General Motors prepares to Declare Bankruptcy Yen rose vs. Dollar

According to the latest Forex updates - After the declaration of U.S. government that General Motors Corp. will file for insolvency today, the Yen climbed up for a 2nd day against the Dollar and the Euro, impelling demand for Yen as a protection from the financial crisis.

The Yen became sophisticated versus 13 of the 16 most-traded currencies after the U.S. government said GM is planning to close 11 factories, accumulating to signs the U.S. recession is far from over. The Euro fell against the Pound on alarm that European Central Bank policy makers will signal this week they plan further steps to keep down borrowing costs, wetting the request of the 16-nation currency. After a Chinese report that shows manufacturing expansion led to the increase of Taiwan Dollar the most in a month.

The Yen became stronger to 95.14 per Dollar as of 1:29 p.m. in Tokyo, from 95.34 in New York last week, when it completed a 3.5 % monthly gain. The Yen increased to 134.58 per Euro from 134.96. The Euro traded at $1.4147 from $1.4158, after gaining 7 % last month, its major forward move since December. Europe’s currency fell to 87.13 pence from 87.46 last week. Sumitomo Mitsui’s Uno said that the Dollar may weaken to as low as 94.25 Yen today.

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Forex updates- Dollar Weakens on Positive Economic News

On Friday the USD closed much weaker against all of the other major currencies, better than expected NFP reports. The recent optimistic global economic news has assured traders that the most terrible of the recession possibly will be over. Traders are moving away from the greenback in favor of riskier, higher yielding assets making market sentiment dollar negative. Equity markets moved higher up with the DOW gaining triple digits and the S&P adding 20 points. The Euro rushed on Friday, it broke all the records of 200 day simple moving average, and closing above the 1.3600.

Since January 2009 the pound closed at the highest level, it hiked at 230 pips on Friday. The pound strengthened against the dollar as the greenback weakened across the board after the employment figures was released and after traders’ worries were calmed with the release of the stress test results.

The Australian Dollar (Aud/Usd) strongly gains all the benefits on Friday after positive news about the stress tests and global equity markets. The pair gained approximately 150 pips, closing above 0.7650 and added 365 pips for the week.

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FOREX-Euro falls to 2-mth low vs. US dollar on rates,Yen deterioates

Euro Worsens Against Dollar,Yen:
The euro fell to a 10-week low against the dollar adding to concern financial turmoil in the region is worsening. The euro also weakened against 14 of the 16 major currencies on speculation its recent declines triggered the execution of automatic sell orders. Meanwhile the yen here also dropped to a five- week low from yesterday against the dollar after Japan’s Finance Minister said today he would resign after budget bills are passed in the nation’s parliament.


Report pushes euro further down:
The Moody’s research and risk analysis report aided push euro down below 1.27 and accelerated dollar gains across the board. The euro needs to find support at $1.2330, the weakest since April 2006, which it touched in October, according to analysts. The euro’s decline against the dollar and the yen accelerated after stop losses on investors’ long positions on the currency were activated.

Traders said a sudden bout of heavy selling had forced the euro lower, triggering a series of sell orders and sending it down about 1 percent to $1.2665, it’s lowest since early December U.S. markets were closed for a holiday on Monday, when the euro lost about half a percent against the dollar and 0.8 percent against the yen as European equities fell and concerns about western banks' exposure to problems in Eastern Europe weighed.

Japan’s Concern:
Japan’s Finance Minister’s resignation spurred growing concern over the world’s second-largest economy .The market sentiment is to short the dollar and long the yen, so there’s a bias to buy back the U.S. currency and sell Japan’s, with forecast predicting the yen may fall to 93 per dollar today. Japan’s benchmark index Nikkei fell to its lowest in more than two months as the stronger yen hurt exporters and investors await the U.S. automakers' plans. According to a Reuter’s poll, Confidence among Japanese manufacturers remained mired near record lows, as exports and output dived amid the global slump and deepening recession at home.

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FOREX-Top Headlines on Monday Morning

Yen Rises, South Korean Won drops to two month low:
The yen climbed to 91.65 against the dollar as of 2 p.m. in Tokyo from 91.93 late in New York on Feb. 13 in forex trading. It advanced to 116.92 per euro from 118.37. Japan’s currency gained 1.2 percent to 59.63 versus Australia’s dollar and rose 1.1 percent to 47.50 against New Zealand’s dollar. The U.S. dollar gained to $1.2756 per euro from $1.2862 in New York last week, and climbed to 1.1668 Swiss francs from 1.1590. The British pound fell 1 percent to $1.4214 and weakened 0.2 percent to 89.75 pence per euro.

The yen snapped two days of losses against the dollar from the Friday session last week.

South Korea’s won shed 11 percent this year, the biggest drop among the 10 most-traded Asian currencies outside Japan, on concern that a deepening global economic slump will discourage investors from buying emerging-market assets.
A forecast revealed the Korean economy will shrink 6 percent this year as the world recession takes a bigger toll on over-leveraged households and smaller companies than during the 1998 Asian crisis.

Geithner Pressed By G-7 to Push Ahead With Bank Bailout Plan:
Finance chiefs from the Group of Seven nations joined the chorus of U.S. investors and lawmakers pushing Treasury Secretary Timothy Geithner to move faster to fix the banking system. The G-7 repeated its traditional message that “excess volatility” and “disorderly movements” in exchange rates must be avoided. The group accounts for about two-thirds of the world economy composing of the U.S., Japan, Germany, U.K., Italy, Canada and France. The yen rose against the euro and the dollar after finance ministers from the Group of Seven nations said the “severe” global slump will persist for most of 2009 and Japan’s economy shrank by the most since 1974, spurring investors to sell riskier assets.

White House dampens stimulus expectations:
President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually. "The acceleration in job loss probably means that this economy is going to get worse before it gets better," he said. The Republicans kept up their criticism on the bill saying it is incredibly expensive. “It has hundreds of billions of dollars in projects which will not yield in jobs," said John McCain, whom Obama defeated in last year's presidential election.

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FOREX- Yen Rises on Speculation, Dollar Gains highest against Yen, Retreats shortly

Dollar hits one month high vs yen later retreats

The yen rose against the dollar on Monday with demand from Japanese exporters lending support after it earlier hit a one-month low as gains in stock markets pointed to an easing of risk aversion. The dollar hit a one-month high against the yen earlier as the Japanese currency carried over its weakness from Friday, when U.S. shares rallied even as data showed that U.S. job losses in January were the deepest in 34 years
But the dollar later shed its gains against the yen due to selling by Japanese exporters, traders said. The yen advanced versus 14 of the 16 most-active currencies today. Against the yen, Australia’s dollar fell 1.3 percent to 61.23, South Africa’s rand declined 1.3 percent to 9.4747 and New Zealand’s dollar weakened 1.5 percent to 48.24. The dollar fell 0.3 percent against the yen to 91.73 yen .The dollar earlier rose to 92.42 yen on trading platform EBS, its highest since early January. The euro rose 0.1 percent to $1.2946. Against the yen, the euro was 0.3 percent lower at 118.70 yen, having retreated from a three-week high of 119.99 yen hit on EBS earlier in the day. The pound fell for the first time in five days against the dollar after the Confederation of British Industry also said Prime Minister Gordon Brown’s government must act quickly to revive lending as businesses battle the worsening credit squeeze.

U.S. financial stability plan to be outlined on Tuesday

In the near term, currencies are seen likely to take their cues from how the stock market reacts to President Barack Obama's financial stability plan, to be outlined by Treasury Secretary Timothy Geithner in a speech on Tuesday. The stabilization steps were initially due to be unveiled on Monday today, but the Obama administration pushed back the announcement as it pressed lawmakers to settle their differences over a huge economic stimulus package. The dollar broke above the triangle pattern against the yen on technical charts late last week, suggesting it has more room to rise.

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World News and Currency Update

EUROPE

The euro traded near a two-month low against since yesterday the dollar on concern the economic slump in Eastern Europe will deepen the recession in the 16-nation currency bloc.The currency may weaken for a second day against the yen on speculation the European Central Bank will signal it plans to cut interest rates again this year, after leaving them unchanged at a meeting today. The Czech koruna approached a two-year low versus the dollar before a government report that may show the trade deficit widened to the most in four years. Russia’s ruble was near an 11-year low after Fitch cut the nation’s debt rating.

ASIA

Indonesia’s central bank is seeking to expand its $6 billion currency swap deal with Japan and add new agreements to bolster the rupiah after foreign-exchange reserves slumped by $10 billion since July.Indonesia, which has similar agreements with China and South Korea for $3 billion each, may also initiate talks with a fourth nation, central bank Governor said, without identifying the country. The rupiah, which fell 16 percent last year, the most in eight years, declined 1 percent to 11,788 against the dollar at 10:19 a.m. in Jakarta.

US
Years of deepening recession in the developed world gnawed at investors on Thursday, after glum earnings from U.S. corporate stalwarts such as Kraft Foods and as the Bank of England looked set to cut record low rates further.As governments worldwide seek measures to ease the pain from the worst financial crisis in decades, the U.S. Senate voted to soften a "Buy American" clause in a $900 billion stimulus plan after President Barack Obama voiced concerns it could spark a trade war.

Excerpts taken from Bloomberg.com.

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Currency Updates for the Day

US dollar
The dollar edged up against a basket of currencies in cautious trade on Wednesday before jobs data in the United States and interest rates decisions by central banks in Europe. The U.S. currency made up for some of its losses the previous day, when an unexpected rebound in housing data and hopes for fresh stimulative economic packages in the United States sapped investor demand for the dollar as a safe haven.
"Investors are basically looking to buy the less-risky yen against other currencies because they are still avoiding risks, though the dollar is the next beneficiary currency, underpinned by prospects for economic stimulus plans," said an analyst at Shinkin Central Bank.
The dollar edged up 0.1 percent to 89.53 yen from late U.S. trading on Tuesday, but Japanese exporters selling of the U.S. currency capped its gains, dealers said. The euro slipped 0.3 percent to $1.2999 and was little changed at 116.34 yen, reported Reuters.

AUD & NZD
Bloomberg reported the Australian and New Zealand dollars rose for a second day as regional stocks gained and government spending worldwide boosted investor appetite for higher-yielding assets. Australia’s currency climbed the most in seven days after a government report showed December retail sales posted the biggest gain in more than eight years. The government yesterday announced a A$42 billion ($27.2 billion) spending package and the central bank cut interest rates to the lowest since 1964 to help the economy avoid a recession.

EURO
The euro fell toward an eight-week low against the dollar before a report that may show retail sales slid for a seventh month, supporting the case for the European Central Bank to cut interest rates.

POUND
The British pound weakened versus the greenback on concern an industry report will show U.K. services shrank at close to the fastest pace in 12 years. The yen may gain for a fifth day versus the dollar on speculation widening credit-market losses will erode corporate earnings, prompting investors to sell higher-yielding assets financed in Japan.

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Yen,AUD,Rupee and Crude Oil Update

YEN
The yen fell, ending three days of gains versus the dollar and euro, after the Bank of Japan said it will buy 1 trillion yen ($11.1 billion) of shares held by financial companies, reviving demand for higher-yielding assets. Japan’s currency dropped from near a one-week high versus the greenback after the central bank said in a statement it will purchase the equities through April 2010 to boost the capital of financial institutions.

AUD
The Australian and New Zealand dollars also ended a three-day losing streak against the yen after the Australian government said it will spend 42 billion AUD ($26.8 billion) to help prevent the economy entering a recession. The Australian dollar gained after the central bank cut interest rates to the lowest since 1964 and the government announced a stimulus package to avoid a recession. New Zealand’s currency rose from near a six-year low.


RUPEE
India’s rupee strengthened the most in a week even as Asian stock gains tempered speculation overseas funds will increase equity sales. The rupee climbed as much as 0.4 percent to 48.7325 a dollar, the strongest intraday since Jan. 19, before trading at 48.775 as of 10:16 a.m. in Mumbai, according to data compiled by Bloomberg. All 10 most-active Asian currencies outside Japan strengthened.

OPEC
Crude oil rose in New York on speculation that OPEC, led by Saudi Arabia, cut its output in January to avoid a supply glut and bolster prices. Production from the Organization of Petroleum Exporting Countries averaged 28.565 million barrels a day last month, down 3.5 percent from December, according to a Bloomberg News survey of oil companies, producers and analysts. A government report yesterday showed U.S. consumer spending fell in December for a record sixth consecutive month, cutting fuel consumption.

The above is compiled news excerpts from Bloomberg.com.

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Yen falls for the second day; Pound on a high

The yen weakened for a second day against the dollar and the euro as gains in stocks reduced demand for the currency as a haven from the financial crisis. Japan’s currency also fell against the Australian dollar and the Brazilian real as measures of bond risk declined after Barclays Plc said it doesn’t need to raise further capital because revenue increased last year. The British pound and the euro strengthened as speculation eased that losses will widen at European banks.
“We’re seeing an improvement in sentiment because it appears Barclays has avoided a crisis,” said Akio Shimizu, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly listed lender. “People will trim their bets on declines in the euro and the pound. There’s a bias for the yen to weaken.” The yen declined to 89.50 against the dollar as of 1:29 p.m. in Tokyo from 89.10 late yesterday in New York. Japan’s currency fell to 118.46 per euro from 117.51. The euro climbed to $1.3236 from $1.3189.
Sterling on the other hand touched a one-week high of $1.4080 after Barclays said yesterday it retains more than 17 billion pounds ($23.9 billion) even after it wrote down another 8 billion pounds of bad loans. The currency rose to $1.4059 from $1.3993.

Britain’s currency plunged to $1.3503 on Jan. 23, the lowest level ever since September 1985, after the government announced a second bank bailout in three months and a further injection of funds into Royal Bank of Scotland Group Plc.

Recommendations:
UBS recommends selling the euro with a target of $1.25 and an automatic buy order at $1.3450 to limit losses, according to the report. The dollar gained 5.6 percent against the euro and 3.9 percent against the pound this month, extending rallies of 4.4 percent and 36 percent last year, respectively, as investors fled higher-yielding assets and sought protection in the world’s reserve currency.

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Asian currencies climb, Yen deteriorates

The yen fell for a second day since yesterday against the euro on speculation stock gains and measures to stabilize the U.S. financial forex system will encourage investors to buy higher-yielding assets funded in Japan’s currency.
The yen also weakened versus the Australian and New Zealand dollars and South Africa’s rand after the U.S. Senate voted to release the second half of a $700 billion financial rescue package to U.S. President-elect Barack Obama
Against the Australian dollar, the yen slipped to 60.56 from 59.55 late yesterday in New York. Japan’s currency also declined to 49.12 versus the New Zealand dollar from 48.28. The yen weakened to 9.1044 per South African rand from 8.9936. Benchmark interest rates are 4.25 percent in Australia, 5 percent in New Zealand, 11.5 percent in South Africa and 0.1 percent in Japan.
Asian currencies strengthened, led by South Korea’s won and Indonesia’s rupiah, as stock-market rebounds in the U.S. and Asia helped shore up confidence in riskier assets.

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Dollar slumps against Pound and Euro with Retail Sales decline

Here's the top story of the day on forex.The dollar relinquished its recent gains versus the majors, tumbling by over four big figures against the pound to 1.4960. The forex economic data released earlier in the session was mixed, with durable goods, factory orders, pending home sales and non-manufacturing ISM reported in the Tuesday session.

The dollar declined from a five-week high against the euro as well on the speculation reports this week which show U.S. retail sales and manufacturing has weakened as recession continues to spread through the world’s largest economy. The Australian and New Zealand dollars rose from four-week lows on speculation a rebound in Asian stocks will give investors the confidence to buy higher-yielding assets

Although the calendar for today that is Wednesday is light, traders will closely scrutinize the December ADP private sector payrolls figure – which is estimated to post a loss of 475k jobs, deteriorating sharply from a month earlier at a loss of 250k jobs. The report will be assessed as a proxy to Friday’s key non-farm payrolls figure and unemployment rate, which are seen at -500k and 7.0%, respectively. Further, the unemployment rate will be at its highest level since 1993.

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Euro deteriorates to One-Month Low

The euro fell for a third day against the dollar, impending a one-month low, as traders furthered bets the European Central Bank(ECB) will reduce interest rates, decreasing the appeal of the area’s assets. Euro-the 16-nation currency was close to the lowest in a month against the Japanese yen. NZD also fell the most in three weeks .euro is expected to fall further, according to experts. The forex market is currently focusing on how much the ECB rates will fall as compared to the rest central banks.

EUR/USD Intraday outlook for today

Support for the Day: - 1.3308 and 1.3285(main), where alteration is possible. Break could give 1.3264, where alteration also might be possible. Then follows 1.3233. Break of the concluding would end result in 1.3204. If a strong desire, we would see 1.3180. Carry-over will give 1.3163 and 1.3142.

Resistance for the Day: - 1.3503, 1.3544 and 1.3590(main). Break could give 1.3633, where an alteration is possible. Then comes 1.3667. Break of the concluding would outcome in 1.3682. If a strong desire, we could see 1.3736. Continuation will give 1.3770.

The euro is predicted to decline to $1.25 by next week.

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