UK Inflation Climbs in October

The inflation rate in the UK climbed higher than experts predicted showing the first rise in last eight months. UK consumer prices rose 1.5 percent compared to 1.1 last months. The experts predicted 1.4 percent rise.

The reasons of such reading are and air fare costs and fuel prices as fuel producers shift their trading terms. However, between September and October the cost of fuel dropped by 0.7 percent.

Prices for second-hand cars, caused by a shortage of stock, rose at the fastest pace pushing up inflation in October, the figures released by the Office for National Statistics showed today. Climbing prices of recorders, games and toys also contributed to inflation.

According to the Bank of England`s growth and inflation forecasts released November, 11, the inflation will not reach 2 percent level until 2012. As the UK economy recovers there are some risks of rise in consumer prices, that is why the Bank of England ties not to withdraw stimulus measures too early and sticks to its low lending rate policy.

Important Slide for USD

Another bottom for the USD was reached as low borrowing costs spurred investors to sell off the Dollar and buy other assets. The USD index was at 77.002, after dropping on Wednesday as much as 0.7% to 76.803. Coming economic recovery spurs investors leave the greenback and try to trade other high profitable units as the greenback becomes highly unappealing to investors.

While the Federal Reserve stimulus measures helped pull the nation out of the recession, it also pumped an enormous amount of Dollars into the economy and with the continuous rise in the jobless rate the Fed is predicted to lift its interest rate soon.

Among important business events capable to make influence on the currency market are the release of the Trade Balance and the Unemployment Claims figures will be released on Thursday at 12:30 GMT.

Durable Telecom Alliance

Chinese Unicom and Spain's Telefonica have concluded a deal that will encourage cooperation between the two telecom companies.

According to an agreement signed on Sunday each company will buy $1 billion of the other's stock. The Spanish firm's stock in Unicom will increase to 8%; and China's second-largest phone operating company will hold about 0.9% of Telefonica, the signing of an agreement is a strategic attempt to remain competitive as the global downturn has shortened. China Unicom currently competes with China Mobile and China Telecom. Unicom recently announced a three-year deal with Apple last month to become the number one Chinese phone company to make support of the iPhone, whose start in China is scheduled for Sept. 28. After the signing of the deal in Beijing Chinese Unicom stock appreciated in the CFD market.

Pending Home Sales Spur USD Rise

Yesterday the US currency continued its bullish trend as optimistic U.S manufacturing data and Pending Home Sales figures were released. The U.S. manufacturers expanded in August for the first time in one year and a half, while home sales contract hit a two-year maximum in July, helping helped the economy to recover and thus spurred the demand for the USD. Factories and constructors, which have accounted for half of all the jobs lost since the recession started, may be rising in coming months as home sales are. The U.S dollar jumped against most of its major currency pairs yesterday as sharp losses in global stock markets offset lower than expected U.S. manufacturing data and boosted the greenback's demand. As a result, the USD finished yesterday trading session 150 pips higher against the EUR at the1.4216 level. As market analysis shows the US currency also saw bullishness against the GBP and closed at 1.6155.

The American Petroleum Institute informed yesterday that crude supplies declined 3.19 million barrels last week. A U.S. government report may also show stockpiles reduced. Oil’s gains were supported as Australia said economic growth unexpectedly accelerated in Q2, adding to expansion in Europe`s leading economies such as France and Germany.

Financial Market Update

The previous week appeared to be very volatile for the US currency during Forex trading hours. The USD remained in a tight range 1.4200 and 1.4400 with no clear direction. The greenback performed a bearish activity yesterday as a result of yesterday`s parliament elections. The election outcome also pushed the Japanese yen sharply higher. The USD volatility was reasoned by mixed results from the US economy. The major data release that impacted USD behavior appeared to be the Preliminary Gross Domestic Product (GDP) report. It dropped by 1.0% in Q2 of the year, showing that the American economy continues its recession, despite some optimistic releases.

According to the Wall Street Journal, the DJIA dropped 0.4% on Friday also damped regional sentiment. DJIA futures were recently 50 points lower in screen trade.

US GDP Data Brind Dollar Fall

The period of steady appreciation for the USD has ended. The greenback experienced the essential drop the end of European trading hours. The trades closed at the level of 1.4364 against the EUR and 1.6284 against the GBP. The fall was reasoned by the following reasons: crude oil appreciation as a result of the global economy growth. The Gross Domestic Product (GDP) of the United States contracted 1.0 percent, better than 1.5 percent expected by the analysts. And it looks like the USD index will continue falling next few days.

The drop in GDP was the fourth straight one, the longest recession since quarterly records started in 1947. The world’s number one economy has shrunk 3.9 percent since last year’s second quarter. Yesterday`s report is the second of three estimates on Q2 growth. As more information becomes available the data will be revised again in September.

Euro M3 Money Supply Grew at a Slower Pace

The ECB stated on Thursday that M3 money supply in Euro-Zone rose at a slower pace of 3% in July compared to June's 3.6%. As market experts tend to think the annual growth rate will ease to 3.2%. Among the main components of M3, M1 increased 12.2% in July, up from 9.4% in June. Meanwhile, the annual rate of change of short-term deposits depreciated to minus 2.6% from 0.4% in June. Furthermore, the annual rate of change of marketable instruments dropped to minus 7% from minus 4% in the previous month. The euro-region economy barely contracted in the Q2 as Germany and France unexpectedly emerged from the decline.

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Strengthening of USD Positions

On Monday the greenback gained its positions versus major currencies traded in Forex market, from a string of recent declines after signals at the end of the week that CBs of different countries continued to carry out a policy of keeping their Interest Rates low for the near future. Technical analysis experts continue to expect that at some point signs of strength in the U.S. economy will be treated as positive for the nation's currency, ending an inverse relationship since the period of financial recession, where negative news performed a negative influence on purchasing the U.S Dollar.

The US currency also appreciated yesterday versus the EUR and Japanese Yen as Wall Street halted earlier gains and traders shifted their trading positions ahead of U.S. consumer and Housing data to be released this week. Solid U.S. data and probable reappointment of Federal Reserve Chairman Ben Bernanke pushed investors to carry out riskier transactions at the expense of the JPY and USD.

First CFD Transaction in Romania

An important event in the history of Romanian stock market. On Monday the Sibiu Stock Exchange carried out the first CFD transaction with SIF Banat-Crişana (SIF1) shares, in an overall value of 4.950 lei for the first time in the history of the home capital market. The SIF Banat-Crişana equities quoted at 0.99 lei / title, 2.94% below Friday's Forex quotes on the Bucharest Stock Exchange. Every contract for difference includes 1,000 shares, and for the transaction conducted Monday the buyer submitted a margin of 990 lei, 20% of the total value of the securities traded there.

Thecontracts for difference help the traders to take advantage of the indices in the price of shares, without effectively buy or sell the respective securities, i.e. if an investor bought a contract for difference for a single share, he did not buy the respective number of equities on the spot market, but has the possibility to gain from the difference between the bid and ask price. CFD's are similar to the futures contracts, with the difference that they have no due-date.

Positive US Indexes Data Brings Gains for USD

The last week ended with significant gains versus other major currencies. But at the same time it ended with decline against the Yen boosted up by optimistic economic figures from Japan. USD/JPY is currently traded 94.50.

The previous week started for the US index with a significant drop caused by pessimistic U.S economic figures. The Federal Budget Balance delivered a negative result, revealing a strong deficit for the federal budget. This fact accompanied by the FOCM decision to leave the interest rates at a record low level added to the USD bearishness. But however, the second half of the week brought much better results and positive releases. The CPI report managed to provide a reversal sign for USD in all Forex crosses showing signs of further recovery of USD.

This week will bring the release of Building Permits and the Producer Price Index (PPI) this Tuesday capable to influence mobile trade. The Building Permits is anticipated to perform the best figures in 8 months.

Low Economic Data Bring Dollar Fall

Yesterday`s trades were marked with a series of worse than expected economic reports. The U.S Retails Sales indicator dropped by 0.1% in July breaking all economists` expectations. The index was expected to rise by 1.8%. The U.S Core Retails Sales index also performed an unexpected drop of 0.6%. The negative data proved o show that Americans are not likely to expend their spending.

Retail sales shows the level of consumer spending so it is treated as a consumer demand and consumer confidence indicator, it may serve as a reference point for the currency market during reversal points of the economic cycle. This index is highly important for following the USA economy, as consumer demand is its main driving force. As a result the US currency reacted immediately. The Dollar dropped against all the Forex currencies. The greenback lose 100 pips at against the EUR on Thursday. The bearish trend against JPY continued.

EUR Goes on Falling against the Yen

Yesterday the EUR performed a record 1.9% loss against the Japanese Yen. The reason of such a decline appeared to be negative data from German consumer prices in July raising opinions that the ECB will maintain interest rates at a record low till the end of the year. The EUR traded $1.4154 from $1.4142 late Monday and was at 135.74 yen, down from 137.32.

The British equity market movements tend to have major affects on the Pound`s value. Even more, Forex traders are staying cautious ahead of today's BOE inflation announcement. Looking ahead to today`s events from the U.K which will likely impact the Pound for the rest of the week with the Claimant Count Change to be released at 8:30 GMT. The Euro-Zone Industrial Production report is also set to be announced at 9:00 GMT, negative results will likely put further downside pressure on the EUR.

Dollar Extends its Gains against the EUR and Pound

Yesterday`s trades were marked with USD appreciation versus European currencies such as EUR and GBP. Monday the Dollar Index, showing the Dollar position against 6 most traded currencies performed an increase of 0.4% hitting a 79.31, second consecutive week`s rise. Last week the index added 0.8 percent. Adding to the Dollar gains yesterday was the increased speculation that in the long run, the U.S. economy will probably grow at a faster pace than the Euro-Zone, Britain and Japan.

The USD's bullishness vs. the EUR continued yesterday. The rate reached its low at 1.4130 level. GBP/USD pair ended trades with a massive drop by 235 pips hitting the low of 1.6475 as a result of British banking woes revived.

Among today business events many news will come from the US economy including the release of Prelim Nonfarm Productivity and Prelim Unit Labor Costs data both at 12:30 GMT, and Wholesale Inventories at 14:00 GMT.

JPY Is the Week`s Loser

The last week`s major loser is considered to be the Yen, which suffered a lot after the release of America's Non-Farm Payroll data. The Japanese currency reached its year lows versus the EUR and GBP correspondently 138.69 and 163.08. The fall was also considerable against the Dollar as the pair hit the June`s low of 97.76.

As a result of the US NFP report, risk appetite of Forex traders rose sharply. With a surprisingly heavy news week for the Japanese currency ahead of traders, the bearishness is likely to continue this week, since many are expecting positive results which may likely boost the appetite for risk in the market and thus put additional selling pressure on the Dollar and Yen.

New US−Specific Forex Regulations

The approval of Compliance Rule 2-43(b) became effective in November, 2008, but parts of the ruling are still being implemented over time to allow for changes to Forex trading software. This new regulation is made to protect the US retail Forex trader from practices that the NFA (National Futures Association) has determined have no economic benefit to the trader. According to the NFA, this type of hedging increases the customer's financial costs by doubling the expense of entering and exiting positions. In addition, if the trader holds positions overnight, the differences in the interest rate rollover evaluation will cost customers additional money over time if they are short high yield currencies.

The National Futures Association has a website that every customer should visit for more information about their broker. Any Forex broker that is an NFA member has to meet high standards including a large minimum capital requirement to carry out business. Customers should check to see if their US Forex broker is an NFA member, and if they have any past customer complaints by doing a Background Affiliation Status Information Center (BASIC) search.