Alan’s Forex Blog

Past Week’s Data and Events The dollar fell off its bed last night after Federal Reserve Chairman Bernanke practically gave the green light to further sales, and the weight of the soft US economic data didn’t help any. Credit is still tight and leading financial names continue to bleed billions by the day. With the appetite for risk swerving wildly, carry trades are toxic, as the end of last week showed. The low yielding currencies should outperform the high yielding ones and cross trading

The disaster of the subprime crisis is far from being fixed and is dragging us in a recession that will likely be significant. But, as I wrote in previous reports, Washington is really working hard on smoothing out our predicament. As of the time of this writing, a solution seems to be in the works for one of the key monolines. That’s a big step, mind you. While the economy is in a tightening corner and the financial and housing sectors are toast, things are not as bad – but a bad attitude can

Problems are piling up on the US economy and the recession can be avoided in word, but not in deed. But the stock markets, with or without artificial help, held its own, and so did the dollar. Expect further choppy trading during this short week, but the odds the dollar should attempt to advance, as the bad news is priced in. United States The dollar was all over the place last week, but basically was stuck in inside ranges. The bill for the excesses of this young millennium is coming like a

The dollar managed to hold its own despite piling proof that the US economy is slipping its recession. The market has priced in rate cuts in both the US and the UK and even the inflation-minded ECB may come to its senses and reduce borrowing costs in an attempt to slow a worldwide recession. Risk adversity is increasing and the antipodean currencies are at risk versus the yen. If the US equity markets can struggle higher, with or without artificial support, the US currency will also do

The financial markets are in a very sensitive place and the worst is not behind us. The credit crunch has yet to end, the monolines companies have yet to be rescued, commodities have yet to plateau, and in the midst of all that the dollar is all over the place. Its divergent paths last week illustrate this situation. The dual fiscal and monetary effort will clearly alleviate the weakness of the economy, but this doesn’t guarantee that jobs won’t be terminated and that a recession will not hit

The dollar gave back its early gains versus the European and commodity currencies early last week and closed flat against the yen amid volatile trading. One of the many “other” shoes to fall came from the bond insuring firms, which are struggling desperately to find some lifesavers. But the joint fiscal and monetary stimulus that the government is putting together started to make sense to the market and the appetite for risk is making a sheepish return. To say that we are out of the woods

The dollar kept its own last week in spite of a widely expected 50-basis point rate cut in the Fed funds futures, and possibly even 75 basis points, at the end of the month. Meanwhile, all eyes had been on the White House fiscal stimulus proposal, which was endorsed by Federal Reserve Chairman Bernanke; but the equity markets dismissed it as insufficient. When the dust settled, the dollar was up against all the higher-yielded currencies and down versus the low-yield yen and franc. Expect more

Amid another tidal wave of subprime mortgage disaster, growing panic in the White Houseand a more jittery Federal Reserve, the dollar and the carry trades didn’t do all that much. The cross that continued to perform was the short sterling/Swiss franc. Shorting sterling/dollar and euro/Swiss franc, and holding long euro/sterling weren’t bad ideas either, but the latter crosses are probably done at this point. So expect a decline in euro/sterling and a recovery in euro/Swiss. The carry trades