Dollar marking time ahead of FOMC meeting

SYDNEY (Thomson Financial) - The U.S. dollar was mixed in midmorning trading in Sydney on Tuesday, marking time ahead of the start of the Federal Open Market Committee's two-day meeting starting later today.
At 10:50 a.m. (0050 GMT) the dollar was at 107.98 yen from 107.83 yen in late New York trade
on Monday while the euro was at $1.5526 from $1.5514.
The dollar gained against the euro overnight on expectations that the FOMC would put inflation higher up its list of worries when it issues a statement after the meeting's conclusion on Wednesday.
No change in the Federal Reserve's fund target rate, now set at 2.0 percent, is expected.
John Noonan, a senior foreign exchange analyst at Thomson Reuters IFR, said trading is likely
to remain whippy ahead of the release of the Fed statement.
'The market is thin and there is a wide divergence of opinion on how the FOMC will shape its statement after they are expected to announce no-change on Wednesday,' said Noonan.
He said the talk on Wall Street was that the Fed was likely to 'talk tough' on inflation to temper wage expectations even if it might not follow up with aggressive tightening efforts.
'There is some speculation that the Fed might even mention the U.S. dollar in their statement and this has helped to underpin the dollar ahead of the event,' said Noonan.
He said until the announcement the euro is expected to trade in a range of $1.5450 to $1.5650.
Sydney 10:50 a.m. (0050 GMT)
U.S. dollar
yen 107.98
Swiss franc 1.0455
Euro
U.S. dollar 1.5526
yen 167.595
Swiss franc 1.6227
pound 0.7902
Pound
U.S. dollar 1.9650
yen 212.091
Swiss franc 2.0536
Australian dollar
U.S. dollar 0.9522
pound 0.4845
yen 102.815
New Zealand dollar
U.S. dollar 0.7571

Forex reserves down $5

The country’s foreign exchange (forex) reserves dipped by a whopping $4.96 billion in the week ended June 13, the steepest dip in over two-and-a-half years.
Reserve Bank of India (RBI) has done in the forex market by selling dollars in a bid to keep the rupee from breaching the 43-mark against the dollar. Last time such a huge fall in reserves recorded was in December 2005, when there were huge redemption pressures on the central bank on account of the India Millennium Deposits (IMD) scheme of State Bank of India.

RBI has been consistently intervening in the forex market over the past couple of weeks, with the rupee under pressure from oil companies which bought dollars to provide for soaring crude prices.

Meanwhile, credit and deposits continue to record modest growth figures for the year. According to data released by RBI in its weekly statistical supplement (WSS) on Friday, bank credit growth stood at 25.9%.

The total stock of money in the system went up Rs 22,655 crore during the fortnight ended June 6, to touch Rs 40,99,957 crore.

US Dollar fall against the euro pound

On Friday dollar fell against the euro as new data showed German producer price inflation accelerating and investors awaited speeches by top European Central Bank officials. Euro bought $1.5547 in morning European trading, up from its level of $1.5499 in late New York trading.

Europe's largest economy, showed producer prices a measure of inflation pressures that contribute to rising prices for consumers rising by an annual 6 percent in May as a result of soaring energy costs, under scrutiny for hints on its future interest rate course before a meeting next month at which many expect it to raise rates.

European Central Bank said earlier this month that it could raise interest rates by a small amount as early as its next meeting to combat rising inflation in the 15-nation euro zone.

Strengthen a currency by giving investors higher returns on investments, while lower interest rates can weigh on a currency. (Now pound- $1.9727)

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FOREX-Dollar rattled by banking sector

The dollar fell broadly on Tuesday, rattled by signs that the U.S. financial sector, and thus probably the economy, is still far from out of the woods. The Wall Street Journal reported on Tuesday that U.S. investment bank Lehman Brothers (LEH.N: Quote, Profile, Research) may raise up to $4 billion in new capital, suggesting the firm could post its first quarterly loss since going public.
The news added to risk aversion stoked during the previous session after Standard & Poor's cut its credit ratings on Lehman, Merrill Lynch, Given the downgrades by S&P yesterday and the WSJ story with regards to Lehman, it's easy to see why risk aversion is rising," said Simon Derrick, head of currency research at Bank of New York Mellon.
In contrast, was benefiting from Eurogroup chairman Jean-Claude Juncker giving his backing to the European Central Bank's hawkish,

Dollar falls as U.S

The dollar was pushed lower by news of dismal U.S. job creation, with the unemployment rate jumping by its largest amount in 22 years.

5.5 percent from the 5.0 percent reported in April, sharply higher than the 5.1 percent rate expected by economists polled by Thomson Reuters IFR Markets, when it also rose 0.5 percentage points. The economy lost 49,000 jobs in May, a smaller loss than 60,000 decline expected from the payroll survey, but markets focused on the unemployment rate by selling off the greenback.

He said markets were looking for a reason to sell the dollar against the euro, which has been buoyed by hawkish inflation talk from the European Central Bank. Some analysts said the underlying payrolls number is somewhat encouraging, as it shows the loss of jobs may be stabilising somewhat, whereas the unemployment rate is a lagging indicator.

The economy remains very weak and enjoys little forward momentum, meaning the dollar will hardly be rallying strongly any time soon.

FOREX-Dollar cheered by Bernanke comments

The dollar advanced broadly on Tuesday after Federal Reserve Chairman Ben Bernanke warned about the inflationary impact of a weak currency, suggesting the central bank is not likely to cut interest rates further this year.

In a speech before the International Monetary Conference Central Bankers' Panel in Barcelona, Bernanke said the Fed is carefully monitoring developments in the currency market.

We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate," he said, referring to the Fed's twins goal of ensuring sustainable growth and low inflation.

China forex reserves

China’s foreign exchange reserves rose to $1.76 trillion at the end of April, state media reported yesterday, reaching a level higher than the rest of Northeast Asia’s combined. China’s reserves, by far the largest in the world, expanded by another $74.5bn during April, the China Business News reported, equivalent to about $100m every hour.
It is possible that one day China’s forex reserves might even top those of all other Asian countries combined, according to Brian Mak, a Hong Kong-based economist with Core Pacific Yamaichi.
Much of the money represents investment inflows, and the economic conditions are much better in China than other Asian countries such as India,” he said. “It will continue to expand unless the government does something to curb the inflows,” he said.

FOREX-Dollar edges up but recovery looks fragile

.Dollar gains as US jobless claims fall
.Greenback still fragile as oil prices keep rising
.High inflation, low growth raise US stagflation fears
The dollar rose on Thursday, boosted by better-then-expected jobless claims data, but support remained fragile as record high oil prices stoked worries about the health of the U.S. economy.

The U.S. currency got a modest boost against the euro and yen after data showed Americans filed fewer applications for first-time jobless benefits than expected in the latest week.

That helped it reverse some losses suffered after the Federal Reserve on Wednesday downgraded its 2008 growth forecast, and some analysts said it offered a glimmer of optimism for the overall May employment picture.

"The market may begin to fret less over the May non-farm payrolls report," said Ron Simpson, director of currency research at Action Economics in Tampa, Florida. Continued...

Diary of a Novice Forex Trader

Last week there were signs of a return to Dollar weakness, but the dip in crude oil prices has given a tentative bid to the greenback.
Not everyone’s cup of tea, but Thatcher had more balls than any of her successors. And this latest bunch of ‘Britain’s got no talent’ try to make a virtue out of U-turns, saying that they’re always ready to listen. For starters that’s not government it’s appeasement. Secondly, this Country hasn’t got the finances for them to keep on ‘listening’. Better to pander to the Sun and cut taxes on gas-guzzlers. The price of diesel at over 120p a litre is shocking and must be hitting hauliers hard. So I was surprised to read of a load of lorry-drivers wasting a tank full on a trip from the South-west up to London, just to block a road.
It was a great display of raw grit and determination; the description of ‘more streetwise’ was a touch harsh, though I reckon Lee Mears couldn’t believe his luck in escaping the sin bin when the touch judge couldn’t identify him.
There’s not a lot of trading to speak of in this shortened Bank Holiday week. I lost a scrap, 25 pips, in real trading whilst making a pretend 75 pips trialling one of my external forex systems. My year to date total slipped to 4956 pips. The Chimp lost a net 100 pips, taking his loss to –1600.

Forex Technical Analysis - RCPL Forex

Euro: Euro breached the 1.5500 for the first time in 3 weeks as it tested the bids of 1.5485 on the back of increasing unemployment and deteriorating Eurozone consumer confidence. However later regained its losses and closed at 1.5511, the daily and 4-hrly stochastic are in the oversold region showing some buying pressure but upmove will be well contained at 1.5626 (100 & 21 4-hrly EMA & 38.2 % retracement ).(Eur/Usd-1.5537).

Pound:Pound dipped down to a low of 1.9672 on the back of weak housing data but could not deteriorate further as it took the trendline support and later surged up to close stronger at 1.9755. The daily and 4-hrly stochastic are in the neutral region while the hourly is in the overbought region. Its currently facing stiff resistance at 21 4-hrly EMA a break of this level for indicate a further upmove upto 1.9825( 100 daily EMA) which has been holding for the past few trading session. (Gbp/Usd- 1.9784).

Yen: USD/JPY pair surged up by 127 pips to touch an intra day high of 105.87 and closed above the 105 mark at 105.57. A continued sustenance above the 105 (21 weekly EMA &100 daily EMA, trend line support, 50% retracement daily charts) would suggest a bullish bias for the pair and a further upmove upto 107.40 (61.8 % retracement daily charts) could be seen in next few sessions. (Usd/Jpy- 105.29).

Nigerian forex reserves

Nigerian foreign exchange reserves rose to a record high of $61.96 billion in mid-May from $60.81 billion at the end of April as world oil prices also hit record highs, the central bank said on Wednesday.
Nigeria, the second biggest economy in sub-Saharan Africa, has seen its foreign exchange reserves grow consistently since 2005 due to rising global oil prices.
The latest figure published on the bank's Web site did not state how many months of Nigerian imports the reserves could finance, but the banking regulator has said the March figure of $59.70 billion could support 38 months of import bills.