BOC Withholds From Signaling Tightening

Recent headwind in global economic outlook should deter BOC's tightening schedule. We believe the central bank will leave the policy rate unchanged at 1% in September. Indeed, Fed's decision to keep interest rates at exceptionally low levels at least until mid-2013 and the increasing downside risks to inflation signaled the BOC will leave the overnight rate unchanged at least until mid -2012. That said, it's also unlikely for the central bank to trim interest rates as headline inflation remains high and the job market is robust.

GDP contracted -0.4% q/q in 2Q11, following a downwardly revised +3.6% expansion in the prior quarter as deterioration in US economy dampened exports. Domestically, growth remained strong with business investment and household spending showing decent growths during the quarter. Headline inflation eased to +2.7% in July, from 3.1% in June and +3.1% in May, due to lower energy costs and changes in tax policy. Yet, inflation stayed at the upper limit for BOC's target. Core CPI rose to +1.6% in July from +1.3% in June. Employment increased only +7K in July after growing more than +20K in each of the past 3 months but the positive sign came from full-time payrolls which continued to rise. The jobless rate slid to 7.2% from 7.4% in June and May.

At the opening statement before the House of Commons Standing Committee on Finance, BOC Governor Mark Carney said that several downside risks, such as the intensified Eurozone sovereign crisis, the downgrade of US credit rating and weakness in macroeconomic data, to the central bank's July MPR projection have been realized. While the spillovers to the Canadian financial markets have been less 'pronounced', the impacts are still 'notable'. Carney stated that 'the considerable external headwinds' are now 'blowing harder' and Canada will have to adapt to a world that is 'awash with debt' and it will 'take years' for the balance sheets to be repaired. As a result, risks to inflation have also skewed to the downgrade as a result of 'somewhat weaker economic momentum globally'. Yet, it reminded us that growth will continue with acceleration being seen in the second half of the year, led by business investment and household expenditures.

We expect the BOC will deliver a less hawkish statement in September. In the July meeting, the central bank stated that 'some of the considerable monetary policy stimulus currently in place will be withdrawn'. That appeared to be more hawkish than the May statement which stated ''some of the considerable monetary policy stimulus currently in place will be eventually withdrawn'. The BOC this month may withhold the tightening rhetoric as policymakers may prefer to gather more information regarding global economic developments.

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A Few Doves Favored More Easing Than Just A Guideline On Fed Funds Rate

The minutes of the August FOMC meeting unveiled that a few members believed the Fed should have done more at the meeting, given the economic developments. The range of tools that policymakers discussed to stimulate the economy included reinforcing forward guidance about the likely path of monetary policy, additional asset purchases, increasing the average maturity of securities holdings, reducing the interest rate paid on excess reserve balances. However, the preference of the above tools was not shown. Information received during the intermeeting period had led the staff to revise down the projection for real GDP growth in the second half of 2011 and in 2012 'notably'. Concerning inflation, policymakers believed headline inflation has 'moderated' as 'prices of energy and some commodities have declined from their earlier peaks'.

As the minutes stated, 'a few members' preferred 'a more substantial move at this meeting'. Some members favored additional easing as they expected 'the unemployment rate to remain well above, and inflation to be at or below, levels consistent with the Committee's mandate. However, they were willing to accept 'the stronger forward guidance as a step in the direction of additional accommodation' as this was 'a measured response to the deterioration in the outlook over the intermeeting period'. In choosing the time horizon of 'at least through mid-2013', members also considered 'conditioning the outlook' for the Fed funds rate on 'explicit numerical values for the unemployment rate or the inflation rate'. While some members said that stating an explicit time horizon would 'establish greater clarity regarding the Fed's intentions and its likely reaction to future economic developments', others questioned about 'how an appropriate numerical value might be chosen'.

Policymakers did not show preference on the stimulating tools but they 'agreed that the September meeting should be extended to two days' as more time is needed for discussion. Among the tools, we believe lengthening the duration of securities holdings would be preferable currently as it would lower longer term interest rates without needing to boost the size of the Fed's balance sheet.

As far as the economic outlook is concerned, most members downgraded their forecasts after taking information during the intermeeting period into account. In particular, the lower estimates of real GDP in recent years that were contained in the annual revisions to the NIPA led the staff to lower its estimate of potential GDP growth, both during recent years and over the forecast period, and to mark down further the staff forecast. Moreover, a 'couple of participants' worried that the 'exceptionally high level of long-term unemployment' could lead to 'permanent negative effects on the skills and employment prospects of those affected'. Concerning inflation, the members 'continued to expect prices to rise at a subdued pace in 2012'.

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Central Bank Forecasts: ECB Remains on Hold Through 2012

After rate hikes in April and July (each by +25 bps), ECB's main refinancing rate is now at 1.5%. We expect the central bank will remain on hold through 2012 given weakened growth and inflation outlook. Recent macroeconomic data have been disappointing. Eurozone's GDP growth eased to +0.2% q/q in 2Q11 from +0.8% in the prior quarter. Germany's economy expanded only +0.1% q/q while growth in France stalled. Manufacturing activities have shown signs of fatigue with manufacturing PMI slipping to 49.7 in August from 50.4 a month ago. while consumer confidence soured as there's no way out for the sovereign debt crisis. ZEW's survey showed that Eurozone's economic sentiment tumbled to -40 in August from -7 a month ago. The market had expected a pickup to -6.2. The index for Germany alone plunged to -37.6 from -15.1. Fiscal consolidative measures in debt-ridden economies will also weigh on growth. Diminishing inflationary pressures due to global economy downturn and easing commodity prices also make the central bank more comfortable in putting interest rates on hold. Tight fiscal and accommodative monetary stances will be the region's policy mix in coming years.

We currently expect Eurozone's GDP to grow +1.8% in 2011 before slowing to +1% in 2012. On annual basis, economic growth was as strong as +2.5% in 1Q11 but then deteriorated to +1.7% in 2Q11. Given the weaker prospect In global economic activities, the 17-nation region's exports will be hurt in the second half of the year. Together with domestic issues such as fiscal tightening and loss in consumer confidence which would result in shrinking household spending, Eurozone's outlook will be significantly weaker in the second half than the first half. Indeed, risks to our growth forecasts are skewed to the downside. Indeed, Both Morgan Stanley and Deutsche Bank trimmed their estimates to +1.7% for 2011 and +0.5% for 2012 last week.

Inflation moderated to +2.5% in July from +2.7% in June but remained above ECB's target of 'below, but close to, 2%'. High energy and food remained the key upward price pressures. In the second half of the year, inflationary pressures may ease as domestic demand weakens. Moreover, geopolitical turmoil in Libya is about to come to an end. This would resume the country's oil supply and alleviate the pressure coming from oil prices.

While we expect the ECB will keep interest rates low given moderating inflationary pressures and sovereign debt problems in the European periphery, it has few measures left to stimulate economic growth. The central bank may adopt rate cuts of -50 bps, thus return the policy rate to the unprecedented level of 1%. As far as non-standard measures are concerned, full allotments of LTROs and MROs remained in place. The ECB announced at the August meeting, Full allotment of fixed rate MROs will be continued for 'as long as necessary'.

President Trichet also signaled at the press conference that the Securities Market Program (SMP) has been re-activated. According to the latest report, the settled 14.29B euro in purchases of government bonds in SMP in the week ended August 19. This compared with the purchase of 22B euro in the prior week when the program was 'resumed' to stabilize Spanish and Italian bond yields. The ECB said it will drain 110.5B euro from the market at its weekly auction of one-week deposits. We expect the program will continue even after the EFSF has started operation. Given the small size of the EFSF, it may have limited capability to intervene through secondary purchases.

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BOE Voted Unanimously To Keep Rates Unchanged, First Time Since May 2010

The BOE minutes for the August meeting turned out to be more dovish than expected as 2 hawks, Spencer Dale and Martin Weale, stopped pushing for a rate hike, making the decision to hold the Bank Rate unchanged at 0.5% unanimous for the first time since May 2010. Adam Posen continued to favor expanding the asset-buying program by +50B pound to 250B pounds. The pound slid after the minutes as it's increasingly likely that the central bank will adopt further easing.

Policymakers acknowledged the slowdown in economic activities with the greatest downside risk coming from the Eurozone. As mentioned in the minutes, 'evidence of slowing activity, and more particularly, concerns about fiscal policy in the U.S. and the substantial challenges faced by the euro area, had resulted in stressed conditions in financial markets' and 'news over the month had generally reinforced the weak tone of indicators of global activity growth over the past few months'. Indeed, the BOE revised lower the growth forecasts for the UK in light of the current headwind.

It's rather unexpected that the Committee voted unanimously for the first time in more than a year to keep interest rates unchanged. Spencer Dale and Martin Weale, who had favored a rate hike of +25 bps, voted to maintain the Bank Rate at 0.5%. According to the minutes, the 2 members 'remained particularly concerned about risks to the upside associated with a sustained period of above-target inflation'. However, recent developments had 'weakened' the case of tightening.

As far as the asset-buying program is concerned, the minutes unveiled that some members 'considered whether there was a case for increasing' the size. However, the conclusion was that there 'was not yet strong enough' evidence to support the move. Policymakers stated that further increase in the size might 'become warranted were some of the downside risks to materialize'. Adam Posen retained the view that 'the balance of risks to inflation continued to warrant an immediate expansion' of asset purchases. Posen believed that the weak pattern of demand domestically and overseas had evolved broadly as expected…There remained a significant margin of spare capacity' and it's like that 'inflation would fall below the target in the medium-term'.

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Central Bank Forecasts: BOJ's Stance To Remain Accommodative After The New PM

We don't expect the monetary policy in Japan will change after the new Prime Minister on board. With economic growth remaining sluggish and deflation still a threat, the BOJ will leave the policy rate at virtually 0% at least until 2012. The central bank will also maintain the asset-purchase program and may expand the scope of assets if necessary. With regard to yen's strength, we believe the government has not given up intervention though the impacts so far have not been significant.

Yoshihiko Noda has been elected as Japan's new Prime Minister. The former Finance Minister will be the 6th PM in 5 years. It is expected that Noda will continue the policies adopted when he served as the Finance Minister. Therefore, his succession would probably give the market a sense of stability. There are a series of issues that Noda has to deal with as the new PM: reconstruction works after the Great East Japan Earthquake in March, the change of energy policy after the nuclear crisis that followed the earthquake and tsunami, the recovery of Japanese economic growth and the control of excessive yen appreciation. As far as economic policies are concerns, we believe the mix of fiscal and monetary policies will remain accommodative in the new regime. Being described as a fiscal conservative, Noda suggested doubling the 5% sales tax to fund disaster reconstruction. However, he has toned down this proposal recently. BOJ's independence will unlikely improve and monetary policies will remain accommodative in coming years.

We expect the policy rate, the uncollateralized overnight call rate, will stay at around 0-0.1% through 2012 as Japan's economy has remained fragile and the risk of deflation is still high. The preliminary estimate showed that Japan's economy contracted -0.3% q/q in 2Q11. While it was better than expected, it was mainly helped by government spending and household consumption actually contracted for the 3rd consecutive quarter. Deflation remained a concern in Japan. Although the nationwide CPI (excluding perishables) rose +0.1% q/q in July while the reading excluding food and energy dipped -0.5%, it remained well-below BOJ's target inflation of +1% y/y.

Since 2008, the BOJ has been expanding easing actions, hoping to revive the economy and curb yen's appreciation. In December 2009, the BOJ cut the policy rate from 0.3% to 0.1%. At the same time, it increased the size of outright purchases of JGBs from 14.4 trillion yen to 16.8 trillion yen as well as expanded the range of JGBs accepted in outright purchases. In 2009, it further increased the size of outright purchases of JGBs to 21.6 trillion yen from 16.8 trillion yen in March and introduced 3-month fixed-rated funding operations in December. In August 2010, the BOJ expanded the scope of fixed-rate operations to 6 months. In October, the policy rate was lowered to 0-0.1%. The central bank at the same time established the asset purchase program to buy 2-year JGBs, commercial papers, J-Reits and other assets. The program was expanded twice (March and August) so far this year to stimulate the economy and to curb yen's strength.

Strength in Japanese yen has been a headache for policymakers as it hurts the country's export-oriented economy. The government has adopted intervention for several times but the impacts have been temporary. Last week, the government introduced a new loan facility worth of $100B to encourage domestic companies to invest overseas. The scheme, which will be in effect for 1 year, is expected to weaken the yen as Japanese companies exchange yen for foreign currency to invest overseas. While the measures may help boost the economy and send the currency lower, the impacts are limited. In his capacity as the Finance Minister, Noda had taken firm steps to intervene against appreciation in Japanese yen. He said last month that he would take 'bold' action to curb yen's appreciation and intervention 'is a measure of last resort -- it would be meaningless if it were not a surprise'. Therefore, we believe currency intervention is still on the government's agenda with Noda as the new PM.

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BoC Leaves Overnight Rate Unchanged, Removes Tightening Rhetoric

As expected, the BOC decided to leave the overnight rate unchanged at 1% and correspondingly, Bank Rate and the deposit rate at 1.25% and 0.75% respectively. The accompanying statement delivered a less hawkish tone than before. As global economic has deteriorated in recent weeks and total CPI inflation will continue to moderate as temporary factors unwind, the central bank believed the need to withdraw monetary policy stimulus has 'diminished'.

The BOC listed a series of events that has caused the recent instability in the economy and financial markets. The European sovereign debt crisis has intensified and 'significant initiatives by European authorities' are needed to resolve the 'acute fiscal and financial strains'. Economic indicators suggested the risk of US recession heightened and fiscal stimulus in the country will 'soon turn into material fiscal drag'. Growth in emerging markets will inevitably be dragged down by weakness in advanced economies.

In Canada, growth eased in 2Q11 as driven by temporary factors and the central bank remained confident that growth will resume in the second half. However, persistent strength of the Canadian dollar will affect net exports which are 'expected to remain a major source of weakness, reflecting more modest global demand and ongoing competitiveness challenges'. Concerning inflation, The BOC expected inflation will ease as high food and energy prices moderate. Yet, the central bank at the same time warned that while 'commodity prices have declined owing to diminished global growth prospects, they remain relatively high'.

Concerning monetary policy, the central bank removed the reference that 'to the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn'. Instead, it stated 'in light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished'. The meeting outcome was largely in line with our expectation. We retain our view that the BOC will leave the policy rate unchanged at least until mid-2012.

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China Watch: Moderation in Inflation not Strong Enough to Trigger Monetary Easing

Moderation of headline CPI to +6.2% y/y in August from +6.5% in the prior month signaled that inflation in China probably peaked in July. Yet, price levels remained elevated and it would be premature to expect China will abandon tightening or even shift to easing monetary policy. Growth of industrial production and fixed asset investment and retail sales decelerated further in August as a result of government's tightening measures. Yet, the rate of expansion remained resilient despite recent global economic turmoil. We expect to see further slowdown in economic activities in coming months but do not envisage any signs of hard landing.

Headline CPI rose to +6.2% y/y in August, easing from +6.5% in July, as helped by slowdown in food and housing prices. PPI increased +7.3% y/y in August, also down from +7.5% in July. We expect inflation has probably peaked in July and further drops are likely in coming months as oil prices have been pressured recently due to rising uncertainty in global economic outlook while pork prices in China has stabilized. Despite the steady decline, elevated inflation should remain a concern for the government. Note that even if inflation falls more significantly to in coming months, the average inflation for 2011 would remain above government's annual target of 4%. Therefore, policymakers would remain vigilant over price pressures and should maintain tightening monetary stance.

Asian stock markets last week were once boosted by a rumor that China may ease monetary policy over the next several months. We believe such speculation is premature. Indeed, just a week ago, some reports 'leaked' the information that the Chinese government is broadening the scope of reserve ratio hikes by including banks' margin deposits in required reserves. Bloomberg estimated that the move will freeze up to RMB 900B from the banking system. While both rumors were not verified, we believe the PBOC will prefer maintaining a tightening bias in monetary policy and turn to a 'proactive fiscal policy' should the economic outlook deteriorate further.

Industrial production (IP) climbed +13.5% y/y in August, easing from 14.0% and +15.1% in July and June respectively. While the reading also missed market expectations, it suggested growth in China remained resilient despite a series of rate hikes and increases in RRR. Fixed asset investment (FAI) grew +25.0% in the first 8 months of 2011, down from +25.4% in the first 7 months of the year. The deceleration was mainly brought about by the slump in railway investment which plunged +15.5%. Property and manufacturing investments remained resilient, soaring +33.2% and +32.2%, respectively.

We are impressed by retail sales which rose +17.0% y/y in August. Although it represented a dip from +17.2% in July, it continued to gyrate stably within a range of 17-18% over the past 2 quarters.

The set of data suggests that growth in China has moderated after government's persistent efforts to drain liquidity from the market. Further slowdown may be inevitable in coming months as tightening measures continue to show its effects and global economic outlook deteriorates further. However, the set of data also indicates the government's capability of curbing inflation while not hammering growth. Barring a rapid downturn in global economic activities, a hard landing of Chinese economy remains unlikely.

China Watch: Rebound in China's PMI Triggers No Change in Monetary Policy

China's PMI climbed +0.2 points higher to 50.9 in August. While the data came in slightly higher than market expectations, the detailed report evidenced that the momentum of manufacturing activities has weakened when compared with the same period last year. China's exports sector has also been affected by the headwind faced in advanced economies. The risk of inflation remains as input prices unexpectedly rebounded during the month. Premier Wen Jiabao reiterated yesterday that stabilizing overall price levels remains the top priority task of the government. In light of heightening risks of global economic slowdown, we doubt if the government will roll out more tightening measures. Yet, a reversal of policies implemented also appears unlikely.

The August PMI represented the first rise of the index since March. Despite that, the +0.4% monthly increase was less than that +1% increase the same period last year. Moreover, the level that the index has been hovering over the past 3 months is around 51, lower than 52 the same period last year. This signaled the government's tightening policy since October 2010 has taken effects. We expect growth in China will slow further but the risk of hard landing remains low.

Domestic demand resilient as 'production' index rebounded to 52.3 from 52.1, 'import' index picked up +0.6 points to 49.7 and 'new orders' index stayed unchanged at 51.1. However, external demand has obviously been hurt with 'new export orders' index slipping to 48.3 from 50.4 in July. China's largest trading partners, the US and the Eurozone, have been facing debt and economic problems recently. Fiscal- consolidative plans are expected to hurt the economy of both sides of the Atlantic and this would further impact China's external trade in the future. Note that, the drop in 'new export orders' suggested that domestic new orders actually rose in August from July.

'Input price' index climbed to 57.2 from 56.3. The first increase in 6 month signals that the upstream inflationary pressure has not eased. While we expect moderation in global commodity prices will ease price pressure in coming months, it's yet to early confirm the rebound was only a 'one-off' issue.

Premier Wen Jiabao said yesterday that China will continue to stabilize overall price levels in the economy and 'the direction of economic policy cannot change'. This suggests that the government will focus on controlling inflation although growth outlook both domestically and in overseas has deteriorated. Indeed, we expect the government will hike interest rates once for the rest of the year but it will most likely not reverse the tightening measures implemented.

ECB Coordinates With Other Central Banks To Provide Liquidity Through Year End

The ECB announced that, in coordination with the Fed, the BOE, the BOJ and the SNB, to conduct 3-month USD liquidity operations for 3 times through the year. In addition to the 7-day USD facility announced on May 10, 2010, the new operation aims to ensure sufficient liquidity in banks. The offerings will be carried out at in the form of repo, at fixed rate and with full allotment. Tender dates will be October 12, November 9 and December 7. The move had sent stocks higher on improved sentiment as central bankers attempted to ease liquidity problems associated to Eurozone's sovereign debt crisis. The euro advanced.

After the collapse of Lehman Brothers in October 2008, the ECB launched the USD liquidity facility in order to meet liquidity demand from the stressed banking system. All operations were discontinued in January 2010 as the funding market improved and demand reduced. However, as the Greek debt crisis began in May 2010, the ECB reactivated the 1-week USD liquidity facility and introduced a special 3-month operation as banks turned more reluctant to lend money to each other again.

The 1-week operation had lacked demand since February this year but a single bidder was reported to have borrowed $500M at a fixed rate of 1.1% on August 18. As we mentioned at that time, this signaled intensified stress in the region's money market conditions. Earlier this week, the ECB said that 2 more banks borrowed a total of $575M via the operation, evidencing rapid deterioration in the banking system in the Eurozone.

Yesterday's announcement marked a step forward to inject liquidity to the market. We believe it would give relief in the short-term but would not help solve the problem. Indeed, we view the move as an indication of the seriousness of deterioration in market sentiment in recent months and world central bankers have envisaged further tightening in the region's banking system going forward. Some market participants said the move was a prelude to the Fed's QE3. We expect the Fed, at next week's meeting' will not deliver anything more than so-called 'operation twist' -increasing the average maturity of securities holdings by swapping holdings of lower maturities Treasuries with longer ones.

ECB Pauses in September, Sends Dovish Message

The ECB left the main refinancing rate unchanged at 1.5%. While this had been widely anticipated, the accompanying statement turned out to be more dovish than the market forecast. The central bank revised lower growth forecasts and did not signal upside risks to inflation. The tone appeared that the central bank is ready for a rate cut should the economy deteriorate further.

As stated in the post-meeting statement, the pace of economic growth 'decelerated' in 2Q11. Going forward, Eurozone's economy will continue to grow 'moderately, subject to particularly high uncertainty and intensified downside risks'. Factors that are dampening the underlying momentum in the region include 'a moderation in the pace of global growth, related declines in equity prices and in business confidence, and unfavorable effects resulting from ongoing tensions in a number of euro area sovereign debt markets'. The ECB pledged to maintain inflation rates below, but close to, 2% over the medium term.

The ECB revised lower the growth outlook. ECB staff forecast annual real GDP will grow 1.4-1.8% in 2011 and 0.4-2.2% in 2012. The projections were revised lower when compared with June's estimates. The risks to the economic outlook are tilted to the downside. Concerning inflation, policymakers believed near-term risks are 'broadly balanced'. While rises in commodity prices and increases in indirect taxes and administered prices might drive up prices, weaker than expected growth in the Eurozone and globally present some downside risks. Staff projections on inflation stayed unchanged at 2.5-2.7% for 2011 and 1.2- 2.2% for 2012.

The central bank left the policy rate unchanged at 1.5%. Regarding the monetary outlook, Preside Trichet said the committee 'never pre-committed' and stands ready to do 'whatever is necessary'. The ECB downplayed inflationary pressures and reduced growth forecasts. These signaled that interest rates will stay low for some time. Indeed, the central bank might ease monetary policy if the situation weakens further.

European Banks Are Becoming Less Willing To Lend Money, An Early Sign Of Credit Crunch?

News that a European bank borrowed $500M from ECB's 7-day USD funding facility last week intensified concerns in the region's money market conditions. The rise in Euribors, the key euro-prices interbank lending rates, also suggests banks are becoming less willing to lend money to each other. They are also increasingly more suspicious of other banks'balance sheets. Some market participants began to worry about a repeat of the credit crunch in 2008. While it's true that persistence of sovereign debt crisis in the European periphery has deteriorated funding conditions in the 17-nation region, traditional interbank funding rate, LIBOR has been staying well-below the level in 2008, suggesting the current situation is still manageable. However, one should be cautious on further tapping of USD facilities as it would signal a dry-up of liquidity in the banking system.

The ECB disclosed that a single bidder borrowed $500M for a week at a fixed rate of 1.1% on August 18. This is the first time since February 23 that a European bank sought funding using this facility. Usage of the facility has been low as current market rates for banks to obtain USD funding are lower and more flexible. Therefore, the operation is probably treated as the last resort which will only be used when a bank has difficulty elsewhere. The bank's action (share prices suggested that the bank is Société Générale) indicated Eurozone's banking system has been stressed by the prolonged debt problems in peripheral economies.

There are several ways that a European bank can seek USD funding. For the facility mentioned above, the interest rate is expected to be 1-month OIS + 100 bps. While the size is unlimited, the borrowing bank needs to post 12% initial margin. Alternatively, a bank can obtain USD through a USD/EUR cross currency basis swap by funding the euro either through Euribor (around 1.54%) or the ECB repo rate of 1.5%. The total funding costs of using cross-currency basis swap have been less than that through the ECB facility from June 2010 until recently. While the costs of the 3 approaches have converged to very similar levels these days, in normal circumstances, the use cross-currency basis swap is more flexible as it does not require the initial margin of 12%.

Various indicators have shown that banks are increasingly concerned about having exposure in other banks due to suspicion in other banks'balance sheet. The chart below shows that the Euribor-OIS spread soared to the highest level since April 2008 recently, suggesting banks are becoming more reluctant to lend money to each other. The 3-month LIBOR has also picked up, rising to a 6 month high of 0.3117% yesterday.

We tend not to be over worried about the market condition as there's only 1 bank tapping the ECB facility. The amount of $500M was insignificant when compared with $300B in late 2008. However, this acts as an alarm that the interbank market is not functioning well. It's undeniable that widespread concerns about fiscal deficits in some European countries, especially those in the periphery, will continue to drag on bank funding conditions in the region.

Evaluation Of QE2 And Preview Of Possible QE3 Ahead Of Jackson Hole Symposium

The next major event in the US after the August FOMC meeting will be next Friday's economic policy symposium in Jackson Hole, Wyoming. After the Fed announced to keep interest rates at exceptionally low levels at least through mid-2013 on August 9, the market has been increasingly speculating that Chairman Ben Bernanke will signal additional easing measures at the meeting next week. According to a CNBC survey done after the FOMC meeting, 46% of respondents said the Fed will resume QE, up from 19% in the July survey while 37% said the Fed will not do QE, down from 68% in July. Also, of those who believe the Fed will resume QE, the asset purchases are expected to average at 628B, up from 377B in July.

While market sentiment has been lifted by the speculations with the Wall Street paring losses and the US dollar weakening, the actual impact of new asset purchases, i.e. QE3, remains uncertain. It's even possible that the new program fails to stimulate the economy. Let's take a look at the economic and financial market developments between the period after Bernanke hinted about QE2, the 600B bond purchase program, at last year's Jackson Hole speech and the end of the program June 2011.

GDP growth eased for 3 more quarters (from 3Q10 to 1Q11) after the speech on august 27, 2010 before recovering softly to +1.28% in 2Q11. Unemployment rate continued to climb higher until reaching 9.8% in November 2010. The rate then began its 4-month fall to 8.8% in March 2011 before rising above 9% again. It's apparent that the 600B asset-purchase program did not satisfactorily boosted growth and employment. Liquidity injection did boost inflation with the headline CPI surging to 3.4% y/y in June from around +1.2% before the Chairman's speech.

Concerning financial markets, Wall Street was bolstered with each of DJIA and S&P 500 Index rising more than +20% during the period. The gains were, however, pared over the past weeks. The commodity index also jumped +20% but the ICE US dollar Index plummeted -10%. Among the assets, silver rose the most, surging +82%, and was followed by oil and copper. Obviously, much of the injected liquidity was fled to commodities with rising inflation as a result.

As stated in the August FOMC statement, the Committee discussed ‘the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate'. We believe the options the Fed has considered, after changing the statement language, include: lowering interest rates paid on excess reserve, shifting the composition of the balance sheet to longer maturity, formalizing an inflation target, indicating explicit interest rate ceilings for longer-term Treasury debts (with an ingredient of asset buying) and outright bond purchases (i.e. QE3).

If the Fed chooses to go further down to easing, we expect it needs to deliver something more than just pledging to keep the balance sheet large or lowering interest rates paid on excess reserve. Chairman Bernanke may have to signal an expansion of asset buying in order to bolster market sentiment. During the first 2 QE programs, the Fed had injected 1.75 trillion and 600B respectively to the market. It's estimated that the central bank had pushed down the 10-year Treasury yields by 25-50 bps per 1 trillion of asset bought during the previous 2 moves. Therefore, we expect the size of asset purchase will be similar in the case of QE3.

The Fed may choose to shift the composition of the balance sheet to longer maturity instead of expanding the size at the current stage. By achieving this, the Fed may increase the average maturity of the reinvestment the MBS proceeds or sell its 279B of Treasury notes and bonds with maturity before the end of June 2013 and buy long-duration securities with the proceeds. It may also consider buying mortgage-backed securities which currently have duration of 6-7 years.

The move to additional quantitative easing is not free from criticism. It's obvious that the 3 dissenters at the August meeting will reject asset purchases or changes in the balance sheet composition. Philly Fed President Plosser said earlier this week that the announcement of keeping the Fed funds rate at exceptionally low levels at least until mid -2013 was an 'inappropriate policy at an inappropriate time'. He is concerned that inflation will accelerate in 2012 and 2013. Both he and Dallas Fed Fisher said that the easing measures should not be used to boost the stock market. Fisher said the central bank should 'never enact such asymmetric policies to protect stock market traders and investors'. Potential stimulus from the Fed also triggered criticism from Republicans. Texas Governor Rick Perry said any move by Bernanke to act on stimulus measures before the 2012 election would be 'almost treasonous'. While the Fed pledged its independence to politics, the 'threatening' language inevitably raises hurdles for the Fed to move further to the path of easing.

RBA Stands Still As Global Market Uncertainty Increases And Inflation Risks Remains

As expected the RBA left the cash rate unchanged at 4.75% in September. The initial market reaction was a rebound in the Aussie as the post-meeting statement turned out to be less dovish than previously anticipated. The central bank attributed the pause to the growing uncertainty in global economic outlook. Recent developments have damped confidence and tamed inflation. Against some of the market participants' forecasts, the RBA did not hint any signs on rate cut.

Policymakers acknowledged that global financial markets have been 'very unsettled over recent weeks' and the uncertainty and financial volatility is 'reducing confidence' and may result in 'more cautious behavior by firms and households in major countries'. In the near-term, the global growth outlook will look 'somewhat weaker' than what was estimated a few months ago.

Although the RBA reiterated that headline inflation should decline as temporary factors disappear, it remained concerned about the medium-term outlook. According to the statement, 'a key question will be the extent to which softer global and domestic growth will work, in due course, to contain inflation'. We believe inflation is a major consideration for RBA's monetary stance.

The jobless rate rose to 5.1% in July after staying at 4.9% over the past 4 months. The total number of payrolls increased +3K to 11.48K during month as addition in part-time employment offset the decline in full-time positions. The RBA did not show much worry about the employment situation although it noted that 'growth in employment has been moderate this year and the unemployment rate has been little changed, near 5 %, for some time now'. We believe the central bank will hold the same tone unless it sees the jobless rate rise to 5.5%.

Concerning monetary policy, the central bank believed that current levels of interest rates have exerted 'a degree of restrain'. Policymakers will continue to 'assess carefully the evolving outlook for growth and inflation' in future meetings.

RBA To Pause For The Rest Of The Year

The RBA will likely be on hold at the September meeting. Indeed, the central bank is now expected to leave interest rates unchanged longer than previously expected. Some market participants even bet a rate cut later in the year after the governor's testimony to the House of Representatives Standing Committee on Economics. The latest Credit Suisse swap index shows the market has priced in -114 bps rate cut by the RBA over a year. We have not yet changed our monetary forecast from tightening to easing. However, we do expect the central bank will not raise interest rate anymore at for the rest of the year.

In the opening statement to House of Representatives last week, there were significant changes in the central bank's stance on economic and inflation outlook. Governor Glenn Stevens noted that a 'decline in confidence' arising from the recent events internationally may 'well dampen demand somewhat compared with the outlook set out in early August. The governor appeared more relaxed regarding the inflation outlook. While 'significant rises in a range of administered prices are still set to occur over this period and unit costs have been rising quite quickly given the fairly poor performance of multi-factor productivity growth over recent years', Dampening in demand and structural economic changes may 'act to lessen the upward trend in inflation pressures that appeared to be in prospect'. The RBA reiterated that the price pressure after the flood is a temporary shock and the central bank will look through the issue in considering monetary policy.

The employment report was probably the most important indicator released since the August RBA meeting. The jobless rate rose to 5.1% in July after staying at 4.9% over the past 4 months. The total number of payrolls increased +3K to 11.48K during month as driven by a addition in part-time employment. However, the decline in full-time jobs has made the situation worrisome. Confidence in Australia continued to deteriorate. The WMI consumer sentiment index slumped to 89.6 in August from 92.8 in the prior month. The NAB business confidence index edged higher to 2 in July from 0 in June but remained at the lowest level in 6 months. The business conditions index dipped to -1 from 2. Weakness in business confidence is expected to affect hiring intention in coming months.

Concerning monetary policy, Stevens pointed out at the testimony that current financial conditions, in particular elevated Australian dollar, have exerted 'a fair degree of restraint' on the central bank's moves. He unveiled that policymakers believed 'the most prudent course was to sit still through this period'. We view this as a neutral stance and expect the same tone will be delivered at the September meeting.

RBNZ Refrains From Reversing Insurance Cut

Given the dramatic global economic downturn since the July RBNZ meeting, we now believe that the central bank will remain on hold in September and probably in October. While there is yet little evidence showing New Zealand's outlook has been hurt by the rising uncertainty in US economy and European debt crisis, such a small and open economy is vulnerable to international shocks. We believe it's prudent for the RBNZ to leave the OCR unchanged at 2.5% and to deliver a less hawkish statement than the previous one.

Global economic developments have deteriorated sharply in August and early September. Signs of a US recession have intensified with the Fed explicitly stating to keep rates low at least until mid-2013 and President Obama announcing new measures to stimulate growth. Speculations of QE3 have heightened. Sovereign debt crisis in the Eurozone remained under the spotlight. ECB's reactivation of the SMP and resignation of an Executive Board member evidenced the division among policymakers and hinted growing difficulties in policy formulation in the future. Inflation outlook appeared to have moderated as commodity prices fell. However, central bankers will remain cautious on the issue as a new round of quantitative easing will inevitably spark a new round of inflationary pressures.

Economic indicators released during the intermeeting period were limited but they did show a solid and positive trend in domestic growth. Retail sales excluding auto climbed +1.4% q/q in 2Q11 after rising +1.3% in the previous quarter. Rugby World Cup, expecting to bring 85K of tourists to the country, is the next stimulus to retail sales in coming months. Improving consumer confidence has been driven by growing momentum in the job market. Unemployment rate stayed at 6.5% in 2Q11, unchanged from 1Q11 but eased from 6.7% in 4Q10. On annual basis, the number of unemployed fell -0.4%. During the quarter, only 1K of payrolls were added but encouragingly the participating rate stayed firm at around 68%, indicating that labors remained optimistic towards the employment outlook.

Inflation expectations moderated. A RBNZ surveyed showed that inflation expectations in a year eased to +2.94% from +3.12% a quarter ago. Inflation expectations in 2 years also eased to +2.86% from +3.00% in the previous survey. The outcomes suggested that households and businesses are not overly worried about price pressure although headline inflation has been held at elevated levels due to temporary factors such as GST.

The post meeting statement will show a setback from the previous meeting. In July, the RBNZ stated that 'provided current global financial risks recede and the economy continues to recover, the Bank sees little need for the March 2011 'insurance' cut to remain in place much longer'. As the condition mentioned in the first part has not materialized, it's unlikely for the central bank to reverse the cut in the meeting. Honestly, the timing for the rate hike is getting more uncertain as it's highly dependent on how the global economy evolves.

RBNZ Will Probably Not Raise Interest Rates Until 2012

The RBNZ left the OCR unchanged at 2.5% and delivered a less hawkish statement in September. Where these have been widely expected, NZD fell after the announcement as the chance of a rate hike this year has markedly reduced given global economic uncertainty. The central bank also trimmed growth and inflation forecasts, signaled the macroeconomic shock in the US and Europe would have some impacts on New Zealand's path of recovery.

Concerning global economic developments, the central bank noted that the global economy has slowed 'sharply'. Financial market sentiment has 'deteriorated' and if the tightening condition of in international bank funding markets does not improve, New Zealand bank funding costs will increase.

Fortunately, the global turmoil has not yet affected New Zealand's economy significantly. According to Governor Bollard, the country's economy has 'performed relatively well while headline inflation has increased' somewhat from 3 months ago. However, risks remained there and will likely increase in the second half of the year. Exports will be negatively affected as New Zealand's trading partners has 'deteriorated markedly' and New Zealand dollar has appreciated a lot against major currencies. The RBNZ warned that strength in NZD is having a 'dampening influence on some parts of the tradable sector and on imported inflation'.

In the quarterly MPS, the RBNZ lower its growth forecasts for the year ended March 2012 to +3.6% and March 2013 to +2.6% from June's projections of +4.4% and +3.6% respectively. The downward revisions were to large extent driven by the reductions in trading partners' growth. Inflation forecasts were also trimmed and CPI is expected to rise to +2.1% in March 2012 and then ease to +2.0% in March 2013 before soaring to +2.2% in March 2014.

While keeping the policy rate unchanged, given 'the recent intensification in global economic and financial risks', at this meeting, the RBNZ continued to forecast a future rate hike, if 'recent global developments have only a mild impact on the New Zealand economy'. Yet, it seems that policymakers will wait until 2012 for the first hike as suggested by the 90-day bill rate.

SNB Lowers Growth And Inflation Forecasts, Pledges To Maintain Minimum EURCHF Rate

The SNB revised down its growth and inflation forecasts at the September meeting global economic slowdown and strength in Swiss franc are beginning to erode Swiss growth. In the meeting statement, the central bank showed its commitment in defending EURCHF at 1.20 or above. The SNB pledged it has 'utmost determination' and may take 'further measures' to enforce the minimum exchange rate.

Despite healthy growth in the first half, Swiss economic growth is expected to halt in the second half of the year. The SNB forecasts growth will reach 1.5-2% for 2011, down from +% projected previously, mainly driven by strength in the 1H11. The central bank warned of a threat of recession should there be no imposition of measures to curb currency appreciation.

As far as inflation in concerned, the SNB believed that 'in the foreseeable future, there is no risk of inflation in Switzerland'. On the contrary, there are 'downside risks for price stability, should the Swiss franc not weaken further'. The central bank trimmed the country's inflation outlook. Based on Libor at 0.0%, inflation rate will ease to +0.4% in 2011, down from +0.9% estimated previously. CPI will fall to -0.3% in 2012 (previous: +1.0%) before climbing higher to +0.5% in 2013 (previous: +1.7%).

As the SNB continues to intervene the FX market, we expect it will concentrate on euro buying initially. However, as the central bank seeks to diversify its reserves, other currencies including US dollar, the pound, Japanese yen and Canadian dollar will be purchased. If SNB's intervention in 1H11 serves as a guide, Canadian dollar will be bought the most while Australian dollar and Swedish Krona the least.

SNB To Reiterate Unlimited Intervention To Prevent Excessive CHF Appreciation

The SNB meeting on Thursday will likely be reiteration on what was said on September 6, when the central bank drew a line in sand to curb Swiss franc's appreciation. We are, however, interested to see how the SNB would update the inflation forecasts. We expect to see downward revisions from 3 months ago given the recent global economic turmoil and strength in CHF.

Last week, the SNB announced in a surprising manner that it had set the minimum target of EUR/CHF at 1.20. It would 'enforce this minimum rate with the utmost determination' and is 'prepared to purchase foreign exchange in unlimited quantities'. FX market reaction indicated the announcement was credible as the franc immediately plunged to 1.20 against euro and has been staying there since then. We believe SNB's intervention will persist for some time, rather than being a one-off action, as the central bank stated that the franc remained too high even at the target level. It would take further measures if the 'economic outlook and deflationary risks demand it'.

Swiss GDP grew +0.4% q/q in 2Q11, easing from +0.6% in the prior quarter. Exports contracted +1.3% q/q after expanding +3.4% in the first quarter, signaling currency appreciation has begun to bite. Economic growth is expected to slow further in the second half of the year due to strong CHF (despite recent interventions, the franc remained 20% against the dollar and +10% against the euro when compared with a year ago) and weakness in Switzerland's major trading partners. Other economic indicators also pointed to a more fragile outlook. KOF leading indicator fell to a 2-year low of 1.61 in August from 1.98 in the prior month while the SVME-PMI index slipped to 51.7 in August from 53.5 in July. Both indicators signaled further moderation in economic growth in coming months.

Intervention may lead to inflationary problem in the medium term. However, this should not be a concern for policymakers as price levels are significantly below the central bank's target. We expect the SNB to revise lower the trajectory of its inflation forecasts in September as economic outlook weakened both domestically and globally. Further ease in inflationary pressure should be consistent with the SNB's monetary decision to leave the 3-month Libor target range at 0-0.25%.

Stark's Shocking Departure Should Not Affect ECB's Decision Making

The ECB announced in a statement last Friday that Jürgen Stark, after being a member of the Executive Board and Governing Council of the central bank since June 2006, will resign before the end of his term of office on May 31, 2014 due to 'personal reason. It's also stated that Stark will stay in his current position until a successor is appointed. According to the appointment procedure, it will be by the end of this year. The euro slumped after the news, plummeting as much as -1.8% against USD at one point, amid worries about ECB's monetary stance in the future. We believe Stark's resignation would not affect the central bank's future strategies as all decisions will be based on the mandate to maintain price stability across the Eurozone.

Jürgen Stark is known as one of the most hawkish members in the ECB. The market has speculated that his resignation was due to his dissatisfaction to the securities markets program (SMP). In August, German news magazine Der Spiegel said that Stark, as well as Bundesbank President Weidmann, Luxembourg Central Bank head Mersch and Dutch Central Bank head Knot, opposed the resumption of the program after voting against its creation dated back in May 2010. Stark's dissatisfaction probably reached the climax when the ECB decided to broaden the bond purchase program to include Italian and Spanish debts on August 8.

Stark's premature resignation came just 7 months after Axel Weber quitted his position as the President of the Bundesbank and withdrew his candidacy as the ECB President. The event suggested that Germany is increasingly anxious about ECB's ultra accommodative policies as well as the single currency. This has also raised the uncertainty for Germany's participation in future bailout programs.

It's expected that Germany will propose Jörg Asmussen, a deputy finance minister, as the successor of Stark. According to Finance Minister Wolfgang Schäuble, the candidate should favor stability-oriented policy. While Asmussen refused to comment if he would support the SMP, he's known to have studied under former Bundesbank President Axel Weber, a hawk and an opponent to the program.

While a shock, Stark's departre is not expected to affect ECB's decision making. The main decision making body of the ECB is the Governing Council which consists of 6 Executive Board members of the Executive Board and the governors of the national central banks of the 17 Eurozone countries. Each member has and will seek to fulfill the mandate of maintaining price stability across the 17-nation region. ECB's stance to the SMP will remain unchanged with assets being purchase in similar pace as in recent weeks. It may, however, be more difficult for the ECB to cut interest rates as it avoid to deliver a more dovish impression after a hawk has left.

What Does Bernanke Want to Tell Us At Jackson Hole?

As the annual Jackson Hole Symposium approaches, there have been talks in recent days that Fed Chairman Ben Bernanke will probably disappoint the market, i.e. he will not hint about additional easing. Look at yesterday's price movements: the advance in the USD, the sharp decline in US Treasury and the selloff in gold, it suggests that investors are reducing their speculations on QE3 in August. The title of Bernanke's speech this year is 'Near and Long-Term Prospects for the US Economy', compared with last year's 'The Economic Outlook and Monetary Policy'. Some market participants said the Chairman omitted 'monetary policy' as he wants to tune down hopes of further policy action.

We expect Bernanke's speech will focus on 1) US economic outlook; 2) review of policy actions and 3) discussion of policy tools. As indicated in the August policy statement, policymakers viewed that growth has been 'considerably slower' than expected. Temporary factors including 'higher food and energy prices' and 'supply chain disruptions' associated with the earthquake in Japan' accounted for 'only some of the recent weakness in economic activity', suggesting the slowdown has been driven by more pervasive factors. The recovery will take place at a 'slower pace' with increasing downside risks in the economic outlook over coming quarters and the unemployment rate will 'decline only gradually' toward levels consistent with the Committee's mandate.. While revising down the economic outlook, policymakers were not completely pessimistic. New York Fed President William Dudley said last week that US data were 'at worst, mixed'. Banks are 'in much better shape' with 'huge liquidity buffers compared to where they were in 2008'. He expected that there would be 'stronger growth in the second half'. Cleveland Fed President Pianalto, who has never dissented from an FOMC decision, said she forecast US' GDP will grow 'at a rate of about 2% this year, and about 3% in each of the next 2 years'. The Chairman will probably elaborate more about the central bank's view on the growth prospect.

As we showed in the article titled 'Evaluation of QE2 and Preview of Possible QE3 Ahead of Jackson Hole Symposium', the impacts of QE2 on bolstering economic growth were not significant. Inflationary pressures were, however, lifted after liquidity injection. The situation should have triggered questions about effectiveness of easing measures. We expect the Chairman to address the issue at the conference. At the same occasion last year, the Chairman stated central bankers 'alone cannot solve the world's economic problems'. He will probably reiterate similar stance this year.

The August FOMC statement unveiled that the Committee had discussed 'the range of policy tools available to promote a stronger economic recovery in a context of price stability'. In our opinion, Fed's remaining options include lowering interest rates paid on excess reserve, shifting the composition of the balance sheet to longer maturity, formalizing an inflation target, indicating explicit interest rate ceilings for longer-term Treasury debts (with an ingredient of asset buying) and outright bond purchases (i.e. QE3). While it may not be announced at the conference, the Fed should be in favor of changing the composition of the balance sheet and outright bond purchases.

Rising inflation and a more-divided Fed may have complicated policymakers' monetary decision. However, we believe the 3 dissenters will unlikely hinder the Fed from implementing additional easing measures they are deemed necessary. The single most important factor is still economic developments, i.e. whether employment and inflation are at levels that are consistent with the Fed's dual mandate.

Forex Trading: The Best Hours to Trade

If you want to earn extra cash aside from the cash you earn from your regular job or your business, maybe it’s time to you to enter the financial market. One kind of financial market that made a lot of people earn a lot of money is the Forex market.

Aside from the fact that the Forex market can give you an opportunity to earn a lot of money, you should also know that Forex is the largest and the most liquid financial market in the world with trade exchanges that amounts up to trillions of dollars each day.
Forex also operates 24 hours a day and therefore making it the most liquid market in the world.
However, Forex is also a very risky market. Besides that fact that it generated a lot of people to become rich, it also made a lot of people lose large amounts of money. Therefore, you should consider that you should think twice before entering this financial market. You should have enough knowledge and skills before you enter this market. Part of the knowledge that you should know the best time you should enter this very liquid and very large market.

Sure you know how to trade, you know what currency pairs to trade, and you even know how to read charts. Perhaps, you also know one or two strategy when trading in the Forex market. However, you should also consider the fact that because the Forex market operates 24 hours a day, you need to know when you should trade.

Every minute in the Forex market counts. One minute you notice a currency is increasing in value, the next you notice that the same kind of currency you noticed a minute ago is decreasing in value. This is why you should consider the fact that Forex market is a very dynamic market with lots of price oscillations.
Minute by minute events are very important in order for you to be successful. Because of this feature that is found in the Forex market, you, as a Forex trader, can enter the market a number of times a day. This will allow you to earn some profits after every number of trades you do and perhaps maybe even lose one if you made the wrong trading decision.
Firstly, you have to remember that the Forex market beings at Sunday at 5PM EST to Friday at 4PM EST then it beings again at 5PM EST. Trading begins in Forex at New Zealand next at Australia followed by Asia, in the Middle East, Europe and ends in America. The major markets in Forex are London, Tokyo and New York with trading activities the heaviest when major markets overlap.

Basing from the times, you will see that there will always be someone anywhere in the world who is buying and selling currencies. You will see that when one market closes, another market opens. Trading in the Forex market is 24 hours a day.

Forex market transaction volume is always high during the whole day. However, it peaks the highest when the Asian market, the European market and the US market opens at the same time.

These are the trading hours in the Forex market you have to trade in, in order to get the highest possible trades. This are the hours that are also the most profitable.

Here are the open market times that you can use as reference:

• New York – 8am to 4pm EST

• London – 2am to 12nn EST

• Great Britain – 3am to 11am EST

• Tokyo – 8pm to 4am EST

• Australia – 7pm to 3am EST

If you look at the schedule and study it, you will see that there are two instances where two of the major markets overlap on trading hours. These are between 2am and 4am EST with Asian and European markets and 8am to 12pm EST with European and North American.
These are the things you should remember when trading in the Forex market. It is not only important that you know how to trade and know some strategies on Forex trading, But, you should also know when is the best time to trade in this very large and very liquid market.
If you follow all these, you can be sure that you can earn a potentially higher profit than on other trading times.

Forex Trading: Trading in The World’s Largest Market Online

The Internet is one of the most useful tools that you can take advantage of today. With the advancement of communications technology, you can send and receive data to and from the Internet for free or at a very cheap price.
Since the development of the Internet and introduction to the public, people have been using it to communicate with family and friends. With the Internet, you can chat for free even though the person you are talking to is half way around the world.


Today, because of the advancement of the Internet, and the availability of a cheap broadband Internet connection, it is now possible for people to start an online business, work online, and even trade in the financial market.


Trading in the financial market online has a lot of advantages. You no longer need to be inside the market floor to trade. All you need is a computer with a high-speed Internet connection, and trading software and you’re ready. If you are thinking of trading in the financial market, you might want to consider trading in Forex.
In the past, because the Internet was still in its infancy and the Forex market have strict sanctions and policies, regular people, such as yourself were not allowed to trade in the Forex market. Only multinational companies and financial institutions were allowed and it also required huge amounts of investment capital to start trading in this financial market.
The Forex market is the largest and the most liquid financial market in the world. It operates 24 hours a day and generates currency exchanges that amount up to 2 trillion dollars each day. With this kind of feature, people would really want to trade in the Forex market.

With the advancement in the Internet technology, it is now possible for people to trade in the Forex market. The Forex market also opened up its doors to individual traders and brokers.
Forex trading is considered to be a great money making tool that you can take advantage of. With the right skills and knowledge, you can really be successful in the Forex market and earn that money you have always wanted.
It is also a fact that many people who have traded in the Forex market have earned quite a lot of profits. Some even considered it to be a great full time career and decided to leave their regular jobs to trade fulltime in the Forex market.
However, the Forex market also carries an equal risk to traders. There is also a chance for you to lose money when you trade in Forex. It is also a fact that Forex took people in the brink of financial collapse. However, with the right skills, knowledge and strategy, you can minimize the risk and maximize your earning potential when you trade in this very liquid market.
If you are looking for a great fulltime career that you can do in your own home, you can consider the Forex market as one of the best career choices.

The first thing you need to have in order to start trading in the Forex market online is by having a fast computer with a fast internet connection. Fast Internet connection is very necessary in order to let you have access to real time information on what is happening in the market. This will also prevent slippage.
The next thing you need to do is hire a firm that is available online that specializes on Forex trading. The online Forex trading firm will give you access on using their online software that is necessary for you to start trading. For inexperienced Forex traders, it is recommended that you hire a firm in order to have first-hand knowledge on how to trade currency, and also help guide you on your trades.

If you don’t want to hire a firm, there are a lot of software programs in the market that you can use to start trading in the Forex market. The most important thing you have to consider in a trading software program is that it should allow you to gain access to the Forex market instantly. It should also give you the tools you need, such as charts and other indicators that are necessary for you to trade effectively.
Software programs are recommended for experienced traders who don’t want to spend money on Forex trading firms.
These are some of the things you should consider when trading in the world’s largest financial market online. Always remember that there are no guarantees in Forex. You should be prepared to lose money during your first few months of trading. Once you completely understand how Forex works, you can be sure that you can earn a lot of money in no time at all.

Title: Internet Trading with FOREX

The presented article is intended for those who just turned their eyes toward FOREX. Beginning traders who are still learning the basics of the foreign exchange market may also find something of interest here. While experienced traders won’t gain anything worth their time reading this article. Basically there are 4 steps which can be defined as “must do“ for those who wish to start trading FOREX. Though, their order is not particularly important, the more important part is their content, to which the great attention and responsibility must be paid.
First step is finding a right FOREX broker which will be your main tool in trading. You can have a great strategy, good technical analysis skills or an outstanding intuition but you will eventually fail if you choose a bad broker. A good FOREX broker is one that will not still your money, will be doing real trading with your positions, supports your preferred deposit/withdraw methods and has fast and helpful user support service. It is nice if a broker is registered with some sort of governmental financial commission. One of the most important aspects of the broker is it’s trading platform – but for a new trader this part is not so important as for expert traders.
Still you’ll probably want to trade with some powerful and informative platform as a MetaTrader or its analogs. For new traders the more important is a demo account which can be used to trade virtual money while you are training your FOREX skills. If you are new trader, start only with the demo account! Don’t lose your money on your first mistakes! Second step is learning the basics of FOREX trading. If you already found your FOREX broker, you will easily get all information from its website or user support. There are many articles and websites dedicated to FOREX basics in the World Wide Web.
All you need to do is just google for “forex trading basics” and you’ll find everything you wanted and even more. This step shouldn’t be underestimated, because trying to trade without even understanding how the market works is not only very risky, it will also become boring very soon. Third step is about education. FOREX trading education is not similar to any other education you probably have got in your life. FOREX market is very chaotic, so is the education – there are no fixed rules and all time laws, it is unstable and dynamical. So, to be on the top you must learn new things about FOREX regularly and constantly. Try to read as many books, articles other traders’ opinions as you can.
The more you learn, the more educated you will be. And with good FOREX education you will be able to create very sophisticated and effective trading strategies. Fourth step is a final one; at least I consider it to be a final one. To achieve the successful results in the FOREX market you need to develop your own strategies. While you are learning you’ll be satisfied with known strategies and probably even FOREX signals. But true goal which leads to successful FOREX trading is to develop your own strategies.
Not one strategy, but to follow the market day by day, developing new strategies and improving those which began to fail. And this comes not only to the trading strategy (this part is obvious), but also to the money management strategy (this part is often underestimated). While you gain experience in trading you’ll inevitably build such strategies that will fit your trading style, you character and your life as best as they can. And after that, trading will become a real pleasure, which will eventually lead to your financial freedom.

Title: Internet Trading with FOREX

An investment, as defined by Merriam-Webster, is “the commitment of funds with a view to minimizing risk and safeguarding capital while earning a return”. Generally speaking, investments are made for the “long haul”, with the belief that the value of the investment vehicle of choice will increase in value. When you say investment to most people in the United States, the first “vehicle” of choice in their minds is the Stock Market, with Mutual Funds in second place, followed more recently by property in third place, and Bonds in a distant fourth.
Commodities and currency trading are rarely considered investments because of the speculative nature of those markets. Speculation, as defined by Merriam-Webster, is the “assumption of unusual business risk in hopes of obtaining commensurate gain”. A quick review of the definitions of “investment” and “speculation” immediately highlights the “inherent amount of risk” as the major difference between both practices.
If you were to survey all those people who “invested” their life savings in the Stock Market and Mutual Funds just prior to the market crash of September 2000, do you think that they would agree that the Stock Market and Mutual Funds still fit the definition of a safe investment? Bonds in reality are extremely low risk trading vehicles and are therefore considered “investments”. While bonds were also affected in the market correction, they are still primarily an institutional trading vehicle and did not affect individual investors as broadly.
While the ownership of private property seems to have escaped the dark shadow of a high risk investment, recent market forces and speculation in private property have eroded the quality of this investment. As of today, the housing boom in the United States has apparently run its’ course due to rising interest rates and increased inventory of discounted properties due to default and foreclosure. Many of the “paper millionaires” which this market has created will soon feel the pinch of paying off properties mortgaged much higher than their present values.
 And to all those owners of property which has long been paid for, you are in possession of a wasting asset against the forces of inflation and the intentional devaluation of the dollar. It would seem that the “safest” investments would be in the purchase of hard assets. Gold immediately comes to mind, but its’ greatest value is as a universal currency standard.
A man with a silo filled with corn will not starve in the near future. A home will keep a family safe from the elements no matter what it is worth. The only problem is that these assets will only earn you money when they are sold, assuming that their value has increased. These investments are not typically made for the purpose of earning a suitable return on one’s capital.
Speculation, on the other hand, is synonymous with large and fast gains on your capital with the higher risk of loss. The additional risk introduced into traditional investments by current market forces has made the FOREX Currency Exchange an attractive option to investors by blurring the lines between investment and speculation. The FOREX is the most liquid of all the exchanges, trading in excess of 1.5 trillion dollars daily, 24 hours per day. Trading practices include everything from intra-day to trend following. Paper trading is highly recommended to sharpen your skill, and an account balance of as little as $300.00 will get you started. Joseph Napolitano I invite anyone who would like an informative report, and to enroll for a free trading course to visit my website at http://www.Trade-Forex.Online-HQ.com

Title: How to Save Yourself from Forex Scam

When you begin to investigate this business of day trading a plethora of information comes at you. Type in day trading, do a search and you get close to a million choices. That’s a lot of info to sieve through. So where do we start? There are some basic necessities that you must have before you can begin. A fairly good computer is a must.
The prices are going down and the power is increasing all the time. So these days you can pick up a new machine for about $800 that will do the job. A high end trading machine with all the bells whistles will set you back about $1500. One thing you must consider is how many monitors are needed. I recommend 2 because you can’t go wrong with screen real estate in this business. Believe me it won’t go to waste. This will push up the price a little, but it is well worth it. Make sure you get a flat panel LCD which comes standard when you buy a new machine.
Remember your eyes. Don’t try and save a couple of bucks by purchasing an old fashion flickering monitor. Hours in front of the screen can be a daily occurrence in this business. Computer auctions are a good option. The second item is a fast internet connection. There are many options available here, but do not go below ADSL. The speed of the information coming to your computer is very important. Finally, on the hardware side, make sure your setup is comfortable. The desk should be at the right height and a swivel type reclining business chair is really nice.
Now you are all set, so what do we trade? There are 3 basic categories to choose from. These are stocks and options, futures and commodities and foreign currencies. Let us look at stocks. There are thousands of them. Then there are the exchanges such as The New York Stock Exchange for the big boys then there is the NASDAQ for the internet type younger companies. We also have pink sheets for stocks with low trading volume. How do you decide which stocks to trade. There are various software packages that screen stocks for whatever parameters you input You can screen for gapers, which are stocks that have gone up or down by a fairly large amount when compared with the previous days close.
Then there are lows and highs, unusual volume, earnings reports, other reports that affect the stocks price, sector performance and on and on it goes. It can be a daunting task deciding “how” if you want to trade stocks. What about options? They are too specialized for the beginner in my opinion. Learn something simple and then you can graduate to options if you so desire. Futures and commodities on the other hand offer the trader a much smaller basket of goods to choose from. I would stay out of commodities if you are just learning. Commodities such as grains, orange juice, coffee and pork bellies etc. require the trader to acquire knowledge about the peculiarities of the commodity.
For instance, when is the end of the grain harvest? How has the weather affected the harvest, and a host of other variables. There is an easier way! When we take a close look at foreign currency trading we see some decided advantages compared to the other instruments already mentioned. Foreign currency trading, commonly called forex, involves the buying and selling of one currency against the other. One of the huge advantages of forex is its’ liquidity, which is the volume of transactions measured daily, weekly or annually.
The liquidity in forex is second to none. This is important because it means when you trade you will almost always get your fills. Can you imagine buying a stock and it starts to dive and you can’t get rid of it because of lack of liquidity! This would not happen in forex trading. Another advantage is its high daily range. This means every day the currencies increase and decrease in price enough to allow the trader to have opportunities for trades every day. The forex market also gives you flexible work hours. All around the globe the same currencies are being traded from almost sunrise to sunrise.
You can literally choose when you want to trade. It is ideal for learning and practice if you have a current job and want to transition to trading over a period of time, or if you want to just trade on the side. One of the biggest advantages of trading foreign currencies is the leverage it gives the trader. This means you can start with as little as US$2000 or sometimes less and start to trade right away.
Another advantage is that you can focus on one or two pairs of currencies and really learn to trade them very well because you will get to know them so well. You do not have to wonder which stock should I going to trade today. Finally the opportunity exists for you to be trained by experts on all aspects of forex trading for a very reasonable price. You do not need to try and reinvent the wheel. It has all been done for you already. Researched, experimented, tried, tested and proven to work. Click on the link to find out how!

Forex Trading -Follow The Money

Forex trading is one of the best home based online business opportunity you can find today. The Big Sharks know that and use the demand for information about Forex market to get every possible dollar in their hands. Who are they? The answer is always easy – Follow the Money.
There is one player on currency market (and in every other market) who never loses his share in every single trade. Brokerage service on Forex trading is claimed to be commission free, right? But you always pay your minimum 3 to 10 pips fee on each trade. Where those 3 to 10 pips go? Make your best guess! There is almost no chance for a person who has no idea for the forces driving the Info market to save himself from being robbed and abused by those well advertised money machines.
You can see their banners on your e-mail provider. You can watch their infomercials on every TV channel. Be aware about the presence of those Big Sharks and be sure that the information they will try to sell to you is always available for free online. Most of the time the quality and the real value of that free information is much better than the one you will be asked to pay for.
Here is the story of a good friend of mine. He was very excited about Forex when he first time heard about it. That happened to be on one of those popular free seminars, organized by one of the Big Sharks on that field. So he got the bite without paying attention for the hook in it. He went to the next level – two days training for $1,995, only. He came back more excited.
He opened Forex trading account on that seminar, using a special form provided by the Big Shark Company. They honestly declared that by doing that the broker agrees to pay them one pip from each trade made by the customer recruited by them. My friend started real trading, constantly increasing the amount of his investment until he put all of his savings into that Forex trading account. Everything was fine until one beautiful day of October. On that day he got the news: his broker filed under chapter 11. He was broke.
I asked him how successful was his trading? His answer was that he actually lost 30% of his investment, from trading, only. He was able to realize know that the training was completely inefficient and not even close enough to start trading with real money. Something big was missing here. He was missing the big picture in the entire game. His trading experience was very frustrating.
After each trade he felt like just hit the wall with a car flying with 100 miles per hour. A few days ago my friend called me on the phone. He was very enthusiastic about a new Forex training package, just delivered to him. I decided to check it by myself, too. The package is very detailed. All the missing information about the big picture is there. More than 20 hours of free videos are revealing all you need to know about that business.
Zooming towards Forex trading is very smooth and on the level every beginner and advanced trader will tremendously benefit of. The one unbeatable and shocking advantage of this package is that it delivers information, priced from between $3,000 and $10,000, for free. Finally we got something valuable about Forex trading, very professionally developed, for free. Probably, that will put the Big Sharks business on hold for awhile, for the good sake to all of us. So, be careful and keep an eye on the Internet unlimited free resources if you want to self yourself from the Forex scam. Happy Forex trading!

FOREX trading Technique

FOREX trading is a great hot technique of successfully trading in the foreign market and successfully flowing in avalanches of money. There are many programs and packages out there that don’t teach you beneficial techniques like precision and on top of that overcharge their packages for extraordinary prices. You shouldn’t have to deal with being robbed.
Instead you should take advantage of the FOREX market and all it has to offer. You shouldn’t have to watch other people lead successful luxurious lifestyles, and ask yourself why not me? The internet is a goldmine of opportunities and pure success. It’s powerful and nothing can stop it, so why not be part of this rapid money making machine. Investing your time and energy on the internet to successfully make some money is a wise choice; however it is even wiser to invest your time in the trading world with FOREX. The FOREX program has a very high percentage of success due to the techniques and strategies used. This program teaches you how to know the precise time to enter a trade or when to not trade.
It also teaches you when to exit a trade and be able to make huge profits. You don’t even have to make complicated calculations like most trading programs. With FOFEX all the calculations are done for you. The FOREX market is not only a day thing. This is open 24 hours a day. So basically you can make money while you’re on vacation, spending time with your family and friends, or even while you sleep. Location is also not an issue with the trading market, because since it’s online you can be located anywhere around the world.
One of the most attracting features of FOREX is it’s not time consuming. You can spend as little as ten minutes a day “working” on your trades and then you’re done. You don’t have to spend 8 hours a day worrying if you managed to make successful trades or worse if you made horrible trades. You can carry out the rest of your day peacefully and stress-free.
Who wouldn’t like this lifestyle? I’m pretty sure you do. This new lifestyle can allow you to lead the life you’ve always dreamed of having. You don’t have to hide in the shadows of wealthy individuals anymore. Instead you can take action and be part of this attracting group. FOREX has many attracting features that can change your life completely around. Once you see the techniques in action, you will be dumbfounded and ready to jump in all the action, more specifically all the money making fun.
Take advantage of FOREX and all its amazing and beneficial techniques and strategies that it has to offer!

Forex Trading: Learning About the Market

You can never hide the fact that people need money. Money buys everything you need to live a comfortable life. You use it to purchase your everyday food, clothes to keep you warm, fuel for your car, and you use it to pay for bills.

Money is necessary in order for you to provide a comfortable life for your family. This is why you work, and this is why people put up businesses. It is true that earning money can be difficult for the average person. However, it is way better than depending on the government to provide you with food.

People have ambitions that requires hard work. Depending on welfare alone can never make your dreams come true. If you are a regular person, who earns a decent salary but still wants to earn extra cash in order for you to afford that dream vacation you saw in a TV ad or perhaps buy that huge TV you have always wanted, you should consider investing your savings.


Investing your savings can only mean two things. Either you can make it grow, or lose it all. It may have some risks but if you do it right, you can really make a lot of money and afford those things you never thought you can ever have.


One great way to invest your money in is by investing it in the largest, most liquid financial market in the world. This kind of market is called the Forex market. In this market, you simply have to buy and sell currencies of the world with hopes of making a profit. The point of all this is that you have to buy low and sell high in order to make a profit out of your investment. Here’s a clearer explanation on what traders do in the Forex market. For example, when a trader purchases a particular currency at a cheap price, the trader will expect the value to rise. Once the value of the particular currency he or she sells rises as expected, you can sell it at a much higher price, hence, getting your investment back together with the profit.


Trading in Forex will require you to trade in pairs. Because you purchase currency, you sell another at the same time. There are a lot of currency pairs in the Forex market. However, the most commonly traded currency pairs in the Forex market are: USD/GBP, USD/JPY, USD/CHF, and GBP/USD. These four are the most popular currency pairs traded in the Forex market and where people are more likely to gain income.

Although trading in the Forex market can really give you the chance of earning a lot of money, it is also a fact that you can also lose a lot of money. This is because Forex is traded on margin. For example, with a 1 percent margin, your 1000 dollars can give you leverage of 1000 dollars. This means that your rate of return will be 100 percent of each percentage change upwards. However, your loss will also be equally great if the market conditions went against you.


This is why you have to have the proper skills and knowledge about the Forex market before you begin to trade. Also, you need to understand that when you invest in this market, make sure you can afford to lose what you invest. This is not necessarily attractive but if you want to make money, you also have to be prepared to lose money.


If you are an inexperienced Forex trader, you should consider hiring a Forex broker and analysts to guide you in your money-making venture. You can also consider opening a dummy account or taking a Forex trading course in your local business school or in online schools.


Knowing the basics in Forex trading can be very beneficial. So, try and look for some time where you can practice your trading skills and strategies in dummy accounts or attending Forex trading courses.


These are the things you should know about Forex trading and the Forex market. If you want to go and earn that money you need for whatever reasons, try investing in the Forex market. If you do it right, you can be sure that you can earn a lot of money through Forex trading.


Always remember that on whatever things you invest in, whether it would be a business or in the world’s largest financial market, you should always consider that there would always be risks involved.

Forex Trading: Information that You Should Always Watch Out For

Getting the necessary and the right information is one of the most important things in order to be successful.
In a company, in the military, in the government, and virtually in any kind of organization, getting the right information is necessary to make the right decision. This is where all decisions are based from. Information plays a vital role in the society.
For example, in the military, making the right decisions during war or even during peacetime is necessary to save and protect lives. In the business world, it is also necessary to get the right information to make the right decision in order for a company to grow and profit.
Most wrong decisions are usually made because of lack of information or because of getting the wrong information.
Here’s another example on what happens when decision makers get the wrong information. Countless leaders of countries have been ousted because of one minor glitch in the information that their advisers gave them.
It cannot be stressed enough that it is necessary for everyone to get the right information. After getting the information, you should study it, and formulate a decision that you think is right for the current situation.
This is also true in the financial market, such as the Forex market.
The Forex market is the largest and the most liquid market in the world which operates 24 hours a day and generates currency exchanges up to two trillion dollars each day. This market has no centralized location as trades are open 24 hours a day in different parts of the world.
It is a fact that the Forex market made lots of people rich and also taken a lot of people in the brink of financial collapse. The Forex market can really be a difficult market for you, as an investor. It can only mean two things, either you make it big by getting lots of money or you can really lose big time.
With the constant oscillation of currency value in this market, it is necessary for you, as an investor to obtain the right information to base your decisions from. The right and wrong information or late information can mean the difference of you hitting the jackpot by earning lots of money or you losing a lot of money.
Having the necessary skills and knowledge about the Forex market is simply not enough for an investor to be successful. It is a known fact that there are lots of seasoned Forex investors or traders who have lost a lot of money in this financial market. Some even got into debt or bankruptcy.

This is why you should first consider your options whether you should join the Forex market or not. However, the fact that you can make lots of money in this market can really attract you. Besides, the Forex market can offer you a chance to make the big bucks.
So, if you want to join the Forex market or if you already have an active, funded account, you should make sure that you have access to the right kind of information.
It is recommended that you should hire technical and/or fundamental analysts or brokers if you don’t know a thing about Forex charts and graphs. The news also plays an important role in the Forex market.
These people can help you make the right kind of decision by informing you with all the necessary information on what currency you should buy and sell.

Although they will charge you a fee for their services, you can be sure that you will be getting the right information on time that will help you in your decision-making. So, to make it short, you should hire these people’s services.

Even if you know how to read the charts, there are simply too many things that you have to consider; there are just simply so many indicators about the different aspects in the Forex market that you should keep an eye on. Simply reading one kind of chart can be very difficult. Try combining it with another chart, and not to mention that you still have to make decisions.

Always remember, if you want to be successful in the world’s largest financial market in the world, you should get informed with the right information on time. You should always keep in mind that the information that analysts and brokers provide you is the key to success.