, 05:50 GMT

EUR/USD Headed Towards 1.40?

Tue, Jul 24 2007, 11:16 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

The dollar hit a record low against the Euro on Monday and more than 20-year lows versus sterling and the New Zealand dollar on worries that problems in the U.S. sub-prime mortgage sector may trickle into the broader economy. Tourist heading to England will pay more than $2 for one U.K. pound, up from about $1.65 at the end of 1997. Against the Canadian dollar, it's the lowest since 1977 and it's the weakest in seven years versus Brazil's real.

Oppenheimer Funds Inc., which is based in New York and manages $250 billion, and Newport Beach, California-based Pacific Investment Management Co., which manages the world's biggest bond fund, say the dollar may reach $1.45 per Euro this year as the Fed keeps its benchmark interest rate unchanged at 5.25 percent.

The currency may end the year at $1.40 per Euro, according to the median forecast of 36 analysts News survey published July. The dollar's “trend will be down over the next couple of years,'' said Richard Clarida, a former assistant Treasury secretary under Bush and now a global strategist at Pimco. The firm manages $687 billion, including the $102 billion Total Return Fund. “A weaker dollar in conjunction with strong demand in the rest of the world is helping the U.S. rebound.''

Looking ahead, the most important pieces of data on the Euro zone calendar are EZ PMI, M3 and the German IFO survey. Steady or softer figures are expected all around. Meanwhile Swiss producer prices were much softer than the market expected in June, but this has not affected the value of the Franc. Next week, we are expecting the KoF report of leading indicators.

The New Zealand dollar broke through the psychological 80 U.S. cent level on Monday, as its high yield and the prospect of an interest rate rise later in the week attracted investors.

The kiwi set a 22-year post float high of $0.7996 late in the local session, having spent much of the day quietly range-reading, and then spiked higher in early offshore trade. "Heavy option-related selling ahead of barriers around the 80 cents region may help cap the topside in the NZ dollar," said Bank of New Zealand currency strategist Danica Hampton. This week's Reserve Bank of NZ official cash rate review on Thursday remained the key event for investors and the prospect of a quarter point rate rise to 8.25 percent was underpinning the kiwi. "The NZ dollar is unlikely to break below 78.80 U.S. cents this week in the absence of a U.S. dollar recovery or a major bout of carry trade unwinding," Hampton said.

Economic calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
AU	23.07.2007	1:30	PPI q/q	Q2	0.00%	0.80%	***
EZ	23.07.2007	7:00	ECB Vice President Papademos Speaks	Jul			**
US	23.07.2007	12:30	Chicago Fed National Activity Index	Jun	-0.22	NA	**
US	23.07.2007	12:30	UBS Gallup Optimism	Jul	89	NA	**
GER	24.07.2007	6:00	German Import Price Index m/m	Jun	0.30%	0.30%	**
JP	24.07.2007	7:30	BOJ Governor Fukui Speaks	Jul			***
EZ	24.07.2007	8:00	Manufacturing PMI (p)	Jul	55.6	55.5	***
EZ	24.07.2007	8:00	Services PMI (p)	Jul	58.3	58	**
EZ	24.07.2007	8:00	Current Account	May	-4.0Bl	-1.2Bl	**
EZ	24.07.2007	8:00	Invest Flow	May	-8.0Bl	NA	**
EZ	24.07.2007	9:00	Industrial New Orders m/m	May	-0.40%	1.10%	**
EZ	24.07.2007	9:00	Industrial New Orders y/y	May	12.20%	7.80%	**
US	24.07.2007	10:00	CBI Industrial Trends Orders	Jul	8	6	**
US	24.07.2007	11:45	ICSC ChainStores w/w	Weekly	0.30%	NA	**
CA	24.07.2007	12:30	Retail Sales m/m	May	0.40%	0.50%	***
CA	24.07.2007	12:30	Core Retail Sales m/m	May	0.00%	0.60%	***
US	24.07.2007	12:55	Red Book	Weekly	0.40%		**
US	24.07.2007	14:00	Richmond Fed Index ,Manufacturing	Jul	4	4	**
US	24.07.2007	14:00	Richmond Fed Index ,Services	Jul	15		**
US	24.07.2007	21:00	ABC watch	Weekly	-11		**
US	24.07.2007	21:30	St. Louis Fed President Poole Speaks	Jul			**
JP	24.07.2007	23:50	Export y/y	Jun	14.00%	15.10%	**
JP	24.07.2007	23:50	Import y/y	Jun	12.90%	15.50%	**
JP	24.07.2007	23:50	Trade Balance (p)	Jun	389.5Bl	948.5Bl	***
JP	24.07.2007	23:50	Trade Balance y/y	Jun	9.30%	18.60%	**
AU	25.07.2007	1:30	CPI q/q	Q2	0.10%	1.00%	***
US	25.07.2007	11:00	Mortgage Index	Weekly	631.6		**
US	25.07.2007	14:00	Home sales	Jun	5.99Mln	5.88Mln	***
US	25.07.2007	14:30	Crude Oil Inventories	Weekly
US	25.07.2007	18:00	Beige Book				***
JP	25.07.2007	23:50	CSPI y/y	Jun	1.40%	1.40%	**
US	25.07.2007	23:50	Foriegn Bond Investing	Weekly			*
GB	26.07.2007	6:00	Nationwide House Prices m/m	Jul	1.10%	0.50%	***
GER	26.07.2007	8:00	German Ifo Business Climate Index	Jul	107	106.5	***
GER	26.07.2007	8:00	German Ifo Business Expectations Index	Jul	102.8	102	***
EZ	26.07.2007	8:00	M3 Money Supply y/y	Jun	10.70%	10.70%	**
US	26.07.2007	12:30	Durable Goods Orders m/m	Jun	-2.40%	1.90%	**
US	26.07.2007	12:30	Durable Goods Orders ex Defence m/m	Jun	-0.40%	0.50%	***
US	26.07.2007	12:30	Core Durable Goods Orders ex Transportation m/m	Jun	-2.80%	0.50%	***
US	26.07.2007	12:30	Unemployment Claims	Weekly	301K	310K	***
US	26.07.2007	14:00	New Home Sales	Jun	0.915Mln	0.899Mln	***
JP	26.07.2007	23:30	Core CPI y/y	Jun	-0.10%	-0.10%	***
JP	26.07.2007	23:30	Core Tokyo CPI y/y	Jul	-0.10%	-0.10%	***
JP	26.07.2007	23:50	Retail Sales y/y	Jul	0.10%	0.60%	***
GER	26.07.2007	NA:NA	German CPI m/m (p)	Jul	0.10%	0.40%	***
US	26.07.2007	NA:NA	Building Permits	Jun	1.406Mln	NA	***
GER	27.07.2007	6:00	German Consumer Confidence	Aug	8.4	8.7	**
US	27.07.2007	12:30	Core PCE	Q2	2.40%	2	***
US	27.07.2007	12:30	GDP Annualized q/q (p)	Q2	0.70%	3.20%	***
US	27.07.2007	12:30	GDP Deflator Annualized q/q (p)	Q2	4.20%	3.30%	***
US	27.07.2007	12:30	PCE	Q2	3.50%	3.70%	**
CA	27.07.2007	12:30	Business Conditions Orders		12	4	**
US	27.07.2007	14:00	Consumer Sentiment (f)	Jul	85.3	90.9	***
US	27.07.2007	14:30	ECRI weekly	Weekly			*

Published on Tue, Jul 24 2007, 11:16 GMT

Investors are eyeing U.S. monetary policy outlook

Mon, Jul 16 2007, 08:14 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook

The horrid Retail Sales numbers which printed at -0.9% vs. 0.2% expected broke the will of the last standing dollar bulls and pushed the EUR/USD to all time highs above the 1.3800 level in early New York trade on Friday.

The horrid Retail Sales numbers which printed at -0.9% vs. 0.2% expected broke the will of the last standing dollar bulls and pushed the EUR/USD to all time highs above the 1.3800 level in early New York trade on Friday. The data made it crystal clear that despite the relatively buoyant employment numbers the US consumer is now in a deep funk as the Mortgage Equity Withdrawal spigot has been completely shut off providing no alternative source of income aside from the relatively stagnant wages. In fact credit card borrowing jump4ed to its highest levels in 6 months in May suggesting that the US consumer has turned to his last source of available funds. None of this of course bodes well for second half growth as spending which makes up more than 70% US GDP is likely continue to be drag on the overall economy.

Euro bulls were out in full force last week, helping to set new record highs against the US dollar and the Japanese yen, with EUR/USD peaking at 1.3813 and EUR/JPY surging to 168.85. The impetus was from an unexpected revision to first quarter GDP to 3.1 percent from a year earlier, led by business investment and surprisingly, export growth. In fact, exports were revised up to 0.8 percent from 0.3 percent, signaling that the appreciation of the euro did little to quell demand for European products. Furthermore, with expansion in the Euro-zone remaining so resilient, the European Central Bank will be more likely to enact policy tightening this year. However, markets will first need to see a pick up in price pressures before ramping up their bets on a hike to 4.25 percent, as CPI is still below the bank’s 2.0 percent ceiling.

This week the calendar offers little hope to greenback bulls unless it provides a series of upside surprises. The middle of the week should set the tone with Industrial Production on Tuesday of key importance followed by Housing starts on Wednesday. If manufacturing aided by the weak dollar continues to perform well then it will be the one bright spot in the US economy, providing a small offset to the gloomy consumer news. Furthermore, should housing data on Wednesday suggest some stabilization then we may have a reflex rally on the assumption that the worst is over. Yet these are all thin reeds of hope to base an argument for a EUR/USD top. The one strong reason may be sentiment.

Economic calendar

Published on Mon, Jul 16 2007, 08:14 GMT

Dollar Weakens By Concerns about US economic growth

Mon, Jul 9 2007, 04:22 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook

The dollar slid against the Euro on Friday after an unexpectedly strong U.S. jobs report failed to change views that U.S. interest rates will stay on hold this year while overseas rates rise. "The jobs data, combined with other strong reports earlier this week, show support to the dollar in the long run, but rates are still higher in Europe and will remain so for the time being," said Jason Schenker, an economist at Wachovia Bank in Charlotte, North Carolina.

Federal Reserve Chairman Ben Bernanke will be speaking about inflation and the risks are clearly skewed to the upside. When oil prices were above $70 exactly one year ago, inflation shot up globally. There is no reason for pricing pressures to be different this time around. Strong and tough words by Bernanke could drive further dollar strength, especially against the Japanese Yen. Aside from Bernanke’s comments, we are also expecting the trade balance and retail sales at the end of next week. The trade balance and retail sales are predicted to be particularly weak.

The Euro rose to a record high against the yen after the European Central Bank suggested it will increase borrowing costs in September. “The ECB will raise the interest rate at least once this year,'' said Dixon Fung, a currency trader at MG Financial Group in New York. “The interest-rate differential between Europe and Japan is tremendous. It's very profitable for carry trades'' in which investors borrow in low-yielding countries to buy high- yielding assets overseas.

The yen fell against all 16 most-actively traded currencies this week as investors in Japan, where its 0.5 percent borrowing costs are the lowest among developed countries, bought overseas assets to obtain higher returns. The Bank of Japan will keep its benchmark interest rate unchanged when it meets July 11-12. “Japanese investors are still looking for better yields overseas,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. “A rate hike in Japan in the context of rising global yields is not going to alter the argument for the carry trade''.

The biggest winner was the Canadian dollar, supported by firm commodity prices and solid economic data, which has supported expectations that the Bank of Canada will raise interest rates this week from 4.25% to 4.5%. The Canadian dollar hit a new 30 year high thanks to the combination of strong economic data and higher oil prices. After two months of weak hiring, Canadian companies added 34.8k jobs onto their payrolls in the month of June. The country continues to enjoy the tightest labor market in years. Despite a strong currency, the economy remains strong which is why the Bank of Canada is widely expected to lift interest rates this week from 4.25% to 4.5%.

Economic calendar

Published on Mon, Jul 9 2007, 04:22 GMT

The dollar continues to show weaknesses against the EUR and GBP on rate decisions

Mon, Jul 2 2007, 13:40 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

U.S. manufacturing growth in June probably stayed close to the highest level in 13 months, a sign demand is picking up as businesses replenish stockpiles, economists said before a report today. The Institute for Supply Management's manufacturing index stayed at 55 for a second month, according to the forecasts. Improvement in manufacturing will help the economy to strengthen during the rest of the year as declines in homebuilding gradually exert less of a drag on growth, economists said. Manufacturers are expanding to meet demand and rebuild inventories after drawing them down in prior months.

Federal Reserve policy makers kept the benchmark U.S. interest rate at 5.25 percent last week and reiterated the economy is likely to expand at a "moderate pace.''

The economy grew at a 0.7 percent pace in the first quarter, the slowest in four years, the Commerce Department reported last week. Companies reduced stockpiles at a $4.2 billion rate in the first three months of the year, cutting almost one percentage point from growth. More recent figures suggest companies have trimmed stockpiles to a satisfactory level and are now gearing up for higher orders. As companies step up spending, the economy will accelerate, even with housing remaining a burden on growth and consumer spending moderating, economists said. While government figures showed orders for durable goods such as cars and refrigerators dropped more than forecast in May, raising concern about the recovery in manufacturing, other regional reports for June were more optimistic. The National Association of Purchasing Management-Chicago's measure of business activity held near a two-year high in June, the group reported last week.

Manufacturing in the Philadelphia region accelerated in June at the fastest pace in more than two years as orders surged, the Fed Bank of Philadelphia said June 21. Factories in New York state expanded at the fastest rate in a year last month, the Fed Bank of New York said June 15.

Here are the highlights of US economic indicators to be released this week, which is shortened by the July 4 Independence Day holiday. On Monday the manufacturing pickup of recent weeks should show up in the June ISM manufacturing index. The median forecast is 55.4, up from 55.0 in May. Strong showings in the regional Fed manufacturing indexes 'suggest that manufacturing continued to surf the inventory replenishment wave a little higher in June.' Tuesday Contrary to the indexes, the big hit from Boeing and general weakness in durable goods orders announced last week should pull the June factory orders number down to -1.3 pct from +0.3 pct in May. Even excluding transportation, the expectation is -0.1 pct, down from +0.7 pct, and 'raising new doubts on the durability of the factory recovery' .Thursday, there has been a small trend toward higher weekly jobless claims numbers. They're expected to rise 2,000 to 315,000 for the week ending June 29. That trend 'is a sign that the so far firm US labor market may be softening a bit,' says Roger Kubarych at HVB. The June ISM non-manufacturing index should pull back a bit to 58.1 from 59.7 in May. On Friday, June's non-farm payroll report is the big number for the markets this week. The higher weekly unemployment claims numbers are 'why we don't expect the June number to be quite as strong as May's 157,000 result,' says Jacqui Douglas at TD Bank. The median forecast is for 130,000 new jobs and a steady 4.5 pct unemployment rate. Bank of America's Pete Kretzmer predicts 'payroll growth is likely to remain sluggish over the next few months, as the economy reacts to higher interest rates and gasoline prices.'

Economic calendar:

Economic calendar

Published on Mon, Jul 2 2007, 13:40 GMT

Will the Dollar Hold?

Mon, Jun 25 2007, 15:05 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

The dollar traded near a three-week low against the Euro on speculation a report will show U.S. home sales fell to the weakest in almost four years. For most of last week trading in EURUSD was lackluster at best as the pair continued to travel the familiar 1.345-1.3350 path remaining range bound as it has the week prior and the week before that. Indeed up until on Friday, the bias in the EURUSD was actually dollar bullish as the most recent economic data proved supportive of the greenback. The currency was also close to trading above $2 per British pound for the first time since May 2, as traders increased bets on a Federal Reserve interest rate cut. The yield premium on U.S. two-year Treasuries over similar-maturity German debt narrowed to a 2 1/2-year low. ``The dollar's yield advantage has waned,'' said Sue Trinh, a foreign-exchange strategist at RBC Capital Markets in Sydney. ``The market is vulnerable to weaker housing data and that will weigh on the currency.''

The yen was pinned near a 4-1/2-year low against the dollar and an all-time trough versus the euro on Monday, staying under pressure as investors kept selling the low-yielding currency in carry trades. There aren't many people who want to buy yen," said a senior trader at Japanese bank. Traders said the market was bracing for a deeper yen slide as a variety of Japanese investment trusts targeting foreign assets were expected to be launched this week, luring funds from households putting their summer bonuses to work. “Traders feel safe to sell the yen because a weakening yen is supportive for Japan's economy, and there are no strong attempts by policy makers here to stop the falling yen," said Kengo Suzuki, currency strategist for Shinko Securities.

The New Zealand dollar recovered all the losses it incurred on suspected central bank intervention in the late U.S. session on Friday, striking a 22-year high against the dollar and climbing near a 20-year peak against the yen. Investors kept putting on carry trades by borrowing in low-yielding currencies like the yen to fund investment in higher-yielding currencies, brushing aside shaky equity markets and the Reserve Bank of New Zealand's suspected third bout of selling in two weeks to limit kiwi strength .

We have some important Data coming from the U.S for the coming week, the housing market reports and the FOMC interest rate decision. Although both new and existing home sales are expected to be weaker, do not underestimate the potential for an upside surprise. DQNews, a firm that tracks real estate sales in key areas like California, Florida and Nevada reported a 5.8 percent increase in California home sales in May. As for the Fed, the up tick in oil prices and the still lofty level of the Dow should prevent them from making any major changes to their monetary policy statement. Expect them to continue to be hawkish about inflation risks, regardless of whether they see bigger problems in housing. The economic calendar in England is light but Prime Minister Tony Blair steps down next week, which will be a big focus.

Economic calendar:

Economic calendar

Published on Mon, Jun 25 2007, 15:05 GMT

Will The Dollar Change Direction Again?

Tue, Jun 19 2007, 10:24 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

The dollar could have ended a seven weeks in arrow gains against the Euro but inflation data stimulated a sales rally of the greenback. However, the stealth rally has been so slow and steady that it was almost difficult to notice. The greenback’s gains are not doubt due in large to the improvement of the US data over the past several weeks as well as the upward creep in inflation gauges. PPI skyrocketed by 0.9% vs. 0.3% expected and CPI also registered its biggest headline gains since August 2005, but the market chose to focus on the slightly softer core CPI reading which dipped to 0.1% from 0.2% expected. Due to the light calendar expected this week the dollar is expected to be traded in technically mostly unless will have some bad surprise from the housing data.

With a complete and utter lack of market-moving data out of the Euro-zone last week, EURUSD closed out Friday almost completely unchanged. With the annual rate of CPI growth still holding at 1.9 percent – just below the European Central Bank’s ceiling of 2.0 percent – the monetary policy committee will likely maintain their stance that rates are still “accommodative.” However, with first quarter labor costs softer than expected at 2.2 percent, traders may perceive the central bank’s fear that wage growth will lead to an up tick in inflation as being unwarranted. Until markets see strong gains in price pressures, they may not be ambitious in pricing in another ECB hike, which creates major downside potential for EURUSD. Nevertheless, as many traders are aware of, all it takes to get a solid rally going for the pair is a bit of hawkish commentary by ECB President Jean-Claude Trichet.Event risk out of the Euro-zone is filled with sentiment reports this week, as the ZEW and IFO surveys will both released. Sentiment is anticipated to reflect optimism amongst investors, as equity markets continue to reach new highs and businesses throughout the Euro-zone outperform, though the IFO is forecasted to ease back slightly. Not to be forgotten, manufacturing PMI and industrial new orders are both predicted to falter, as export demand could feel the effect of the appreciation of the euro. From a technical perspective, given the fact the EURUSD managed to hold above six month ascending trend line at the all-important 1.3300 level, the pair could be in for further gains if 1.3400 gets taken out, and resilient sentiment could be the fundamental trigger.

Strong data coming from down under supported the Australian dollar record high levels. The data offered a good overview of the economy with a look into employment, business and consumer sentiment and housing. Taking it chronologically, the Australian Manpower Survey started things off with a third quarter forecast that pulled back to a net 24 percent positive read from 31 percent the previous quarter. A realized pull back in employment from 33-year highs would be a welcome relief by the RBAThe single indicator of interest in the data trickle is Tuesday evening’s first quarter dwelling starts. There is no official consensus available for the number which may help to boost its appeal among event traders. Setting up the release, the housing sector has not been one of the stands out sectors in GDP, though it is often times a good barometer for consumer strength and their tolerance for lending rates. Looking outside of the fixed boarders of the docket, carry trade sentiment will likely act as the rudder for the Australian dollar. Last week, RBA Governor Glenn Stevens diffused speculation for a rate hike anytime this year.

Economic calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
EZ	18.06.2007	16:00	ECB President Trichet Speaks	Jun			***
US	18.06.2007	17:00	NAHB Housing Market Index	Jun	30	29	**
US	18.06.2007	23:00	Boston Fed President Minehan Speaks	Jun			***
GER	19.06.2007	09:00	German ZEW Economic Sentiment		24.0	29.0	**
CA	19.06.2007	11:00	CPI m/m	May	0.4%	0.5%	***
CA	19.06.2007	11:00	Core CPI m/m	May	0.2%	0.3%	***
CA	19.06.2007	11:00	Core CPI y/y	May	2.5%	2.3%	***
US	19.06.2007	12:30	Housing Starts	May	1.53Mln	1.48Mln	**
US	19.06.2007	12:30	Building Permits	May	1.46Mln	1.47Mln	**
US	19.06.2007	12:30	Redbook	Weekly	-1.0	NA	*
US	19.06.2007	21:00	ABC/WashP	Weekly	-13.0	-12.0	*
JP	19.06.2007	23:50	All Industries Activity Index m/m	Apr	-1.4%	1.0%	*
JP	19.06.2007	23:50	Monetary Policy Meeting Minutes				***
GER	20.06.2007	06:00	PPI m/m	May	0.1%	0.2%	**
CH	20.06.2007	07:15	PPI m/m	May	0.4%	0.9%	***
GB	20.06.2007	08:30	MPC Meeting Minutes	Jun			***
CA	20.06.2007	12:30	Wholesale Sales m/m	Apr	1.9%	0.3%	**
CA	20.06.2007	12:30	Leading Indicators m/m	May	0.4%	0.5%	**
US	20.06.2007	14:30	Crude Oil Inventories	Weekly	0.1Mln	NA	**
US	20.06.2007	15:30	New York Fed President Geithner Speaks	Jun			***
US	20.06.2007	23:50	Trade Balance	May	926.7Mln	448.5	***
US	21.06.2007	06:15	Trade Balance	May	643.4Mln	1100.0Mln	***
JP	21.06.2007	06:30	BOJ Governor Fukui Speaks	Jun			***
EZ	21.06.2007	08:00	Manufacturing PMI	Jun	55.0	54.5	**
GB	21.06.2007	10:00	CBI Industrial Trends Orders	Jun	5.0	5.0	**
US	21.06.2007	12:30	Jobless Claims	Weekly	311.0K	312.0K	**
CA	21.06.2007	12:30	Retail Sales m/m	Apr	1.9%	0.9%	***
CA	21.06.2007	12:30	Core Retail Sales m/m	Apr	1.1%	0.5%	***
US	21.06.2007	14:00	Leading Indicators m/m	May	-0.5%	0.2%	**
US	21.06.2007	16:00	Philadelphia Fed Manufacturing Index	Jun	4.2	7.0	**
GER	22.06.2007	08:00	Ifo Business Climate Index	Jun	108.6	108.4	***
EZ	22.06.2007	08:00	ECB President Trichet Speaks	Jun			***
EZ	22.06.2007	09:00	Industrial New Orders m/m	Apr	2.7%	-1.0%	**

Published on Tue, Jun 19 2007, 10:24 GMT

The Dollar Ended the Week with a Roar Backed By Risings Stock Markets

Tue, Jun 12 2007, 07:12 GMT
by Sarah Vladimirsky

Finotec Group Inc.

Forex outlook:

The U.S currency ended the week as he strengthens to a more than tow month high Vs. the Euro. Strong growth expectations for the second half got some confirmation from a narrowing deficit in the U.S trade balance and signaled a rising export trend. Many economists including the FED Chairman Ben Bernanke are basing their growth estimates on the record high export demand. The continuing raise in the stock market is giving support to the dollar but is also supported by a relatively weak U.S currency.

The ten years U.S yields rose to 5.24% before settling around 5.12% and increased demand for the dollar.

The pound fell versus the dollar for a second week after the Bank of England kept interest rates unchanged at its monthly meeting. ``The BOE met market expectations,'' said Tom Vosa, head of market economics at National Australia Bank in London, and a former economist at the central bank. ``Although a rise in July is possible, we think members might opt to wait until August.'' Further declines for the pound were limited after data yesterday showed industrial and manufacturing production in Europe's second-largest economy increased for a second month in April. The strong data has driven the sterling higher against the Japanese Yen, Euro and the Swiss Franc.

The Yen managed to recover toward the end of the week after reaching records high against the Euro and weakening above 122.00 vs. the dollar.

The rally in the Dow exacerbated the rise in carry trades but those currency pairs already began to trend higher before the US stock market even opened. The initial sell-off in the Japanese Yen was triggered by the nonchalant attitude of the Ministry of Finance towards the carry trade. MoF Watanabe said that there is “no immediate risks of carry trade unwind” and that any unwind would be “small compared to the entire FX market.” The Japanese government is clearly not concerned about the Japanese Yen strengthening. In fact, they probably will welcome it since it automatically tightens the economy and therefore reduces the need for a premature interest rate hike.

The investors will eye the US retail sales, producer prices and the Fed Beige Book report due to be release further in the week. The UK has one of the busiest calendars next week with producer prices, consumer prices, employment and retail sales due for release, so big moves are possible in the British pound. Japan Second release of GDP, CGPI, consumer confidence, the current account, and industrial production are due for release. The Bank of Japan will be meeting to decide on monetary policy, but interest rates are not expected to be changed. The rate in Switzerland is expected to raise in 0.25 basis point to be set at 2.5%.

Economic calendar:


Country	Date	Time (GMT)	E Event	Period	Previous	Forecast	Significance
JP	10/06/07	23:50:00	GDP q/q (r)	Q1	0.6%	0.8%	***
JP	10/06/07	23:50:00	GDP Deflator y/y (r)	Q1	-0.2%	-0.2%	***
GB	11/06/07	08:30:00	PPI core m/m	May	0.1%	0.3%	***
GB	11/06/07	08:30:00	PPI core y/y	May	2.4%	2.3%	**
GB	11/06/07	08:30:00	PPI Input m/m	May	0.7%	0.6%	***
GB	11/06/07	08:30:00	PPI Output m/m	May	0.4%	0.5%	**
CA	11/06/07	12:30:00	Industrial Capacity Utilization Rate	Q1	82.5%	82.9%	***
CA	11/06/07	12:30:00	New Housing Price Index m/m	Apr	0.3%	0.3%	**
EZ	11/06/07	14:00:00	ECB President Trichet Speaks	Jun			***
JP	11/06/07	23:50:00	Corporate Goods Price Index m/m	May	2.2%	2.0%	**
JP	12/06/07	05:00:00	Household Confidence	May	47.4	48.0	**
GER	12/06/07	06:00:00	Wholesale Price Index m/m	May	0.8%	0.5%	**
GB	12/06/07	08:30:00	CPI y/y	May	2.8%	2.6%	**
GB	12/06/07	08:30:00	CPI m/m	May	0.3%	0.3%	***
GB	12/06/07	08:30:00	Retail Price Index y/y	May	4.5%	4.3%	**
GB	12/06/07	08:30:00	Retail Price Index m/m	May	0.5%	0.4%	***
GB	12/06/07	08:30:00	Core CPI y/y	May	1.8%	1.8%	***
GB	12/06/07	08:30:00	Trade Balance	May	-7.1B	-7.0B	***
EZ	12/06/07	09:00:00	Industrial Production m/m	Apr	0.4%	0.2%	**
US	12/06/07	11:45:00	ICSC Chain	Weekly	-0.5%	NA	**
US	12/06/07	12:30:00	Treasury Secretary Paulson Speaks	Jun			***
US	12/06/07	12:55:00	Redbook m/m	Weekly	2.1%	NA	**
US	12/06/07	14:00:00	IBD consumer sentiment	Jun	48.0	NA	*
US	12/06/07	16:30:00	Alan Greenspan Speaks	Jun			**
US	12/06/07	18:00:00	Fed budget	May	-42.7B	-57.8B	**
JP	12/06/07	23:50:00	Current Account	Apr	2.4T	2.0T	***
GB	13/06/07	08:30:00	Average Earnings Index +Bonus q/y	Apr	4.5%	4.4%	***
GB	13/06/07	08:30:00	Claimant Count Change	May	-15.7K	-8.4K	***
GB	13/06/07	08:30:00	Unemployment Rate	Apr	5.5%	5.5%	**
US	13/06/07	12:30:00	Core Retail Sales m/m	May	0.0%	0.6%	***
US	13/06/07	12:30:00	Import Price Index m/m	May	1.3%	0.3%	***
US	13/06/07	12:30:00	Export Price Index m/m	May	0.3%	0.3%	**
US	13/06/07	12:30:00	Retail Sales m/m	May	-0.2%	0.6%	**
CA	13/06/07	12:30:00	Labor Productivity q/q	Q1	0.3%	0.7%	**

FXstreet.com

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