Yen Rises; Subprime Losses Spur Sales of Higher-Yielding Assets

The yen rose to the highest in more than two years against the dollar as losses related to U.S. subprime mortgages widened, prompting investors to sell higher- yielding assets funded by loans from Japan.

The currency strengthened against all 16 of the most- actively traded currencies after Freddie Mac, the second-biggest U.S. mortgage-finance company, reported a record loss and the Federal Reserve reduced its 2008 economic growth forecast. Crude oil rose above $99 a barrel, which may slow consumer spending and put pressure on the central bank to cut interest rates.

``Subprime problems are far from done,'' said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. in Tokyo, Japan's fifth-largest lender by assets. ``The yen is being buoyed by it.''

Japan's currency climbed to 108.93 per dollar, the highest since September 2005, before trading at 109.15 as of 2:17 p.m. in Tokyo, compared with 109.97 late yesterday in New York. It rose to 161.96 a euro from 163.21. The dollar traded at $1.4839 per euro, after reaching $1.4852 yesterday, the lowest since the single European currency's debut in 1999.

Japan's currency may rise to 107 per dollar this year, Matsumoto said.

Australia's dollar slipped 1.4 percent to 96.71 against the yen from 98.13, New Zealand's dollar weakened 1.4 percent to 82.93 yen from 84.15, and South Korea's won declined 1.5 percent to 8.4959.

Dollar Losses

The dollar may extend losses as traders bet the Fed will cut interest rates for a third time to keep the economy from slipping into recession. The U.S. consumes one quarter of the world's oil, the price of which has risen to a record, posing a dilemma to the central bank in cutting rates at the same time as keeping inflation at bay.

``This is one of the biggest challenges the central bank faces, weighing up the near-term risks of economic weakness with more medium-term inflationary pressures,'' said Adrian Foster, director of currency sales in Beijing at Dresdner Kleinwort, the investment bank owned by Germany's Allianz SE. ``It's very much a dollar decline.''

The currency may fall to $1.50 per euro by year-end, Foster said.

Oil had a correlation of minus 0.89 in the past month with the U.S. Dollar Index traded on ICE Futures U.S. in New York, which measures the currency against six major counterparts including the euro, yen and Swiss franc. A reading of minus 1 would mean the two moved in opposite directions.

Full story at Bloomberg

Dollar Slides to Record Low Against Euro Before Housing Data

The dollar fell to a record low against the euro and the Swiss franc on speculation a U.S. government report will show a deepening property slump, prompting the Federal Reserve to lower interest rates.

A report today may show U.S. housing starts slipped to a 14- year low in October, prompting traders to raise bets the Federal Reserve will cut interest rates by December. The dollar also slid on speculation a group of six Arab nations will change their fixed exchange rates to the U.S. currency. The yen fell versus all 16 of the major currencies as global stocks rose.

``The dollar right now is the `persona non-grata' of the currency world,'' said Boris Schlossberg, senior currency strategist at DailyFX.com in New York.

The dollar weakened to $1.4778 per euro as of 7:55 a.m. in New York from $1.4665 late yesterday. It touched $1.4797, the lowest since the 13-nation currency was started in 1999. It rose to 110.39 yen from 109.76 yen, and fell to a record low of 1.1070 versus the franc from 1.1152 yesterday.

The yen fell as European and Asian stocks gained, giving traders confidence to buy higher-yielding assets funded by selling the Japanese currency. The currency slid 2.3 percent against the Norwegian krone as investors returned to so-called carry trades.

Source: Bloomberg

OPEC Comments on Depreciating US Dollar Drive Oil Prices Near $95

Oil prices rose Monday with more talk among OPEC members about converting their cash reserves to the euro and away from the U.S. dollar.

There is also doubt a possible OPEC output hike next month would get more supplies to market in time for the northern winter.

Fresh purchases of the new Nymex expiry -- the December contract expired Friday -- were also behind some of the gains.

Light, sweet crude for January delivery rose 81 cents to $94.65 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract rose $1.77 to settle at $93.84 a barrel on Friday.

In London, January Brent crude futures added 53 cents to $92.15 a barrel on the ICE Futures exchange.

New comments about the dollar arose during a weekend summit, where the heads of state of the Organization of Petroleum Exporting Countries sought to find ways to mitigate the adverse impact the battered U.S. currency has had on revenues.

Oil is priced in U.S. dollars and the currency's depreciation has contributed to rising crude prices and eroded the value of dollar reserves. Cartel officials have resisted pressure to increase oil production to ease prices.

"The fact that the OPEC members are talking about issues like the weak U.S. dollar and not talking about raising output is supportive of strong pricing and so we're seeing signs of the market gaining strength," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Iranian President Mahmoud Ahmadinejad, in Riyadh, Saudi Arabia, called the dollar a "worthless piece of paper," and said the cartel's members have expressed interest in converting cash reserves into a currency other than the U.S. dollar -- a sentiment echoed by Venezuelan President Hugo Chavez, who called the euro a better option.

Source: Yahoo! Finance

U.S. Consumer Price Index Rose 0.3% in October; Core Rose 0.2%

Nov. 15 (Bloomberg) -- Consumer prices in the U.S. rose in October at the same pace as the prior month, led by increases in fuel costs that threaten to boost inflation and slow growth.

The cost of living increased 0.3 percent in October, as forecast, the Labor Department said today in Washington. So-called core producer prices, which exclude fuel and food costs, rose 0.2 percent for a fifth month.

Gasoline and heating-oil prices started rising in late October and have continued higher this month, suggesting fuel costs will remain a concern. Still, the damage higher energy bills may inflict on spending and investment will keep the Federal Reserve focused on ensuring the expansion is sustained.

``Higher energy prices are something the Fed is going to continue to watch, but for as long as core prices are stable it's not really going to be an issue,'' Jonathan Basile, an economist at Credit Suisse Group in New York, said before the report.

The gain in prices matched the median forecast of 79 economists in a Bloomberg News survey. Estimates ranged from gains of 0.1 percent to 0.5 percent.

Core prices were forecast to rise 0.2 percent.

First-time claims for jobless benefits rose a greater-than- forecast 20,000 to 339,000 last week, the Labor Department also reported. The figures are consistent with a slowing job market, economists said.

Over the past 12 months, consumer prices rose 3.5 percent, the most since August 2006, compared with a 2.8 percent rise in the 12 months through September. Consumer prices excluding food and energy rose 2.2 percent in the year through October, compared with a 2.1 percent increase in the 12 months ended in September. It rose for the first time since January.

First 10 Months

So far this year, prices are rising at a 3.6 percent rate, compared with a 2.4 percent rate through the first 10 months of 2006. Core prices are rising at a 2.3 percent pace, compared with a 2.8 percent pace in the same period a year earlier.

Today's report showed energy prices climbed 1.4 percent, the most since May. Gasoline prices also increased 1.4 percent and electricity costs increased 1.5 percent, the most since January.

Crude oil futures on the New York Mercantile Exchange averaged $85.26 a barrel in October, up from $79.63 in September, and rose to a record $98.62 on Nov. 7. The price of regular gasoline at the pump exceeded $3 a gallon this month for the first time since July, according to AAA.

The cost of fuel is prompting some businesses to increase prices. Airlines have raised fares seven times since Sept. 1, and all five of the biggest U.S. carriers last week added a $10 round- trip fuel surcharge to ticket prices. Today's report showed airfares jumped 1.6 percent in October.

Source: Bloomberg

Yen Falls on Speculation Japanese Funds Buying Overseas Assets

Nov. 15 (Bloomberg) -- The yen declined against 14 of the 16 most-actively traded currencies on speculation Japanese mutual funds are buying overseas assets in search of higher yields.

The yen fell for a third day versus the euro as three mutual funds in Japan focused on foreign markets with the equivalent of $4.92 billion in assets, according to data compiled by Bloomberg. The currency weakened 4 percent versus the euro this year and 6.4 percent against Australia's dollar as Japan's low interest rates prompted investors to buy securities that offer higher returns.

``Investment trust funds are being set up tomorrow, so there seems to be some selling of the yen,'' said Nobuaki Tani, a client manager at Resona Bank Ltd., a unit of Japan's fourth- largest publicly traded lender. ``Higher-yielding currencies such as the Australian dollar and the euro are attractive.''

Japan's currency dropped to 163.36 per euro as of 11:30 a.m. in Tokyo, from 163.07 in New York. It was at 111.38 against the dollar compared with 111.32 yesterday. The yen may weaken to 164 per euro and 112 versus the dollar today, Tani forecast.

Against the Australian dollar, the yen fell to 100.27 from 99.65. Japan's currency fell to 85.13 against the New Zealand dollar from 84.92 and declined against the pound to 229.39 from 228.48.

Japanese investors bought 982.8 billion yen ($8.8 billion) in offshore assets in the week to Nov. 10 compared with 950.9 billion the previous week, the Ministry of Finance said today.

Go to Bloomberg for more details.

Bank of England Signals Need for Rate Cut in 2008

Nov. 14 (Bloomberg) -- The Bank of England signaled there is room to cut its benchmark interest rate at least once next year to prevent an economic slowdown without boosting inflation.

The inflation rate will settle to the bank's 2 percent target in 2009 after rising above it next year, the central bank said. Its forecasts are based on market assumptions the bank will cut the main rate a quarter point to 5.5 percent in the first quarter. Growth risks are ``on the downside,'' and inflation risks are ``balanced,'' the bank said.

``The central projection is for growth to slow sharply in the next year,'' Bank of England Governor Mervyn King said at a press conference in London today. ``There has been some tightening of credit. Residential and commercial property investment are likely to moderate, possibly quite sharply.''

Britain's economy is cooling from its fastest growth since 2004 after the Monetary Policy Committee lifted the key lending rate to a six-year high. House prices are falling, and service industries expanded at the slowest pace in 4 1/2 years after contagion from the U.S. mortgage market spread.

``The report gives a clear signal that a series of interest rate cuts lies ahead,'' said Vicky Redwood, an economist at Capital Economics Ltd. ``The MPC will wait until early next year to cut.''

Forecast Rates

If policy makers hold the rate at 5.75 percent, inflation will undershoot the target in two years, the forecasts show. The forecasts assume that the key rate averages 5.3 percent in the second half of 2008.

The pound fell after the report, dropping 0.0053 of a dollar to $2.0676 at 11:36 a.m. It had traded as high as $2.0844 earlier in the day. Bonds pared earlier losses, with yields on the 2-year gilt falling 1 basis point to 4.8 percent.

Source: Bloomberg

Yen Falls Against Euro as Stock Gains Spur High-Yield Purchases

Nov. 14 (Bloomberg) -- The yen fell for a second day against the euro as Asian stocks rose, giving traders confidence to buy high-yielding assets with loans in Japan.

Investors were encouraged to return to so-called carry trades after Goldman Sachs Group Inc. yesterday said it doesn't plan any significant writedowns related to subprime mortgages. The yen slid the most against the Australian and New Zealand dollars today among the 16 most-actively traded currencies.

``The yen weakness will probably continue today as equities will be well bid,'' said Greg Gibbs, a currency strategist in Sydney at ABN Amro Holding NV, the biggest Dutch bank.

The Japanese currency traded at 162.62 per euro at 10:01 a.m. in Tokyo compared with 161.96 in late New York yesterday when it fell 1.9 percent. Japan's currency was at 111.19 against the dollar from 110.90 yesterday. It touched 109.13 per dollar on Nov. 12, the strongest since May 2006.

The yen fell 0.9 percent to 100.23 per Australian dollar and 0.8 percent versus New Zealand's to 84.93. The two currencies are popular targets of carry trades because of their higher interest rate premium over Japan.

Volatility implied by dollar-yen options expiring in one month, with a strike price near the current price fell to 14.20 percent from 14.35 percent yesterday. Traders quote implied volatility, a measure of expectations for future price swings, as part of pricing options. Lower volatility may encourage carry trades as it exposes these bets to less currency risk.

Investor Confidence

Japan's currency has still risen against all 16 major counterparts this month as concerns more banks will join Citigroup Inc. and Morgan Stanley in reporting losses related to bad U.S. home loans shook investors' confidence in carry trades.

In carry trades, investors borrow in a country with low interest rates and invest in those with higher borrowing costs, profiting on the yield difference. The trades are considered risky because the currency's fluctuations can erase profits earned on the gap between the two rates.

Borrowing costs in Australia and New Zealand are 6.75 percent and 8.25 percent, respectively. The Bank of Japan held its overnight lending rate at 0.5 percent yesterday, the lowest among major economies.

The Nikkei 225 Stock Average gained 2.1 percent. The Standard & Poor's 500 Index rose 2.9 percent yesterday, the biggest gain since the Federal Reserve cut borrowing costs on Sept. 18.

European Growth

The euro may rise on speculation a European report today will show economic growth in the 13 nations rebounded in the three months ended Sept. 30.

The currency may gain for a second day against the dollar and the yen on prospects the economy is picking up steam, backing the case for the European Central Bank to raise interest rates. The International Monetary Fund this week said the ECB may need to resume increasing borrowing costs to curb inflation if the recent financial market turmoil eases.

``The euro-zone economy seems to be doing well,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. ``A rate hike is possible. The euro is likely to strengthen.''

The euro traded at $1.4627 from $1.4602. It may climb to $1.4650 today, Ishikawa forecast.

The 13-nation region's economy grew 0.6 percent last quarter, after a 0.3 percent increase in the previous period, according to a Bloomberg News survey of economists. The European Union's statistics office releases the report at 11 a.m. in Luxembourg.

Full story at Bloomberg

Yen Falls as BOJ's Fukui Says No Preset Time for Rate Increase

Nov. 13 (Bloomberg) -- The yen fell against all 16 of the most-active currencies as Bank of Japan Governor Toshihiko Fukui said there was no set time for raising interest rates.

The currency dropped the most in eight weeks versus the euro after the BOJ kept its overnight lending rate at 0.5 percent and Japanese Prime Minister Yasuo Fukuda said the currency's extreme volatility is not desirable. The dollar extended losses after a United Arab Emirates central bank official said the country's dollar peg was at a ``crossroads.''

``This has just been seen as a selling opportunity,'' said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. ``By no means does the move signal that concerns about growth and inflation have dissipated.''

The yen fell to 109.90 per dollar as of 10:04 a.m. in London, from 109.41 in New York yesterday, when it rose to 109.13, the highest since May 17, 2006. The yen slid 1.3 percent to 160.29 per euro, from 158.99.

The dollar reversed gains against the euro on speculation economic data this week will show weakness in U.S. housing and consumer spending, pressuring the central bank to ease monetary policy a third time this year. It dropped to $1.4584 against the euro, from $1.4531 late yesterday in New York.

United Arab Emirates

It also extended losses after comments from United Arab Emirates central bank Governor Sultan Bin Nasser al-Suwaidi fueled speculation the country may end its fixed-exchange rate against the U.S. currency.

``We have reached a crossroads now with a further deterioration in the U.S. dollar and expected further weakening of the U.S. economy,'' Reuters cited him as saying in Tokyo today.

The U.A.E. has no plans to drop the peg alone and any decision will be made by the Gulf Cooperation Council ``at the right time,'' he said, according to the report.

The dollar has declined 2.3 percent against the euro this quarter, falling to $1.4752 on Nov. 9, an all-time low against the synthetic euro, a theoretical value that estimates where the currency would have traded before its inception. The prior record was $1.4557 set in 1992.

The euro's gains have helped weaken investor confidence in Germany, pushing it to its lowest in more than 14 years, a survey of economists shows.

Source: Bloomberg

Forex Trading Signal 11/13/07

1. Tuesday, November 13th, 2007 (4:30 a.m. New York Time) UK
At 4:30 a.m. New York time we will have UK CPI. The most important number to watch is the headline number which is actually expected to come out at either 1.9 or 2.0%. If the UK CPI y/y reads 2.1% or higher, I think GBP/USD may possibly go up by 50 pips or more in the first hour of the report. On the other hand, if the CPI reads at 1.8% or below, I think GBP/USD may possibly go down by 50 pips or more in the first hour of the report.

SUMMARY:
* Report: UK CPI y/y
* Buy on GBP/USD if the number will be 2.1% or higher
* Sell on GBP/USD if the number will be 1.8% or less
* If the trigger is hit, expect 50 pips or more in the first hour of the report.

From Felix

Yen Rises to 1 1/2-Year High Against Dollar on Risk Reduction

Nov. 12 (Bloomberg) -- The yen strengthened against all 16 of the most-traded currencies, rising beyond 110 per dollar for the first time in 1 1/2 years, as investors reduced holdings of higher-yielding assets bought with loans in Japan.

The currency rose as much as 4.5 percent versus the Australian dollar and 2.2 percent against the euro as speculators retreated from so-called carry trades. Investors cut holdings of riskier assets after Morgan Stanley analysts downgraded HSBC Holdings Plc because of mortgage defaults and Deutsche Bank AG estimated that losses from falling values of subprime mortgages may reach $400 billion worldwide.

``We've seen the carry trade unwind on credit-market concerns,'' said Sue Trinh, a senior currency strategist in Sydney with RBC Capital Markets, the most accurate forecaster of the yen's value against the euro in the second quarter, according to data compiled by Bloomberg. ``The big beneficiary at the moment is the yen.''

The yen traded at 109.18 per dollar at 7:29 p.m. in New York, the highest since May 2006, from 110.69 late in New York on Nov. 9. It was at a two-month high against the euro at 159.01, from 162.48 late last week.

The dollar rose the most in three weeks against the euro to $1.4544, from $1.4678 late last week. It fell to $1.4752 on Nov. 9, an all-time low against the synthetic euro, a theoretical value that estimates where the currency would have traded before its inception. The prior record was $1.4557 set in 1992. Trading may be less than normal today because of the U.S. Veterans Day holiday.

Credit-Market Losses

Investors pared carry trades as concern grew about writedowns on securities tied to defaults on U.S. subprime mortgages. Shares of HSBC Holdings Plc, Europe's biggest bank by market value, fell to the lowest in almost three months after Morgan Stanley downgraded the stock on the view provisions for defaults will swell.

The credit market shakeout that started with the subprime- market collapse this year may force banks and brokers to write off up to $130 billion in writedowns and loan losses, Deutsche Bank AG said in a report today.

``The market has to realize this crisis isn't yet complete and that means a lot of these carry trades are at risk,'' said Hans-Guenter Redeker, head of currency strategy at BNP Paribas SA in London, and the most accurate foreign-exchange forecaster last quarter in a Bloomberg survey. ``We are running on fear this week. There is a lot of negative potential in the news.''

Go to Bloomberg for full story!

Asian Stocks Slide on New Subprime Losses, Strengthening Yen

According to Bloomberg, the Asian stocks declined for a third day. Japan's Topix index dropped to a two-year low after reports of subprime losses at U.S. banks sent the dollar tumbling against the yen.

Japan's Sony Corp., which gets about 70 percent of sales abroad, fell on speculation the yen's gain will erode profit. Lenders including Australia and New Zealand Banking Group Ltd. declined on concern credit-market losses will spread.

``It's not just the decline in U.S. stocks that we need to worry about; investors are reducing risk, which is causing yen strength across a lot of currencies, and that's bad for the exporters,'' said Norihiro Fujito, a senior strategist at Mitsubishi UFJ Securities Co. in Tokyo.

BHP Billiton Ltd. dropped for a second day after Perennial Investment Partners Ltd. said the world's largest mining company may need to offer a 60 percent premium to the pre-takeover bid price for its offer to buy Rio Tinto Group to be accepted. Shares of Rio jumped to a record.

The Morgan Stanley Capital International Asia Pacific Index dropped 2 percent to 159.65 as of 10:19 a.m. in Tokyo, adding to a two-day, 2.7 percent drop. All 10 industry groups declined.

Japan's Topix, which was set for its lowest close since Oct. 31, 2005, dropped 2.5 percent, its seventh straight day of declines, while the Nikkei 225 Stock Average fell 2.5 percent to 15,195.31.

Visit Bloomberg for full story.

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Oil Rises Above $98 to a Record on Forecasts U.S. Supplies Fell

Nov. 7 (Bloomberg) -- Crude oil rose above $98 a barrel for the first time in New York after the dollar slid to a record low and analysts forecast U.S. stockpiles declined for a third week.

BP Plc and ConocoPhillips plan to reduce production in the North Sea starting tonight before storms and 36-foot waves batter the area. The dollar slumped, pushing up prices of commodities based in the currency, and traders expected a 1.5 million barrel drop in U.S. crude inventories.

``The $100 mark is inevitable,'' said Michael Davies, an analyst at Sucden (U.K.) Ltd. in London. ``We're expecting another draw in crude stocks today, and that could be another thing everyone jumps on.''

Crude oil for December delivery gained as much as $1.92, or 2 percent, to $98.62 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. It was at $97.79 at 1:48 p.m. in London. Futures have climbed 66 percent in the past year.

Brent crude oil for December settlement rose as much as $1.93, or 2.1 percent, to a record $95.19 a barrel on the London-based ICE Futures Europe exchange. It was last at $94.30.

Production at BP's 80,000 barrel-a-day Valhall field will come to a stop tonight after an evacuation of about 150 workers from the site, BP spokesman Jan Erik Geirmo said. Production from five platforms at ConocoPhillips' North Sea Ekofisk and Eldfisk fields is also set to halt tomorrow, ConocoPhillips spokesman Stig Kvendseth said.

For Full Story: Bloomberg

Intra−day forex market trend

This session trend: other majors are expected to swing and slide .......
Sell/buy trade recommendations:
Currency sell buy Stop/Adv. hedge
EURO/USD 1.4567 - 1.4586 1.4223 - 1.4162 1.4639
GBP/USD 2.0909 - 2.0942 2.0433 - 2.0346 2.0978
AUD/USD 0.9273 - 0.9298 0.9027 - 0.8937 0.9349

Buy/sell trade recommendations:

Currency	buy	sell	Stop/Adv. hedge
USD/YEN	114.24-114.48	115.85 - 116.67	113.86
USD/CHF	1.1402-1.1429	1.1786 -1.1834	1.1373
USD/CAD	0.9207-0.9234	0.9736-0.9876	0.9171

Source: Fxstreet

Forex Trading Signal 11/06/07

1. Tuesday, November 6th, 2007 (6:30 p.m. New York Time) AUSTRALIA
We will have Interest Rate statement out of Australia which is coming out at 6:30 p.m. New York time. It is expected that they will raise the rate from 6.50% to 6.75%. If that happens, then what is important are comments. If the comments are hawkish and they hint to a possibility of another rate hike, then AUD/USD may possibly go up by 50 pips or more in the first 30 minutes of the report. On the other hand, if they hike the rate and their comments are dovish like they will say there will be no more rate hikes, then we may see AUD/USD going down by 50 pips or more in the first hour of the report. Also, if they do not hike the rate (keep the rate unchanged at 6.50%), I think it is very possible that AUD/USD will go down by 50 pips or more in the first 30 minutes of the report.

Source: Felix

GBP/USD: To 2.1000 and Higher

Cable continues to make multi decade highs, so where is resistance? A well defined bullish channel along with sentiment indicators that are not yet extreme favor the upside until at least 2.1100. Wave structure and Fibonacci levels pinpoint levels for entry and define risk. Find out where these levels are : Dailyfx

Subprime bailouts: Chump check

NEW YORK (CNNMoney.com) -- Not everyone is happy about mortgage lenders' latest efforts to help troubled borrowers.

Take Teresa Nelson. Instead of going for an adjustable rate mortgage with its lure of low initial rates, she opted for the security of a 30-year fixed at 7.10 percent for a house she bought in Pinellas Park, Fla. in December, 2005.

"I was well aware of what an ARM meant, and was staying far away from those snake-oil pipe-dream promises," Nelson said. "I also wasn't shopping for a short-term, big payoff investment - I was looking for my home, until I retire."

But many delinquent subprime borrowers who went for low teaser rates that shot up to unaffordable levels are now paying lower rates than Nelson as part of a new round of foreclosure prevention packages. And she doesn't like it.

For example, one subprime borrower had a riskier hybrid adjustable rate mortgage (ARM) with a rate of just under 7 percent that was going to reset in December to 10.5 percent. But last month, as part of a new bailout plan from Countrywide Financial, the lender gave him a rate reduction to 5 percent on his loan, saving him hundreds of dollars a month.

Nelson feels cheated and has little sympathy for people who she believes weren't as careful as she was. "Everybody was seeing dollar signs," she said, "and let their greed get the better of them. So, no. No bail-out, no assistance with my tax dollars. Not one red cent."

She's not alone. Last month, many CNNMoney.com readers expressed outrage to bailouts - whether they involved tax dollars or not - after Countrywide announced good deals for bad loans.

The company said it will refinance or restructure loans or reduce interest for hybrid ARM borrowers whose rates are scheduled to reset. And no one will have to pony up prepayment penalties for retiring loans early.

Countrywide then announced it will rework loans, prime and subprime alike, for any troubled borrower, adjusting payments to reflect what individuals can afford. The company will administer the program with non-profit community advocate, the Neighborhood Assistance Corporation of America (NACA). Some troubled borrowers will escape with refinanced loans as low as 5.25 percent.

Why should help be given, and possible taxpayer money spent, to home owners in trouble?

According to Steve Bailey, Countrywide's CEO of loan administration, there are good reasons, but it's a mischaracterization to say all the foreclosure prevention programs are aimed at irresponsible borrowers.

One of the biggest groups Countrywide targeted - 52,000 subprime hybrid ARM borrowers that it will offer refinanced loans - have good payment histories and low-risk profiles, according to the company.

They typically had credit problems in the past but, according to Doug Duncan, chief economist for the Mortgage Bakers Association, hybrid ARMs have traditionally been the right remedy.

For full story : CNN Money

Bank of Japan to adjust interest rates gradually - September minutes

TOKYO (Thomson Financial) - The Bank of Japan's policy board reaffirmed in September that it should raise interest rates gradually in line with economic growth and the outlook for consumer prices in order to prevent a

misallocation of resources, minutes from the board's Sept 18-19 meeting showed Monday.

The central bank also warned of the risk from unstable financial markets due to ongoing adjustments in the US housing market and the subprime loan problems.

The board members agreed that the central bank would "adjust the level of interest rates gradually, in accordance with improvements in the economic and price situation."

The board decided by a vote of 8-1 at the September meeting to leave the overnight call rate target at 0.5 percent. Board member Atsushi Mizuno voted against the proposal by governor Toshihiko Fukui.

At the bank's subsequent meetings on Oct 10-11 and Oct 31, policymakers also decided to leave interest rates unchanged. They had wanted more time to see how financial markets fared after the recent turbulence and how problems in the US housing market would affect the global economy before considering their next move.

The minutes of the September meeting showed that excessive positions in the markets, such as yen carry trades, had declined, thereby weakening "the upside risk arising from excessive......

Source: FXStreet

NFP Beat Expectations But Will It Be Enough to Save The Dollar?

Non Farm payrolls for October printed much better than expected at 166,000 jobs versus 85,000 forecast, confirming earlier reports in the week that pointed to a rebound in the US labor markets. The unemployment rate remained the same at 4.7% as did the average weekly hours at 33.8. However, the one dark cloud in the report was the weaker than expected rise in average hourly earnings which increased only 3.8% versus 4.0% projected.

The news confirms the thesis that US economy remains remarkably resilient despite the woes in the housing and financial sectors and casts doubt on any additional easing by the Federal Reserve for the rest of the year. The dollar however, saw only a fleeting moment of strength as the currency market continues to be dominated by dollar bears skeptical of any positive US economic news.

As we noted in our morning piece, " We continue to believe that the EURUSD is near the end of its current rally and while it may make another run at the 1.45 figure, any additional gains going forward are likely to be small and slow." At this point the EURUSD is trading on pure momentum, driven by sheer speculative demand. Euro bulls may be counting on a hint of a possible year end rate hike from the ECB at next week's rate announcement meeting but if no such signal is forthcoming from Mr. Trichet and company the pair becomes vulnerable to a sharp sell off in the near future.

Source: Dailyfx

Non Farm Payroll - Consensus Estimate 80,000 jobs

What a difference a month makes! The Department of Labor’s most recent report stated that non-farm payroll (NFP) employment rose by 110,000 during the month of September, leaving analysts stunned and the majority in agreement on the consensus of 80,000 new jobs in October. The surprise announcement and revision, which raised total payroll employment to 138.3 million, followed increases of 93,000 in July and 89,000 in August . With initial claims of a recent uptrend, however, look for job growth to slow in October.

Several key factors are thought to have influenced the recent NFP report. They include:

· Employment in manufacturing and construction decreased by 18,000 in September, bringing total amount of jobs lost to 223,000 year to date

· Private service-providing jobs expected to rise to nearly 100,000

· Unemployment expected to hold steady at 4.7%

For week ending October 27^th, the Department of Labor reported that the advance figure for seasonally adjusted initial claims was 327,000, a decrease of 6,000 from the previous week's revised figure of 333,000. They also reported a four week moving average of 327,000, an increase of 1,750 from the previous week's revised average of 325,250.

When the Fed next meets on December 11^th for the Federal Open Market Committee (FOMC), October and November's jobs reports will most certainly play a key role in whether interest rates are cut in December.

What is the non-farm payroll report?

Of all the world monthly economic reports, the monthly US NFP report is the most highly anticipated and has the most dramatic impact on the currency market.

The report, which is released on the first Friday of each month and states the previous month’s numbers, provides detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. These numbers are the best way to gauge the current state of the US market as well as the direction that the economy is heading.

What’s more, the employment numbers provided by the report are used by the Fed to shape their interest rate policies. The health of the US economy and interest rates translate to the strength or weakness of the US dollar.

Stocks Plunge on Oil, Credit Worries

Stocks Plunge in Early Trading on Weak Consumer Spending Report, Another Jump in Oil Prices
NEW YORK (AP) -- Wall Street plunged Thursday as multiplying concerns about inflation and slower economic growth erased optimism about the Federal Reserve's positive take on the economy just a day earlier. The Dow Jones industrials skidded nearly 200 points.

Inflation fears revived as crude oil vaulted to a record $96 a barrel before easing. Meanwhile, a report from the Commerce Department indicated consumers scaled back their spending in September as worries mounted about a worsening housing market and further credit market turmoil. And a trade group reported that manufacturing in the U.S. grew in October at the weakest pace since March.

That combination led investors to retreat from Wednesday's rally, in which the Dow climbed 137 points after the Fed -- while cutting interest rates a quarter point -- said the economy had weathered the summer's credit crisis. The assessment temporarily put to rest Wall Street's concerns that tighter credit was crippling the economy.

But the Fed also warned that inflation remained a concern, and oil's ascent to another record raised the prospect not only that the Fed might stop cutting rates, but that might even consider raising them.

"Wall Street is in love with the idea of a rate cut, and realized that the Fed said inflation is still a concern -- that lowered the chances of a cut in December," said Ryan Detrick, a senior technical strategist with Schaeffer's Investment Research. "We're now feeling the pain now that investors have slept on it, and figured out what they said."

Stocks also moved lower after Exxon Mobil Corp., the world's biggest publicly traded oil company, posted a second-straight retreat in quarterly profit for the first time in five years. Citigroup Inc. and Bank of America Corp., the two biggest U.S. banks, were downgraded by CIBC on worries about the credit markets -- causing financial stocks to tumble.

The Dow plunged 198.67, or 1.43 percent, to 13,731.34 after being down more than 200 earlier.

The Standard & Poor's 500 index was off 21.49, or 1.39 percent, at 1,527.89, while the Nasdaq composite index dropped 32.40, or 1.13 percent, to 2,826.72.

Investors pulling money out of stocks turned to the safe haven of the Treasury market. The yield on the 10-year Treasury note fell to 4.37 percent from 4.47 percent late Wednesday.

The Commerce Department's report that consumer spending rose by 0.3 percent in September, slightly lower than the 0.4 percent increase that analysts expected, raised concerns about a slowing economy, and worries that the Fed might still consider inflation a more important issue.

In addition, the performance of the manufacturing sector in October suggested that ongoing troubles in the housing and credit markets have seeped into the industrial sector. The Institute for Supply Management, a Tempe, Ariz.-based trade group, reported its manufacturing index registered 50.9, down from 52.0 in September and below expectations for 51.8. A reading above 50 indicates growth; below that spells contraction.

Also Thursday, the Labor Department said the number of people filing for unemployment benefits declined by a larger-than-expected 6,000 last week to total 327,000.

Crude prices pulled back after surpassing $96 per barrel in overnight trading, but that decline did not ease Wall Street's worries. A barrel of light sweet crude fell $1.79 to $92.74 on the New York Mercantile Exchange.

Wall Street was also troubled by the day's corporate news, including Exxon's report that its profit fell 10 percent during the third quarter because of lower refining and chemical margins. Shares of the Dow component dropped $2.86, or 3.1 percent to $89.13.

Financial stocks fell on lingering worries about the aftereffects of the credit crisis. CIBC World Markets on Thursday downgraded both BofA and Citigroup on concerns about sluggish growth in 2007.

Bank of America, the nation's second-largest bank, dropped $1.78, or 3.7 percent, to $46.50. Citi, the nation's largest financial institution, dropped $2.96, or 7.1 percent to $38.40 -- its lowest level in four years.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 229.3 million shares.

The Russell 2000 index of smaller companies was down 20.21, or 2.44 percent, at 807.81.

The plunge in U.S. stocks caused European bourses to tumble. In afternoon trading, Britain's FTSE 100 was down 1.66 percent, Germany's DAX index fell 1.33 percent, and France's CAC-40 dropped 1.80 percent. Japan's Nikkei stock average, which closed before U.S. markets opened, rose 0.79 percent.

Source: Yahoo Finance

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Oil Above $96 on Drop in US Supplies

Oil Prices Rise to Record Above $96 a Barrel After Surprise Drop in US Supplies SINGAPORE (AP) -- The price of oil rose to a new record above $96 a barrel Thursday after a surprise drop in U.S. crude stockpiles raised concerns about supplies for coming winter demand. Other energy futures also gained.

The U.S. Federal Reserve's move to cut interest rates by a quarter percentage point also supported prices.

It was the second week in a row the U.S. Energy Information Administration reported a sharp and unexpected drop in oil inventories.

"The decline in U.S. crude oil inventories has been a key driver of oil prices," said David Moore, commodity strategist at the Commonwealth Bank of Australia in Sydney.

Light, sweet crude for December delivery rose as high as $96.24 a barrel in electronic trading on the New York Mercantile Exchange by late morning in Singapore. Prices later receded to $96.05 a barrel.

Crude prices have reached inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, $38 a barrel then would be worth $96 to more than $101 today.

"We are stepping into an unknown area. Nobody wants to sell (given the fear of a) further rise," broker Ken Hasegawa of Fimat Japan told Dow Jones Newswires.

The December Nymex crude contract rose $4.15 Wednesday to a record settlement price of $94.53 a barrel.

Source: Yahoo Finance

Label: Oil Price, Federal Reserve, New York Mercantile Exchange

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Fed Rate Cut Expected Wednesday

Fed Expected to Cut Rates Wednesday for a Second Time in an Effort to Ward Off a Recession

WASHINGTON (AP) -- With oil prices soaring and the housing market sinking, the Federal Reserve is likely to combat the economic turmoil with more interest rate cuts.

Federal Reserve Chairman Ben Bernanke and his colleagues were wrapping up a two-day meeting Wednesday and many economists believe they will announce that they have decided to follow September's half-point cut in the federal funds rate with a quarter-point cut at this meeting.

"They are going to cut rates," predicted Mark Zandi, chief economist at Moody's Economy.com. "The economy is weakening and financial markets remain unsettled."

Many analysts said this rate reduction probably will not be the last either, as the central bank keeps reducing rates to help the economy overcome a host of problems.

The Fed cut the federal funds rate, the interest that banks charge each other, for the first time in four years at its September meeting, reducing it to 4.75 percent. Responding to that move, commercial banks cut their prime lending rate, the benchmark for millions of consumer and business loans, by a half-point as well to 7.75 percent.

The economy's troubles include the worst slump in housing in more than two decades and a credit crunch that roiled financial markets this summer when investors suddenly became concerned about mounting losses from defaults on subprime mortgages.

With lenders tightening mortgage standards, marking it harder for prospective buyers to qualify for loans, and defaults continuing to rise, the slump in housing has deepened......

Source: Finance yahoo

Label: Fed Rate,

Subprime mortgage,

Federal reserve

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Malaysia's central bank says it expects inflation to remain manageable

KUALA LUMPUR (Thomson Financial) - Malaysia's central bank said on Wednesday it will keep a close eye on rising prices, especially energy prices, in an effort to curb inflation.

But the bank expects the inflation rate to remain manageable going forward because the rising prices were not caused by a spike in demand.

"We are starting at a low level of inflation that is less than 2 percent, which is one of the lowest in the region," said Bank Negara Malaysia governor Zeti Akhtar Aziz.

"Of course as prices adjust it will affect our overall inflation, but we are also operating below full capacity utilisation and investment is increasing quite significantly," she said. "As a result we are not seeing demand-induced pressures (on inflation)."

Zeti said the price adjustments were "a result of rising costs, and this is what we will monitor."

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Source: http://www.afxnews.com

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Forex vs. Stocks

Remember that both stocks and forex trading involve risk. Forex trading is not conducted on a regulated exchange and as a result, there are additional risks associated with forex trading.

Though stocks were traditionally viewed as an investment, recent volatility and instability has led to stock trading taking on a more speculative role. Many stock traders are also trading another speculative market with many differences – forex. Instead of trading stocks of individual companies, traders are switching to trading currencies in the world’s primary market. Greater leverage, sophisticated software and strong market trends have led many former stock traders to explore the benefits of currency trading.

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GREATER LEVERAGE

Forex trading provides greater leverage than is found in traditional stock trading, which allows traders to control larger positions with smaller amounts of capital. This also allows you to trade the same size positions you might take with a stock broker, while leaving you with more available capital to trade more markets.

NO MIDDLEMEN

Currency trading is done by the trader, online. By trading directly, a dealer and a primary market maker, there are no extra parties between you, the trader, and the buyer or seller of the currency pair. This elimination of the middleman can save traders in time and fees. This is different than the stock market, where you may deal with a broker and the exchange, both who charge fees and commissions. This translates to quicker access and cheaper costs for currency traders.

8000 STOCKS VS 4 MAJOR CURRENCY PAIRS

There are approximately 4,500 stocks listed on the New York Stock exchange, and another 3,500 on the NASDAQ. Which are you going to follow? Do you have time to research all the companies? In spot currency trading, there are 4 major currency pairs – EUR/USD, GBP/USD, USD/JPY and USD/CHF. If you want, you can branch out to the second-tier currencies. But most traders choose to concentrate on the major currency pairs. So choose your currency pair. Decide if you’re going to buy or sell. Then spend your afternoon on the golf course or with your family.

Forex: A World Of Opportunities

Forex Market Benefits

· Forex is open 24 hours a day, 5.5 days a week.

· Forex is the most liquid market in the world.

· Up to 400:1 leverage. Without appropriate use of risk management, a high degree of leverage can lead to large losses as well as gains.

· No restrictions on shorting which allows you to enjoy trading opportunities during any market condition.