FX Desk; A View from the Floor

Bernanke’s Financial Experiment, Open-Ended QE

noreply@blogger.com (fxdesk) — Mon, 17 Sep 2012 17:45:00 +0000

In 2002, the Chairman of the Federal Reserve, Ben Bernanke, gave a speech about deflation in which he mentioned that the government in a fiat money system owns the physical means of creating money. Control of the means of production for money implies that the government can always avoid deflation by simply issuing (creating money out of thin air) more money. He said "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost." He went on and referred to a statement made by Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation. Ever since then Bernanke was nicknamed helicopter Ben.

Read the rest of the AscendantFX Weekly Market Dispatch here.

noreply@blogger.com (fxdesk) — Wed, 05 Sep 2012 16:02:00 +0000

Please follow the link below to download the Septemer 4th edition of AscendantFX's Weekly Dispatch.

http://www.ascendantfx.com/resources/market_dispatches.html

Elliot Wave Big Picture Outlook of the CAD

noreply@blogger.com (fxdesk) — Tue, 03 May 2011 00:49:00 +0000

Knee-Jerk Reaction to the Death of OBL

noreply@blogger.com (fxdesk) — Tue, 03 May 2011 00:44:00 +0000

As you can see from the chart, there was a knee-jerk reaction to the death of Osama Bin Laden at around the 11th hour of May 1st as evidence by the large green spikes on the chart. Unfortunately for the USD, it was down hill after midnight as the rally fizzled. Be on the lookout for a possible knee-jerk reaction in the CAD in response to tonight's federal election results for Canada.

Change Of Address

noreply@blogger.com (fxdesk) — Thu, 28 Apr 2011 00:25:00 +0000

I'm on temporary leave due to my change in employment so posting will be intermittent. I should be back into full swing of things on or after May 2nd, 2011.

What Happened To All The Fed Hawks?

noreply@blogger.com (fxdesk) — Thu, 28 Apr 2011 00:24:00 +0000

Where did all the Fed hawks go? No Fed members voting against the current policy, what happen to all the hawkish talk. I guess that's all it was, talk. And the reason for the talk was the USD was in danger of falling off a cliff. As you can see from the chart above, the hawks were trying to make sure that the supporting trend line would hold. So by talking tough and hawkish they were able to shake off the speculators who were jumping on the short side. Remember, all that the Fed and the government want is a controlled or orderly decent in the USD not a waterfall decline. Now that support has been violated, expect more USD weakness on the way, at least until the end of QE2 at the end of June.

Currency Humour, Sort Of

noreply@blogger.com (fxdesk) — Thu, 21 Apr 2011 15:41:00 +0000

Rumour Mill - Greece To Restructure This Weekend

noreply@blogger.com (fxdesk) — Wed, 20 Apr 2011 18:51:00 +0000

Greek 10-year spread hit fresh record high at +1131bps vs German Bunds earlier on continued speculation in the market of a debt restructuring, as soon as this Easter weekend. There is talk of a haircut of between 40-50% in order to make Greece's debt sustainable. Even if this happens, I don't think it is enough to knock the USD from the ugly duckling crown of the forex market.

Money in Motion: Dollar

noreply@blogger.com (fxdesk) — Wed, 20 Apr 2011 18:40:00 +0000

Andy Busch, BMO Capital Markets, discusses the decline of the dollar as traders say "risk on."

S & P Downgrade & Debt Ceiling, What Does It All Mean?

noreply@blogger.com (fxdesk) — Tue, 19 Apr 2011 16:26:00 +0000

Discussing the ways to address the country's long-term fiscal woes, with Andy Busch, BMO Capital Markets; Vince Farrell, Soleil Securities; David Dietze, Point View Financial Services and CNBC's Rick Santelli.

In a wide-ranging discussion, Jason Trennert, Strategas Research Partners; Maury Harris, UBS, and Ashraf Laidi, Intermarket Strategy, break down S&P's negative outlook report, what it indicates about the economy, and its impact on the markets.

Uncertainty To Help Commodity Currencies

noreply@blogger.com (fxdesk) — Mon, 18 Apr 2011 16:27:00 +0000

Increased uncertainty over policy in the euro zone and the U.S. will make the greater clarity and higher yields of commodity currency policies more attractive.

Morning Currency Wrap for Monday April 18, 2011

noreply@blogger.com (fxdesk) — Mon, 18 Apr 2011 14:28:00 +0000

It's The Debt Stupid - I was going to start this commentary about how debt concerns was weighing on the Euro when a shocker came across the news feeds at around 9:01 am EST - Standard & Poor's revised its rating outlook on the United States to negative. Wow, I didn't think a US based credit agency had the guts to do it. Well its done now and the USD is down across the board. In overnight trading, China got things going with its fourth hike in bank reserve ratios this year and its seventh such move since October signaling that it is determined to combat inflation. In the European secession, the combination of the results of the Finnish vote and talk that Greece will be forced to restructure its debt caused the Euro to fall down to support at around the 1.4250 level. Firstly, the rise of Finland's anti euro party, True Finns, may cause problems for the euro zone because they are against any and all bailouts. This is problematic because Finland's parliament has the right to vote on European Union requests for bailout funds, meaning it could hold up costly plans to shore up Portugal and bring stability to debt markets. Secondly, a Greek newspaper reported on Monday that the government had asked the International Monetary Fund and European Union to start discussions on a restructuring. A Greek finance ministry source said the report was not true. Support for the Euro held on comments by Austria's Ewald Nowotny who said that expectations that the key ECB rate will be increased by another 50 bps in 2011 were "well founded." Keep in mind that this week will be short due to the long Easter weekend, so a lack of liquidity can exacerbate currency moves. In Canada, the CAD started the week softer as risk aversion went into full swing after China's move and the worries over the sovereign debt fears in Europe. Also weighing on the CAD, the price of oil fell by over a dollar, which is a little odd since Saudi Arabia decide to cut output saying the market was well supplied.

Here are the interbank mid-market rates at the time of posting:

EUR/USD 1.4271 USD/CHF 0.8949

GBP/USD 1.6285 USD/CAD 0.9672

AUD/USD 1.0489 EUR/CAD 1.3799

NZD/USD 0.7858 GBP/CAD 1.5750

USD/JPY 82.57 USD/MXN 11.8005

Elliot Wave Update on the CAD

noreply@blogger.com (fxdesk) — Sun, 17 Apr 2011 16:13:00 +0000

The CAD remains below daily channel support and therefore maintains the decline to a C=A target of 94.50 with a chance to over extend to a 5=1 objective of 92.70 before the reversal.

China Raises Bank Reserves Yet Again

noreply@blogger.com (fxdesk) — Sun, 17 Apr 2011 13:49:00 +0000

China raised banks' required reserves ratio for the fourth time this year by 50-basis-point to a record 20.5% on Sunday in order to combat inflation. Read the rest of the story here.

US and China compete for Brazil’s oil

noreply@blogger.com (fxdesk) — Sun, 17 Apr 2011 13:49:00 +0000

With the brewing conflicts in North Africa and the Middle East there is a rush to secure stable sources of energy. The US is realizing that strategic competition with China for scarce resources is no longer something it does far from home. Latin America, once the backyard of the US, is shaping up to become the stage for the next tussle between these two giants. Read the whole story here.

Money In Motion, April 15, 2011

noreply@blogger.com (fxdesk) — Sat, 16 Apr 2011 16:40:00 +0000

Forex Measuring Stick for Week Ending 15/04/2011

noreply@blogger.com (fxdesk) — Sat, 16 Apr 2011 01:34:00 +0000

Afternoon Market Video Update From CMC Markets

noreply@blogger.com (fxdesk) — Fri, 15 Apr 2011 16:40:00 +0000

Michael Hewson looks back at the week just gone, a disappointing start to earnings season, rising inflation, sovereign debt fears, China and looks ahead to next weeks Bank of England minutes, UK public finances and UK retail sales figures.

Morning Currency Wrap for Friday April 15, 2011

noreply@blogger.com (fxdesk) — Fri, 15 Apr 2011 14:17:00 +0000

Chinese GDP & Inflation and Irish Downgrade & Upgrade - The Asian session started with a bang as Chinese economic data spurred risk aversion spurring the Yen higher because the data demonstrated that China still has work to do in terms of tightening monetary policy. China’s economy grew 9.7% in Q1, while consumer prices increased 5.4% in March from a year earlier. In the European session, all eyes were on Ireland as Moody's Investors Service downgraded Ireland's foreign and local currency government bond ratings by two notches to Baa3 from Baa1 with the outlook remained negative. In essence, Moody's cut Ireland's rating to just above junk status. However, yesterday Fitch Ratings affirmed Ireland at BBB+ and removed it from Rating Watch Negative to negative outlook. Confused? I am. In sports betting they call that a push so I will choose to shake it off and move on and that is exactly what the Euro did. Today's euro zone inflation numbers came in a little higher than the flash reading, reaffirming views that the European Central Bank will continue to raise rates in coming months. The ECB raised rates by 25 basis points last week and the market is pricing in two more rate increases before year end. In the US today, the CPI data showed that consumers paid more for food, gas and rent last month, but outside those categories inflation remained tame, which allowed the USD to extend its gains against the Euro. In Canada, the CAD softened a little against the USD as the price of oil weakened and on concerns that the Chinese will have to be more aggressive on interest rate hike, which could possibly change the outlook for global growth. With no domestic data out today, I expect the CAD is stay within range. I don't see much downside in the CAD with plenty of sovereign interest to buy CAD out there.

Here are the interbank mid-market rates at the time of posting:

EUR/USD 1.4431 USD/CHF 0.8940

GBP/USD 1.6346 USD/CAD 0.9642

AUD/USD 1.0559 EUR/CAD 1.3917

NZD/USD 0.7968 GBP/CAD 1.5763

USD/JPY 83.08 USD/MXN 11.7175

IMF Takes Aim at U.S.

noreply@blogger.com (fxdesk) — Thu, 14 Apr 2011 16:35:00 +0000

Discussing whether the IMF could take action against the United States regarding its mounting debt, Vince Reinhart, American Enterprise Institute, and CNBC's Steve Liesman.

Morning Currency Wrap for Thursday April 14, 2011

noreply@blogger.com (fxdesk) — Thu, 14 Apr 2011 13:57:00 +0000

Possible Debt Restructuring For Greece Spurs Risk Aversion - Greece's debt costs surged after German Finance Minister Wolfgang Schaeuble told a newspaper that Athens may need to restructure its debt if an audit in June questions the nation’s ability to make debt repayments. Of course this spurred speculation that other peripheral euro zone countries would also need to restructure their debts causing the Euro to move lower. European Central Bank Executive Board member Lorenzo Bin Smaghi warned that such a move would be a "catastrophe" and fellow ECB policymaker Juergen Stark also warned that Irish banks cannot rely on ECB emergency funding indefinitely. In the UK, the GBP bounced higher after a Nationwide Building Society report showed U.K. confidence rose in March from a record low as Brits grew more optimistic. In Asia, the risk aversion trade put a firm bid under the Yen while the SGD rallied to a record high after the Monetary Authority of Singapore said it will reorient the currency’s band upward. Meanwhile, China was in the news again after its foreign exchange reserves soared to a record of more than $3 trillion by end-March. Also, China's money supply growth blew past forecasts which is threatening to aggravate the nation's inflation woes so expect more hikes in bank reserve ratios. In the US, this morning's round of data flow, jobless claims unexpectedly increased and wholesale prices rose, caused the USD to give back some of its overnight gains. In Canada, the CAD was weaker in overnight trading due to peripheral European government debt woes and continued its downtrend after this morning's weaker-than-expected Canadian manufacturing data. Manufacturing sales fell in February, its biggest dip since August 2009, as auto sales pulled back after a January surge.

Here are the interbank mid-market rates at the time of posting:

EUR/USD 1.4429 USD/CHF 0.8932

GBP/USD 1.6330 USD/CAD 0.9647

AUD/USD 1.0511 EUR/CAD 1.3927

NZD/USD 0.7910 GBP/CAD 1.5757

USD/JPY 83.16 USD/MXN 11.8049

World's Reserve Managers Sold Euro Bonds for CAD, AUD, & Gold

noreply@blogger.com (fxdesk) — Wed, 13 Apr 2011 17:31:00 +0000

It looks like central bankers around the world were busy de-risking their reserves by selling euro-zone bonds issued by the pigs and replacing them with 'non-traditional' reserve currencies such as the Australian and Canadian dollars, and gold. Read the results of the poll conducted by Central Banking Publications over the winter of 2010-2011 in this Reuters article here.

Morning Currency Wrap for Wednesday April 13, 2011

noreply@blogger.com (fxdesk) — Wed, 13 Apr 2011 14:05:00 +0000

Yesterday The Screens Were Red, Today The Screens are Green - Yes from risk off to risk on, now that turnaround Tuesday is over we are back to risk on, sort of, I think. With this change come Yen weakness across the board as traders go back to selling Yen and going long high yielders, aka the Yen carry trade. The Yen carry trade also put a firm bid under the AUD and NZD with a recovery in commodity prices and stocks. Also weighing on the Yen was the downgrade of the economy by the Japanese government for the first time in six months, which will ensure that Japanese monetary policy will remain ultra-loose for a prolonged period of time. Elsewhere in Asia, the Chinese Yuan snapped two days of losses as the Economic Information Daily reported that banks’ reserve ratios may be increased by 50 basis points on either April 15 or April 22. In Europe, the Euro continued to push higher on the back of data that showed the euro-zone economy is improving and on sovereign demand. Euro-zone industrial output rose for a fifth month in February, spurring speculation that the European Central Bank will tighten policy further after last week’s interest-rate increase. Also keeping a firm bid under the Euro was demand from sovereign names looking to recycle USD proceeds as the Euro offers better yields due to further rate rises in the euro zone while policy stays loose in the United States and Japan. In the US today, the USD clawed back some of its losses to the Euro after some measures of US retail sales improved more than expected in March. Excluding auto purchases, US retail sales rose 0.8%, a touch better than forecasts calling for a 0.7% increase. Statistics for prior months were also revised higher, which confirm that the US consumer is still spending. In Canada, the CAD was a little firmer ahead of detailed economic projections from the Bank of Canada. Yesterday, the market scaled back its expectations of future interest rate hikes in Canada after the BOC held interest rates steady at 1% as expected on Tuesday. The BOC did raise its growth estimates, but it also used strong language on CAD's strength. The market will now focus on the BOC's Monetary Policy Report and news conference later this morning to gleam any insight into future policy moves.

Here are the interbank mid-market rates at the time of posting:

EUR/USD 1.4475 USD/CHF 0.8985

GBP/USD 1.6260 USD/CAD 0.9623

AUD/USD 1.0493 EUR/CAD 1.3933

NZD/USD 0.7903 GBP/CAD 1.5653

USD/JPY 84.10 USD/MXN 11.7949

USD Looks More Sick Than We Thought

noreply@blogger.com (fxdesk) — Tue, 12 Apr 2011 18:32:00 +0000

Not only are yields moving against it but debt default fears and reserve diversification are conspiring to ensure that the USD doesn't have an early recovery.

Currency Humour, Sort Of

noreply@blogger.com (fxdesk) — Tue, 12 Apr 2011 17:00:00 +0000