Daily Letter

The Letter was last Updated:         11/10/08 23:55 ET


Market View          ==        NEUTRAL

Stocks finished lower again today after a late day rally attempt failed to push the major indices into the green.
The Dow ended 2% lower while the S&P closed 2.2% below its previous close. News about a new government
program to limit foreclosures gave a little boost to battered stocks but investors quickly sold into strength and
raised more cash. Volume was higher than the previous day but still below average for this time of year.
Everyday now we hear more talk about bailouts and more companies trying to get capital from the government
to be able to survive the current crisis. But it remains to be seen if there will be enough money to supply all the
current demand. So far the US Dollar is holding up pretty well as investors repatriate their money to the US
from emerging markets and foreign governments still willing to buy US debt.

Read our previous day commentary.

Daily performance of our Model Portfolio.



Recommended Stocks and ETFs (by Sector, Industry, or Country)

1. TECHNOLOGY

AMZN  ADBE

2. HEALTHCARE

AMGN

3. SMALL CAPS

UWM

4. FINANCIALS

MA  XLF

5. CONSUMER PRODUCTS

AVP



Investing Tip Of The Week

How to buy a stock or ETF? When establishing a new position, never invest all the money you are allocating
for the stock all at once. Even the greatest traders can’t predict the exact bottom and most likely it will go lower
after you buy. We recommend buying half the position or less at first, and then after a couple of weeks, if the
stock is up or down slightly, then buy some more. If the stock moves considerably lower (around 8-10%) after
you buy it, then you should sell. If the stock breaks out (up more than 5%) right after you buy it, then wait for
the first pullback and buy more.





Notes on how to read our Stock Newsletter:
1. We update our letter every night after the market close (except for the trading updates during the day), usually around 23:00 ET or earlier.
2. Our Stocks and ETF recommendations are not meant to be used for Day Trading purposes. We won't try to call the market direction for one
particular day.
3. Our market view reflects our sentiment on the overall market. It can be one of three states: BULL, BEAR, or NEUTRAL. We only recommend
buying stocks when the sentiment is BULL. BEAR means that we recommend selling stocks and staying in cash (or short stocks in some
occasions). When we are neutral on the market, it usually means that the sentiment is changing and we will indicate if it is positive or
negative in our commentary but we don't recommend buying at that point.
4. Our stock and ETF picks will be colored in Black, Red, or Green. Black means that we like the stock and we don’t think it is necessarily
cheap or overpriced. In that case, we recommend buying on light pullbacks. Red means the stock is overpriced in the short term and we don’t
recommend starting a new position. However, color Red doesn't mean we recommend shorting or selling an existing position. Green means
that the stock is at an attractive level to buy, either because it has pulled back to support levels, or it is bottoming out from a steep decline.
5. When we drop a stock or ETF from our list, we usually are recommending that you sell the stock



* Investing in stocks is risky and can lead to financial loss. Past performance is not indicative of future results. We do not assume responsibility
for any profits or losses when trading stocks listed on our website. The information on this website is meant to be used as an additional tool to
assist you in your trading decisions.

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Dollar Versus the Euro

Dollar little changed versus euro after China plan
Reuters, Monday November 10 2008
By Vivianne Rodrigues

NEW YORK, Nov 10 (Reuters) - The U.S. dollar was little changed against the euro on Monday after falling earlier in the session as news of a large economic stimulus package from China made some traders more willing to take on risk.

Courtesy: sneijers.net

Initial optimism quickly faded, however, as U.S. stocks surrendered early gains on concerns that China's plan may not be enough to help avert a global recession, helping the safe-haven yen regain some strength versus the greenback.
China launched an economic stimulus package on Sunday worth nearly $600 billion in what could mark the start of a round of big spending or interest rate cuts to stave off a recession in many countries.
"The initial reaction to the announcement … to read the full story, please follow this link:

Courtesy: UK Currency | Reuters

World Finance

Emerging economies want new role

The G20 says there must be a global solution to current problems

World finance chiefs are looking to increase the role of emerging nations, as part of reforms to tackle the current crisis.

Finance ministers and central bank presidents from the world's 20 major economies have been meeting at a G20 summit in Sao Paulo in Brazil.

World Bank President Robert Zoellick said countries see the need for better coordination towards economic issues.

"All of us know it's a meeting at a time of historic challenge," he said.

"The food and fuel crises of the recent years have now been supplemented by the blow of a financial crisis. Virtually no country has escaped... all countries are moving into a danger zone."

'Developing country voices'

Emerging nations want to see the G20 grouping - which includes the G7 and the BRIC countries (Brazil, Russia, India, China) plus others - enhanced and also elevated to a heads-of-state and heads-of-government level, above the present finance ministerial status.

In October Mr Zoellick said the G20 system was "too unwieldy". In Brazil, he has now said that a new grouping of nations must emerge.

"We need to modernise the multilateral system to bring in the important developing country voices such as Brazil... I think over the next two years we are going to see some real changes to the global system," he said.

Brazil and other emerging-market nations do not feel that under the current set-up they have sufficient representation within bodies like the IMF and the World Bank.

France is suggesting bringing emerging economies on board as members of the G8 club of industrialized nations.

'Real change'

Brazil's President Luiz Inacio Lula da Silva said there was acceptance the G7 group of elite nations was no longer capable of working alone.

"It is time for a pact between governments to build a new financial architecture for the world," he said.

"This is a global crisis and it demands global solutions."

He said nations must "avoid temptations to take unilateral measures," and stressed that "new universal mechanisms are needed" that have to be worked out in concert.

"The crisis gives an opportunity for real changes," he said, adding: "We cannot, we must not and don't have the right to fail."

On Friday the Bric nations had called for reform of institutions like the IMF to give more influence to developing economies.

China and the Gulf states have trillions of dollars in reserves that could help the IMF help smaller countries withstand the present turmoil.

Courtesy: Currency UK | BBC News

Euro Poll

Euro poll question revealed
 

Mr Brown will examine euro case next year

The referendum question the UK may use if a vote is held on joining the euro has been published by the government.

The question, revealed in the government's draft euro referendum bill, is: "Should the United Kingdom adopt the euro as its currency?"

Gordon Brown announced the paving bill in his pre-Budget report speech to MPs.

Downing Street on Thursday played down suggestions that the bill meant Tony Blair wanted a referendum on the same day as a general election.

Vote coincidence?

The chancellor announced in June that the UK had yet to meet his five economic tests for joining the single currency.

The government says the new bill gives "maximum flexibility" over holding a referendum if the tests are passed.

Ian Davidson, chairman of Labour Against the Euro, said the bill included a clause specifically stating that a euro vote could be combined with an election.

 

The MP warned: "Plans to hold a euro referendum on the same day as a general election are another sign of desperation by the euro enthusiasts.

"In their zeal to bounce Britain into the euro, they are willing to place at risk Labour seats and votes.

"A Labour Party seeking re-election would be deeply divided in a referendum, while the Tories would be handed the bonus of a campaign in tune with the majority of British voters."

'Ruled out'

But Downing Street said the government's stance had not budged since Mr Blair was questioned about the idea in May.

He had told reporters: "I have never had the idea of holding a referendum on the same day as the general election."

A Number 10 spokesman said: "The position has not changed. It is pretty categorical in terms of ruling it out."

The timing of the draft bill's publication has prompted Conservatives to accuse ministers of trying use the diversion of the pre-Budget report on Wednesday to hide the "controversial" wording of the referendum.

Tory constitutional affairs spokesman Alan Duncan said: "The government are back to their old tricks of trying to 'bury bad news'.

"The proposed referendum question breaches Electoral Commission guidelines on fair wording. It makes no mention that the pound would be replaced if people vote 'yes'.

"A fair question would make clear the implications for our existing national currency.

"The government are using sleight of hand to hide a euro referendum fix."

'Guidelines followed'

Mr Brown has said he will reveal in his Budget next year whether he thinks there is a case for another assessment of possible UK-membership of the euro according to his five economic tests.

In his statement on the single currency to MPs in June, Mr Brown said four of the five tests had yet to be met - the one relating to financial services being the only one to get the chancellor's approval.

But he said progress on passing two of the tests - on economic flexibility and convergence with the eurozone - would lead to the remaining two tests being satisfied.

The Department for Constitutional Affairs said the question had been drafted using Electoral Commission guidelines.

The Commission - which has a statutory obligation to assess the question - will formally review it when the bill is introduced into Parliament.

That would only happen if the Treasury decided its convergence criteria had been met and the economic conditions were right for Britain to lose to the pound.

Cabinet and then Parliament would then have to approve the decision before it went out to the British people.

 

Courtesy: Currency Dollar / Pound | BBC News

Dollar Fall Against the Pound

Dollar Falls on Speculation Jobs Report Will Spur Fed Rate Cut
By Lukanyo Mnyanda and Stanley White

 Nov. 7 (Bloomberg) -- The dollar fell against the yen and the euro on speculation a government report will show the U.S. economy lost the most jobs since 2003, bolstering the case for the Federal Reserve to lower interest rates.

The U.S. currency also declined versus the British pound as ... for the full story please follow this link:

Courtesy: Convert Currency UK | Bloomberg

Strong Dollar Policy

Obama win cements need for strong dollar policy
Reuters, Wednesday November 5 2008

By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 5 (Reuters) - With Democratic Senator Barack Obama headed to the White House, the U.S. dollar looks poised to continue its four-month rally over the coming months, especially if the new administration embraces a strong currency policy to help attract much-needed capital inflows.

Under Obama, the United States will have to sell a raft of new debt to maintain funding for two wars, pay for a massive bailout package aimed at unlocking tight credit markets and fund a potential second stimulus plan.

Attracting investors to new U.S. debt will be a top priority, and a strong dollar will be crucial in luring fresh cash into the United States.

To read the full story please follow this link:

Courtesy: Online Currency Exchange | guardian.co.uk | reuters

Obama Victory and Currency Changes Instantly

Dollar Gains Against Euro After Obama Victory in U.S. Election
By Stanley White

 Nov. 5 (Bloomberg) -- The dollar gained against the euro on speculation Barack Obama's victory in the U.S. presidential election and Democrat gains in Congress will accelerate policies aimed at overcoming a recession.

The currency also rose against the British pound and the Australian dollar as television networks projected 338 electoral votes for Obama to 156 for Republican rival John McCain, who conceded defeat. To read the full story, please follow this link:

Online Currency Exchange

Courtesy: Euro Currency News | Bloomberg.com

Central Bank to the World

The Fed as a central bank to the world– Jacqueline Thorpe, Financial Post  Published: Sunday, November 02, 2008

The U.S. dollar's status as the main currency of international and central bank business has barely been tarnished by the whole sorry credit crisis.

Nicolas Sarkozy may be pushing for a new financial order but Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson have beaten him to it.

While the French President dreams of global economic cooperation ahead of the G20 summit in Washington, the Fed is quietly becoming central bank to the world, backed by the full might of the U.S. Treasury and a teflon-coated greenback.

Last week saw a new program added ... to read the full article, please visit this link:

Pounds Converter

News Courtesy: Euros | financialpost.com

Dollar's uptrend

Dollar's uptrend against rivals has dark side

By Lisa Twaronite, MarketWatch
Last update: 6:00 a.m. EST Nov. 2, 2008

It was only July 15 that the euro hit a new record high of $1.6036 -- its loftiest level since the single European currency began trading in January 1999. Since then, it's dropped to trade at levels below $1.300.

In October alone, the euro as well as the British pound sterling fell more than 9% against the dollar, and the Australian dollar plunged more than 16% against the greenback. The Canadian dollar lost over 14%. As credit conditions tightened, equities sold off and fears of global recession rose, the resulting flight-to-safety flows favored the dollar over all but the even lower-yielding Japanese yen.

Cheaper imported goods - and therefore less inflation - may be good news for consumers here, but the resurgent greenback has a dark side, too. As worldwide economic growth slows, the stronger dollar makes exported American goods more expensive in overseas markets, and can hurt companies' global market share at a time when they can least afford to lose it.

The stronger currency also will discourage buyers holding other currencies from snapping up bargains at fire-sale prices, which is bad news for lenders hoping to unload all those foreclosed vacation homes.

"Europeans will no longer be looking at the U.S. housing market as a value. Now that the dollar is strong, it will sap foreign demand for U.S. goods which could slow the U.S. economy even further," said Kathy Lien, director of currency research at GFT.

"An overly strong dollar at a time when growth is weak should be very concerning for the U.S. Treasury. They did not complain about the prior weakness in the dollar because they knew that a softer currency was needed to avert a deeper slowdown," she said.
To read the full article, please follow the link:

Courtesy: UK Currency Broker | marketwatch.com

Russia reserves drop past $500 bln as rescue takes off

By Gleb Bryanski

MOSCOW, Oct 30 (Reuters) - Russia's gold and foreign exchange reserves fell below the $500 billion mark for the first time in eight months, data showed on Thursday, suggesting the Kremlin's cash is starting to flow into the economy.
The central bank data showed reserves fell $31 billion in the week to Oct. 24 to stand at $484.7 billion. Traders told Reuters the central bank spent only $13 billion propping up the rouble during the last week.
"A stunning one-week drop, more than twice the fall in the previous weeks," said Anna Zadornova from Goldman Sachs.
The rating agencies are closely watching Russia's reserves, which are dwindling as the central bank burns foreign currency in daily market interventions. Many analysts say such policy is unsustainable and Russia will soon devalue the rouble.
Credit ratings agency Standard & Poor's, which cut Russia's outlook to negative from stable last week, warning of the costs of bailing out troubled banks and a rising risk of a budget deficit, declined to comment.
"The drop in reserves corresponds to a potential drop in the total foreign debt, so I do not see a drama there," said Yevgeny Nadorshin, analyst at Trust Bank.
The euro, which accounts for about 40 percent of Russia's reserves, weakened by 6 percent against the dollar, which accounts for about 49 percent. Sterling, which makes up about 10 percent of reserves, also weakened versus the U.S. unit.
That also contributed to the fall of reserves, whose total value is calculated in dollars.
UNDER ATTACK FROM POPULATION
Russia also plans to use $50 billion of its reserves to help corporations redeem their foreign debt. United Company RUSAL, owned by Russia's richest man Oleg Deripaska, on Wednesday became the first beneficiary, securing a $4.5 billion loan.
The government has also disbursed around $3 billion to billionaire Mikhail Fridman's Alfa Group and state oil major Rosneft to help refinance their foreign debts.
The central bank plans to transfer the cash in small tranches to state-owned VEB bank, also known as Development Bank, tasked with administering the package. Reuters sources said VEB's board approved loans worth a total of $7.9 billion.
The central bank has spent tens of billions of dollars of its reserves since August to prevent the rouble from weakening beyond the 30.41 level against a euro-dollar basket.
Several of the western banks investing in Russia said last week they expect the central bank at some stage to allow the rouble to depreciate.
"We expect the central bank to continue to support the currency in the near term by defending the rouble in an effort to calm the population's fears ... and because it perceives itself to be under speculative attack from the markets," Goldman's Zadornova said.
From last week, the bank introduced daily limits on currency swap operations in a further bid to deter speculators from betting on a fall in the rouble. On Thursday, the day's swap limit was set at zero for the first time.
The central bank also told commercial banks to keep a lid on growth in their foreign currency denominated assets in a bid to stop currency speculation and a flight from rouble deposits, which accelerated sharply in October.
The central bank warned it will monitor the banks' compliance with the instruction and make decisions to grant individual banks collateral-free loans based on the results of the monitoring.
"We believe the currency is mainly under attack by the Russian population," said Zadornova.
The rouble gained four kopecks versus the currency basket to trade at 30.34 by 1255 GMT, possibly drawing some cheer from this week's resurgence on Moscow's bourses. (Additional reporting by Toni Vorobyova and Yelena Fabrichnaya) (Reporting by Gleb Bryanski; Editing by Andy Bruce)

Courtesy: Currency Conversions Online | Reuters | guardian.co.uk

Currency News November

Australian dollar survives wild week
By Stephen Johnson | November 02, 2008

WATCHING the Australian dollar last week was like being on a rollercoaster ride after lunch.

The currency, known in foreign exchange markets as the  "Aussie'', dropped to a five-and-a-half year low on Tuesday as fears of a global recession spooked traders.

But two days later the resilient Aussie battler, the world's fourth most traded currency, had staged a 15 per cent comeback.

Optimistic market strategists say the Australian dollar is undervalued and could test US80c again by Christmas as a recovery in commodity prices and a renewed confidence in financial markets makes risk-sentiment currencies more attractive.

Conversely, a London-based currency strategist says that in a worse-case scenario the Australian dollar could sink to US40c, a level below the all-time low of US47.78c touched in April 2001.

To read the full story, please follow this link:

Courtesy: Online Currency | theaustralian.news.com.au

BOJ keeps hand out of currency jar
Sunday, Nov. 2, 2008 |

October despite the yen leaping to its strongest level in more than 13 years against the dollar, the Finance Ministry said.

The ministry did not conduct currency intervention via the Bank of Japan from Sept. 29 to Oct. 29, and hasn't done so since March 17, 2004.

On Oct. 24, the dollar briefly entered the upper ¥90 range in London for the first time in 13 years and two months as prospects darkened for the global economy.

The Group of Seven economies expressed concern about the yen's rapid appreciation versus the U.S. dollar and other major currencies in an emergency statement released Monday — at the request of the BOJ.

Currency policy is controlled by the Finance Ministry, with the Bank of Japan acting as its agent.

Tokyo conducted sales of more than ¥35 trillion in the 15 months from January 2003 through March 2004 to stem the yen's sharp rise against the dollar. A stronger yen hurts exports, the main engine of Japan's economic growth.

Courtesy: search.japantimes.co.jp | Currency Abroad

NT dollar enjoys biggest weekly gain since March
FOREIGN EXCHANGE: Although the NT dollar on Friday pared its solid advance for the week, it contributed to regional currency strength, an IDEAglobal analyst said

Sunday, Nov 02, 2008, Page 10

The New Taiwan dollar had the biggest weekly gain against the greenback in eight months on speculation governments around the world will provide further support measures to stem the deepening global economic slump.

The NT dollar gained 1.2 percent this week after the IMF said it has sufficient money available to meet current demand for loans from member nations. US Federal Reserve Chairman Ben Bernanke signaled he’s ready to cut the benchmark interest rate to the lowest level on record, after a half-point reduction to 1 percent.
 To read the full story, please follow this link:
Courtesy: Exchanging Money Abroad | Bloomberg | taipeitimes.com

 

US Dollar Comeback

US dollar makes comeback, 'bucking' world downturn
Amid wreckage of the US financial system, the battered buck makes surprise comeback

October 29, 2008: 06:24 PM EST

The stock market is in shambles, credit markets are squeezed and corporate earnings are cratering. But one piece of the mangled U.S. economy is making an improbable comeback: The once-almighty dollar.

As the financial meltdown clobbers world economies from South America to Asia, investors desperate for safe assets are plowing money into the battered buck _ helping it snap a six-year slide and reclaim its long-held status as a stable asset during rough times.

"The dollar has become the safe-haven play," said Kathy Lien, director of currency research at Global Forex Trading in New York. "It's a pretty monumental move we're seeing."

Trouble is, a resurrected greenback may not be a good thing.

While a stronger dollar makes vacations overseas and commodities like oil cheaper for Americans, it also makes U.S. exports more expensive. That could deepen the U.S. downturn by hurting companies from Boeing Co. to Caterpillar Inc. and Coca-Cola Co. that get an increasingly big chunk of their earnings from overseas.

Still, the dollar's recovery is stunning for a currency that until recently was considered the dog among its main rivals. After reigning supreme as the world's dominant reserve currency for decades, the dollar began a steep decline in 2002, buckling under the weight of costly wars in Iraq and Afghanistan and an economy with an $800 billion annual trade deficit.

Falling U.S. interest rates this year sped up the dollar's decline until it took $1.60 to buy one euro at one point this summer. Shortly after the euro was introduced in January 2002, it took only 88 cents to buy one euro.

Now, suddenly, the buck looks safe by comparison. to read the full story, please follow this link:

Courtesy: UK Currency News | money.cnn.com | NEW YORK (Associated Press)

Yen Rises against Dollar and Euro

Oct. 29 (Bloomberg) -- The yen rose against the dollar and the euro after U.S. stock futures fell, prompting investors to pare holdings of higher-yielding assets funded with Japan's currency. To read more please follow this link:

Dollar – Euros – Pounds – Yen

Courtesy: Convert Currency | Bloomberg.com

Dollar and The Silver Lining

Dollar the silver lining of cloudy finances
Kathleen Pender
Monday, October 27, 2008

One of the few things going up since the financial meltdown began? The U.S. dollar.

Around midyear, as the credit crisis intensified, the dollar ended its seven-year losing streak and started rising against most currencies except the Japanese yen, which is soaring for reasons I'll get to below.
Net Worth

More Net Worth »

Since June 30, the greenback is up 26 percent against the euro, 28 percent against the British pound and 59 percent against the Australian dollar... To read more, please follow this link:

Currency Broker

Currency News October 27

India Morning Call - Global Markets
Mon Oct 27, 2008 8:06am IST

FOREIGN EXCHANGE

NEW YORK - The U.S. dollar surged to two-year peaks versus a basket of currencies on Friday as dismal economic data from Europe reinforced fears of a global recession, adding to a selling frenzy on world stock markets.

The yen soared to multiyear highs versus the dollar and euro on the ensuing risk aversion, while at the low the British pound suffered its biggest one-day percentage drop against the U.S. currency since September 1992, according to Reuters data.

For Full Story, Please follow this link: Foreign Exchange

Economic rout seems to take on a life of its own
By Jeremy Gaunt
Published: October 26, 2008

LONDON: The big question facing investors across the world this week is, "How long will this go on."

The U.S. Federal Reserve Board is widely expected to cut interest rates sharply, corporate earnings reports will flow in and many investors will be looking at the preparations for a global financial summit meeting next month, and even the U.S. presidential election.

But the sell-off/panic/rout - call it what you will - on stock markets and foreign exchange last week and in the months preceding has become so severe that it is almost gaining a life of its own outside of events.

For Full story, please follow this link: Currency Online

Yen gains, Nikkei hits 26-yr low as markets suffer
Monday October 27 2008

* Yen rises near 13-yr high vs dlr, all-time high vs Aussie
* Yen gains trimmed as stocks attempt recovery, EM FX rise
* RBA confirms Aussie-buying Friday, says will intervene
* Japan set to offer market help, IMF aids Ukraine, Hungary
By Eric Burroughs

TOKYO, Oct 27 (Reuters) - The yen climbed back near a 13-year peak against the dollar on Monday and an all-time high versus the Australian dollar as more investors dumped stocks and higher-yielding currencies on fears of a deep global recession.

But the yen relinquished some early gains as Japan's Nikkei share average tried to mount a recovery from an early drop to a 26-year low and emerging market currencies such as the South Korean won pushed higher.

For full story, please follow this link: Euros | Pounds | Dollars

Currency Crisis

GLOBAL ECONOMY
‘A Full-Blown Crisis’

Emerging markets were supposed to save the world with their fiscal responsibility. So much for that.
By Stefan Theil | NEWSWEEK

Last week seemed to be the nail in the coffin of "decoupling," a theory that said increasingly savvy and solvent emerging markets would no longer march in economic tandem with more-developed nations. As the global financial crisis deepened, South Korea announced a $130 billion bailout for credit-starved banks and companies, Ukraine canceled elections amid a growing national crisis over frozen credit markets and a plummeting currency, and Pakistan asked the International Monetary Fund to arrange emergency financing amid the country's worsening economic meltdown. All this came after a torrent of ratings and outlook downgrades by agencies like Fitch and Moody's on former shooting stars such as India, Vietnam, Hungary and Argentina.

What happened? Only a few months ago...

To read the full story please follow this link:

Courtesy: Online Currency Exchange | newsweek.com/id/165771/page/2

Partners: Foreign Currency Online | Exchanging Pounds | Fx-Trading

Dollar and Yen Soar

By MARK LANDLER and VIKAS BAJAJ
Published: October 24, 2008

WASHINGTON — Fear that the financial crisis is infecting once-healthy economies created another white-knuckle day for investors Friday, causing stocks to tumble from Tokyo to New York.

Dealers at a currency exchange in Tokyo. The yen drove down currencies in emerging markets.

Uncertainty also roiled currency markets as investors continued to turn to the security of the United States dollar and the Japanese yen and drove down currencies of developing countries like Brazil, Ukraine and South Korea and even of developed countries like Britain.

In the United States, where the crisis began, investors were less alarmed than elsewhere. A rout in Asian and European stock markets sent the Dow Jones industrial average swooning by more than 500 points in early trading in New York, but trading recovered enough ground through the day to leave the Dow down 312.30 points, or 3.6 percent.

Just a year ago, a drop of that size would have been considered a black day in the markets, but in these days of routine triple-digit declines, it offered a modicum of relief to traumatized investors.

Still, there were chilling new developments that attested to the wide scope of the crisis, despite efforts by heads of state, central bankers and corporate leaders to stop the bleeding. Cash flowed into the dollar and the Japanese yen, the two most sought-after safe havens in a storm-tossed world, as it fled from emerging markets.

To read the full story… Please follow this link:

Convert Currency

Article courtesy: nytimes.com/2008/10/25/business/25currency.html?pagewanted=2&_r=1&ref=worldbusiness

Other News Partners: Currency | Forex | Day Trading

Australian Dollar Plummets

Dollar plummets to 6-year low against yen
October 24, 2008 - 7:21PM

The Australian dollar fell this week to the lowest levels against the yen in at least six years as investors sold higher-yielding assets.

The currency headed for its third weekly drop this month as Asian stocks slid on signs the world economy is on the brink of a recession. Investors bought back yen they borrowed in so-called carry trades used to purchase assets offering higher returns in Australia.

The dollar also fell versus the US currency as the price of commodities the countries export plunged on concern demand will falter.

``What you have is the global economy going down, commodity prices coming off and the old theme of global de-leveraging,'' said Thomas Harr, a senior currency strategist at Standard Chartered in Singapore. ``All of these issues are negative for the Aussie and the (New Zealand dollar) and positive for the yen.''

Australia's dollar dropped 13.7% this week to 60.42 yen in Sydney from 70 yen on October 17 in New York. It earlier reached 60.17 today, the lowest since October 2001.

The Australian dollar fell 7.3% to 63.84 US cents from 68.88 cents in New York on October 17.

Risk aversion

``The Aussie is always seen as a proxy for risk aversion and emerging currencies in these times,'' said Gregg Gibbs, a currency strategist at ABN Amro Australia in Sydney. ``It's a liquid currency that offers scope to get in and get trades done when people are fearing the worst.''

Australia's dollar has dropped 31% against the yen and 23% versus the US dollar in the past month, the second-biggest losses of the 16 major currencies, as increasing signs of a global recession hammered stock and commodity prices.

The Australian dollar still ``targets'' the 2000 low of 55.52 yen based on charts that predict price movements, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London. Daily momentum indicators such as the stochastic oscillator chart have ``turned lower again,'' Edgeley wrote in a research note yesterday.

Australia's S&P/ASX 200 Index of shares has declined 39% this year, joining a rout in global equities. Asian stocks tumbled after South Korea's economic growth weakened, deepening concern a global slowdown is hurting profits.

Commodities

The UBS Bloomberg Constant Maturity Commodity index of 26 raw materials dropped for a third day yesterday and is down 24% for the year. Raw materials account for 60% of Australia's exports.
The VIX volatility index, a gauge reflecting expectations for stock-market price changes and risk appetite, was at 67.80 compared with a record high closing price of 70.33 on October 17.

Benchmark interest rates are 6% in Australia, compared with 0.5% in Japan and 1.5% in the US, making its assets a favorite for carry trades.

In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the two. The risk is that currency moves erase those profits.

RBA

The Reserve Bank of Australia will lower rates by 1.60 percentage points over the next year, according to a separate Credit Suisse index.

``We are now forecasting below-trend growth through to 2010,'' Tony Morriss, a senior currency strategist at ANZ Banking Group Ltd. in Sydney, wrote in a research note October 21. ``We now expect the Reserve Bank to cut rates further over coming months, toward a cash rate of 4.5%.''

Australian government bonds rose for a fifth day. The yield on the benchmark 10-year note fell 17 basis points to 4.91%, according to data compiled by Bloomberg. The price of the 5.25% security due March 2019 climbed 1.372, or $13.72 per $1,000 face amount, to 102.711. A basis point equals 0.01 percentage point.

Courtesy: Dollar-Euros-Pound | business.smh.com.au | Bloomberg News

Partners: Currency Online | Online Currency Exchange | UK Currency

India's Currency and the Yen...

Will Currency Futures become BIG in India?
2008-10-24 11:01:57

Currency news from India... Currency Futures, will they ever become big like other countries?

The many current restrictions — ban on participation of foreign players and outflow of funds, cap on volumes, margin requirement for trading, and so on — could certainly be playing the spoilsport. But, does this have anything to do with the currency futures in India being traded on a stock exchange, unlike in developed markets where these instruments are traded on the commodities exchanges?

Of course the National Stock Exchange (NSE) was responsible for bringing currency futures to India — so it wanted to keep the new platform to itself. Stock market regulator Securities and Exchange Board of India (Sebi) is probably better equipped to regulate trading activities than its counterpart for the commodities market, the Forward Markets Commission.

But, a large number of potential players in the currency futures market could be commodities traders, because as major exporters and importers, they need to hedge against fluctuations in rupee’s value. For them, however, taking positions on two different exchanges could be a tough task.

Maybe an answer to this is the MCX Stock Exchange, set up by the Multi Commodity Exchange (MCX) to trade in currency futures. Currency volumes at MCX-SX are picking up fast. NSE’s main rival, the Bombay Stock Exchange, too has approached Sebi to set up a currency trading platform. There were also media reports that some banks and other companies were working on a fourth platform.

That means, there would be no monopoly in offering currency futures and there could be more suitable options for the commodity traders. So far, the trading volumes have been very thin. So far proprietary trades by banks and other financial institutions dominated the show.

The market would need retail players to bring in liquidity. But that would take time as they need to get familiar with this instrument first. A group that could make the market more dynamic is big corporates. For instance, major information technology companies earn most of their revenues from abroad and currency fluctuations are a big threat to them.

But the cap on volumes – the $5-million-per-client limit imposed on participants – is a major hindrance for them. The absence of a full range of currency pairs is another barrier for the companies that operate in several countries. The current system allows only dollar-rupee trades, and more currency pairs, for instance rupee-euro, are needed for the instrument to become more attractive.

Meanwhile, NSE has indicated that it is planning to introduce rupee-yen, rupee-euro, rupee-yuan and rupee-pound futures as well. What is going to change is Reserve Bank of India’s role in regulating exchange rates – the market forces will discover the price in futures trade and that will influence the sport market.

But, as long as settlement prices are based on the RBI reference rate, the central bank can still have a major say in the way the rupee’s value moves.

Courtesy: Currency News + commodityonline.com/futures-trading/currency/When-will-Currency-Futures-become-big-in-India-93-1.html

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Yen Rises Above 95 Per Dollar, 13-Year High; Carry Trades Cut
By Stanley White and Ron Harui

Last Updated: October 24, 2008 02:46 EDT

The Yen... Hits a peak and reaches a 13 year high...

 Oct. 24 (Bloomberg) -- The yen climbed to a 13-year high against the dollar as the risk of a global recession prompted investors to slash carry trades, in which they fund purchases of higher-yielding assets with Japanese currency.

The yen also surged to the strongest in six years versus the euro after Belarus, Ukraine, Hungary and Iceland joined Pakistan in requesting at least $20 billion of emergency loans from the International Monetary Fund. The common European currency fell to a two-year low versus the dollar after Standard & Poor's Ratings Services threatened yesterday to cut Russia's debt ratings, adding to signs the credit crisis is spreading.

``I can't rule out the scenario where the yen rises even faster than I had anticipated,'' said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain's third- biggest lender. ``Speculators are unwinding carry trades. This risk aversion is coming from the credit crunch and the chance of a global recession.''

The yen rose to 94.77 per dollar, the highest level since Aug. 15, 1995, and traded at 94.84 at 7:40 a.m. in London from 97.31 late yesterday in New York. Against the euro, it climbed to 120.75, the strongest level since November 2002, before trading at 120.93 from 125.89. The euro bought $1.275 from $1.2934 yesterday, when it reached $1.2728, the lowest level since November 2006.

The yen touched a post-World War II high of 79.75 against the dollar on April 19, 1995, prompting the Group of Seven nations to intervene that year by buying the greenback to stabilize currency markets. The G-7 is comprised of Canada, France, Germany, Italy, Japan, the U.K. and the U.S. The yen may rise to 90 per dollar by the end of March, Umemoto said.

Carry Trades

The yen rose 7 percent this week against the dollar, the biggest gain since October 1998. It surged 13 percent against the euro, the biggest weekly advance since the 15-nation currency's 1999 debut. The euro headed for a 4.9 percent decline versus the dollar.

The Australian dollar fell 6 percent to 61.22 yen from late yesterday in New York. New Zealand's dollar declined by 4.7 percent to 55.21 yen. The two currencies are favorites for carry trades, where investors borrow in countries with low interest rates and invest in nations with higher rates. The risk is that financial-market moves erase those profits. Japan's target rate of 0.5 percent compares with 6 percent in Australia and 6.5 percent in New Zealand.

Volatility on one-month dollar-yen options, a measure of expectations for future price swings, rose to 28.14 percent, the highest since Oct. 13, indicating greater risk market moves may erode carry trade profits. It reached 32.175 percent on Oct. 10, the highest since Bloomberg began collecting data in December 1995.

Financial Turmoil

South Korea halted Kosdaq stock trading after the index slumped more than 11 percent following data showing the slowest economic growth in four years. A rout in global stocks has wiped out more than $10 trillion of market value this month.

Coordinated rate cuts by major central banks on Oct. 8 and financial system bailouts in the U.S. and Europe have failed to revive stock markets or encourage banks to resume lending. Australian three-month interbank borrowing costs rose 3 basis points to 5.89 percent, the highest since Oct. 15.

The pound fell to $1.5949 from $1.6230 for a 7.7 percent drop this week on speculation the Bank of England will lower interest rates to help avert a prolonged recession. Sterling earlier touched $1.5938, the weakest since September 2003. It slid as much as 3.4 percent on Oct. 22, the biggest intraday loss since September 1992, when investor George Soros helped drive the currency out of Europe's system of linked exchange rates.

U.K. Economy

U.K. gross domestic product rose 0.5 percent from a year earlier in the third quarter, slowing from a 1.5 percent pace of growth in the previous three months, according to a Bloomberg survey of economists. The Office for National Statistics will release the data at 9:30 a.m. today in London

The spread, or difference in yield, between two- and 10-year gilts was at 122 basis points, near the widest since October 1996, a sign traders expect the BOE to lower its 4.5 percent benchmark rates by year-end.

The euro and the pound may weaken as European and U.K. banks have five times as much loan exposure to emerging markets as the U.S. or Japan, with most lending to Eastern Europe, according to Morgan Stanley.

``Part of the reason why euro-dollar continues to drift lower has to do with the rising risk that pressures in Eastern Europe will have a negative boomerang effect on Euroland,'' London-based currency strategists Stephen Jen and Spyros Andreopoulos wrote in a research note yesterday.

Emerging Markets

European banks' lending to emerging markets is about 21 percent of Europe's GDP and U.K. banks' loans are around 24 percent of national output, compared with 4 percent for the U.S. and 5 percent for Japan, the strategists wrote, citing data from the Bank for International Settlements.

``There are concerns over country risk in Europe,'' said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan's biggest bank. ``Some currencies there appear to be under speculative attack because their banking sectors aren't sufficiently guaranteed by the governments.'' The euro may weaken to parity with the dollar by year-end, he said.

The Hungarian forint weakened by 2.5 percent to 221.79 per dollar, near a two-year low of 223.63. The Polish zloty fell 1.3 percent to 3.0415 per dollar, the weakest since January 2007.

Australia's dollar ``targets'' the 2000 low of 55.52 yen, based on charts that predict price movements, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London.

Daily momentum indicators such as the stochastic oscillator chart have ``turned lower again,'' Edgeley wrote in a research note yesterday. ``The Aussie-yen has scope to the 2000 lows at 55.52,'' he said, referring to the currency by its nickname.

Courtesy: Currency Exchange News + bloomberg.com/apps/news?pid=20601101&sid=aTUjwu8hm.vA&refer=japan

 

 

Today's Currency News in Brief

Currency Gambles Backfire

Huge Losses From Dollar's Gains Surface at Companies in Developing World

Currency is a gamble... But here is the classic backfire. A currency news snippet...

One day, Controladora Comercial Mexicana SAB de CV was thriving as Mexico's No. 3 retailer and a competitor of discount giant Wal-Mart Stores Inc. The next day, Oct. 9, the family-owned chain, known to Mexican shoppers as La Comer, had filed for bankruptcy protection, crippled by risky foreign-currency bets.

Such abrupt reversals have gotten more common these days. As global stock markets have plunged in recent months, so has the value of almost everything else, from Mexico's peso to the price of oil. That's left some companies that made big wagers on the direction prices were headed reeling from unexpected ...

Courtesy: Currency Charts + Wall Street Journal

 

Korea Could Give Currency Help, Jun Says
By Bomi Lim and Bernard Lo

Oct. 22 (Bloomberg) -- South Korea is ready to take more measures to restore confidence in its financial system if needed, including a package to shore up the economy, the nation's top financial regulator said.

"The follow-up measures any country can take now are fiscal stimulus packages, economic boosting measures,'' Jun Kwang Woo, chairman of the Financial Services Commission, said yesterday in an interview in Seoul. ``Korea is in the most comfortable position to do just that.''

The benchmark Kospi stock index and the won fell for a second day on concern government measures -- including 8 trillion won ($6 billion) to support the construction industry -- won't be enough to avert an economic slowdown. Growth probably slowed to a three-year low 3.6 percent in the third quarter, according to the median estimate of 12 economists surveyed by Bloomberg News.

"We certainly have the right kind of support mechanism to be used whenever it is needed,'' Jun, 59, said in the interview. ``Given the enormity of this current round of credit crunch around the world, we cannot live without having an adequate contingency plan.''

South Korea, saddled with a record current account deficit, pledged $130 billion, equivalent to 14 percent of gross domestic product, to support banks as the global credit crunch saps access to foreign funds. The government Oct. 19 agreed to give lenders access to $30 billion in U.S. dollars and guarantee $100 billion of foreign-currency debt.

Package Approved

The financial-aid package won the support of the three main credit ratings companies. Moody's Investors Service and Fitch Ratings yesterday affirmed South Korea's sovereign credit ratings. Standard & Poor's, which last week sparked the won's biggest one- day drop since 1997 by placing the five biggest banks on review for a rating cut, said the bank plan is more ``swift and broad'' than expected.

South Korea's central bank may buy debt from lenders, Finance Minister Kang Man Soo said today after a Korea Economic Daily report that the Bank of Korea may purchase 25 trillion won of local bank debt maturing by the end of the year.

"We expect there will soon be an action plan on details of buying bank bonds, Kang told lawmakers in Seoul.

South Korea joined the U.S., Europe and Australia in providing lenders with state backing after S&P warned that banks in Asia's fourth-largest economy may struggle to secure overseas funds.

Debt Ratio

President Lee Myung Bak said yesterday the global financial turmoil is worse than the 1997-98 Asian crisis that forced South Korea to accept an International Monetary Fund bailout.

"We are a lot better equipped than 10 years ago,'' said Jun, who earned a doctor's degree in finance at Indiana University in 1981. Korean companies have become more competitive globally over the decade, and banks' capital and asset quality remain sound, he said.

South Korea's debt ratio is near the lowest among major economies, according to the Organization for Economic Cooperation and Development. The country's financial liabilities stood at 28 percent of GDP in 2006, compared with Japan's 180 percent and 62 percent in the U.S., according to the OECD Web site.

South Korean banks' capital adequacy ratio stood at 11.36 percent at the end of June, compared with the U.S. average of 12.36 percent, according to the Financial Supervisory Service. Korean lenders' nonperforming loan ratio dropped to 0.7 percent at the end of June from three months earlier.

Loan Delinquency

The delinquency ratio on corporate loans rose in the third quarter as more small firms were late on payments, the watchdog agency said today. The delinquency ratio rose to 1.35 percent at the end of September from 1.22 percent at the end of June.

The chief executive officers of 18 banks in Korea met today and agreed to cut executive salaries and operating costs ``to share the pain of our people.''

The lenders will consider rescheduling debts and allowing borrowers to repay in installments, according to a copy of the resolution released by the Korea Federation of Banks.

The Kospi index fell 3.2 percent at 1:24 p.m. in Seoul, led by Posco, after Asia's biggest maker of stainless steel, said it will slash production as demand slows. The index has slumped 39 percent this year.

The won, Asia's worst performing currency this year, fell 3.1 percent to 1,361.50 to the dollar.

"We may need a stronger package to meaningfully reduce embedded risks in Korea's financial system,'' Morgan Stanley analysts including Chan Hwang wrote in an Oct. 20 report. They cited a potential slowdown in exports, a weakening outlook for consumption and financial deterioration at smaller companies as some of the risks Korea faces. Exports account to more than 50 percent of the Korean economy.

"It's always good to have preemptive measures,'' Jun said. "At the same time, we have to be careful about overshooting.''

Last Updated: October 22, 2008 00:27 EDT

Courtesy: Charts for Currency Conversions + Bloomberg