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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (38189)	9/14/2003 1:03:57 AM
From: Haim R. Branisteanu	Read Replies (2) \| Respond to of 74559

Dollar Falls Against Euro for a Third Week on Economic Reports Sept. 13 (Bloomberg) -- The dollar fell for a third week in New York trading against the euro, reaching its lowest level in a month, after economic reports showed the U.S. economy shed jobs and consumer confidence declined. Concern the U.S. won't attract the $1.5 billion a day needed to finance its current-account deficit, the broadest measure of trade and investment, dragged the dollar 1.7 percent lower on the week, the biggest decline since July. ``The whole psychology of the dollar market has shifted'' after three straight months of gains from June through August, said Tim Stewart, New York-based chief foreign-exchange strategist at Morgan Stanley. ``There are doubts about whether the recovery will be sustained, especially if the U.S. doesn't get job growth.'' The dollar weakened to $1.1291 per euro as of 5 p.m. Friday, from $1.1104 the week before. It dropped as low as $1.1330 during the week, its lowest level since Aug. 14. The dollar is down 2.8 percent this month, erasing a 2.3 percent gain for August that came amid economic reports such as gross domestic product that hinted at stronger growth. Against the Japanese yen, the dollar rose to 117.29 yesterday and gained 0.4 percent for the week on speculation the Bank of Japan will sell yen to prevent the currency's advances from threatening exports. The dollar may continue to drop against the euro on concern the U.S. economy isn't growing fast enough to create jobs that will sustain a recovery, analysts said. The number of Americans applying for unemployment benefits rose to a two-month high last week, and a report Sept. 5 showed the U.S. lost jobs in August. Retail Sales The data ``make us think we might not see the robust, raging recovery in the next couple of months,'' said Greg Anderson, senior foreign-exchange strategist at ABN Amro Inc., in Chicago. ``After breaking the $1.13 barrier, the market will try to test $1.1480 in coming days,'' he said. Retail sales increased a less-than-forecast 0.6 percent during August, the Commerce Department said yesterday, after a revised 1.3 percent increase in July. An index of consumer confidence unexpectedly fell this month, the University of Michigan said. Investors withdrew a net $147 million from U.S. equities in the week ended Sept. 5, leaving the average withdrawal of the past four weeks at $378 million, according to UBS AG, the largest currency-trading bank. ``This continues to support our view that net equity inflows are unlikely to recover to levels consistent with ongoing dollar strength,'' Benedikt Germanier, a currency strategist at UBS in Zurich, wrote in a note to investors. Dresdner Forecast Dresdner Kleinwort Wasserstein and Goldman Sachs Group Inc. this week both revised lower their outlook for the U.S. currency against the yen and the euro. Dresdner, which ranked 15th in a Euromoney magazine poll of the biggest currency traders, predicted the dollar will drop to 112 yen in the next three months, and to 108 yen in the next six months. The bank's previous forecast was that the dollar would trade at 115 yen next quarter and 110 yen in the next half-year. Dresdner predicted the euro will climb to $1.24 in a year. Dollar ``depreciation still has some way to go,'' Zahra Ward- Murphy, a currency analyst at Dresdner in London, wrote in the bank's FX Navigator report. Goldman Sachs, the fifth-biggest currency trader, forecast the dollar will weaken to $1.14 per euro in three months and $1.24 in six months. The dollar's decline this week was limited by economic reports in Europe that suggested growth prospects there may not be much brighter. Industrial production in July unexpectedly slid in France, the second-largest economy among the 12 countries using the euro, behind Germany. Yen Sales Against the yen, the dollar gained on investor expectations the Bank of Japan will sell its currency to prevent gains from threatening the nation's exports. The yen is the best performing of 16 major currencies monitored by Bloomberg against the dollar this quarter, with a 2.14 percent gain. Japan's central bank sold yen last week when the currency reached a three-month high of 115.81 on Sept. 4, traders dealing with the central bank said. The bank sold a single-month record of 3.98 trillion yen ($34 billion) in May, when the currency fluctuated between 115.07 and 117.79, and has sold a total 9.03 trillion yen this year through July. Overseas holdings of securities issued by the U.S. government and federal agencies rose by $8.1 billion during the week ended Sept. 10, the biggest gain in at least in six weeks, Federal Reserve data showed. That suggests Japan may be increasing its purchases of U.S. debt with dollars obtained by selling yen. ``The yen is not in condition to continue to strengthen,'' said Zembei Mizoguchi, Japan's vice finance minister for international affairs. The Ministry of Finance directs the central bank to buy or sell in the foreign-exchange markets. Last Updated: September 13, 2003 09:01 EDT

To: Haim R. Branisteanu who wrote (38189)	9/14/2003 10:55:38 AM
From: gumnam	Read Replies (1) \| Respond to of 74559

Hi HRB, Currency returns are a lot smaller than the comparable returns in QQQ or other stocks especially in the face of apparent volatility. But the vols in currencies are much much lower and the ranges are much tighter. So by necessity to make any big money you have to use leverage. I will just illustrate using Eur and NEM Eur has moved between 1.05 to 1.19 almost 14% in the whole year. NEM on the other hand has moved from 25 to 40, almost 60%. Even though day to day it almost seems that they are as volatile, the ranges indicate that a lot of Euro moves are just noise. Also the 1 month implied vols in Eur have never crossed 15% this year, and these days are at 11% levels. NEM on the other hand is 34%. Currencies are just not that risky, and to make serious money in currencies, you have to use leverage. The easiest way is to open up a commodities trading account at some broker and use futures. Cheers Gumnam