Romano Prodi: Greece`s Crisis Has Bottomed Out

Romano Prodi, the former European Commission President during his interview told the reporters that Greece`s financial slump has already bottomed and there is no concern on further collapse of the European united currency system resulted from budget deficit in Greece. According to Mr. Prodi, the euro will strengthen in the Forex currency market as the other Euro-bloc countries avoid following the Greece`s way. The problem with shortfall of Greek budget deficit seems to be over now.

The deficit of budget of Greece already exerted a bad influence on the 16-nation economy as the euro tumbled to its lowest level in last 10 months.

Recently Greek officials announced they do not need cooperation with other European countries as Greece`s economy has enough strength to overcome a 12.7% budget deficit. The government decided to cut spending and to increase taxes. These plans were treated with hostility by working unions staging a series of strikes around the country.

Romano Prodi, who managed to cut Italy`s budget deficit from 7 percent to 2.7% when he was Italian Prime Minister believes that concerns over Greece debt will be subdued soon and euro will pare its losses versus other major Forex currencies.

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.

14-Month Low for the Dollar

The USD reached its 14-month low versus the EUR as investors choose higher yielding assets for trading abandoning dollars. On Tuesday the EUR/USD reached the top of $1.4828 and ended trades at $1.4786. The last time when these results were seen was August 2008. Gold seems to be the most attractive asset for trading.
The investors looking for high yield ignored pessimistic Euro-Zone economic data to ensure the better-returning Euro to $1.50. It seems that this level will be attained shortly.

The greenback may drop even more today before the government reports its forecast to deliver consumer prices rose last month. This report is one the most important economic events for today.

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Federal Reserve May Announce Exit of Stimulus Measures

Concern that FOMC may remove stimulus measures encouraged appeal for the US Dollars. As a result the Dollar reached its week high versus the Yen and the Euro, according to Bloomberg.

Many economists tend to suppose that FOMC is likely to become a catalyst of USD rising as FED will probably announce the withdrawal of its economy stimulus measures. The USD rose to 92.17 yen as of 7:45 a.m. in London from 91.29 yen in New York Sept. 18. It jumped to $1.4645 per euro from $1.4712. The U.S. currency advanced to $1.6143 per pound from $1.6271, after earlier touching $1.6135, the highest level for the last three weeks. The USD index climbed 0.6 percent to 76.878.

The JPY fell to its three-week bottom versus the Euro after Hirohisa Fujii new Finance Minister refused to make comments meaning he would let the Japanese currency rise.

It is expected that Japan will remain the only country among big economies that will keep its benchmark interest rate at a record low. Japan`s Overnight call rate is now at the lowest level worldwide . The economy is likely to expand 0.8 percent next year after declining 6 percent in 2009 putting assets in the world’s second-largest economy not in favor comparing to those in countries with higher borrowing rates.

No Positive Future for Dollar

Going short on the US currency brought lots of profits for traders last week. The USD continued its fall versus the EUR and other major Forex currencies. This fall accounted for 300 pips versus EUR, 400 pips versus the GBP and 350 pips versus the Japanese currency.

Another fall for the greenback was reasoned by negative US data. The gap between import and export increased by 16 percent or $32 billion, the largest difference since 1999. The U.S Consumer Credit fell by 21.6$ billion in July. Unemployment rate is constantly getting to 10 percent rate. It looks like until the employment condition will take a turn for the better, the Dollar might continue to weaken.At the beginning of the previous week market analysis showed a modest decline, but the final result appeared to be well below all expectations.

This week is full of important business events including the Consumer Price Indices, the Retails Sales Indices, the Producer Price Induces, the Long-Term Purchases, the Building Permits and the weekly Unemployment Claims.

US Trades after Labor Day

As the US market was closed yesterday, the US Dollar slid versus other Forex currencies. The Labor Day holiday in the USA and Canada took its toll on the American currency. It came close to its 2-week low versus the GBP after the statement of Kraft Foods to buy British chocolate maker Cadbury. In spite of low trading risk appetite remained high on Monday. The Dollar Index, which measures the value of the Dollar versus its six main counterparts, dropped by 0.2% to 78.00 yesterday.The USD/JPY cross weightened by 25 pips yesterday to the 92.85 level.

On Monday the Australian Dollar performed a significant rise hitting a 1 year high vs. the U.S. Dollar. The AUD was received unexpected support from rising Gold and Crude Oil prices as of late, which Australia's currency is highly dependent. In addition, Australia's currency is in much greater shape than that of America. The CAD made became closer to the greenback. By the end of yesterday's trading, the EUR/USD pair finished trades at 1.4332.

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.

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 Tumbles on Optimistic Manufacturing Data

The release of better than expected figures of ISM Manufacturing PMI brought the Dollar tumbling. The indicator reached its 11 month high of 48.9. It appears to be much higher than forecasted 46.4. The improvement in U.S. construction also added to optimism. Risk appetite grew on Monday bringing decline in demand for the greenback. The U.S. currency tumbled against all major Forex currencies as traders believe that the worst of recession is over expecting sooner growth. Therefore, the Dollar declined to its 7 month bottom.

The EUR/USD pair jumped to as high as 1.4444, before ending the trades at 1.4421 level the lowest rate for 7 months. The USD fell by about 250 pips vs. the British Pound to 1.6980. One of the only currencies that the Dollar appreciated against yesterday was the Yen. Among today`s economic events, forex traders can assume volatile market. The Dollar is expected to rise against its major currency counterparts. The traders are expecting for the release of Personal Spending and Personal Income data at 12:30 GMT, and the release of U.S. Pending Home Sales at 14:00 GMT.