Asian Market Raise on US Consumer Spending

Asian markets grew for the first time in last few days of trading which help by positive US reports. The US futures market continued to increase in the after-hours session, something that helped the Asian markets.

Even though the US GDP numbers came in much poorer than estimated, the financial market found the power to progress as consumer spending increased, while stockpiles decreased, which can make the perfect environment for the economy to improve later this year.

The combination of consumers rising their spending, where companies decrease their inventories may give the financial markets expect that the economy will rebound in the coming months, expert said. They also said that at this point, the market is in very positive form it overcame a report saying that 6 banks failed in the Treasury’s stress-test.

As such companies that have direct disclosure to the overseas markets placed important gains during the Asian session. Retail companies advanced also in the Asian equity markets, increased the gains from the US session.

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Statistical Arbitrage is known as Risk Arbitrage

Statistical arbitrage is not correct arbitrage since it does not bring a certain profit; in fact many statistical arbitrageurs have finished large fatalities. The term is frequently abbreviated to statarb. Even though statistical arbitrage is often described as being synonymous with pair trading, it is probably more precise to speak that the terms partly cover. Only because of it is not possible to lay down an unqualified regulation when tradition varies as a good deal as it does.

It is known as Risk arbitrage as well, Statistical arbitrage is very frequently overlapped while buy or short couple trading as well as other complicated quantitative methods, where highly developed trading technologies are implemented. Statistical arbitrage trading frequently involves a black box methodology. This is a computer mock-up which is specially programmed to trigger a buy or sell signal when certain financial variables are met. For example a buy signal could compare a stock previous P/E to the 90 day moving average P/E or use certain sophisticated fundamental as well as technical analysis to trigger buy and sell orders directly to the exchange.

These models are very often created by professional scientists and mathematicians who are skilled at back testing using advanced computer programs. Statistical arbitrage is also involved with the miss pricing of derivatives where the derivative is selling away from its quantitatively derived fair value price.

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US Futures Declined at a Strong Pace, But Asian Market Rise

US Futures post significant decline tonight, although Asian markets are trading in the green. The main cause of concern seems to be the swine flu that just hit the US borders.

It seems that the swine flu is the problem to hit the US and the global financial system. For now, the investors are anxious that the cost of combating the new disease will only add another streak on the government’s budget, already influenced by the huge rescues that financial sector requisite. Also, like this time, consumers tend to spend less, which will also affect the business cycle rising significantly the recovery period. Experts said.

However, Asian equity markets seem unaffected up to now, reaching the maximum valuation in the last three months of trading. The financial sector constant to progress tonight, helped by the unofficial, preliminary stress test outcomes, which show that most banks have a sufficient capital base. Equally with the financial sector, pharmaceutical companies also placed some major gains tonight, as drug sales are possibly to raise up.

Additionally, the Japanese government decreased yet again the GDP projections for 2009, down to 3.3%, something that should have pulled the Asian markets worse.

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G24- Developing Countries harder hit by Global Recession

Group of 24 nations said on Friday the global financial and economic crisis is hurting to developing countries, which will have to deal with the fallout long after advanced economies.

The G24, made up of developing countries from Latin America, Asia and Africa said quick turn down in increasing and falling currency reserves were leading to growing unemployment and poverty levels.

The risks of a more protracted worsening in the world economy remain significant a G24 communique said after a meeting on the sideline of the spring meeting of the World Bank and International Monetary Fund.

The communique noted the crisis had originated in advanced economies and was affecting developing economies through sharp falls in remittance, exports, private capital flows and a global credit crisis.

The group said that developing countries will require unprecedented and urgent support from global financial institutions like the World Bank and IMF.

The G24 also supported an early review of the role of the IMF in the international monetary system, including the role of major currencies like the Euro, Yen, Dollar and British Pound.

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Gold and EURO given reason to smile

EUR/USD has been facing hard times since early week and the pair held 1.2930 support level and has appreciated more than 250 points since then. The pair found some momentum that was extended towards 1.3270 which gives more strength. As long as 1.3060 holds for now we expect further improvement in the next week. However, for now 1.330 is the next level that euro bulls should be aware.

GBP/USD has been trading choppily since UK budget released in Wednesday. After the news we witness a big slide in the pair, the pound manages to reverse all losses and continue to rise towards 1.4750. The risk appetite returned and traders were happy to trade both pound and euro. As long as the pair continues to trade above 1.45 we might witness some range forex trading in the coming days, as investors are still deciding which way to go.

The currency is now trading in the aftermath of the news, with euro still being strong and pound weakening as the day progress. Later on, we have very important number in the US with durable goods and new home sales. It will be interesting to see some improvement in numbers but more interestingly, I would be awesome to see the reaction of the investors if better numbers are printed.

Regarding the economic future markets is still under pressure. So far, future and equities, managed to sustain the upside and it will be interesting to see how DOW JONES will close the week.

With the G7 meeting starting today and forwarding in the weekend, let’s see what the 7 world leaders say about the current position and we are definitely going to hear something new about the way to solve the deepening global recession.

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Global Financial Crisis fuels qualms of US workplace violence

A worker recently fired from his job by US financial services. The company disappointed that the firm had followed to be sure he did not remove violently at his ex- bosses or co-workers.

‘Tough times will cause people to do crazy things’, said Kenneth Springer, who is company Corporate Resolutions Inc. did the surveillance. “People are taking more precautions”.

Job uncertainty, Job losses and slashed budgets are all straining that could push somebody over the edge.

An expert says workplace violence can range from intimidation to violence and harassment and homicides.

While economic pressure can make some people violent, it would not turn just anybody into killer, said Laurence Miller.

Statistics on workplace violence in this financial crisis will take years to collect and examine an expert says. From 1997 to 2007, the most recent year for which data is available, there above 7,000 professional homicides countrywide, according to the US Bureau of Labor statistics.

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More insights from equities and earnings reports

Markets are in the process of bottoming out with sentiment changing as the global crisis faces more challenges and investors are ready to take more risks.

Stocks in the US and Asia rose on financials with better than expected earnings from Wells Fargo and Goldman Sachs and speculation that other US banks will also post robust quarterly results (JP Morgan Chase on Thursday, Citigroup on Friday and Bank of America and Morgan Stanley next week). In Europe, UBS announced $ 1.7 billion loss, cutting 7.5k jobs.

Fed Beige book gave signs of stabilization with deceleration in the pace of economic decline in 5 of 12 districts and reaffirmed general weak economic conditions (weaker manufacturing, industrial production lowest since 98, sluggish retail spending, weak labor market conditions and residential real estate, downward pressure on inflation) while builder optimism jumped. US retail sales on Tuesday showed unexpected fall.

USD gained as uncertainties persist ahead of the earnings reports.

EUR fell after ECB official said ECB to announce “Non standard measures” to boost the Euro zone economy. ECB expected to cut rate from 1.25% to 1% at its May 7th meeting.

GBP still enjoying a strong rally in the absence of bad news with UK housing data boosting it above key 1.50 level.

Rangebound Gold pressured by lower US consumer inflation and firmer USD.

Crude Oil range trading around 50USD since the start of April despite crude stocks rising to highest since Sept 90. Focus on USD, inflation and stocks.

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Stimulus Plans are starting to show results

Stimulus plans are beginning to work, obviously in China and uncertainly in the US, but the governments require being arranged to do more, the head of the OECD (Organization for Economic Cooperation and Development) said on Monday.

Angel Gurria, OECD secretary-general, said that the world economy would not bottom out until 2010 and would possibly begin rising again towards the finish of that year.

Gurria, speaking on the sideline of a meeting in Beijing, said that China’s 6.1% annual development in the first-quarter presented by the government’s fiscal stimulus and rising and falling bank loans were making up for about half the country’s export deficit.

He also added that it is very strong, very powerful, stimulus, which means it, is already starts to have some effect.

Gurria also said that the combination of higher public spending as well as support to the banking sector was also helping to alleviate the US economy.

But he also said that the 2009 year would remain very complex. Last month OECD predicts that its 30 member nations would bond -4.3% this year.

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Asian Stocks climbed for sixth week as Recession Concern Reduces

Asian Stock rally for sixth week, the highest line of gains in more than two years, on rising confidence the worst of the global financial crisis is over.

China Cosco Holdings Co., the world’s biggest operator of dry-bulk ships, surged 21% on increasing Chinese shipping rates and exports. PT Bumi Resources, Asia’s biggest exporter of power-station coal increased 21% in Jakarta. JFE Holdings Inc., Japan’s second-largest steel maker, rose 22% on speculation it would not make big price cuts and as the government revealed a record stimulus package.

This week the MSCI Asia Pacific Index increased 2.0% to 89.69, completing the highest stretch of gains since December 2006. Asian market has climbed 27% since the MSCI benchmark fell down to a six-year low on March 9.

Japan’s Nikkei 225 Stock Average lost 0.6%. South Korea’s Kospi index fall down 0.5% as brokerages cut recommendation on financial companies. Thailand’s SET Index increased 0.6% in a week reduced by New Year holidays. The Thai government called a state of emergency following collides between protestors in Bangkok and security forces.

MSCI’s Asian Index plummet by a record 43% last year as the credit crunch tipped the world’s biggest economies into financial crisis, forcing companies to cut jobs among falling profits.

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Forex Updates- JPY falls against USD, AUD, NZD

On Friday, the yen fell down against the dollar and other major currencies as short-term traders pushed it down, but improbability about economic improvement scenario left the market stressed for momentum as it also expected result from Citigroup.

On Thursday, the yen had rose against the commodity currencies and greenback after China's 6.1% economic growth rate let down many who had expected on a quick step.
Bit it failed to uphold the gains into Friday, quickly short-term traders to push the dollar ahead instead, prompting dollar buy orders at upper levels and taking the like of the NZD and AUD ahead with it.

In Sydney, the senior currency strategist at RBC Capital Market Sue Trinh said that it is investors and intraday trading which is running the market action.
The dollar which has risen increasingly against the yen as hitting a 13-year low in January rose 0.3% to 99.65 yen on Friday, after breaking support from its 200 day moving average at 98.88 on Thursday but after that not settling below it.

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U.S. Interbank loan Rates are down

U.S government disclose on Thursday U.S. loan rates are lower. In May U.S, government will disclose the results of stress tests of financial institutions.

On Thursday, Obama government that they would publish results of stress test on 19 on this month of the U.S. largest financial institutions.

Obama spokesperson said on Thursday, this move has been taken to ensure confidence in financial market and provide as much transparency as possible to the common mass.

British bankers association said on Thursday, overnight U.S dollar labor lost 1.25 bps to 0.25% while the three-month labor was down 0.56 bps to 1.11%.

In another place the overnight Canadian dollar, Libor was up to 0.33 bps to 0.43%, while the three month remained unmoved at 1.00%. The euro Libor gained 3.38 bps to 0.83% while Libor fell 0.13 bps to 1.41% in the three-month. Sterling Libor was flat 0.60% while Libor declined 1.00 bps to 1.52% in three-months.

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Risk and Reward

This question is very difficult to answer in a precise way, as it does not have an exact answer. Hence, the question of risk and reward always changes with the circumstances of the moment. The traditional ration is 2:1 risking half the amount of pips as you are trying to make. So if your profit aim is 100 then your stop would be around 50.

Theoretically, it sounds like a fantastic plan. You just need to be right four out of 10 times to make money. However, no trader put this basic principal in real practice. I have read various views in this regard from analysts, trading gurus and whole host of others who have never risk so much money on trade. I have never seen anyone who actually makes living from the market employ 2:1 risk reward ratio.

Might be thinking why?

The basic reason behind this is that most people who trade do not give importance to such things they believe there is no such things in the market. In fact, market does not respond according to the goals. Just imagine a trade where you risk 100 points with a profit target off 200 points. At the start, trade moves in the favor and touches 199 points. However, you waited the profit to touch mark of 200 points but guess what? The forex market all of a sudden falls. It could be a nightmare where positive turns negative in a matter of minutes. What is your loss? On paper you loss 100 points but actually your loss is 299 points. This is what can happen in real trading. Theoretically 2:1 risk reward is far more elusive then you imagine.

Profit cannot be predicted in the market. The only thing you can control is risk. That is why we always trade with two units. That is why we always take short target and attentively control risk by trailing our stops. It may not be stunning but that the only way to cope up risk and reward.

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Slow and Realistic Euro Sink

With humongous US budget slump it is hard to get thrilled about the US position and dollar outlook. Overall confidence in short term the euro zone economy is likely to dip further. Euro is going to come further down against the dollar. The best strategy now is to sell euro on rally above the 1.3350 level.

After slipping on Thursday and Friday, the euro eyed strong recovery on Monday. Trading liquidity is still very low especially in European market due to Easter holidays. From 1.3120 the euro rallied around 1.3390 in New York.

After doing great than the expected outcome positive earnings data from the US banking sector would help and would lean to lessen dollar demand.

There will be still lying dark clouds in the euro zone economy with default spreads on German debt lying higher. Comments from ECB officials have confirmed that they are going to continue further interest rates cut again. Euro weakness was illustrated by declines against pound and the franc over the last 24 hours.

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Before US bank earns, Dollar rises up against Yen

On Monday, the dollar rises up vs. yen in quiet trade with many overseas companies even now left for the Easter holiday and further to come until the US market earnings season gets into full form.

This week the US banks which includes Citigroup and Goldman Sachs JPMorgan are prepared to report Q1 results and traders are eager to look for how stock market respond to these earnings reports.

The dollar increased against the yen, last week, buoyed by a meeting in US stocks after better earnings advice from the US bank Wells Fargo.

Market spectators said the currency market has valued in positive US earnings records, so the market is more expected to react to any negative surprises.

The dollar was around 100.33 yen or Fx trading, as compare with 100.22 yen in late Tokyo trading on Friday. Last week the US currency touched 101.45 yen; it’s uppermost in six months.

On Friday, the euro was figured at $1.3144, down from $1.3186 when it also falls to $1.3090, a rank not seen since middle of the March.

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Glimpse of hope for Obama of recovering financial system, after meeting

On Friday, President Obama said that we are starting to see is ‘glimmers of hope’ across the economy to reporters after a meeting with teams of economy and regulatory also with Federal Reserve Board Chairman, Treasury Secretary and the Chairman of the Federal Deposit Insurance Corp. He also added, “We’re starting to see progress”.

Obama mentioned to improve refinancing of home mortgages, money flows from $787 billions stimulus package and 20% raise in government backed loans to small business over the previous month only. He also said we are still lots of job losses and lots of hardship.

The talks that lastly about one hour, pointed on stabilizing banks, stimulating the economy, the rising unemployed rate, falling strain in the credit markets, the health evaluation of banks and the mortgage refinancing, which also includes “stress tests” being organized by the Fed. The result of the Test, due at the end of this month, are awaited by the financial market.

He also said in the meeting that in the coming next few weeks, you will be seeing other actions by the administration but gave no details.

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Barack Obama plans meeting for bank stress tests

On Thursday, a White House speaker said U.S. President Obama plans to meet with the top financial regulators to talk about the “stress tests” being scheduled at the 19 biggest U.S. banks,

Obama will converse with Treasury Secretary, Federal Reserve Chairman and Federal deposit Insurance Corp Chairman and with top White House economic adviser, on a “wide” range of financial topics.

In an attempt to assess banks’ capital require, the government is testing how they would charge under more unfavorable conditions than are predictable. The markets are worriedly expecting the results that owe at the end of April, to see which firms will probable require more taxpayer help and which firms get a clean bill.

The regulators is expected to present Obama a progress report on what the regulatory stress tests is show the condition of the top banks.

A source well-known with the meeting said regulators plan to also converse with Obama what another steps may require after the tests.

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Forex Book

There is undoubtedly about it that forex book is very helpful for new currency trader and evenly for the traders who want to develop their skills with new strategies. Nowadays there is a huge range of currency trading training resources presented in both offline and online which includes forums, seminars, online courses, members-only websites, conferences and even one-to-one training from professional tutors. But there are times as a good traditional book is just that you require.

No matter whether your forex book is available on paper or downloads as an eBook, it can be the good method to learn in many situations. It has both the option prices and convenience.

Another benefit of forex books is that you save time by skipping more the things you already know. If you have any knowledge at all, going more than the basics, it can waste lots of your time in preparation that is based around seminars or even online audio/video sessions as you stay for everybody else to be shown the methods that you have already expert.

It is said that the currency trading market is area where you can hope to find a sure amount of publicity. Do not to be too fast to make negative decisions only because a book or eBook is promoted with the fair amount of tough sell. Keep in mind that the advertising copy is possibly written by the professionals, not any writer of the book.
So you can carefully ignore most of the publicity in the promotional advertisements and look for the thing that you really require to know. These are:

• What fields of expertise is covered in the book.
• Whether it is correct for you, i.e. whether it is meant for your experience level and skill.
• What is the pay back that you individually can expect to get from it

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Eurozone GDP Contracts

Eurozone economy has recorded a bigger shrunk in its economy than was estimated in the last three years of 2008.As per the EU's Eurostat office GDP in the 15 nation area fell 1.6%, more than the 1.5% expected.

In Fx trading, euro declined against the dollar to $1.3270 amidst fears the economy could contract even further in 2009.As of now the Eurozone includes 16 countries that use euro as their national currency. Slovakia was the 16th nation to switch to the euro at the beginning of this year.

Analysts are worried that GDP contraction in the eurozone must have been worse in the first quarter of 2009.The data and survey evidence collected has largely been gloomy. Analysts are expecting slow recovery.

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U.S. Budgt Deficit Worth 1 Trillion

The U.S. recorded a gigantic budget deficit of nearly $1 trillion in the first six months of this fiscal year which began on October 1.

The estimates released on Monday by the Congressional Budget Office said the government likely recorded $953 billion in red ink from October through March.

WHY DEFICITS MATTER

• Increased debt costs for government
• Increased risk of inflation
• Long-term pressure on dollar
• Could lead to higher taxes and spending cuts later

The CBO, the nonpartisan budget analyst for Congress, said the drop in corporate receipts was the largest in more than three decades.
In addition to dropping revenue and the bailout money for Wall Street, the government has poured more money out the door to try to jump-start the ailing economy, which has been in recession since December 2007.

An arm of the U.S. Treasury Department also loaned $10 billion to credit unions to help them address recent liquidity pressures, the CBO said.

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UK's Budget Deficit to be Worse Than Predicted

The budget deficit is at least 2.7% more than what was being expected in the pre budget announcements by the Chancellor Alistair Darling.Darling (seen in picture) who will be presenting the budget later in the month said the recession in UK has been more severe than expected.

In Fx Trading, the pound has tumbled amid these persistent economic problems here.

The £39bn (approx 58bn US dollars) deficit could be financed by either raising the tax limits or by putting a five-year real freeze in total public spending.The Institute for Fiscal Studies (IFS) estimates that taxes in Britain will have to rise by at least £20bn a year to cover record borrowing.

Noticeably, at the last week Summit of the leaders of the world's largest economies, a deal worth $1.1 trillion (£681bn) was reached at to tackle the global financial crisis.

The British Prime Minister Gordon Brown will be meeting the chancellor and the Bank of England governor to discuss about measures agreed at the concluded G20 summit.The prime Minister here is hopeful the consensus reached at the meeting will help build the dwindling confidence in the banks, and will make a difference to the lives and to the aspirations of families and businesses in the UK.


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A New World Order in the Making

The world leaders meet at the G20 Summit in London with the motto of Stability Growth and Jobs has ended marking a turning point in the world history. Overall, there have been mixed responses regarding the success of the Summit.

The distinction between the developed and the developing countries seemed to fade away as there was marked difference in the particularity of America. China Brazil and India drew as much attention.While the G20 meet did end in global settlement to boost the world growth there have been some misses. Here are some of the highlights from the Summit.

Hits

• US president Barack Obama called the Meeting Historic in its pursuit to recover from the financial quagmire.
• IMF's managing director was happy after the summit and especially enthusiastic about IMF issuing $250bn worth of its own currency, the SDR. Top jobs in the IMF will be open to people from all parts of the world which until now had only Europeans on them.
• Countries like China and India have been given bigger say in the working of this international institution.
• Leaders called the summit a "real progress" in efforts to enforce tighter regulation of the financial system.
• G20 meet succeeded in inciting cooperation on crackdown on tax havens as also greater support for the poorest countries.

Misses

• The Summit's biggest failure is being seen in its inability to settle on a global plan for recovery from the crisis.
• There have been no major deals on plans of co-ordinated global stimulus packages.
• A representative from the World Development Movement said one of the biggest misses of the summit is that leaders failed to get a consensus on a global green new deal that puts the interests of poor people and the environment as an important part of the international trade and finance.

On the whole the summit is being as mixed bag of goodies. The summit is being widely considered to have taken only insufficient measures to meet the challenges facing the global economy even while a clearer financial structure is expected to emerge out of the chaos.

It remains to seen when and how the pledges at the Summit get transformed into real worth.
The G20 Summit is best being regarded as embarking of the journey of a new beginning.

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Global leaders begin G20 summit

High Hopes from the G20 Meet:
Leaders from across the world have assembled for the G20 Summit in London to discuss about one of the worst financial crisis since the 1930s.Security is beefed up at the at the Excel Centre in London's Docklands where the summit began today. Leaders at the summit have only a few hours to reach agreement on plans to revive the world economy.

Key Issue is the Global Financial Calamity: Consensus on boosts in public spending to revive the world economy is likely to be arrived. Leaders will debate however if a target figure should be put on the size of the stimulus plans already announced.

Other Agendas:A number of other issues will also come up which require commitment of money figures from the governments One of the important ones being how much more money should be given to the International Monetary Fund (IMF), whose role in the present financial climate has increased radically.


Future of the Dollar:
Debate has been fired on the future of the US dollar as the main reserve currency in the world that will continue for some time.China's voice is likely to grow stronger on this issue as there is already agreement that it will be given a bigger say in the IMF from 2011.

Most other developing countries are eager to get a bigger influence too, and would like the US to be stripped of its veto power.Leaders are also expected to pledge additional funds to help the poorest developing countries who have been hit by the crisis

Here are Some Pictures from the Summit in London

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Forex ~ Afternoon Forex Updates

US Dollar slips:
Risk sentiment has been soured with reports that bankruptcy could a viable option for the car makers like GM. Economists have warned that the collapse of big automakers may reverberate beyond North America given the network of global supplies chains.The warning followed news from the Bloomberg that the Obama administration is looking at a prepackaged bankruptcy for GM.

In fx trading,US dollar came off highs with further news that this report is "not accurate" and that President Barack Obama's thinking on the crisis facing GM has not changed since Monday. The dollar fell about 0.1 percent against the yen.

Traders alert before key events later this week:
Forex Traders are wary of chasing prices aggressively in view of key events including the G20 Summit, later this week.Investors are treading cautiously ahead of the G20 meeting and the ECB policy announcement in the coming days.


Banks take to 'unconventional' ways:
U.S., British and Japanese central banks have turned to unconventional steps to pump funds into their economies, including outright buying of government and corporate debt. ECB is expected to follow suit.

Business confidence at record low in Japan:
A survey by the central bank in Japan has showed that business confidence among manufacturers in Japan is at a record low. Government reports yesterday showed that U.S. home prices are still plunging and consumer confidence is holding at just above record lows.In online forex trading the yen traded near its weakest level in almost a month against the greenback.

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