Alan’s Forex Blog

Quote: ‘The greatest chasm in understanding is between the polygamous and the serially monogamous. You see, I’ve never stopped loving anyone whom I really loved greatly’. Margaret Mead (1901-1978) The News: Japan’s Upper House rejects Muto as Bank of Japan governor. The Numbers: Greenwich Mean Time, with expectations and previous figures in brackets. (23:50) JP Bank of Japan Minutes of February 14/15th meeting. (23:50) JP February Domestic CGPI +0.4% M/M, +3.4% Y/Y, versus +0.2% and +3.0%

• The Rupee ended up against the Dollar as it tracked the domestic stock market. The USD/INR pair ended at 40.45 from 40.48 yesterday. • The 6- month and 1-year forward premium was at a 0.79% and 0.78% as compared to 0.77% and 0.78% yesterday. • The Euro rose to a record high against the greenback following comments by ECB Webber indicating no possibility of a rate cut by ECB and better than expected data from the Euro zone. However, later on the announcement of coordinated central bank action

Economic News   USD The greenback slipped lower against the JPY yesterday as U.S stocks tumbled on the back of heightened recession speculation. Therefore carry trades continued their sharp unwind as “riskier” positions were pared off by investors. However the greenback did manage to consolidate nearly all across the board today, in particular against the EUR on the back of comments from President Trichet that the ECB is concerned about the recent exchange rate volatility. Nevertheless,

The news that BOC, BOE, ECB, SNK and the Federal Reserve have announced measures to ease inject funds in the financial markets as what has happened in last December and January in the money markets. Such coordinated central bank action to shore up liquidity can give back some trust to the equity market which can trigger a new carry trade wave supporting the greenback and the other high yielding currencies versus the Japanese yen which pushed up above 103 after the news. The US trade deficit

Tuesday’s London Session has brought a merciful reprieve from the moves seen over the past few days. The pressure on assets of risk has alleviated, at least for a few hours. Specific to the currency market, the Euro has experienced robust gains across the board and hit fresh all-time highs near 1.5500. Trading conditions have been active and orderly, characterized by ”normal” volume, modest ranges and light volatility. A mood of nervousness is undoubtedly circulating across trading desks.

The dollar regained some ground against the euro on speculation investor sentiment is weakening in Germany, ECB President Trichet said in his speech yesterday. “Trichet is likely to continue making such comments, and that will put a cap on the euro,” said Kenta Inoue, economist and currency analyst in Tokyo at Mitsubishi UFJ Securities, a unit of Japan’s largest publicly traded bank. “Negative economic data will also weigh on the euro.” Royal Bank of Scotland expects the dollar to fall

News and Events: The JPY and CHF firmed broadly on Monday as US stocks fell on credit-related worries, prompting investors to reduce exposure to risky assets and unwind trades funded by the Japanese and Swiss currencies’ low rates. The Yen approached eight-year highs against the Dollar while the Swiss franc rose to roughly two-year peaks against the Euro and was within striking distance of its record high against the Dollar. Meanwhile, the Dollar was steady against the Euro after Europe’s top

In the Dow Jones Industrials , the view for over the last month remains unchanged as trade from the Jan low at 11635 is a correction (wave 4 in the fall from the Oct high at 14267, see numbering on daily chart below) and continues to target eventual declines back below the 11635 low (within wave 5, but further weakness may be short-lived, see longer term below). In the Feb 27th email and the market near the ceiling of its range from Jan, said it was a good risk/reward to reshort and sold there