Thread: Forex News from InstaForex

During early European deals on Tuesday, the Australian dollar extended its Asian session's downtrend against other major currencies. The Aussie thus declined to a 15-day low against the New Zealand dollar and a 4-day low versus the euro.

The Aussie plunged today as business confidence in Australia fell to a record low in January. According to the survey results published today by National Australia Bank, business confidence index declined 12 points for January to a reading of minus-32, the lowest since the bank began the survey in 1989. In December, the Business Confidence Index improved to minus-20, following the November reading of minus-30.

Australian firms are expected to face exceptionally challenging economic conditions in 2009, the latest Dun & Bradstreet (D&B) business expectations survey revealed today. "Australian firms have had a difficult start to the New Year and ****utives are anticipating the quarter ahead will be the most challenging yet," D&B said.

Meanwhile, the Reserve Bank of Australia Governor said today that the global financial crisis boils down to a combination of extreme borrowing and optimism.

He noted the financial system is characterised by cycles of optimism and pessimism, but the scale of the latest crisis is new.

Mr Stevens says central banks now face the challenge of creating policy that can handle the complexity of the financial system.

Against the US dollar, the Australian currency traded down during early deals on Tuesday. At 4:10 am ET, the aussie-dollar pair slipped to 0.6635, compared to 0.6788 hit late New York Monday. The pair is currently trading at 0.6650 with 0.64 seen as the next target level.

U.S. President Barack Obama is demanding an economic stimulus bill on his desk before Congress leaves for the Presidents' Day holiday on February 16. The U.S. legislation passed a key test in the Senate earlier today with a 61-36 vote to end delaying-tactics by conservative Republicans that had pushed debate into a seventh day. This has set the stage for a final vote, which would send the package into a House-Senate conference to resolve significant differences between the chambers' respective bills.

Treasury Secretary Timothy Geithner also plans to outline rules today for $350 billion in bailout funds designed to help the financial industry as well as homeowners facing foreclosure.

The Australian dollar that closed Monday's North American session at 1.9168 against the European currency touched a 4-day low of 1.9466 at 4:50 am ET Tuesday. The next downside target level for the Aussie is seen around 1.962.

Italy's unadjusted industrial production dropped 12.2% year-on-year in December, after falling 12.7% in November, the ISTAT said Tuesday. The decline was severe than the expected fall of 11.3%. Production dropped for the eighth straight month.

French industrial production declined 1.8% month-on-month in December, slower than November's revised 2.8% fall, the statistical office INSEE said Tuesday. The decline in December matched economists' expectations.

Against the Japanese yen, the Australian currency showed weakness during Tuesday's early deals. At 4:20 am ET, the aussie-yen pair dropped to 60.39, compared to Monday's closing value of 62.10. If the pair falls further, 59.4 is seen as the next target level.

Japanese household consumer confidence rose to 26.4 in January from 26.2 in December, a monthly survey from Cabinet Office showed today. Economists had expected the indicator to fall to 25.2 in January.

The Australian dollar edged down to 1.2436 against its New Zealand counterpart at 4:10 am ET Tuesday. This set a 15-day low for the pair.

The next downside target level for the aussie-kiwi pair is seen around 1.229. The pair closed Monday's New York deals at 1.2615.

Against the Canadian dollar, the Aussie hit a low of 0.8167 at 4:10 am ET Tuesday. The aussie-loonie pair that closed yesterday's late New York trading at 0.8265 is now worth 0.8199. On the downside, 0.807 is seen as the next support level for the pair.

Turning to the US, all eyes will be on Treasury Secretary Timothy Geithner's announcement of plans for the remaining $350 billion left in the U.S. Troubled Asset Relief Program (TARP).

Also, New York Federal Reserve President William Dudley will speak on inflation at 9:30 am ET.

The Commerce Department is due to release its wholesale inventories report at 10 am ET. Economists expect wholesale inventories at the end of December to show a 0.6% decline.

In the afternoon, the US Federal Reserve Chairman Ben Bernanke will testify in front of the House Financial Services Committee.

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The US dollar extended its recent rally against the Japanese currency in early trading on Wednesday. The greenback soared to near a 6-week high of 92.83 versus the yen by 7:15 am Eastern Time, up from an Asian session low of 92.11. On the upside, the dollar-yen pair is likely to target near the 93.6 level. The pair that closed Tuesday at 92.42 is currently trading at 92.81.

Investors chewed a final report from the Economic and Social Research Institute showing the Japanese leading index stood at 80 in December, revised up from the initial estimate of 79.8. In November, the reading was 81.8. Meanwhile, the coincident index for December was upwardly revised to 92.4 from 92.3. However, the reading was below November's 94.9.

Also, the Bank of Japan began its two-day policy meeting today. Analysts expect the central bank to leave its interest rate unchanged at 0.10% at the end of the meeting tomorrow.

Traders now likely to focus on the New York session, in which the US import and export price indexes, housing starts and the industrial production reports-all for the month of January have been slated for release.

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After trading down in early European deals, the British currency edged up against its major counterparts during New York morning trading on Wednesday. The minutes of the Bank of England's Monetary Policy Committee meeting released in early European session, which showed that policymakers were split while deciding on a 50 basis points rate cut.

The meeting was held on February 4 and 5. Eight members of the Committee voted to reduce the Bank Rate by 50 basis points to 1%. The well-known dove of the rate setting body, David Blanchflower preferred a reduction of 100 basis points.

After touching a 16-day low of 1.4097 by about 4:30 am ET, the pound reversed its direction against the US dollar in New York morning deals on Wednesday. As of now, the pair is trading near 1.4186.

The US Federal Reserve released its report on industrial production and capacity utilization in the month of January today. The report showed that production fell by 1.8 percent in January following a revised 2.4 percent decrease in December.

According to a report released by the US Commerce Department on Wednesday that housing starts fell 16.8 percent to an annual rate of 466,000 in January from the revised December estimate of 560,000.

The U.S. Commerce Department also said today that import prices fell 1.1 percent for January.

The sterling ticked up against the euro and the Swiss franc from previous session's lows of 0.8910 and 1.6594 in New York morning today. At present, the pound is worth 1.6768 against the franc and 0.8828 versus the euro, compared to yesterday's close of 1.6656 and 0.8840, respectively.

Against the Japanese yen, the British currency also showed strength from European session's downtrend in New York morning deals today. At 10:30 am ET, the pound-yen pair climbed to 133.21 from earlier low of 130.44. Presently, the pair is trading at 132.84.

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Australia's economy is expected to weather global economic crisis more than its international counterparts as it has a better financial system compared to other economies, Reserve Bank of Australia's Assistant Governor of Economics, Malcolm Edey said Wednesday. But, he agreed that Australia will be operating in a difficult international environment this year.

"There are reasons to expect that the Australian economy can continue to perform better than its international counterparts in the difficult period that lies ahead," Edey said in a speech in Sydney.

Edey noted that Australia had more momentum than most comparable economies in the period leading into the crisis. He said the economy's financial system remains in a much better shape than its international counterparts and it helped gain much more traction from cuts in official interest rates.

He said the central bank's rate cuts have been passed through to end borrowers, especially for housing loans, since it started lowering rates in September. He noted that this was in marked contrast to other countries, where banks were hit hard by financial crisis and the degree of pass-through was limited.

Since September 2008, the RBA had cut its key cash rate by a total of 4 percentage points to a record low of 3.25%. In addition, Malcolm Edey said the depreciation of the exchange rate is also insulating the domestic economy.

Further, Edey said while major industrial countries were slowing due to crisis, China and the other developing economies in Asia and elsewhere were growing at a good pace until the September quarter. But, he said 2009 is shaping up as a very difficult year for the world economy.

Growth in virtually all of Australia's trading partners will be well below trend this year. "This would also mean that the current cycle is more highly synchronized than the three previous international recessions, in the early 80s, the early 90s and in 2001," Edey said.

Official forecasts, including those of the IMF, imply that output in the major industrial economies will contract further in the first half of this year, but start to pick up later in the year and into 2010. "The situation is still very uncertain but, for the reasons I've been outlining, that seems like a reasonable expectation."

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News are provided by InstaForex in partnership with RTT.

India may not achieve the $200 billion trade target fixed for the current fiscal, reported the PTI quoting the Minister of State for Industry, Ashwani Kumar in Lok Sabha. He said that the government and the Reserve Bank of India are closely watching both domestic and international economic developments. He also said that the RBI has already taken various measures to reduce the cost of credit and improve liquidity for trade and industry.

Kumar said that the downtrend in exports is witnessed particularly in sectors like gems and jewellery, textiles and garments, handicrafts, auto******s, leather and leather products, marine products and plastic and linoleum and said employment in these sectors are also impacted. He added that the government is taking steps to create new jobs to solve the problem.

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Italy's consumer price index, or CPI, including tobacco rose 1.6% year-on-year in February, at the same pace recorded in January, a preliminary report from the statistical office ISTAT showed Monday. Economists had expected the CPI to climb 1.5%.

On a monthly basis, the CPI rose 0.2% after recording declines in past three months.

The harmonized index of consumer prices, or HICP, grew 0.2% in February following a 1.7% fall in January. The HICP annual inflation edged up to 1.5% from 1.4%.

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News are provided by InstaForex in partnership with RTT.

The US dollar pared its Wednesday's early Asian session gains against the European currency, the British pound and the Swiss franc. The dollar thus eased from a 12-day high against the euro. On the other hand, the greenback showed strength against the Japanese yen.

Against the European currency, the US dollar lost ground after hitting a 12-day high of 1.2540 during early Asian deals on Tuesday. At 10:55 pm ET, the dollar touched a low of 1.2640 against the euro, compared to 1.2579 hit late New York Monday. The euro-dollar pair is currently trading at 1.2621 with 1.29 seen as the next target level.

The US dollar that closed Monday's North American session at 1.4057 against the British pound, climbed to 1.3996 during Tuesday's early Asian deals. Thereafter, the dollar reversed its direction and was quoted at 1.4091 against the pound at 11:45 pm ET. The next downside target level for the greenback is seen around 1.43.

Against the Swiss franc, the US dollar touched 1.1720 at 10:55 pm ET, moving down from an early Asian session high of 1.1784. If the dollar-franc pair falls further, 1.159 is seen as the next target level. The pair that closed Monday's New York deals at 1.1755 is currently quoted at 1.1731.

The US dollar traded higher against the Japanese yen during today's early deals. At 11:05 pm ET, the dollar-yen pair reached a high of 97.62, compared to Monday's closing value of 97.49. On the upside, 99.1 is seen as the next target level for the dollar.

Japan's monetary base was up 6.4 percent on year in February, the Bank of Japan said today, standing at 93.653 trillion yen. That follows a 3.9 percent annual advance in January to 93.504 trillion yen.

Switzerland's fourth quarter GDP and the UK February construction PMI reports are expected in the European session today.

Turning to the US, Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to speak about the U.S. economy on a panel in Tampa, Florida at 8 AM ET.

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET. The index is likely to show a 3% decline for January.

The pending home sales index rose 6.3% to 87.7 in December compared to November. On a year-over-year basis, the index was up 2%.

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News are provided by InstaForex in partnership with RTT.

European Economics Preview: ECB, BoE Forecast To Cut Rates By 50 Bps


Thursday, the European Central Bank is expected to cut its key interest rate by 50 basis points to a record low of 1.5% as leading economic indicators increasingly point downwards. In the UK, the Bank of England is also expected to cut interest rates to near zero and announce non-conventional measures to improve liquidity.

At the end of two day rate setting meeting, the Monetary Policy Committee of the central bank is widely expected to reduce the Bank Rate by another half a percent to a historic low of 0.5% to kick start the British economy that is falling into deeper recession.

Further, the Treasury is expected to give authority to the central bank to print money and provide funds through purchase of assets. At 2.00am ET, the Federal Statistical Office is scheduled to release the German retail sales report for January. Retail sales are expected to grow 0.2% month-on-month in January, after rising 0.1% in December.

Thereafter, the French ILO jobless rate is due at 2.45am ET. The French unemployment rate is seen at 7.9% in the fourth quarter, up from 7.7% in the prior quarter.

At 2.50am ET, the French statistical office INSEE is slated to issue producer prices results for the month of January. On a yearly basis, producer prices are forecast to fall 0.4%, after remaining flat in December.

Spanish industrial production and Hungarian trade balance are due at 3.00am ET. Spanish industrial production is forecast to fall 20.2% year-on-year in January.

At 5.00am ET, the Eurozone GDP data is expected from the Eurostat. According to the flash estimate, Eurozone GDP contracted 1.5% sequentially in the fourth quarter, larger than the 0.2% decline seen in the second and third quarters of 2008. Compared with the same quarter of the previous year, seasonally adjusted GDP decreased 1.2% in the fourth quarter.

The statistical office is expected to confirm the GDP estimate released on February 13.

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Billionaire investor Warren Buffett warned Monday that the economy has "fallen off a cliff," accompanied with a drastic change in consumer habits. The CEO of Berkshire-Hathaway (BRK), Buffett offered long-term optimism to temper his short-term pessimism.

Appearing on CNBC, Buffett was blunt about his short-term outlook, adding that consumers are really changing their habits.

"It's fallen off a cliff," Buffett said of the economy. "Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen."

However, despite gloomy skies on the immediate horizon, Buffett said he has confidence in the U.S. economy.

"Everything will be alright. We do have the greatest economic machine that's ever been created," Buffett said.

The famous investor also explained his bets on the market. For example, he has invested in Tiffany & Co. (TIF), despite the fact that he recognized that it will be a bad year for all luxury dealers and he will likely deal with some losses in the short term. Looking ahead, however, Buffett predicted that Tiffany's will survive, and when the stock rebounds he will catch a big upside.

He has noticeably toned down his presence in the political arena, specifically with the Obama administration. During the campaign and transition period, Buffett served as an advisor to Obama and then on his Transition Economic Advisory Board.

Buffett, 78, expressed on his frustration that some members of Congress have been unable or unwilling to put aside partisan differences and really attack the problem at hand. Although he said overall the economy will recover no matter how Congress acts, the speed of the recovery will be greatly impacted by their decision to cooperate or not.

"It's important in terms of the speed with which we work," Buffett said. "I've been very pleased actually with the immediate response.kind of disappointed as we've gone along in terms of we can't quite get our act together."

He had brief words of advice for Barack Obama, stating that "what is required is a commander in chief that's looked at like a commander in chief in a time of war."

Last week, Berkshire Hathaway reported a steep decline of about 96% in its fourth-quarter profit, while earnings for 2008 declined 62% from last year. Further, the Oracle of Omaha said the economy would be in shambles throughout 2009 and probably well beyond, but expressed hope that America's best days lie ahead.

In his letter to shareholders, the investment guru noted, "Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so."

Buffett's comments and outlook on companies are closely watched by investors and analysts alike, who consider him an astute business man and a far-sighted investor. He was named the richest American by Forbes last year. He took over Berkshire when it was an ailing textile maker. Now, Berkshire owns companies operating in sectors as varied as insurance, utility, furniture, restaurants, carpet and jewelry. It also has interests in companies like Coca-Cola Co., Wells Fargo & Co. and Kraft Foods Inc.

The Omaha, Nebraska-based company's net income for the fourth quarter plummeted to $117 million or $76 per share from $2.947 billion or $1,904 per share in the year-ago period. Revenues dropped to $24.592 billion from $28.043 billion in the same period in 2007.

In a candid admission in the letter, Buffett said, "During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt...

Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.''

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Monday, the Icelandic Financial Supervisory Authority took control of the operations of Straumur-Burdaras Investment Bank hf. after the bank found it difficult to meet its obligation.

In a letter to the Financial Supervisory Authority, the bank revealed that it had to meet obligations totaling EUR 33 million on March 9, but only had disposable funds of EUR 15.3 million. Further, Straumur assessed that raising necessary funds for continued operations was not a viable option.

Considering this grave situation, the Financial Supervisory Authority found it necessary to take control of the bank.

All deposits in domestic commercial banks, savings banks and their branches in Iceland are fully guaranteed, the FME said in a statement.

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