googlecf611d5cf0994826.html

FOREX-Dollar climb knocks pound to 7-1/2-yr low, euro weaker

By Naomi Tajitsu

LONDON, Jan 21 (Reuters) - Sterling tumbled on Wednesday, hitting a 7-1/2-year low against the dollar, as intensified risk aversion drove investors back into the U.S. currency which reached its strongest levels against the euro in six weeks.

The pound extended deep losses on the view that an ailing UK financial sector will keep the economy weak despite bank bailouts, fiscal stimulus and drastic interest rate cuts. A surge in UK joblessness also kept sterling weak.

Economic worries around the world stung global stock markets and sliding European shares kept pressure high to dump risky assets, boosting the dollar and the yen.

"There's a lot of jitters in the financial markets, and it's taking its toll on currencies which have stressed capital financing needs and which are particularly exposed to financial sector weakness," said Phyllis Papadavid, currency strategist at Societe Generale in London.

She added that this had put sterling in the firing line, and that the euro would also continue to suffer.

Sterling was hit as UK banking shares took a beating on the view that the British financial sector continues to deteriorate despite the government's latest bank rescue plan, putting the broader economy in deep trouble.

Bank of England Governor Mervyn King said on Tuesday that the UK economy will likely shrink significantly in the first half of the year, and that policymakers need to consider using more than just interest rates to stimulate demand. [ID:nLK713961]

Economic worries were not confined to the UK, however. European shares .FTEU3 fell 1.7 percent and edged towards their lowest in nearly six years, reminding investors that the global economy is continuing to suffer despite dramatic rate cuts and fiscal stimulus plans by authorities around the world.

Sterling fell more than 1 percent to $1.3715, its weakest since mid-2001. The pair has fallen more than 7 percent so far this week, its biggest weekly slide since late October.

Sterling dropped across the board, hitting a record low of 123.01 yen against the low-yielding Japanese yen, which tends to rally during periods of risk aversion.

The euro rose more than 1 percent to 94.10 pence, its strongest since the start of the month and inched closer to a record high around 98 pence hit last month.

Despite the euro's gains against sterling, the single currency fell to $1.2845 on electronic trading platform EBS, its lowest level since Dec. 9.

This boosted the dollar across the board, pushing the U.S. currency .DXY as high as 86.504 against a basket of currencies, its highest level since early December.

Against the yen, the dollar was little changed at 89.90 yen.

"It's still a positive environment for the dollar, with equities down. The dollar and the yen are still strong in this risk-averse environment," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.

"With other central banks cutting rates down to the level of the U.S. and Japanese central banks, there's still more downside for currencies like sterling and the euro."

UK DATA, BOE MINUTES

Keeping sterling out of favour were figures on Wednesday showing that the UK claimant count jumped by 77,900, the 11th straight month of rises, while a broad measure of unemployment rose to 6.1 percent from 6.0 percent, its highest since the three months to April 1999. [ID:nONS004013]

Minutes from the BoE's monetary policy meeting earlier this month showed that one member voted to cut rates by 100 basis points, before the central bank ultimately decided to cut by 50 basis points to 1.5 percent. [ID:nLL446707]

The UK currency's latest pummelling was sparked after the Royal Bank of Scotland announced massive losses on Monday, which reinforced investor worries about the UK's hobbling financial sector.

The euro has been hurt lately by sovereign debt rating downgrades to euro zone member nations including Spain, and deteriorating economic prospects, which analysts say could hasten monetary easing by the European Central Bank.

Speaking before a committee of the European Parliament, ECB President Jean-Claude Trichet on Wednesday played down the threat of deflation, while rebuffing rumours that some euro zone member would leave the union given the financial crisis. [ID:nLL367087]

He added that all global currencies were under pressure.

(Editing by Stephen Nisbet)

FOREX-Dollar gains, pound suffers on UK bank woes

* Pound tumbles 3.5 pct vs dollar to 7-1/2 yr low

* Euro drops to 6-week low vs dollar, dlr index at 6-wk high

* Stronger-than-expected German ZEW fails to lift euro

* UK banking woes weigh on pound; euro hit by grim outlook

(Changes byline, adds quotes, updates prices)

By Naomi Tajitsu

LONDON, Jan 20 (Reuters) - The dollar climbed broadly on Tuesday, boosted by sterling's tumble to a 7-1/2 year low on UK banking sector concerns, while the view that the euro zone will suffer a deep recession pushed the euro to a six-week low.

The dollar hit its strongest level against a currency basket since early December, with market participants also saying that euphoria ahead of Barack Obama's inauguration as U.S. president had increased short-term demand for the U.S. currency

AceTrader: Market Moving News

Gbp/usd - 1.3820 ... Investors are now expecting the Bank of England will probably soon start buying 'a rather wide range of financial assets' in an effort to increase money supply and boost the economy. The British pound rebounded fm 1.3721 on short-covering, however, selling interest is likely to emerge at 1.3840, 1.3860/65 n 1.3900. On the downside, stops are reported below 1.3715/20 but some demand is seen abv major support at 1.3682 (2001 low).

USD Surges vs GBP

The dollar surged sharply against the sterling and the euro, rallying to its highest level since June 2001 versus the pound at 1.3860 and to 1.2855 against the euro. The key highlight of the US session was the inauguration of President Obama, which had little impact on the currency market.

Rand Benefits from Carry Trade

Yesterday, the Forex Blog reported that the Yen could soon peak as a result of renewed interest in the carry trade. On the other side of this equation are emerging market currencies, most of which offer interest rates well above their industrialized counterparts. The spread between South Africa's benchmark interest rate and the rates of Switzerland, Japan, and the US, now exceeds 10%. As a result of near-zero rates in these countries, investors have once again taken to scouring the earth for yield. Apparently, government stimulus plans and monetary incentives have restored confidence in risk-taking. South Africa is especially poised to benefit, as it is one of the world's largest producers of gold, which recently resumed its upward trend. Bloomberg News reports:

“South African interest rates are very high relative to other markets and that yield differential is underpinning the rand at a time when trading is very thin.”

Consensus: Fed is Devaluing Dollar

The Fed is officially in panic mode, having lowered its benchmark federal funds rate close to zero and exhausted all of the tools in its monetary arsenal, with one notable exception: its printing press. In other words, the Fed is trying to jumpstart credit markets by acting as a market participant- investing funds to compensate for the reticence of private investors. Capital markets are naturally enthusiastic about this policy, since some of the new cash will probably be used to make leveraged bets on asset prices and erase some of the losses of the last year. Forex markets are palpably less excited that the Fed has essentially eroded much of the impetus for foreigners to hold their ash in the US, with paltry short-term yields and long-term gains that will likely be offset by inflation. Unless foreign Central Banks follow suit

and eliminate the current interest rate disparity with the US, it could be a bumpy 2009 for the Dollar. Forbes reports:

Citi Analyst Steven Wieting opined: "If you want yield, you'll have to take some risk." With borrowing rates suddenly close to zero and the Fed saying it will keep them at “exceptionally low levels ... for some time, you'll get as little of it from government-issued debt as possible."

Vietnam Dong Finally Devalued

The Central Bank of Vietnam finally acceded to reality and devalued its currency, the Vietnam Dong, by 3%. Prior to the change, the Dong (as well as its neighbor, the Chinese Yuan, which has also experienced a decline) was one of the few relative winners of the credit crisis. Perhaps this was because the currency had already depreciated significantly in recent years (35% since 1994), as well as because it remains fixed to the Dollar and hence it is impossible for the markets to short it when it becomes overvalued. Vietnam continues to be plagued by double-digit inflation and a surging current account imbalance, which suggest that the currency will probably have to suffer an additional 'correction' before reaching a sustainable level. In fact, the black market rate remains well below the official rate, reports Bloomberg News:

The devaluation followed five interest-rate cuts by the central bank this quarter to help bolster the economy. Policy makers last lowered the benchmark rate on Dec. 19 by the most ever this year to 8.5 percent, from 10 percent.

Tobin Tax Could Restore Yen

While the Yen's 30% rise in 2008 is no mystery (a result of the unwinding of carry trades), its performance nonetheless defies economic fundamentals. Exports have fallen and industrial production has collapsed, such that recession now appears inevitable. Japan is not alone in this regard, as a number of economies have suffered unnecessarily as a result of excessive volatility in currency markets. The solution could be the so-called "Tobin tax," which aims to limit forex speculation by levying a nominal tax on short-term currency trades. The proceeds from such a tax would be used to restore some equilibrium in forex markets by providing Central Banks with funds for direct intervention. While the tax itself has never been implemented, countries have previously taken to cooperating on forex matters for the sake of global macroeconomic stability. Seeking Alpha reports:

Exchange rates have to be within a certain range for all economies to prosper. The major economies have to work together to ensure this. If the Group of Five could work together to depreciate the "Super Dollar" in 1985, so the major nations today can and should work together to stem the surge of the super Yen.

Read More: Japanese Yen: An Excessively Strong Currency Spells Recession

Pound Versus the Euro

In recent years, the idea of parity seemed to pop up repeatedly in forex markets. First, the Canadian Dollar breached the mythical 1:1 barrier against the USD; then, it looked as though the Australian Dollar would follow suit. The most recent battle for parity is being waged across the Atlantic Ocean, between the British Pound and the Euro. Both economic and monetary circumstances favor the Euro, as the housing crisis pummeled the UK economy and the UK Central Bank subsequently embarked on a steep program of monetary easing. The Euro has probably also received a boost from the perception that the EU is one of the most stable economies and investing locales, outside of the US. In any event, investors tend to get carried away with psychological milestones and ignore economic fundamentals, which means the Euro could quickly achieve parity, before pulling back. The Wall Street Journal reports:

On Monday, one euro briefly bought almost 98 pence, a new record. That paves the way for parity “as early as this week,” wrote Ashraf Laidi, chief market strategist at CMC Markets.

UK, EU Rates Headed Downwards

As investors gradually re-acquaint themselves with risk-taking, the interest rate story is once again dominating forex markets. For the last few weeks, this meant that investors were taking advantage of record-low US interest rates to fund carry trades in riskier currencies. Most recently, however, investors have begun to focus on the interest rate picture on the other side of the Atlantic. The Bank of UK just lowered rates to 1.5% and is "threatening" to match the Fed by dropping rates all the way to zero. The European Central Bank, meanwhile, is probably on the cusp of a similar interest rate cut. As commodity prices have relaxed and the credit crunch has slowed the expansion of the money supply, the ECB is firmly justified in cutting rates, under the pretext of fulfilling its mandate, which is to guard against inflation. The upshot is that interest rate differentials, which have been fueling the Dollar's recent decline, may become less pronounced over the next year. Bloomberg News reports:

"There is increasingly more room for the ECB to be more aggressive on rate cuts. That will naturally put more pressure on the euro from an interest-rate differential perspective. We're seeing interest-rate differentials really come back into play in terms of a currency driver."

NZD, AUD Down in 2009?

While the Australian Dollar and New Zealand Kiwi technically started 2009 in the black, most analysts believe that both currencies will continue their record declines that began in 2008. All economic indicators continue to point downward, due to the adverse conditions created by the worldwide recession. The economies of Australia and New Zealand are extremely dependent on exports of raw materials and dairy products, respectively. Unfortunately, due to a contraction in demand and a decline in speculation, the prices for both types of commodities appears unlikely to erase even a fraction of the losses suffered last year. The death blow into the heart of both currencies will likely be delivered by their respective Central Banks, which are expected to make additional interest rate cuts. This will further erode the rate differential with the US/Japan, that previously signaled the currencies as attractive investments. Bloomberg News reports:

The average forecast is for the currency [AUD] to reach a low of 62 cents in the first quarter before recovering to 66 cents by the end of 2009. New Zealand’s dollar...will bottom at 52 U.S. cents in the second quarter and recover to 55 cents by the end of the year...

Forex Education

class forex education based on the MetaTrader 4 platform, in our real-time Live Trading Room.

• See our charts, hear our voice, and ask questions while the market moves
• Observe us analyzing the market, opening positions, and managing trades
• Learn "best practices" for trading through our own example
• Acquire powerful new strategies and skills
• Learn to approach the market with discipline and patience
• Trade together with a global community of fellow traders
• Access a vast library of lessons, videos, and tutorials

*FX Instructor is the recommended trading school for all traders of FXOpen.*

Attending the Live Trading Room is beneficial for traders of all levels, no matter how big your account or experience - and it costs just $24.95 a month, with a 100% Satisfaction Guarantee.

This is quite possibly the best investment ever made by traders who becomes a member of our Live Trading Room community. To take advantage of the Live Trading Room

SCALPING SYSTEM

Forex scalping systems are all over the net and there very popular as traders seek to scalp small regular profits and build big gains and an income over the longer term. So how do you find a forex scalping system to lead you to currency trading success? Let's find out.Of course the promises of regular profits and the track records produced by vendors are not real because forex scalping simply doesn't work and whenever you see a forex day trading or scalping track record, you will see the disclaimer below

SPOT DEALS - FOREX TRADE

When you buy or sell on the spot market the deals are completed immediately so it is the base for all other operations. They use the so called “benchmark price”. Although they are instant deals their settlement is processed on the second business day after the inquiry which gives the opportunities the involved institutions to do the necessary clearing operations.These spot deals are the ABC of forex trading. Most simply said you have to choose the best moment to buy a currency pair (the cheapest the best) and then choose the best time to sell it (when the price is bigger). It is not that easy, indeed, and if you get the wrong timing you can put yourself in a dangerous situation when you currency pair start to devaluate. Then you have the choice to sell it in order to reduce the loose (damage control) or to wait until it gets higher values again.

FOREX FOR EVERYONE

I know many people who started trading currencies with the great ambitions to change their lives and make good money but most of them failed. It appears that this is work only for those who can survive under serious pressure. When you play demo accounts it looks really easy (and this is why most of the brokers have this option for new comers). You can even create a really working system and double even treble you demo money only in a couple of days. The truth is that this is what causes many people to put on the platform money which they cannot afford to lose. And here is the problem: it appears that many players know exactly what to do when they win but when they are not mentally prepared to loose. They easily turn a small lose into disaster making a consequence of wrong decisions.

WEEKLY REVIEW

Rupee in a Flash......

Updated On October 18th -25th, 2008

This article reveals in a flash for you, the currency trading trend for the Rupee against the top most traded currencies at close of the markets as on Saturday October18th, 2008

RUPEE/US DOLLAR

The US dollar traded all time high versus the national currency in the kerb this week amid demand of the US currency remained significantly high. The American currency kicked at Rs.79/80, continued to trade on high note and was changing hands at Rs.85/00 at 11:42AM local time on Saturday. Thus, rupee ended another week on a negative note versus dollar in the kerb dealings.

RUPEE/POUND STERLING

The cable recorded more gains against rupee in the open market dealings this week. Pound Sterling set off new week’s trading at Rs.140/00, registered more gains and was changing hands at Rs.147/20 at 11:42AM local time on Saturday. Thus, rupee lost Rs.7/20 versus the British Pound.

RUPEE/EURO

Euro soared significantly versus rupee in the kerb this week. The single currency commenced new week’s trading at Rs.109/30, posted more gains and was trading at Rs.1114/00 at 11:42AM local time on Saturday. Thus, rupee gave up hefty grounds versus Euro in the kerb.

Forex Rates - Karachi

updated at:11/7/2008 11:24:01 PM(PST)

Remittance	Buying	Selling	Trend
USD-DD/TT	81	81.5
Currency Notes
CAD	68.1	68.5
Yuan	11.95	12.45
EUR	103.3	105.3
SR	21.3	21.7
UAE	21.9	22.3
GBP	127.15	129.15
USD	81	81.5
Analysis>> | Full Chart