WORLD FOREX: Dollar Down Vs Yen But Jobs Data Pose Upside Risk

TOKYO (Dow Jones)--The dollar fell against the yen in Asia Friday as Japanese exporters sold the currency to settle accounts. But the decline was limited ahead of key U.S. non-farm payrolls data due later in the day.
Trading was subdued in Asia because most short-term-focused investors stood on the sidelines ahead of the 1330 GMT jobs data, which traders said would be a watershed for the greenback.
"Nonfarm payrolls will be crucial," said Calvin Tse, a strategist at Morgan Stanley.
Traders said the result is likely to surprise to upside, as recent U.S. economic data have beaten market expectations.
The non-farm payrolls number is forecast to increase by 144,000 in November from October, when it climbed by 151,000. The jobless rate, meanwhile, may stand unchanged at 9.6%, according to a Dow Jones poll of economists.
A strong jobs number would lead investors to expect the Federal Reserve to scale back its latest quantitative easing measures, and so is a definite positive for the U.S. currency, they said.
Barclays Capital senior Japan strategist Masafumi Yamamoto is one of many who expect a positive surprise, forecasting a 170,000 increase and a 9.5% jobless rate. If this view is correct, the dollar may rise to Y84.50, he said.
As of 0450 GMT, the U.S. unit was at Y83.70 from Y83.86 overnight in New York. The ICE Dollar Index, which tracks the U.S. currency against a trade-weighted basket of currencies, was at 80.262 from 80.203.
Meanwhile, the euro was again weaker against its U.S. and Japanese counterparts. It was at $1.3203 from $1.3225 and Y110.52 from Y110.95.
European Central Bank President Jean-Claude Trichet told Dow Jones Newswires in an interview Thursday that cheap money will continue to be easily available. His remarks were in line with expectations, but weren't enough to give the euro a sustained boost, dealers said.
They said there are no quick solutions to the ongoing European debt concerns, and that will keep weighing on the common currency for some time. The problem may even undermine investor confidence in the euro if the situation keeps worsening, dealers said.
"What happens next is a great concern to investors, as the currency union increasingly looks less sustainable over the long term," said Stephen Hull, a senior strategist at Morgan Stanley.
The house says the best way to play a weak euro is to buy the safe-haven Swiss franc. As of 0450 GMT, the euro was CHF1.3126, and Morgan Stanley targets CHF1.2800 in the short term.

Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT 
 
                         Latest     Previous   %Chg   Daily   Daily    %Chg 
                                    2150 GMT          High    Low      12/31 
 
USD/JPY Yen              83.69-70   83.86-88   -0.20  83.89   83.68   -10.09 
EUR/USD Euro             1.3201-05  1.3220-22  -0.14  1.3222  1.3194   -7.79 
GBP/USD Sterling         1.5591-96  1.5603-06  -0.08  1.5605  1.5582   -3.54 
USD/CHF Swiss Franc      0.9939-44  0.9921-29  +0.18  0.9950  0.9922   -4.01 
USD/CAD Canadian Dlr     1.0037-39  1.0029-32  +0.08  1.0044  1.0025   -4.53 
AUD/USD Australian Dlr   0.9753-58  0.9761-66  -0.08  0.9774  0.9741   +8.57 
NZD/USD New Zealand Dlr  0.7553-63  0.7549-59  +0.05  0.7564  0.7547   +4.09 
EUR/JPY Yen              110.47-53  110.86-91  -0.35  110.87  110.45  -17.10 
 
 

NFA publishes guide for retail forex traders

December 2, Chicago - National Futures Association (NFA) announced today that it has published a revised edition of its popular investor education booklet for consumers interested in the retail off-exchange foreign currency (forex) market. The revised publication, now entitled "Trading Forex: What Investors Need to Know", describes how the retail forex market operates, the risks involved in trading forex and how the market is regulated. The guide also includes a glossary of terms.

"We revised the publication to reflect the Commodity Futures Trading Commission's retail forex rules, which became effective on October 18," says NFA's Director of Communications and Education Larry Dyekman. "Among other things, the rules now require any retail forex introducing broker, money manager or pool operator to register with the CFTC and become Members of NFA. We believe that consumers should learn as much as they can about the market and how it is regulated before opening a forex trading account."

Single copies of the guide will be offered free of charge to the investing public. Individuals may order a free copy of the publication by calling NFA's Information Center at 312-781-1410 or 800-621-3570 or by emailing NFA at information@nfa.futures.org.

Individuals also have the option of viewing and printing the publication by downloading it from the Investor Information section of NFA's website (www.nfa.futures.org).

NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.

FOREX-Euro inches up

 TOKYO, Dec 3 (Reuters) - The euro's rebound from a 2-½ month low stalled on Friday, though it retained most gains made after talk of European Central Bank buying of euro zone periphery debt helped knock down those yields.

The immediate focus of the market moved to U.S. payrolls data later in the day, with a surprisingly strong U.S. housing number adding to budding optimism on the U.S. economy.

The euro nestled at $1.3220 EUR=, little changed on the day and floating well above a 2-½ month low of $1.2969 plumbed on Tuesday in the wake of massive selling in euro zone periphery government bonds.

"I suspect the euro has bottomed out in the near term and will test $1.33-34," said a trader at a Japanese brokerage house.

Its 100-day moving average, at around $1.3327, is seen as the next resistance level. More important resistance lurks in the $1.3334-64 area, its August peak and a 38.2 percent retracement of its June-November rally.

Traders said the ECB was buying Portuguese and Irish debt on Thursday, calming investor panic over euro zone debt for now, helping the single currency.

The sharp fall in the yields of Spanish, Portuguese and other countries' bonds offset initial disappointment after ECB President Jean-Claude Trichet did not explicitly commit the bank to ramping up bond buying.

As widely expected, the ECB extended nonstandard provisions, committing to provide unlimited one-week, one-month and three-month funding for vulnerable banks until at least April.

Forex Market :-Market Introduction :- forex history

Forex (Foreign Exchange) is the international financial market used for trade of world currencies. It has been working since 70s of the 20th century - from the moment when the biggest world nations decided to switch from fixed exchange rates to floating ones.

Daily volume of Forex trade exceeds 4 trillion United States dollars, and this number is always growing.

Main currency for Forex operations is the United States dollar (USD).

Main Forex market participants:

- Central banks of countries;
- Commercial banks;
- Investing banks;
- Brokers, dealers;
- Pension funds;
- Insurance companies;
- International corporations;
- Individuals.

Unlike stock exchanges, Forex market doesn't have any fixed schedule or operating hours - it's open 24 hours per day, 5 days per week from Monday to Friday, since buy/sell orders are performed by world banks any time during the day or night (some banks even work on Saturdays and Sundays). Just like any other exchange, Forex market is driven by supply and demand of a particular tool. For instance, there are buyers and sellers for "Euro vs US dollar".

Exchange rates at Forex are changing constantly, and fluctuations may happen many times per second - this market is very liquid.

Exchange rates are influenced by:

- Economical factors (economical indicators of countries at the moment, politics of Central banks, changing interest rates, behaviour of importers and exporters, etc);
- Political factors (speeches of political leaders, president elections, etc);
- Market participants' mood and feelings, their expectations, rumours, etc;
- Force-major events (terroristic acts, accidents, catastrophes, etc).

Nevertheless, Forex market is much more stable than stock exchanges - it is not subject to huge surges, even if one currency is declining, another one is improving.

One of big advantages of the market is its' close relation with latest information technologies. Clients from different parts of the planet may connect to Internet and start trading. Even big banks tend to use electronic trading - it's the most common way of trading now. At this moment, Forex is at the rapid developing phase, and it's expected to grow more and more in the future.

Some of the advantages of Forex market over stock markets and/or other equities include:

- Traders can make profits both on declining and developing economies;
- Traders can make very short-term orders - with some other markets there are certain regulations;
- Thanks to retail centers like "Forex 4 You", it's much easier to join Forex market - virtually no minimum capital, quick registration, etc;
- Market is not regulated;
- There are no broker commissions or they are very low;
- Much higher leverages are provided;
- Market works non-stop 24 hours.

Forex Market :- forex history

  Historically the value of goods was expressed through some other goods, for example - a barter economy where individuals exchange goods. The obvious disadvantages of such a system encouraged establishment of more generally accepted and understanded means of goods exchange long time ago in history - to set a common scale of value. In different places everything from teeth to jewelry has served this purpose but later metals, and especially gold and silver, were introduced as an accepted means of payment, and also a reliable form of value storage.

   Originally, coins were basically minted from the metal, but stable political systems introduced a paper form of IOUs (I owe you) which gained wide acceptance during the Middle Ages. Such paper IOUs became the basis of our modern currencies.

   Before First World War most central banks supported currencies with gold. Even though banknotes always could be exchanged for gold, in reality this did not happen that often, developing an understanding that full reserves are not really needed.

   Sometimes huge supply of banknotes without gold support led to giant inflation and hence political instability. To protect national interests foreign exchange controls were introduced to demand more responsibility from market players.

   Closer to the end of World War II, the Bretton Woods agreement was signed as the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.

   The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.

   The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.

   But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.

   The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.

   But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD 3,000 billion is traded every day, far more than the world's stock and bond markets combined.

forex :- Inventories released by the US

The Wholesale Inventories released by the US Census Bureau captures sales and inventory statistics from the second stage of the manufacturing process. The sales figures do not move the market as they do not reflect personal consumption while wholesale inventories may change the aggregate inventory profile which can influence the GDP forecast. A high inventory suggests economic slowing in the US, that is seen as negative (or bearish) for the USD, whereas a low reading is seen as positive (or bullish).

forex :- Germany consumer price index

The Germany consumer price index released by the Statistiches Bundesamt Deutschland measures the average price change for all goods and services purchased by households for consumption purposes. CPI is the main indicator to measure inflation and changes in purchasing trends. A high reading is positive (or Bullish) for the EUR, while a low reading is negative (or bearish).