Do You Need a Chinese Bank Account?

The Wall Street Journal brings us five reasons why we should open up a Chineses Bank account.

Marc Chandler on Forex

Marc Chandler, global head of currency strategy, Brown Brothers Harriman, gives his view on U.S. Dollar, the Euro, China & and the emerging markets. Dow Jones Wealth Advisers' Veronica Dagher has the interview.

Morning Currency Wrap for Thursday March 31, 2011

What's The Difference Between A Fed Hawk & An ECB Hawk? - The market listens to the ECB hawk as evidence by the Euro's move in overnight trading. The various Fed hawks that have spoken over the last few days were only able to push the Euro down a couple pips but yesterday's comments from ECB member Lorenzo Bini Smaghi was able to rally the Euro over the 1.42 level. Smaghi said that the ECB should introduce a series of gradual rate hikes and this is in the face of Portugal's funding problems and today's Irish bank stress tests, which are expected to signal the effective nationalization of the entire financial system. Also, today's release of eurozone inflation showed a more-than-expected jump of 2.6% in March, strengthening the ECB’s case for increasing interest rates next week for the first time in almost three years. A note of caution, the Euro will probably rally right up to the April 7 rate hike but could sell off there after on a classic buy the rumour sell the fact type move. In Asia, the Yen carry trade is back on as interest rate differentials are causing the Yen to move lower. The Yen is back to being used as a funding currency as ultra loose Japanese monetary and fiscal policy, in order to help the economy in the wake of the earthquake and tsunami, is encouraging players to sell the Yen to fund higher-yielding investments. In Australia, the AUD continued to hit fresh 29-year highs after favourable retail sales and credit growth data. In Canada, the CAD was firm in overnight trading and edged higher this morning after domestic GDP growth in January came in as expected at 0.5%. The CAD should continue to trend higher with the current risk on trade.

Here are the interbank mid-market rates at the time of posting:

EUR/USD    1.4221            USD/CHF     0.9154

GBP/USD    1.6085            USD/CAD    0.9714

AUD/USD   1.0337            EUR/CAD     1.3770

NZD/USD    0.7622           GBP/CAD     1.5575       

USD/JPY      82.86            USD/MXN    11.9192         

Yen Drop Gathers Steam

The slide in the yen is gathering momentum, much to the joy, no doubt, of Japanese authorities, the G-7, and indeed currencies funds.

The Euro & Aussie Trade

Discussing how the euro will react to the S&P's cut of Portugal and Greece's debt rating and the latest turn around in the Aussie, with Andy Busch, BMO Capital Markets.

Currency Humour

Sterling's Rally Runs out of Road

As chances of a U.K. rate rise fade, along with hopes of an early U.K. recovery, but talk of higher rates in the euro zone and the U.S. increase, the pound will lose support.

Gartman's Likes Canadian & Aussie Dollars

Dennis Gartman, The Gartman Letter, says he's buying Australian, New Zealand and Canadian dollars, even with the government turmoil across the northern border.

Morning Currency Wrap for Wednesday March 29, 2011

Bla, Bla, Bla, Bla, Bla Its Repeat Monday - The Euro was little changed against the USD as nothing has changed since yesterday, as the propaganda about possible changes to the Fed's monetary policy continues to be spewed by non-voting Fed member, James Bullard. Look the key take away from Bullard's comments are that he is a non-voting member and that there is nothing new in his comments because they don't represent a new view. Furthermore, the notion that the Euro is being weighed down by speculation that Portugal will require a bailout doesn't make sense to me. Well for one thing, if Portugal did get a bailout then wouldn't the Euro go higher? I think it would because the bailout would be the solution to the problem. Also, I don't see the difference between Europe's sovereign debt crisis and the US's debt crisis. Of the 27 euro zone member only Greece and Ireland have required a bailout so far but in the US over 80% of the 50 states have serious debt problems not to mention the debt crisis of the federal government. Look for Eur/USD to remain range bound until Friday's US jobs data. In the UK, the GBP remained near its weakest level in five months against the Euro and near yesterday's level versus the USD after data showed the U.K. economy shrank. GDP fell 0.5% from the previous three months, near an earlier estimate of 0.6 %. This data doesn't change the market's view on UK monetary policy - both the ECB and Bank of England meet next on April 7, where a euro zone interest rate hike is expected but no change is expected for the BOE. Moving over to Asia, the USD continues to gain traction against the Yen as we approach Japan's financial year as the threat of intervention continues to hang over the market thus putting a floor under the Yen and as Japanese equities remain under pressure due to the worsening nuclear situation. Also, front page commentary from the China Securities Journal says that the People's Bank of China is likely to raise interest rates again in April and in the middle of this year to help drag real rates out of negative territory to tackle inflation. In Canada, the CAD remained will bid along with the other dollar block currencies (AUD & NZD) as the risk on trade continues. Comments over the weekend by Bank of Canada Governor Mark Carney that hinted that rate hikes, while not imminent, were on the horizon also kept the CAD well bid.

Here are the interbank mid-market rates at the time of posting:

EUE/USD    1.4063            USD/CHF     0.9210

GBP/USD    1.5974            USD/CAD    0.9778

AUD/USD   1.0217            EUR/CAD     1.3756

NZD/USD    0.7505           GBP/CAD     1.5627       

USD/JPY      82.34            USD/MXN    11.9828           

Aussie Dollar a Safe Haven?

Recent events, such as the Japan disaster and turmoil in the Middle East, have made the Australian dollar more attractive says Greg Gibbs, FX strategist at RBS.

Has The Euro Peaked For Now?

With only the interest-rate argument supporting the euro for now, investors may consider taking profits at these levels.

Morning Currency Wrap for Monday March 28, 2011

Politics & Propaganda - The Euro came off against the USD after the 2-day EU summit ended without the "grand bargain" that all were expecting and political defeats for the ruling parties of Germany and France. The loss by Chancellor Angela Merkel's conservatives of Baden-Wuertemberg, which they had held for nearly six decades, led markets to believe that Germany will be less inclined to be Euro's ATM machine. It was very clear that the EU summit was not going to have a solution with Finland's opposition party gaining in the polls and threatening not to support any more bailouts ahead of the key April 17 decision. So the EU agreed to defer until June, in hopes that after all the elections are concluded they can then come up with the new grand bargain. Also, weighing on the Euro was talk of ending QE2 early by Fed's James Bullard, which seems a stretch since Bullard is not a voting member. Please enough of this propaganda, a glance at the chart of the USD index showed that it was in danger of falling through a 3-year support line so the Fed trotted out various officials to try and talk up the USD. Look, I will on record by saying that the Fed will not end QE2 - it will probably end in June but they will continue to reinvest the proceeds of their portfolio into Treasurys. In effect I don't expect the Fed's balance sheet to change, which in effect means that QE will continue indefinitely. Meanwhile in Asia, the AUD hit a 29-year high and the NZD was also up on repatriation flows as insurers face massive payouts on the claims from Queensland floods and the earthquake in neighboring New Zealand. The Yen also inched higher toward the 82 level as the fear of more intervention hangs over the market. In Canada, the CAD moved higher after the Bank of Canada warned over the weekend of inflationary concerns, suggesting interest rates may not be on hold much past the May 2nd federal election. Bank of Canada Governor Mark Carney said sustained growth from emerging economies means high commodity prices are expected to stick around for a long time.

Here are the interbank mid-market rates at the time of posting:

EUE/USD    1.4055            USD/CHF     0.9198

GBP/USD    1.5996            USD/CAD    0.9790

AUD/USD   1.0274            EUR/CAD     1.3750

NZD/USD    0.7514           GBP/CAD     1.5644       

USD/JPY      81.78            USD/MXN    11.9935           

Euro Starts The Week On Its Backfoot

That 100 pip drop on the Euro/USD chart is courtesy of a German state election rout for Chancellor Angela Merkel's conservatives. Chancellor Merkel's conservatives lost power in a regional stronghold, with early poll results showing the Greens surging to their first premiership in the Baden-Wuerttemberg state. The expectation of an ECB rate hike is limiting the Euro's downside.

10 Bizarre Regional Currencies That You've Never Heard Of

You've heard of the USD, GBP, Yen, and the Euro, but have you ever heard of the Kelfrank or Bershares?

Here businessinsider.com profiles 10 different kinds of funny money.

This Week's Money In Motion

A look at the Teflon euro. Despite threats of a bailout and sovereign default, the euro continues to rally. Is this a euro gain, or dollar pain, with CNBC's Melissa Lee and the Money In Motion traders.

Forex Measuring Stick for Week Ending 25/03/2011

Europe Watch

CNBC's Guy Johnson has the detail on Portugal likely to hold off on a bailout request until June.

Currency Humour, Sort Of

World to Have 3 Reserve Currencies in Future

Barry Eichengreen, professor of political science at Berkeley, calls for policymakers to “step up” and “draw a line under the economic crisis”. He also suggests there will be 3international currencies in the future, the US dollar, the euro - which “isn’t going anywhere” he says - and the Chinese renminbi. Europe needs to complete monetary union he adds, saying the impetus for that will come from France and Germany as always.

Morning Currency Wrap for Thursday March 24, 2011

Spanish Bank Downgrades & Portugese Government Collaspses, Euro Up - News yesterday that Portugal's prime minister quit after parliament rejected his government's latest austerity measures and today's downgrade by Moody's of the Spanish banking sector was basically a nonevent for the Euro. The Euro initially fell but recovered quickly as the market's main focus remains on one thing, the near certain rate hike by the ECB in the first week of April contrasted against ultra easy US monetary policy. The fall of the Portuguese government increasing the chances that the country will need a bailout of around 80 bln Euros to cover the next three years of its financing needs. If you think about it, the downgrade of the Spanish banking sector is a non factor because they will receive a backdoor bailout via Portugal's bailout, since Spanish banks hold most of Portugal's debt. All of this puts added pressure on the 27 euro zone members to formalize a plan to deal with its sovereign debt crisis at the starts of today's 2-day EU summit. Don't hold your breath because leaks from the parties involved suggest that the conclusion of this summit will be to reach a final deal before June as the foot dragging continues. Elsewhere, the GBP lost ground for a second straight day after a larger than expected fall in retail sales in February raised concerns over the prospects for UK growth. This data suggests that the retail sector is cooling off at a fast pace compounding the Bank of England's next move in the face of higher inflation. In Asia, the song remains the same as USD/Yen remains glued to the 81 Yen level as market players are wary that Japan may intervene further to sell the Yen if the USD drops below the 80 level. Meanwhile, the NZD was the strongest performer as data showed the country’s economy avoided a recession in the fourth quarter. GDP rose 0.2%, spurring relief that the economy was in reasonable shape ahead of the earthquake that hit the country last month. In Canada, the CAD was stronger against the USD on firmer oil prices despite the expected no-confidence motion that will likely bring down the federal government. If the opposition parties does bring the government down then a early spring election is expected, but one that might not change the political landscape. It's a case of heads you win, tales you win - the election will result in one of two things, a minority government, which is what Canada has now, or a Conservatives majority government, in which case the CAD would strengthen even more.

Currency Humour, Sort Of

Pre Portugal Vote and Limited Euro Downside

Your trade on Portugal's vote on its deficit reduction plan, with Andrew Busch, BMO Capital Markets.

Morning Currency Wrap for Wednesday March 23, 2011

Politics, Politics, & A Rumour - The Euro came off against the USD ahead of th3 2-day EU summit that starts tomorrow as politics and a rumour get in the way. First the politics, Portuguese Prime Minister Jose Socrates faces a vote against his deficit-cutting plan today, which is a the heart of its austerity plan. If the vote fails then the Portuguese government will fall and it may need to ask for a bailout during the EU summit. This in itself is not a surprise to the market since Portuguese 10-year bond yields have been over 7% for almost a month, which is the same yield that Greece and Ireland had to throw in the towel. Also weighing on the Euro was a rumour sweeping the trading floors yesterday that Allied Irish  Banks would not pay a coupon later in the week -- something that AIB had to formally deny. This caused 2-year Irish bonds to push past a yield of 10% indicating that Ireland may need more bailout funds. Euro losses should be limited to the 1.40 level as the market is expect an ECB rate hike in the first week of April. In the UK, the GBP was on its back foot, after yesterday's surge, after minutes of the Bank of England last policy meeting didn't reveal any new members sliding into the hawkish camp. The next focus for the GBP will be today's budget by UK finance minister George Osborne, who has billed the 2011/12 budget as one for growth. In Asia, the Yen was virtually unchanged as traders are weary of possible intervention by Japanese authorities. Japan’s government today estimated the damage from the earthquake and tsunami at as much as 25 trillion yen or about USD $309 billion, almost four times the costs imposed by Hurricane Katrina on the US In Canada, politics are in play causing the CAD to come off as the opposition parties in Canada are likely to vote against the budget forcing a spring election. The minority Conservative government promised to cut Canada's deficit by a quarter this year and return to surplus by 2015, but the three opposition parties said they would vote against the budget plan.

The Risk Of A Dollar Crisis Increases By The Day

Incredibly, the dollar has lost 7.5% of its value in less than 3 months (since January 7th 2011) and more than 17% in just 8 months since August 2010. Hence the nominal record highs in gold and silver. The volatility and sharp falls in the dollar are leading to deepening inflation throughout the world (as seen in the UK inflation rate of 4.4% today). Thus, the dollar’s safe haven status is being increasingly questioned.

This could feed on itself and lead to a currency crash as was seen with the British pound in 1992. The monetary and fiscal position of the U.S. today is many times worse than that of the UK in 1992 which makes this risk very real. Read the rest of ZeroHedge's story here.

Euroview: Dollar Loses Even More Friends

As global inflation pressures increase, but the Fed refrains from tightening monetary policy, the dollar is finding itself falling out of favor even more.

Morning Currency Wrap for Tuesday March 22, 2011

Uneventful Trading Except For Sterling & An Ominous Sign - The GBP strengthened to 1.64 level for the first time since January 2010 as U.K. inflation accelerated more than economists forecast, renewing speculation that the Bank of England will raise interest rates. The Office for National Statistics reported that consumer inflation rose at a 4.4% annual pace in February, up from 4% in January and more than double the Bank of England’s 2% target. Interest-rate expectations had come off last month but today's data has pulled forward rate hike expectations as early as May. Elsewhere, the rest of the major currencies all traded within a tight band and were little changed. Now a few thoughts on the ominous sign in USD index - since the beginning of the year we have experienced multiple black swans (flooding and cyclones in Australia, political turmoil in North Africa and the Middle East, New Zealand earthquake, and Japan's earthquake, tsunami, and nuclear disaster) but yet the USD index has kept falling. The USD index has fallen through the November 2010 low and is now on a trajectory to hit the low of 2008 in the next couple of months. I'm bringing this up because what has happen to the notion that the USD as a safe haven? I guess the debasing of the USD through multiple QE and the out of control government spending by the US is taking its toll. The next couple of months should see all commodities rally even more in the face of a falling USD. In Canada, the CAD came off its meager gains after a disappointing retail sales report and on slightly lower oil prices. Retail sales unexpectedly fell 0.3% in January, the second monthly decline. This data validates the Bank of Canada's decision to remain on hold.

In Favor of the Norwegian Kroner

Adam Reynolds, Co-Head of Asian Fixed Income & Currencies at Societe Generale CIB, likes the Norwegian kroner as the currency has the potential to move higher in these uncertain times. He also names other currencies worth betting on.

Volatile Global Markets

Continued unrest in the Middle East and Asia are bound to keep the oil and currency markets busy this week, with Marc Chandler, Brown Brothers Harriman and Stephen Schork, The Schork Report.

Morning Currency Wrap for Monday March 21, 2011

Post G7 Intervention Trading & EU Focus - The line in the sand seems to have been drawn in and around 80 Yen for intervention purposes. The USD/Yen trading below 80 will be embarrassing for the G7 so look for that level to repel any gains in the Yen. Most interventions don't work but this has shot because as Bank of Japan Governor Masaaki Shirakawa injects cash into the financial system, other central banks are  preparing to tighten monetary policy. Meanwhile, the other focus of this week's trading will be the EU summit on March 24-25. This summit is suppose to further develop a package of measures on the region’s debt crisis and economic governance. Last week, the market was unsure if the European Central Bank would get second thoughts about raising interest rates in the face of Japan's disaster, but with the G7 intervention in the currency markets the rate hike would be in line with a rising Euro/Yen. Elsewhere, the risk trade is on today so the dollar block currencies of CAD, AUD, and NZD are all up today with the CHF down slightly. In Canada, the CAD continued to pick up steam today as firm commodity prices and developments in war-torn Libya and Japan's quake and nuclear strife has bolstered the CAD. The U.N.-mandated air strikes on Libya and continued unrest in the Middle East has fueled worries about the region's oil supply and caused the price of oil to increase, putting a firm bid under the CAD. Also, as long as Japan's situation doe not deteriorate than the risk trade should stay on.

The Week Ahead by MarketWatch Videos

Asia's Week Ahead: Nuke disaster response
March 18, 2011
In Japan, investors will be watching for progress in bringing reactors at the earthquake-damaged Fukushima power-generating complex under control, and evidence that global intervention has stabilized the yen. MarketWatch's Chris Noble reports.



Europe's Week Ahead: Metro, UniCredit Earnings
March 18, 2011
Retailer Metro AG and banking group UniCredit SpA will report earnings next week, while European leaders will hold a summit on the euro-zone debt crisis.



U.S. Week Ahead: Consumer Sentiment, Gas in Focus
March 18, 2011
How the U.S. consumer feels about gas prices and discretionary spending will take center stage on the economic front in the coming week, along with a fresh reading on orders for durable goods. Kelsey Hubbard as a look at the policy and market implications of the new data with MarketWatch economic reporter Greg Robb.

Forex Measuring Stick for Week Ending 18/03/2011

Currency Humour

G7 Agrees on Joint FX Action to Weaken Yen

The G7 coordinates its first intervention since 2000 in order to weaken the yen, reports CNBC's Steve Liesman.




The G7 is stepping into the Forex markets in a move intended to aid Japan and halt the rising yen, with Joseph Trevisani, FX Solutions , and Ben Lichtenstein, TradersAudio.com.

Morning Currency Wrap for Friday March 18, 2011

Pledge By G7 For Coordinated Intervention - was enough to make USD/JPY shorts cover. As you can see from the chart above that the announcement at 8pm last night by the G7 to intervene in the foreign exchange market for the first time since 2000 caused the Yen to plunge as market players covered their shorts. Japan’s Vice Finance Minister Fumihiko Igarashi said in an interview that he hoped the action would put a floor under the USD/JPY rate, while Japan’s central bank repeated its pledge to pursue “powerful monetary easing” as policy makers sought to reduce the threat of the world’s third-largest economy sinking into a recession. Further intervention is likely to occur during today's trading secession, with the Federal Reserve and the Bank of Canada expected to join in selling the Yen. Lost in the shuffle today was news that the United Nations Security Council approved  the imposition of a no-fly zone over Libya and “all necessary measures” to protect civilians and an increase by China's central bank of bank reserve requirement ratio by 50 bps to 20%. Elsewhere, the GBP was down against the Euro after a report showed U.K. consumer confidence fell to a record low, fueling concern the economic recovery will slow. Also weighing on the GBP were dovish comments last night by Deputy Governor Bean, who was thought to be moving to the hawkish camp, suggesting no rate hike next month. Meanwhile, the G7 Yen intervention has put a bid in the dollar block currencies of CAD, AUD, and NZD and taken a little of the air out of the CHF balloon. In Canada, the CAD has moved higher due to the G7 intervention and on firmer oil prices due to the UN's no-fly zone over Libya, despite weaker than expected domestic inflation rate. Canada's annual inflation rate in February cooled to 2.2% from 2.3% in January and the core rate fell to its lowest level on record at 0.9%, which would suggest that there is less of a need for a swift interest rate hike by the Bank of Canada.

Swiss Franc A Good Barometer Of Risk

In times of extreme uncertainty the Swiss franc outperforms, and this week has been no exception.

Economist Eichengreen Sees Yuan Being Widely Used

David Wessel, Economics Editor for the Wall Street Journal, sits down with Barry Eichengreen, an economics professor at the University of California Berkley, to discuss how the yuan could be widely used within ten years.

Morning Currency Wrap for Thursday March 17, 2011

As you can see from the hourly chart, volume has picked up since the earthquake and tsunami on March 11. Notice the spike lower last night in the currency pair which took out the previous high of 79.75, reached in April 1995 in the wake of an earthquake that devastated the city of Kobe. I get the sense that the Bank of Japan is going to let the speculators jump in and keep driving the currency pair (USD/JPY) lower so that it can intervene later and cause heavy losses to the speculators. I also think that the BOJ is waiting for a meeting with its G7 counterparts, which will begin at 7 a.m. Tokyo time, to get their blessings or even help in a co-ordinated fashion to intervene in the currency markets. Elsewhere, the Euro moved over the 1.40 level on solid demand at a Spanish bond auction and on the view euro zone interest rates may rise as soon as April. Meanwhile, the CHF continued to receive safe haven flows, which has pushed the CHF to record highs against the USD, even though the Swiss Central Bank kept interest rates on hold. In Canada, the CAD moved higher as oil prices headed higher on continued turmoil in the Middle East and North Africa. Clashes between security forces, some brought in from Saudi Arabia and other Gulf states and anti-government protesters in Bahrain, caused oil prices to tick up because of worries that it could spark an escalation of a conflict between Sunni Saudis and Shiite Iran .

Bernanke Forced Into QE3?

Discussing whether Fed chief Bernanke will be forced into another round of stimulus due to the market's reaction to events in Japan, with David Rehr, George Washington University, and Krystal Ball, Democratic strategist.

Asia's 'Safe Haven' Currency

Rebecca Patterson, JPMorgan, says Singapore is the "Switzerland of Asia," with CNBC's Simon Hobbs. Should you be bullish on Singapore's currency now?

Morning Currency Wrap for Wednesday March 16, 2011

Collective Sigh Of Relief As Rick Aversion Subsides - causing the USD to give back some of yesterday's gains, but safe haven flows continued to flow towards the CHF and gold. The Yen was higher against the USD and stands about one Yen away from its all-time high back in 1995 as Japan's nuclear crisis could trigger more Yen demand as Japanese insurers and companies may repatriate funds to help pay claims and reconstruction costs. Gains in the Yen have been capped as speculation is rampant that the Bank of Japan will intervene to stem Yen gains. In fact, traders have said that the BOJ was seen checking rates on currencies with banks in Tokyo. In Europe, the Euro was repelled from the 1.40 level after Moody’s Investors Service cut Portugal's rating by two notches to A3 from A1, putting its Portugal rating in line with Standard & Poor's. Meanwhile, the GBP was up after data showed that the number of people claiming jobless benefit fell by 10,200 last month, its biggest monthly drop since June. Gains in the GBP were quickly reversed after other data showed a rise in the British unemployment rate to 8% from 7.9% in the three months ending in January, as the total number of unemployed hit a level last seen in 1994. Elsewhere, safe haven flows continued into the CHF and gold and worked to lower the USD due to the ongoing uncertainty in the Middle East and North Africa. In Canada, the CAD was little changed from yesterday's close after recovering about half of its losses during Tuesday's wild ride. The currency should continue to be well bid as risk aversion subsides and on rising oil prices. Also helping the CAD was today's release of Canadian manufacturing sales, which were unexpectedly strong.

Barack Obama Is the New Jimmy Carter: Niall Ferguson

The current inflation scenario is reminiscent of the 1970s and the transition of economic dominance from the United States to China is already well under way, Harvard Professor Niall Ferguson told CNBC.

Meltdown, Panic, Risk Aversion

That's it in a nutshell today. Everything is being sold off and funds are flowing to the safe haven of USD, CHF, Yen, and US bonds.

Euroview: Better Times Ahead For Euro?

Although there are still peripheral issues to be resolved, the speedy agreement by EU leaders to the extension of the European Financial Stability Facility, and the prospect of higher interest rates in Europe, should be good news for the euro.

Morning Currency Wrap for Monday March 14, 2011

Shock & Awe - I'm not referring to the utter devastation of Japan's earthquake and tsunami, which is Japan's worst crisis since World War Two, but rather to the Bank of Japan's response to the crisis. The BOJ has injected a record 15 trillion Yen in to the banking system and increased its asset purchases under quantitative easing by 5 trillion Yen. For the time being, the BOJ's response has put the focus back on yield differentials from repatriation flows, but Yen trade was likely remain volatile. Initial trading in the Yen last night took it to a high of 80.68 against the USD, which is about one Yen away from the record high of 79.70 that it hit in April 1995 in the aftermath of the Kobe earthquake in January of that year. Meanwhile in Europe, the Euro advance after a surprise deal to boost Europe's sovereign bailout fund, which will allow it to boost its lending capacity and also allow  it to buy sovereign bonds directly from governments. The EU also agreed to cut the interest rate by 1% off of Greece's bailout and extend the duration to 7 1/2 years from 3 years. However, it did no such thing for the Irish  due to Ireland refusal to increase its 12.5% corporate tax rate. This could back fire on the EU because the Irish could just default on all its loans and walk away from the Euro. Elsewhere, China's new bank loans for the month of February where below expectations which demonstrates that their combination of increases in bank reserve ratios and lending rates are working to slow down the rate of growth of the economy. In Canada, the CAD moved lower as the price of oil fell on the feeling that the Japanese disaster which has killed an estimated 10,000 people has more or less frozen the world's third-largest economy. Also weighing on the CAD, was Canada's industrial capacity which rose slightly in Q4, for the sixth consecutive quarter, but from a downwardly revised Q3.

Quake's Impact on Dollar & Yen & Possible QE3

Discussing the dollar and the yen's direction following tragic news from Japan, with Brian Dolan, FOREX.com; Boris Schlossberg, GFT Forex; and CNBC's Rick Santelli.

Debut of Money in Motion

How the Japan quake rocked the foreign exchange market. The yen rallies as Forex traders bet on a re-patriation of capital, with Dennis Gartman, The Gartman Letter; and CNBC's Melissa Lee and the Money In Motion traders.

Forex Measuring Stick for Week Ending 11/03/2011

Japanese Earthquake May Not Hit Economy

We don't know the full scale of the Japanese earthquake. But to judge by Kobe in 1995, the markets will initially take it badly but then rebound when investors see the rebuilding boosting economic growth.

Morning Currency Wrap for Friday March 11, 2011

Japanese Earthquake Spurs Risk Aversion - The Yen dove as the deadly earthquake and tsunami shook Japan. The earthquake registered 8.9 on the Richter scale and caused a tsunami of 10 meters (33 feet) to engulf towns along the northern coast. However, just as in past Japanese earthquakes, the Yen recovered and moved higher against most currencies as the rebuild will lead to a construction phase on top of the repatriation and insurance flows. Wow, the earthquake will be able to do something that the Bank of Japan has been unable to do in years - create inflation. Meanwhile in Europe, the story remains the same, the Euro is on its back foot ahead of today meeting of euro zone leaders. Today's meeting is a prelude to the 27-nation European Union summit on March 24-25, which is suppose to tackle the ongoing debt crisis that has been pressuring the Euro for a year. In Canada, the CAD fell after the earthquake spurred risk aversion. Also, today jobs numbers for Canada gave the Bank of Canada room to breathe as the data was a little soft. The Canadian economy was only able to add 15,100 jobs in February, which was less than the 21K that was expected. The unemployment rate was unchanged at 7.8% in February. A closer look at the data reveals that full time jobs were down by 24k which was offset by an increase of 38K part time jobs.

Pimco Dumps Government Debt

Debating whether Fed chief Bernanke is fueling inflation and a bond bubble, with Donald Luskin, Trend Macro and Michael Pento, Euro Pacific Capital.

Morning Currency Wrap for Thursday March 10, 2011

Spanish Downgrade & Chinese Trade Deficit - Moody's downgrade of Spain to Aa2 from Aa1 with a negative outlook took the floor from underneath the Euro causing it to tumble towards the 1.38 level where bids emerged from foreign sovereigns. The possibility of a European Central Bank rate hike next month is containing a further slide in the Euro for now, but if the Euro closes below 1.38 this week then more losses should be expected. The downgrade served as a reminder to investors that the euro zone's debt crisis is far from over. In the UK, the GBP moved lower after the Bank of England kept its benchmark interest rate at a record low and left its asset-purchase program unchanged. In Asia, the central bank of New Zealand cut rates by 50 bps while the central bank of South Korea raised rates by 25bps. Most of the banks in Asia are raising rates to battle inflation but New Zealand choose to cut in order to deal with the massive fallout of last month's devastating earthquake. But the big news out of Asia was that China had a trade deficit not a surplus. The $7.3 bln deficit is the largest monthly trade deficit in seven years, which was worse than the $5 bln that was expected. So does this data show that the increases in the bank reserve ratio and lending rates have worked to slow down the Chinese economy or did the lunar New Year skew the data? This news combined with the Spanish downgrade have put a firm bid under the USD today. News that US jobless claims rose more than expected and that the US trade deficit widened more than expected only caused a slight give back in the currency this morning. In Canada, the CAD came off on news that Canada barely eked out a trade surplus ($0.12 billion) for the month of January. Also, December's surplus was revised down by almost half. The CAD was already down before the news as the price of oil slid to US$102.67 a barrel and due to the risk off trade due to the Spanish downgrade and Chinese trade deficit.

Sell British Pound?

Tomorrow the Bank of England makes its decision on interest rates, with Andy Busch, BMO Capital Markets. What should investors do if the bank doesn't take a more hawkish stance? Busch says "sell the British pound."

Afternoon Market Video Update

Kathy Lien of GFX Forex talks about China, the outlook for major central banks, and the Canadian dollar. To view click here.

Morning Currency Wrap for Wednesday March 9, 2011

March Madness, A Smorgasbord Of Risk Factors - The rest of March is going to get very volatile due to the smorgasbord of risk factors - EU meeting this Friday and on March 25 regarding European Financial Stability Facility (EFSF), regional elections in Germany, debt ceiling discussions in the US, and continued speculation on QE2 and possible QE3, and talk of double dip recessions due to oil price spike. Case in point, the Euro was able to rally off yesterday's lows in face of continued concerns on Portugal. Portuguese 10-year bonds continue to yield over 7% which is the level that both Greece and Ireland had to throw in the towel. The reason the Euro rallied was due to rumours that the European Central Bank was checking prices of some peripheral bonds lending to speculation that the ECB was ready to step up and buy bonds in order to support the Euro. As far as I'm concerned, the Euro will move higher because the ECB or the EFSF will be there to lend support by buying bonds. The market keeps worrying that a bailout of Portugal will lead to contagion in Spain, but I disagree. A Portuguese bailout will help Spain because lets face it, these bailouts or not for the countries but rather the lenders, aka the banksters, so if Portugal gets a bailout then Spanish banks will be made whole thus easing the pressure on Spanish debt. Elsewhere, the GBP was able to reverse a four day decline after a report showed the U.K. trade deficit narrowed more than economists forecast in January as exports surged to a record. In Asia, Japan's January machinery orders rose 4.2%, which was more than twice than expected, but the Yen still moved lower against the USD as Japan's fiscal concerns are currently trumping economic news. In Canada, the CAD moved higher, breaking free of its recent trading range, as commodity prices moved higher and global equity markets advanced.

Morning Currency Wrap for March February 8, 2011

Dirty Laundry, A Test For Euro Bulls - The Euro continued it downward move after not being able to hold the 1.40 level against the USD in yesterday's succession. Is this a pause in the Euro's uptrend or the start of a correction? The short answer is it depends. If the lead up to the Friday March 11 meeting of the heads of states of euro-zone nations is quite then this will be just a pause; if however, the French-German axis clash with EU leaders Van Rompuy and Barroso then the airing of their dirty laundry will cause a much deeper correction. That's right it comes down to politics yet again. Friday's meeting is a prelude to the March 24-25 summit which is suppose to produce measures to resolve the region's debt crisis. Meanwhile, the slide in the price of oil has caused safe haven flows into the CHF, Yen, and gold to reverse. The price of oil retreated on reports that Moammar Gadhafi may be looking for a way to exit Libya and after Kuwait's oil minister said OPEC was considering raising output in order to make up any supply disrupted by Libya's conflict. In the UK, the GBP came off after reports showed retail sales declined in February and house prices fell, cutting expectations for rate increases this year. Bank of England policy makers will on March 10. In Asia, the NZD was finally able to move higher after falling for a about a week due to perceptions of interest rate cuts in response to the earthquake. In Canada, the CAD is still trapped inside its recent trading range, needing a catalyst to move it out of the range. Right now the CAD is vulnerable to a further sell off in the price of oil while the market waits for domestic data later in the week. Balance of trade data on Thursday and Friday's jobs data could demonstrate that the Canadian economy has momentum.

Political Trouble May Hurt the Yen

Political trouble in Japan and the government's inability to deal with an aging society could hurt the yen says Mark Cranfield of Dow Jones Newswires.

Morning Currency Wrap for Monday March 7, 2011

Possible ECB April Rate Hike Trumps Debt Woes - The number one driver in the forex market right now is that the ECB is going to raise rates at its next policy meeting in April and nothing else matters. That nothing else happens to be a Fitch downgrade in Spain's outlook late Friday and today's downgrade by Moody's of Greece's rating by three notches to B1. Moody's even noted that 20% of the B1 rated sovereigns default within five years but the Euro barely flinched and moved higher. On top of this, comes news that Germany has rejected Irish requests for lower rates on the bailout package from the EU/IMF. I don't know how long the market can continue to shrug off Europe's sovereigns debt issues. German Chancellor Angela Merkel and French President Nicolas Sarkozy have both said that they will do whatever is needed to support the Euro, and promised that meetings scheduled for March 11 and on March 24 and 25 will produce a “comprehensive” solution to the crisis - stay tuned. Meanwhile, speculators and managed money are both on the short USD trade as the US Federal Reserve is expected to keep monetary policy loose for some time, reflecting more concern about the outlook for growth than about inflationary pressures. In Asia, the Yen moved higher against the USD as investors raise their appetite for risk and shrugged off the latest Japanese political problem. The resignation of Japan’s foreign minister, Seiji Maehara, over an illegal political donation piles further pressure on Prime Minister Naoto Kan’s unpopular government, increasing speculation that he may resign if his DPJ party does not do well in local elections in April. In Canada, the CAD continued to move higher after the nation’s biggest export, crude oil, rose to a 29-month high in New York. Nervousness that the unrest in the biggest oil producer in Africa, Libya, could spread to other oil-rich nations in the Mideast, particularly Saudi Arabia continue to pressure the price of oil.

The Week Ahead by MarketWatch Videos

Asia's Week Ahead: China Takes Spotlight
March 3, 2011
China's National People's Congress will take the Asian spotlight next week. Investors will also see Cathay Pacific's earnings, data on core machinery orders from Japan, and interest-rate decisions from South Korea and New Zealand. MarketWatch's Lisa Twaronite in Tokyo looks at the week ahead.



Europe's Week Ahead: EADS, U.K. Insurers In Focus
March 4, 2011
Havas, EADS and a batch of U.K. insurers report earnings. Bank of England unveils latest interest-rate decision on Thursday.



U.S. Week Ahead: Brighter Retail Sales Highlight
March 4, 2011
After some encouraging same-store sales numbers, investors will look to the government's retail-sales report due March 11 to confirm the upbeat news. Kelsey Hubbard talks with MarketWatch retail reporter Andria Cheng.

Forex Measuring Stick for Week Ending 4/03/2011

Greenback Done as Reserve Currency?

Discussing whether the dollar's run as the world's reserve currency is coming to an end, with Axel Merk, Merk Hard Currency; Keith McCullough, Hedgeye Risk Mgmt.; and CNBC's Rick Santelli.

Canada's Ivey PMI Soars

The Ivey Purchasing Managers Index (PMI) by the end of February 2011 stood at 67.9. The corresponding Ivey PMI figure for January 2011 was 36.6, for February 2010 was 52.9 and for February 2009 was 45.8. This index is confirming other indicators that are showing that the Canadian economy is starting to build strength, which will soon be reflected in a stronger CAD.

Morning Currency Wrap for Friday March 4, 2011

Interest Rate Differentials - US Labor Department said payrolls increased 192,000 in February, fewer than analysts expected and a bounce back from a revised but still weather-hindered 58,000 gain in January. The headline unemployment rate for February fell from 9.0% to 8.9%, which probably means more job seekers gave up looking for work. So the numbers are slightly positive but are they good enough to push US yields higher? This market is being driven by interest rate differentials and if the job data is not enough to push US yield higher than  it won't help the USD. In overnight trading, the Euro continued its push higher as the market is convinced that the European Central Bank will raise rates in April, with an outside chance of a total of  75 basis points worth of hikes this year, after ECB President Jean-Claude Trichet stunned investors on Thursday by saying a rate rise in April was a possibility. Even if the ECB decides to skip April and raise in May, the bottom line is that they will rase rate by 50 to 75 basis points before the US Fed delivers its first rate hike. The spread between two-year German government bonds and its US counterparts is now at its widest since January 2009. Elsewhere, safe haven flow continue to wane causing the CHF and Yen to move lower as political turmoil in the Arab world ease. In Canada, the CAD was flat in overnight trading and then moved slightly higher after the US jobs data because what's good for the US is good for the Canadian economy.

Bernanke in Denial

Debating whether now is the time to sound the inflation alarm, with Robert Reich, former Labor Secretary and Steve Forbes, Forbes Media chairman/editor in chief.

Political Revolt in Europe; No More Bailouts Cries Get Louder

The political landscape of Ireland was completely changed after last weeks federal elections and German Chancellor Angela Merkel's party was trounced at last month's regional elections in Hamburg.

It has become very clear that supporting the Euro demands hugely unpopular bailouts or grueling austerity measures, which means sacrificing your political career. Faced with this dilemma, I wouldn't be surprised if more politicians opt for re-election and turn their back on the Euro. Read more here.

Morning Currency Wrap for Thursday March 3, 2011

Waiting on Trichet, On Deck US Jobs Data - On balance, German, French, and UK service PMI did not match the strength of the manufacturing PMI that were released earlier in the week. Surprisingly, the reading in the Italy, Spain, and Ireland were strong but the market is waiting to hear from ECB President Jean-Claude Trichet. The Euro ran past the 1.39 level and is priced for perfection right now because it is expecting the ECB to raise interest rates by two quarter-point hikes this year. If Trichet fails to warn that the ECB is ready to act soon to make sure high inflation does not become entrenched than look for the Euro to sell off. Once Trichet speaks the next focus for the Euro will be the self imposed deadline by the EU to address the sovereign debt crisis by month end. Meanwhile, the price of oil came off a little on news  that Libya's Muammar Gaddafi and the president of the Arab League had agreed to a peace plan supported by Venezuela's president, Hugo Chavez. This also caused some safe haven flows to reverse, so the CHF, Yen, and gold were all down. The market's next focus will be tomorrow US jobs numbers. After yesterday's ADP Employment change figures came in better than expected, the market is increasing its expectations for a good US jobs figure tomorrow. Even if we do get a great number, let's keep in mind that job creation needs to average 300K a month before the Fed is ready to raise interest rates. In Canada, the CAD was little changed from yesterday's close and with no market moving data out of Canada today the market is expected to track global sentiment.

Change is Afoot as Cross-Border Renmimbi Trade Flourishes

Chinese banks are expecting exponential growth in cross-border renminbi trade settlement as more companies in China and around the world choose to pay and be paid in the Chinese Renmimbi. In fact, Japanese company, Sony, announced on Tuesday that it had established a currency trading operation in Hong Kong in order to facilitate trade settlement in Renmimbi. Read more on this here.

Currency Humour, Sort Of

Morning Currency Wrap for Wednesday March 2, 2011

Kiwi Sags; Save Haven Flows Continue - The story today is that NZD, aka the kiwi, fell to the lowest level this year after Prime Minister John Key said he welcomed a cut in the nation’s benchmark rate to bolster the economy following last month’s earthquake in Christchurch. The earthquake may have caused as much as NZ$20 billion of damages. The market is now pricing in a cut of 25 basis points at its meeting on March 10, with an outside chance of a 50-basis point reduction. Meanwhile, the Euro continued to be bid up by expectations of higher interest rates, especially after euro zone rose at its fastest clip since September 2008. Factory-gate prices in the euro zone jumped 6.1% from a year earlier, after increasing 5.3% in December. The ECB meets tomorrow and will probably signal that it intends to end its provision of unlimited 3-month funds. This move would be a precursor to eventual rate hike. Keep in mind that measure to address the European sovereign debt crisis will be worked out this month and should restrain the upward movement in the Euro until a comprise is agreed to. Elsewhere, safe haven flows continue to flow towards the CHF, Yen, and gold as the North Africa and the Middle East situation simmer. There were reports yesterday that Saudi Arabia was sending tanks to Bahrain, which were latter denied. The market is nervous the crisis could spread and engulf key oil producer Saudi Arabia with its planned Day of Rage protests on March 11. In the US today, the USD stayed within its overnight ranges after a report showed US private employers added more jobs than expected in February. The Ben Bernanke show continues on capital hill today as he reports to the House of Representatives at 10:00 am. He is unlikely to offer any new take on the economy or its outlook after signally yesterday that he’s in no rush to tighten credit after the Fed finishes an expansion of record monetary stimulus, seeing little inflation risk and still-slow job growth. In Canada, the CAD lost a little ground yesterday after the Bank of Canada's policy statement, but managed to claw back some of its losses today as oil prices continued to advance surpassing the $100 level yet again.

Treat Gold as a Hard Currency

Beat Wittmann, CEO & partner at Dynapartners, explains why he is bullish on gold and hard currencies such as the Singapore dollar, Norwegian krone & Swiss franc.

Euroview: A Swedish Star is Born

As geopolitical tensions rise, the Swedish krona, which has escaped much of the financial crisis fallout and is likely to benefit from the continued hiking of rates, is looking more attractive.