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General Update February 6, 2006 The dollar rose versus the euro and reached a high for the year against the yen after a government report signaling a stronger U.S. labor market added to expectations the Federal Reserve will increase interest rates. The Labor Department said U.S. employers added 193,000 jobs last month from a revised 140,000 in December. The jobless rate slid to 4.7 percent, the lowest since July 2001, from 4.9 percent. While there's good news on jobs, higher energy prices and interest rates are beginning to concern companies. U.S. services industries expanded in January at the slowest pace in four months, the Institute for Supply Management said today. The group's index of financial services, construction, retail and other non- manufacturing businesses fell to 56.8 last month from 61. Numbers above 50 indicate expansion. Economists expected payrolls would rise by 250,000 last month following a previously reported increase of 108,000 in December, based on the median of 76 forecasts in a Bloomberg News survey. Economists also projected the unemployment rate would hold at 4.9 percent. December's payroll gain was raised to 140,000 in today's report and November's increased to 354,000 from 305,000. Low unemployment signals the economy is expanding quickly enough to use up capacity, prompting investors to increase bets the Fed will keep raising interest rates beyond its next meeting in March. Stocks fell on concern about higher borrowing costs. The job and wage gains helped keep consumer confidence close to a five- month high in January, the University of Michigan said today. The University of Michigan said its final reading on January consumer sentiment was 91.2 after December's 91.5, which was the highest since July. Fed policy makers raised the benchmark U.S. interest rate this week, saying high fuel prices and lack of spare capacity threatened to stoke inflation. Policy makers next meet on March 28, the first gathering under Ben S. Bernanke, who took over as Fed chairman this week after Alan Greenspan retired. The quarter-point increase to 4.5 percent was the 14th in a row by the Federal Open Market Committee. Today's gains helped the U.S. currency pare its loss for the year against the euro by about 50 percent this week. Traders raised bets the Fed will boost its benchmark lending rate for a 15th straight meeting in March, widening the U.S. yield advantage over assets denominated in the yen and euro. Bank of New York expects the dollar to strengthen to 122 yen and weaken to $1.2350 per euro in six months, Woolfolk said. "The longer-term trend for the dollar is higher for the balance of the year,'' said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products Corp. in Wilton, Connecticut. "The economy is doing fine.'' The gap between two-year U.S. Treasuries and Japanese debt widened to 4.28 percentage points this week, the most since May 2001. The yield premium offered by two-year notes over German debt is about 1.61 percentage points. The difference, or spread, has averaged 0.84 percentage points in the past decade. The dollar's gain this week was predicted by Bloomberg's weekly currency survey published Jan. 30. Sixty-four percent of the 50 traders, strategists and investors surveyed Jan. 27 from Sydney to New York advised buying the dollar against the yen. The U.S. currency posted its biggest weekly in decline in three years during the first week of January, after the Fed released minutes from its December meeting that said additional rate increases "probably would not be large." Traders betting on a decline in the dollar were surprised by the strength in the labor market in areas such as higher average hourly earnings and the positive revision to the December job total, said Kathy Lien, a currency strategist in New York at Forex Capital Markets LLC. "It's more the flushing out of dollar shorts," Lien said, referring to bets on the currency's decline. The yield on federal fund futures for April delivery rose 1 basis point, or 0.01 percentage point, to 4.73 percent at the Chicago Board of Trade. The level signals traders see a 90 percent chance of an increase to 4.75 percent rate at the Fed's March 28 meeting, up from 86 percent yesterday. The dollar gained about 14 percent versus the euro and yen last year as the European Central Bank only raised rates once and the Bank of Japan kept rates near zero percent, where they have been since 2001. BOJ Deputy Governor Toshiro Muto said yesterday it's too early to reverse the bank's zero-rate policy. ECB President Jean-Claude Trichet said yesterday that market wagers on an increase next month were "reasonable.'' He spoke after policy makers kept the refinancing rate at 2.25 percent. Some investors who are forecasting the dollar will resume a decline said the recent rally provided an opportunity to purchase the euro at lower levels. General Update January 23rd, 2006 The euro rose to a four-month high against the dollar after European Central Bank board members suggested interest rates need to rise from near a six-decade low to limit inflation. The European currency headed for the biggest two-day gain in almost three weeks after Christian Noyer told French television late on Jan. 20 that rates are "too low for price stability." Lorenzo Bini Smaghi said on Italian radio the following day he saw a risk of quicker inflation because of rising oil prices. "The hawkish commentary is providing some support for the euro," said Sharada Selvanathan, a foreign-exchange strategist in Singapore at BNP Paribas SA. "There's no need for the ECB to have rates at these emergency levels. It's time for normalization and that will come through in ECB talk in the next few weeks." Geo-political risks typically spur investors to sell the dollar and buy currencies such as the Swiss franc, which also traded at a four-month high of 1.2645 per dollar. Gains in the euro accelerated after pre-set orders to buy were triggered at $1.22, said Nobuaki Tani, a currency dealer in Tokyo at Resona Bank Ltd. The euro may gain to $1.23 today, as "concerns about Iran and political risk are leading to dollar selling," he said. The euro extended its advance against the dollar to 3.5 percent this year on speculation policy makers will add to the first increase in borrowing costs since 2000 from a six-decade low. The ECB on Dec. 1 lifted its benchmark lending rate to 2.25 percent from 2 percent. By comparison, the Federal Reserve's overnight lending rate is 4.25 percent after it raised interest rates 13 straight times since June 2004. "The ECB's priorities are those of maintaining price stability and keeping inflation low, notwithstanding all the risks,'' Italy's Bini Smaghi said. Fifty-three percent of the 62 traders, strategists and investors surveyed Jan. 20 by Bloomberg advised buying the euro against the dollar, up from 24 percent a week earlier. Survey participants turned more bullish on the euro after ECB Chief Economist Otmar Issing on Jan. 18 said the region's economic "upswing is continuing and strengthening." Traders last week strengthened expectations the central bank will raise its benchmark rate to 3 percent by year-end, interest- rate futures show. The yield on the three-month Euribor contract due September rose 5 basis points last week to 2.995 percent. A basis point is 0.01 percentage point. The contracts settle to the three-month euro interbank offered rate, which has averaged 15 basis points more than the ECB's target since the euro's introduction in 1999. The euro may rise to $1.24 in the next few weeks, he said. Iran may be referred to the UN Security Council for possible sanctions as early as next month after the Islamic republic decided to resume research on the nuclear fuel cycle. The UN International Atomic Energy Agency is due to hold an emergency meeting on Feb. 2-3. Foreign Ministry spokesman Hamid Reza Asefi said yesterday Iran rejected Israeli accusations that it was involved in a Jan. 19 suicide bombing in Tel Aviv that injured 31 people. "Geo-political tensions are contributing to the sharp rise in the euro," said Ashley Davies, a currency strategist at UBS AG in Singapore. "The dollar is quite vulnerable to developments on this front" and will drop to $1.23 against the euro and 113 versus the yen within a month, he said. The market impact of the latest Bin Laden tape may have been dampened since the US administration reiterated its claims that Bin Laden’s may have become largely symbolic and that the real culprits remain the likes of Zarqawi and Zawahiri. The reoccurrence of the Bin Laden factor coupled with the standoff over Iran’s nuclear aspirations may serve as geopolitical obstacle to the dollar’s upside. The combination of cold winter weather and a potential stand off in the Arabian Gulf in the event of a military strike on Iran is causing many oil analysts to expect $80 per barrel oil as early as this quarter. EUR/USD – DOWNTREND Resistance: 1.2190 Support: 1.1970(100 day MA), 1.1780 Sentiment: BEARISH USD/JPY – UPTREND Resistance: 119.40, 121.40 Support: 118.50, 117.50 Sentiment: BULLISH, but RSI near overbought! Consolidation is expected GBP/USD –consolidating with downtrend bias Resistance: 1.7840/50 Support: 1.7410/40 Sentiment: bearish USD/CHF – UPTREND Resistance: 1.3160 Support: 1.2740 Sentiment: BULLISH USD/CAD – DOWNTREND Resistance: 1.1665 Support: 1.1395 Sentiment: GETTING OVERSOLD AUD/USD – sideways with downtrend bias Resistance: 0.7600 Support: 0.7230 Sentiment: bearish _______________________________________________________________________________________________________ Jan. 30 (Bloomberg) The dollar may gain against the euro and yen this week on speculation the Federal Reserve will raise interest rates twice this year, a Bloomberg survey shows. Sixty-four percent of the 50 traders, strategists and investors surveyed on Jan. 27 from Sydney to New York advised buying the dollar against the yen and 56 percent recommended purchasing it against the 12-nation European currency. The dollar rallied for a third straight week against the euro and a second against the yen as the U.S. government reported higher-than-forecast orders at factories and new home sales. Treasury yields rose compared with European and Japanese debt and traders increased bets the Fed will lift rates to 4.75 percent by April from the current 4.25 percent. "The U.S. economy will surprise positively this year," Momtchil Pojarliev, a currency manager in Geneva at Pictet & Cie, which oversees about $168 billion, said in a Jan. 27 interview. The difference between U.S. rates and those in Europe and Japan "will continue to support the dollar." The dollar traded at 117.32 yen at 2:25 p.m. in Tokyo from 117.33 yen late Jan. 27 in New York. The dollar was at $1.2097 versus the euro from $1.2094. The U.S. currency will reach $1.10 per euro and 122 yen by the end of the year, Pojarliev said. The advance against the euro last week wasn't anticipated by participants in Bloomberg's previous survey. Fifty-three percent advised buying the 12-nation currency against the dollar. The survey accurately predicted the dollar's direction in 29 of the past 52 weeks against the euro and in 25 weeks against the yen. Policy makers will raise rates tomorrow to 4.5 percent, according to 64 of 65 economists surveyed by Bloomberg. It will be the 14th consecutive increase, the longest streak since 1979. The European Central Bank lifted its benchmark for the first time in five years in December, to 2.25 percent, and the Bank of Japan has held rates near zero percent since March 2001. The premium U.S. bonds offered above European and Japanese debt propelled the dollar to gains of 14.4 percent against the euro and 14.7 percent against the yen last year. Two-year Treasuries yielded 1.56 percentage points more than similar-maturity German government bonds on Jan. 27, the most in more than three weeks. The difference, which averaged 1.45 percentage points in 2005, widened 10 basis points last week, the biggest increase since the week ended Dec. 2. The gap between U.S. and Japanese government debt due in 2006 swelled by 9.8 basis points last week, the most since the week ended Oct. 28, to 4.19 percentage points. Interest-rate futures indicate traders see an 82 percent chance the Fed will lift its target to 4.75 percent on March 28. The odds of a March increase fell below 50 percent on Jan. 4, the day after the Fed released minutes from its December meeting that said additional rate increases "probably would not be large." "If the Fed pauses at 4.5 percent, the risk would be the Fed has stopped too early and they would have to restart the tightening process," Steve Barrow, chief currency strategist at Bear Stearns Cos. in London, said in a Jan. 27 interview. "That would be a big supporting factor for the dollar." The government on Jan. 26 said orders at U.S. factories for goods made to last more than three years last month increased 1.3 percent. Sales of new U.S. homes unexpectedly rose in December, capping a fifth straight record year for the industry, the Commerce Department said on Jan. 27. Gains in the dollar may be limited by speculation the ECB will raise its benchmark lending rate in two quarter-point steps this year. Interest-rate futures show traders expect the benchmark to be at least 2.75 percent by year-end. The Frankfurt- based bank will leave rates unchanged at its Feb. 2 meeting, according to all 18 economists surveyed by Bloomberg. "Rates are going to rise, and we see potential for further upside in the euro," Sven Friebe, a currency strategist at Credit Suisse Group in Zurich said Jan. 27. The 12-nation currency may reach $1.25 per dollar in a month, he said. The euro may also get a boost from reports this week that are forecast to show European manufacturing increased this month, after rising at the fastest pace in 16 months in December. Analyst surveys predict consumer prices in the region will show a gain of 2.4 percent in January, the 12th month above the ECB's 2 percent target for inflation. The dollar gained even after a report on Jan. 27 showed the U.S. economy grew only 1.1 percent in the fourth quarter. The pace was below the 2.8 percent median forecast in a Bloomberg survey of 72 economists. Last quarter was the first in 11 that economic growth dropped below 3 percent. "The dollar bears have tried to get a foothold but they have not been successful," Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Mellon Financial Corp., said in an interview on Jan. 27. "You scratch the surface of the data and you say, it's not all that bad." Additional evidence of strength in the may come on Feb. 3 when the Labor Department will say employers added 250,000 jobs this month after 108,000 in December, according to the median forecast of 50 economists surveyed by Bloomberg. The U.S. economy may grow 3.4 percent this year, according to the median forecast of 68 economists surveyed between Dec. 23 and Jan. 9. The ECB in December said it expects the region to expand about 1.9 percent this year from 1.4 percent in 2005. The Bank of Japan on Jan. 20 said the nation's economy will probably grow faster than the 2.2 percent pace it predicted in October. VETO Forex’s software package includes fundamental analysis, policies, procedures and technical trading systems that are supported by the most modern risk mitigation and management techniques available today. Many of these ideas and concepts have been proven successful from within the trading rooms and their back offices of some of the world's major International Trading Companies. VETO Forex has developed several analytical tools capable of analyzing immense volumes of data in seconds via its own software platform and applications. This system is capable of producing a buy/sell decision approximately every 1 to 15 minutes or you can position trade for months at a time. VETO Forex’s system is not reliant upon or subject to human error. VETO Forex and it's software has been stress tested and implemented all of these successful methods of analyzing data and the software application has proven to be invaluable when competing for the preeminent financial trading position while utilizing the finest risk mitigation products in today's modern business and financial electronic markets. VETO Forex has aligned itself with one of the industries most prolific and innovative currency trade companies, FX Trainer Financial Services, Inc. FX Trainer assists with education and trains their Affiliates and Independent Associates utilizing established web charts along with demo trading accounts and as a secure practice, always adheres to a contractual financial parameter of those specific Affiliate(s) and Associate(s). Other types of Joint Venture Partners can contract with VETO Forex by participating in several different types of agreements. VETO Forex’s accounts are currently established with several Top Trading and Financial Services companies, as well as the Bank of International Settlements. Financial parameters are established between VETO Forex and its Joint Venture Partner(s) or Client(s) and the transactions are executed via VETO Forex’s secure and exclusive electronic platform. To learn more about how to Joint Venture with VETO Forex or to become your own Position or Swing Trader, please go to the "Contact Us" button this Web site and click to send an e-mail. An associate will contact you to explain the business and how to get started in the fastest and most exciting business available today! TECHNICAL OUTLOOK - DAILY CHARTS - (1 DAY, 6 MONTHS) EUR/USD - (UPTREND) It seems that there wasn’t any particular news behind the surge higher early Monday, but sentiment towards the pairing turned bullish last Friday afternoon after the Dow plunged over 200 pts, oil approached 70 bucks and risk aversion appeared again after the Bin Laden tape, as a result geo-political uncertainty builds up. Resistance: 1.2450 Support: 1.2170/80, 1.2005 Sentiment: BULLISH USD/JPY - (DOWNTREND) Resistance: 114.80 Support: 113.50 Sentiment: BEARISH GBP/USD - (UPTREND) Resistance: 1.7940/50, 1.8150 Support: 1.7630, 1.7520 Sentiment: BULLISH USD/CHF - (DOWNTREND) Resistance: 1.2940 Support: 1.2525 Sentiment: BEARISH USD/CAD - (DOWNTREND) Resistance: 1.1680 Support: 1.1425 Sentiment: MILDLY BEARISH AUD/USD - (UPTREND) Resistance: 0.7600 - 0.7750 Support: 0.7400 Sentiment: BULLISH Disclaimer: The content provided above is put forward in good faith and believed to be accurate; however there are no implicit guarantees of accuracy. The material contained herein is for information purposes only and is not to be construed as an offer for the sale or purchase of securities, options and/or Futures or Exchange contracts. Any historical data provided above is for information purposes only and must not be construed as an indication or guarantee of any kind of what will be the future performance of the concerned markets or of the financial instruments described. Actual trading results may vary. The reader accepts that by using this information, he or she will not hold VETO Forex responsible for decisions based on the above information. Currency trading is risky, it involves substantial risks of loss, it is not appropriate for everyone, and therefore only risk capital should be used for trading. Risk capital: money that a person can afford to lose. ______________________________________________________________________________________________________ Jan. 10 (Bloomberg)) The recent spurt in Asian currencies has provided the region's central banks a glimpse of their biggest opportunity -- and No. 1 challenge -- in 2006. The Korean won yesterday (01-09-06) shot up to its highest in more than eight years against the U.S. dollar; the Japanese yen strengthened to a three-month peak. Since minutes of the Federal Open Market Committee's last meeting were released Jan. 3, 11 major world currencies have risen 1 percent or more. Six of them are from Asia. Stronger Asian currencies will spur domestic demand in the region by reducing local prices of imported commodities. That's an important consideration for policy makers, especially with crude oil close to a three-month high at more than $63 a barrel. Currency appreciation in Asia might also satisfy one of the necessary preconditions for a long-awaited adjustment in global current-account imbalances. While stronger currencies would also help Asian equities by improving returns on dollar-denominated investments, the biggest risk is that Asian exporters may not be able to adjust to currency appreciation if it is too large or occurs too quickly. And if the region's central banks try too hard to resist appreciation by buying dollars for their bloated reserves, they might, like China, end up losing control of domestic money supply. The rally in Asian currencies is taking place even without a consensus on how soon the Federal Reserve will stop raising interest rates. The minutes merely said additional increases needed to tame inflation ``probably would not be large.'' When it becomes clearer that the Fed is done raising rates, traders may extend their bets on Asian currencies. That's because domestic demand and inflationary pressures may remain strong in Asia even as the U.S. economy slows. Asia Lags Behind ``We envisage Asia to continue to lag the Fed rate cycle by carrying on tightening into the second half of 2006,'' Goldman Sachs Group Inc. economists Kim Sun Bae and Adam Le Mesurier wrote in a Dec. 12 note to clients. ``This is likely to be a key catalyst'' for the dollar to weaken against Asian currencies, the Goldman economists said. Bank of Korea said last week that it would ``counter inflationary pressures preemptively,'' adding that prices may rise faster in the second half of 2006. Korean consumers, who went into a deep funk after a credit- card bubble burst in 2003, are starting to spend again. Expectations of rate increases in Korea are helping the won. Bank of Korea may raise its benchmark rate by 75 basis points to 4.5 percent this year, according to Citigroup Global Markets Inc. Thailand, Malaysia Thailand, which raised interest rates for the ninth time in 16 months in December, may not be done yet, or indeed, for some time to come. ``We have to ensure that real interest rates are positive to help induce more saving,'' Bank of Thailand Governor Pridiyathorn Devakula said in a speech in Bangkok last month. The five biggest Thai banks pay, on average, 2.5 percent for one-year deposits. The inflation rate in December was 5.8 percent. Thailand's first current account deficit in eight years in 2005, a result of domestic investment exceeding local savings, was ``an early warning signal'' that Thailand needs to close the saving- investment gap, Pridiyathorn said. Malaysia too may have to raise interest rates this year. Standard Chartered Plc economist Joseph Tan expects four increases of 25 basis points each in February, April, May and July. Morgan Stanley economist Chetan Ahya predicts a 100 basis point increase in India's short-term policy rate in 2006. China and Japan The tightly controlled yuan may also rise in 2006, though a large revaluation may remain elusive. China's increasing overcapacity is acting as a lid on price increases, and the authorities in Beijing will be reluctant to allow the yuan to rise significantly when inflationary pressures are absent. If the tiny 2.1 percent revaluation in July 2005 is any guide, the People's Bank of China will perhaps only take token steps toward a more flexible exchange rate, largely to deflect pressure from the U.S. Treasury and Congress. Money supply in China grew 18 percent from a year earlier in November, the fastest expansion in 20 months and a sign that the central bank may be unable to mop up the yuan it's forced to create in the process of keeping its exchange rate undervalued. That should be a compelling reason to revalue the currency decisively, though one suspects China is wedded to a gradualist approach. Currency appreciation in Asia in 2006 may be led, therefore, not by the yuan, but by the Japanese yen. With Japan getting closer to abandoning its five-year policy of keeping interest rates near zero, the yen may be set to climb from its current level of about 114 to the dollar, pulling other Asian currencies higher. It's up to Asian central banks to decide if they're going to fight the market or stand aside and let their currencies appreciate. China, and to an extent India, may settle for the first strategy, while Japan and Korea might opt for the second. Andy Mukherjee in Singapore Last Updated: January 9, 2006 14:20 EST Click on the “Register” button on the front page of this Web site and start creating wealth. This is not a get rich quick type of Business. It is a way of financial security for your life over the long term! |