Friday, March 6, 2009
Forward Outrights
For forward outrights, settlement on the value date selected in the trade means that even though the trade itself is carried out immediately, there is a small interest rate calculation left. The interest rate differential doesn't usually affect trade considerations unless you plan on holding a position with a large differential for a long period of time. The interest rate differential varies according to the cross you are trading. On the USDCHF, for example, the interest rate differential is quite small, whereas the differential on NOKJPY is large. This is because if you trade e.g. NOKJPY, you get almost 7% (annual) interest in Norway and close to 0% in Japan. So, if you borrow money in Japan, to finance the trade and buying NOK, you have a positive interest rate differential. This differential has to be calculated and added to your account. You can have both a positive and a negative interest rate differential, so it may work for or against you when you make a trade.
important rules of forex
Cut your LOOSING trades and let your WINNING trades RUN YOU WILL HAVE LOSING TRADES. Every FOREX trader has. The secret is, that a consistent, disciplined trader, at the end of the day, adds up more winning trades than losing trades.
When you and see on your charts, without any doubt, that you are in a losing trade, don't keep losing money. Most of the novice traders are lowering their stop loss just to “prove they are right” or “hoping that the market will reverse”. 99% of these trades, are ending up with more losses. Most of the profitable trades are usually "right" immediately.
Remember, smart traders know there are many other opportunities. CUT your losses short and compound those winning positions.
NEVER EVER trade FOREX without placing a Stop Loss Order.
PLACE a STOP order, right along with your ENTRY order, via your online trading station, to prevent potential losses.
Before initiating any trade, you have to calculate at what point ( price) you would be wrong, because the market changed direction, and would want to cut your losses.
To make profits, in the FOREX, a trader can enter the market with a *buy position* (known as going "long") or a *sell position* (known as going "short").
As an example let's assume you've been studying the EURO. The EURO is paired first with the U.S. dollar or USD.
Your trading methods, rules, strategies, etc., tell you that the EURO will rice in the next 2 weeks, So you buy the EUR/USD pair meaning you will simultaneously buy EUROS, and SELL dollars).
You open up your excellent trading station software (provided to you for free by Fenix Capital Management, LLC www.fenixcapitalmanagement.com ) and you see that the EUR/USD pair is trading at:
When you and see on your charts, without any doubt, that you are in a losing trade, don't keep losing money. Most of the novice traders are lowering their stop loss just to “prove they are right” or “hoping that the market will reverse”. 99% of these trades, are ending up with more losses. Most of the profitable trades are usually "right" immediately.
Remember, smart traders know there are many other opportunities. CUT your losses short and compound those winning positions.
NEVER EVER trade FOREX without placing a Stop Loss Order.
PLACE a STOP order, right along with your ENTRY order, via your online trading station, to prevent potential losses.
Before initiating any trade, you have to calculate at what point ( price) you would be wrong, because the market changed direction, and would want to cut your losses.
To make profits, in the FOREX, a trader can enter the market with a *buy position* (known as going "long") or a *sell position* (known as going "short").
As an example let's assume you've been studying the EURO. The EURO is paired first with the U.S. dollar or USD.
Your trading methods, rules, strategies, etc., tell you that the EURO will rice in the next 2 weeks, So you buy the EUR/USD pair meaning you will simultaneously buy EUROS, and SELL dollars).
You open up your excellent trading station software (provided to you for free by Fenix Capital Management, LLC www.fenixcapitalmanagement.com ) and you see that the EUR/USD pair is trading at:
Recommended Forex Trading Sites
ForexYard
ForexYard offers 2 levels of Forex Trading: A SuperMini for beginners that included a $10k Practice Account. Or a Pro Account for more experienced traders. A 100% welcome bonus on your first deposit is available using the red button
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Posted by FAISAL ANIS at 7:31 AM
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ForexYard offers 2 levels of Forex Trading: A SuperMini for beginners that included a $10k Practice Account. Or a Pro Account for more experienced traders. A 100% welcome bonus on your first deposit is available using the red button
More info on ForexYard
Posted by FAISAL ANIS at 7:31 AM
0 comments:
Post a Comment
Advantages of Forex
No Commissions
As opposed to shares and securities trade, Xforex™ offers you no-commission trading in the foreign currency market. The company's income derives solely from the spread of purchase / selling foreign currency rates.
Minimal purchase/sale spreads
The spreads Xforex™ offers are actually the lowest in the market. This means that you get the most profitable transactions.
Leverage of Up to 400 Times the Amount Invested
The leverage that Xforex™ offers is the largest in the market – up to 400 times the investment. This level of leverage does not exist in other markets or with other market-makers and it is exclusive to Xforex™. This means that even a 10,000-dollar account can carry out transactions with a volume of up to four million dollars!
Loss-Protection Mechanisms
In addition, the Stop-Loss mechanism Xforex™'s system offers makes the foreign currency market the only market where one can make a commitment to stop the trading exactly at the point the client is interested in.
Optimal Utilization of Your Collateral
In the foreign currency market, your collateral is optimally utilized. There is no need for a certain percentage or amount of collateral in order to remain in a transaction. It is far simpler; as long as you have money in your account, all of your transactions can remain open.
Around-the-Clock Trade
Another main advantage of the foreign currency market is that trading takes place around the clock. This enables everyone to find the most convenient time to deal with their investments portfolio. Whether you get up at the crack of dawn or are a night bird – the market is open. You can enter or exit any transaction at any given moment. And naturally, we at Xforex™ are at your service 24 hours a day. View Website
As opposed to shares and securities trade, Xforex™ offers you no-commission trading in the foreign currency market. The company's income derives solely from the spread of purchase / selling foreign currency rates.
Minimal purchase/sale spreads
The spreads Xforex™ offers are actually the lowest in the market. This means that you get the most profitable transactions.
Leverage of Up to 400 Times the Amount Invested
The leverage that Xforex™ offers is the largest in the market – up to 400 times the investment. This level of leverage does not exist in other markets or with other market-makers and it is exclusive to Xforex™. This means that even a 10,000-dollar account can carry out transactions with a volume of up to four million dollars!
Loss-Protection Mechanisms
In addition, the Stop-Loss mechanism Xforex™'s system offers makes the foreign currency market the only market where one can make a commitment to stop the trading exactly at the point the client is interested in.
Optimal Utilization of Your Collateral
In the foreign currency market, your collateral is optimally utilized. There is no need for a certain percentage or amount of collateral in order to remain in a transaction. It is far simpler; as long as you have money in your account, all of your transactions can remain open.
Around-the-Clock Trade
Another main advantage of the foreign currency market is that trading takes place around the clock. This enables everyone to find the most convenient time to deal with their investments portfolio. Whether you get up at the crack of dawn or are a night bird – the market is open. You can enter or exit any transaction at any given moment. And naturally, we at Xforex™ are at your service 24 hours a day. View Website
What is Forex (Foreign Exchange, FX)
ACM offers online forex trading services for traders wanting to make speculative transactions on the exchange rate between two currencies.
These rates may be influenced by world economic and political events, currency rate differentials, as well as many other factors including extreme weather conditions (hurricanes), acts of terror etc.
Forex is the largest marketplace in the world with more than 3.2 trillion dollars changing hands daily and so making it one of the most attractive and lucrative markets.How does the foreign exchange market work?
The forex market allows you to buy and sell currencies against each other and speculate on the differences in exchange rates.
Making a transaction on the forex market is simple: the procedures are identical to that of any other market so switching to trading currencies is straightforward for most traders.
Buying/Selling - B/S
If you want to open a position (i.e.: place an order to sell – to make a profit if the exchange rate falls) you have to choose the amount (i.e.: 100.000 EURUSD) from the drop down menu on the platform and then click the mouse on the sell currency button: SELL (if you want to place an order to buy, you should act in reverse).
This will open a position in the market and you will receive an immediate notification of it on your trading station.
To close an open position, you have to do the opposite of the initial operation – in our case buy the 100.000 EURUSD back.
Different order types also exist to open or close a position under a certain condition.
How does the B/S system work?
As with any market, for each currency pair, there are 2 prices. The difference between them is called the spread.
The spread is measured in points or pips – lowest decimal figure in a currency rate.
For a EURUSD a pip equals 0.0001 (or 10 dollars on 100.000), for EURJPY a pip equals 0.01 (or 1000 yen on 100.000). More information on P/L calculation on the following page: profit and loss.
These rates may be influenced by world economic and political events, currency rate differentials, as well as many other factors including extreme weather conditions (hurricanes), acts of terror etc.
Forex is the largest marketplace in the world with more than 3.2 trillion dollars changing hands daily and so making it one of the most attractive and lucrative markets.How does the foreign exchange market work?
The forex market allows you to buy and sell currencies against each other and speculate on the differences in exchange rates.
Making a transaction on the forex market is simple: the procedures are identical to that of any other market so switching to trading currencies is straightforward for most traders.
Buying/Selling - B/S
If you want to open a position (i.e.: place an order to sell – to make a profit if the exchange rate falls) you have to choose the amount (i.e.: 100.000 EURUSD) from the drop down menu on the platform and then click the mouse on the sell currency button: SELL (if you want to place an order to buy, you should act in reverse).
This will open a position in the market and you will receive an immediate notification of it on your trading station.
To close an open position, you have to do the opposite of the initial operation – in our case buy the 100.000 EURUSD back.
Different order types also exist to open or close a position under a certain condition.
How does the B/S system work?
As with any market, for each currency pair, there are 2 prices. The difference between them is called the spread.
The spread is measured in points or pips – lowest decimal figure in a currency rate.
For a EURUSD a pip equals 0.0001 (or 10 dollars on 100.000), for EURJPY a pip equals 0.01 (or 1000 yen on 100.000). More information on P/L calculation on the following page: profit and loss.
Forex trading system platformStraighthold Investment Group,
Inc. offers its clients the most popular and powerful platform - SIGTrader 4 Forex trading system - developed by MetaQuotes Software Corporation.
The client terminal SIGTrader 4 is an online Forex trading broker system intended for online trading and technical analyses on the Forex, CFD and Futures markets.
Some types of installed orders let you manage your trading activity flexibly.
Beside a number of technical indicators and online instruments, this Forex trading system terminal is also equipped with MetaQuotes Language 4, a customized language for trading strategy programming. This language will help you to develop Advisers and Expert Advisors - mechanical Forex trading system, Custom Indicators and Scripts. Advisers analyze the current market situation online and take decisions, place trading orders and open positions without trader participation. Custom and technical indicators can analyze market conditions and generate different signals. And Scripts are intended for one-time executed actions.
The client terminal SIGTrader 4 is an online Forex trading broker system intended for online trading and technical analyses on the Forex, CFD and Futures markets.
Some types of installed orders let you manage your trading activity flexibly.
Beside a number of technical indicators and online instruments, this Forex trading system terminal is also equipped with MetaQuotes Language 4, a customized language for trading strategy programming. This language will help you to develop Advisers and Expert Advisors - mechanical Forex trading system, Custom Indicators and Scripts. Advisers analyze the current market situation online and take decisions, place trading orders and open positions without trader participation. Custom and technical indicators can analyze market conditions and generate different signals. And Scripts are intended for one-time executed actions.
US GDP Contracts by most since 1982
The greenback edged up higher against the majors amid heightened risk aversion, pushing the euro beneath the 1.28-level. Data from the US pointed toward further deterioration in fundamentals, suggesting the recession continues to worsen.
US economic reports released earlier revealed a sharp contraction in GDP growth, down by an annualized 3.8% in Q4 versus a 0.5% decline previously. Although the drop in GDP was less than the anticipated drop of 5.4%, it was still the steepest contraction in the US economy since 1982. The Q4 sales component of GDP declined by 5.1% versus a 1.3% decline previously, while PCE price index posted a 5.5% drop versus a 5% decline. The Q4 employment costs eased to 0.5% from 0.7%. The January Chicago PMI declined to 33.3 from 35.1 in December, while the University of Michigan consumer sentiment survey improved to 61.2 in January, up from 60.1.
US economic reports released earlier revealed a sharp contraction in GDP growth, down by an annualized 3.8% in Q4 versus a 0.5% decline previously. Although the drop in GDP was less than the anticipated drop of 5.4%, it was still the steepest contraction in the US economy since 1982. The Q4 sales component of GDP declined by 5.1% versus a 1.3% decline previously, while PCE price index posted a 5.5% drop versus a 5% decline. The Q4 employment costs eased to 0.5% from 0.7%. The January Chicago PMI declined to 33.3 from 35.1 in December, while the University of Michigan consumer sentiment survey improved to 61.2 in January, up from 60.1.
Morning Slices: UK Data Once Again Exceeds Expectations
Australia cuts by 100bps as expected to 3.25%. Australia Treasurer announces stimulus package. Bank of Japan to buy shares held by Japanese banks. UK construction PMI better than expected. Eurozone PPI slightly softer.
MORNING SLICES
Fundys – A relatively quiet overnight session of trade with all major currencies trading at or near daily opening levels. The initial event risk came in the form of the as expected RBA decision to cut interest rates by 100bps to 3.25%. This helped to generate some fresh bids by the lows with gains seen accelerating on the news of a large stimulus package from Australia Treasurer Swan. USD/JPY was well supported overnight after the news hit the wires the BoJ would be buying shares held by Japanese banks. In the European markets, UK data once again exceeded expectations with the January construction PMI coming in at 34.5 versus a 29.0 forecast. Eurozone PPI was slightly lower than expected at -1.3% after analysts had been looking for a -1.2% print. Elsewhere, the IMF once again was on the wires saying that the Yuan was undervalued. The FTSE and DAX are lower today down some 0.6% and 0.9% respectively, while commodities have been mixed with oil up some 1.0% while gold is marginally lower. Looking ahead, a quiet calendar for the North American session with US pending home sales at 15:00GMT followed by consumer confidence at 22:00GMT. Many are now expecting price action to remained confined to familiar ranges into the latter part of the week when event risk picks back up with the BoE and ECB rate decisions.
Techs - EUR/USD trading with heavy tone following recent break back below 1.2765 and looks set for an eventual retest on the 1.2335 critical multi-year lows. Next supports come in by 1.2550-1.2670 (4Dec low/lower bollinger) while key levels to watch above come in by 1.2960-1.3000 (Friday high/psychological). USD/JPY remains locked in some bearish sideways consolidation with the latest setbacks seriously damaging prospects for major base and double bottom. The market seems intent on taking out the key matched trend lows by 87.15. Key levels to watch over the coming session come in by 90.10 and 88.40. GBP/USD gains have stalled out and the pair is in the process of putting in a key bearish reversal day after just taking out Friday’s low. A break back below 1.4070 will confirm bearish resumption while only back above 1.4545 brings upside back into play. USD/CHF price action remains constructive with the market confined to a well defined bull channel. While the market trades back to daily opening levels, a fresh higher high on Monday keeps the structure intact. Key levels to watch above and below come in by 1.1715 and 1.1515 respectively.
Flows – Solid bids reported in Cable by 1.4150 with decent stops below 1.4140; UK Clearer and CTAs on the offer ahead of 1.4300. Local French bank demand for USD/CAD. Talk of a large 1.2700/1.3700 EUR/USD Double-No-Touch which matures a week from Friday. Talk of broad based USD offers against the Euro and GBP from large US buy-side shop. London fix related demand for EUR/JPY.
Trade of the Day – EUR/USD: Despite the setbacks seen thus far today, the pair has been well supported in the 1.2700’s over the past several days and could be once again looking to base out by Monday’s low at 1.2705. A bullish hammer-like close on Monday is encouraging and we would expect to see some positive follow through into the US session with gains accelerating on a break back above 1.2915 (today’s high). All relevant moving averages currently reside above the market and this would suggest that the pair is somewhat overextended and likely to revert back to its mean. Nevertheless, the overriding structure remains grossly bearish and we will only look to establish fresh longs on a break back above 1.2915. Strategy: BUY @ 1.2920 FOR A 1.3330 OBJECTIVE, STOP @1.2690.
MORNING SLICES
Fundys – A relatively quiet overnight session of trade with all major currencies trading at or near daily opening levels. The initial event risk came in the form of the as expected RBA decision to cut interest rates by 100bps to 3.25%. This helped to generate some fresh bids by the lows with gains seen accelerating on the news of a large stimulus package from Australia Treasurer Swan. USD/JPY was well supported overnight after the news hit the wires the BoJ would be buying shares held by Japanese banks. In the European markets, UK data once again exceeded expectations with the January construction PMI coming in at 34.5 versus a 29.0 forecast. Eurozone PPI was slightly lower than expected at -1.3% after analysts had been looking for a -1.2% print. Elsewhere, the IMF once again was on the wires saying that the Yuan was undervalued. The FTSE and DAX are lower today down some 0.6% and 0.9% respectively, while commodities have been mixed with oil up some 1.0% while gold is marginally lower. Looking ahead, a quiet calendar for the North American session with US pending home sales at 15:00GMT followed by consumer confidence at 22:00GMT. Many are now expecting price action to remained confined to familiar ranges into the latter part of the week when event risk picks back up with the BoE and ECB rate decisions.
Techs - EUR/USD trading with heavy tone following recent break back below 1.2765 and looks set for an eventual retest on the 1.2335 critical multi-year lows. Next supports come in by 1.2550-1.2670 (4Dec low/lower bollinger) while key levels to watch above come in by 1.2960-1.3000 (Friday high/psychological). USD/JPY remains locked in some bearish sideways consolidation with the latest setbacks seriously damaging prospects for major base and double bottom. The market seems intent on taking out the key matched trend lows by 87.15. Key levels to watch over the coming session come in by 90.10 and 88.40. GBP/USD gains have stalled out and the pair is in the process of putting in a key bearish reversal day after just taking out Friday’s low. A break back below 1.4070 will confirm bearish resumption while only back above 1.4545 brings upside back into play. USD/CHF price action remains constructive with the market confined to a well defined bull channel. While the market trades back to daily opening levels, a fresh higher high on Monday keeps the structure intact. Key levels to watch above and below come in by 1.1715 and 1.1515 respectively.
Flows – Solid bids reported in Cable by 1.4150 with decent stops below 1.4140; UK Clearer and CTAs on the offer ahead of 1.4300. Local French bank demand for USD/CAD. Talk of a large 1.2700/1.3700 EUR/USD Double-No-Touch which matures a week from Friday. Talk of broad based USD offers against the Euro and GBP from large US buy-side shop. London fix related demand for EUR/JPY.
Trade of the Day – EUR/USD: Despite the setbacks seen thus far today, the pair has been well supported in the 1.2700’s over the past several days and could be once again looking to base out by Monday’s low at 1.2705. A bullish hammer-like close on Monday is encouraging and we would expect to see some positive follow through into the US session with gains accelerating on a break back above 1.2915 (today’s high). All relevant moving averages currently reside above the market and this would suggest that the pair is somewhat overextended and likely to revert back to its mean. Nevertheless, the overriding structure remains grossly bearish and we will only look to establish fresh longs on a break back above 1.2915. Strategy: BUY @ 1.2920 FOR A 1.3330 OBJECTIVE, STOP @1.2690.
Euro Falls As German Retail Sales and Producer Prices Decline, Will ECB Cut Rates Again?
The Euro fell to support at 1.2800 on an unexpected 0.2% drop in German retail sales against forecasts of a 0.5% improvement. The single currency was receiving support before the release on the back of risk appetite driven by the BoJ’s announcement that it would buy shares in Japanese banks.
Talking Points
• Japanese Yen: BoJ To Buy Financial Shares
• Pound: Finds Support On Increasing Construction Activity
• Euro: Weighed by A Drop In German Retail Sales and Inflation
• US Dollar: Housing Data On Tap
Euro Falls As German Retail Sales and Producer Prices Decline, Will ECB Cut Rates Again?
The Euro fell to support at 1.2800 on an unexpected 0.2% drop in German retail sales against forecasts of a 0.5% improvement. The single currency was receiving support before the release on the back of risk appetite driven by the BoJ’s announcement that it would buy shares in Japanese banks. Before the central bank’s statements the Euro had been under pressure as forex traders were anticipating the producer price report would show further easing of inflation, which would add pressure for another ECB rate cut. Indeed, markets weren’t disappointed as costs dropped 1.3% in December bringing the annualized rate to 1.8% from 3.3% the month prior.
Falling oil prices continued to be the source of disinflation as the reading stripped of energy costs fell a modest 0.6%. The ECB has forecasted that core prices will begin to stabilize in the second half of 2009, which is expected to allow them to take a measured approach in the monetary policy. The central bank has already signaled that they will keep rates on hold at their meeting on Thursday. However, the weaker German consumption numbers demonstrates that the weakening labor market is weighing on consumption, which could lead to a sharp fall in domestic growth. If unemployment continues to mount across the region we may see country leaders demand for more action from the MPC. We may start to see support for the single currency as markets start to price hold, which became more certain when council member Mario Draghi stated that there was “not much room left” to cut rates.
The BoJ announced today that it would buy 1 trillion yen of shares owned by financial institutions. The central bank will continue purchases until 2010 as they reestablish a practice they ended more than four years ago. That news and the RBA lowering their benchmark by 100 bps helped fuel optimism and helped equity markets turn positive. However, British Petroleum, Europe’s second biggest oil company, reported its first quarterly loss in seven years which has offset the optimism generated by the central banks.
After falling to as low as 1.4150 the Pound found support on the back of better than expected construction PMI reading. Indeed, the indicator rose to 34.5 from 29.3 in December. Nevertheless the BoE is expected to lower their benchmark rate by 50 bps on Thursday, which will remain a weighing factor. Yet, the string of improving data from the region may give the MPC reason to pause which will keep markets guessing and may lead to the continuation of recent volatility for the currency.
The dollar may slip today as fears have slightly eased which may lead to equities trading higher on the day. The fundamental calendar may help fuel risk appetite as the U.S. pending home sales report is expected to show a flat reading for December which will be welcome news for the markets, after the gauge posted three consecutive months of plus 4% declines. However, a Vehicle sales report that is expected to show the lowest demand in 27 years may temper any optimism. The data may remind trades of the impact of the slumping industry on the economy and lower expectations for Friday’s NFP print that could fuel risk aversion and add dollar support.
Talking Points
• Japanese Yen: BoJ To Buy Financial Shares
• Pound: Finds Support On Increasing Construction Activity
• Euro: Weighed by A Drop In German Retail Sales and Inflation
• US Dollar: Housing Data On Tap
Euro Falls As German Retail Sales and Producer Prices Decline, Will ECB Cut Rates Again?
The Euro fell to support at 1.2800 on an unexpected 0.2% drop in German retail sales against forecasts of a 0.5% improvement. The single currency was receiving support before the release on the back of risk appetite driven by the BoJ’s announcement that it would buy shares in Japanese banks. Before the central bank’s statements the Euro had been under pressure as forex traders were anticipating the producer price report would show further easing of inflation, which would add pressure for another ECB rate cut. Indeed, markets weren’t disappointed as costs dropped 1.3% in December bringing the annualized rate to 1.8% from 3.3% the month prior.
Falling oil prices continued to be the source of disinflation as the reading stripped of energy costs fell a modest 0.6%. The ECB has forecasted that core prices will begin to stabilize in the second half of 2009, which is expected to allow them to take a measured approach in the monetary policy. The central bank has already signaled that they will keep rates on hold at their meeting on Thursday. However, the weaker German consumption numbers demonstrates that the weakening labor market is weighing on consumption, which could lead to a sharp fall in domestic growth. If unemployment continues to mount across the region we may see country leaders demand for more action from the MPC. We may start to see support for the single currency as markets start to price hold, which became more certain when council member Mario Draghi stated that there was “not much room left” to cut rates.
The BoJ announced today that it would buy 1 trillion yen of shares owned by financial institutions. The central bank will continue purchases until 2010 as they reestablish a practice they ended more than four years ago. That news and the RBA lowering their benchmark by 100 bps helped fuel optimism and helped equity markets turn positive. However, British Petroleum, Europe’s second biggest oil company, reported its first quarterly loss in seven years which has offset the optimism generated by the central banks.
After falling to as low as 1.4150 the Pound found support on the back of better than expected construction PMI reading. Indeed, the indicator rose to 34.5 from 29.3 in December. Nevertheless the BoE is expected to lower their benchmark rate by 50 bps on Thursday, which will remain a weighing factor. Yet, the string of improving data from the region may give the MPC reason to pause which will keep markets guessing and may lead to the continuation of recent volatility for the currency.
The dollar may slip today as fears have slightly eased which may lead to equities trading higher on the day. The fundamental calendar may help fuel risk appetite as the U.S. pending home sales report is expected to show a flat reading for December which will be welcome news for the markets, after the gauge posted three consecutive months of plus 4% declines. However, a Vehicle sales report that is expected to show the lowest demand in 27 years may temper any optimism. The data may remind trades of the impact of the slumping industry on the economy and lower expectations for Friday’s NFP print that could fuel risk aversion and add dollar support.
Euro Falls As German Retail Sales and Producer Prices Decline, Will ECB Cut Rates Again?
The Euro fell to support at 1.2800 on an unexpected 0.2% drop in German retail sales against forecasts of a 0.5% improvement. The single currency was receiving support before the release on the back of risk appetite driven by the BoJ’s announcement that it would buy shares in Japanese banks.
Talking Points
• Japanese Yen: BoJ To Buy Financial Shares
• Pound: Finds Support On Increasing Construction Activity
• Euro: Weighed by A Drop In German Retail Sales and Inflation
• US Dollar: Housing Data On Tap
Euro Falls As German Retail Sales and Producer Prices Decline, Will ECB Cut Rates Again?
The Euro fell to support at 1.2800 on an unexpected 0.2% drop in German retail sales against forecasts of a 0.5% improvement. The single currency was receiving support before the release on the back of risk appetite driven by the BoJ’s announcement that it would buy shares in Japanese banks. Before the central bank’s statements the Euro had been under pressure as forex traders were anticipating the producer price report would show further easing of inflation, which would add pressure for another ECB rate cut. Indeed, markets weren’t disappointed as costs dropped 1.3% in December bringing the annualized rate to 1.8% from 3.3% the month prior.
Falling oil prices continued to be the source of disinflation as the reading stripped of energy costs fell a modest 0.6%. The ECB has forecasted that core prices will begin to stabilize in the second half of 2009, which is expected to allow them to take a measured approach in the monetary policy. The central bank has already signaled that they will keep rates on hold at their meeting on Thursday. However, the weaker German consumption numbers demonstrates that the weakening labor market is weighing on consumption, which could lead to a sharp fall in domestic growth. If unemployment continues to mount across the region we may see country leaders demand for more action from the MPC. We may start to see support for the single currency as markets start to price hold, which became more certain when council member Mario Draghi stated that there was “not much room left” to cut rates.
The BoJ announced today that it would buy 1 trillion yen of shares owned by financial institutions. The central bank will continue purchases until 2010 as they reestablish a practice they ended more than four years ago. That news and the RBA lowering their benchmark by 100 bps helped fuel optimism and helped equity markets turn positive. However, British Petroleum, Europe’s second biggest oil company, reported its first quarterly loss in seven years which has offset the optimism generated by the central banks.
After falling to as low as 1.4150 the Pound found support on the back of better than expected construction PMI reading. Indeed, the indicator rose to 34.5 from 29.3 in December. Nevertheless the BoE is expected to lower their benchmark rate by 50 bps on Thursday, which will remain a weighing factor. Yet, the string of improving data from the region may give the MPC reason to pause which will keep markets guessing and may lead to the continuation of recent volatility for the currency.
The dollar may slip today as fears have slightly eased which may lead to equities trading higher on the day. The fundamental calendar may help fuel risk appetite as the U.S. pending home sales report is expected to show a flat reading for December which will be welcome news for the markets, after the gauge posted three consecutive months of plus 4% declines. However, a Vehicle sales report that is expected to show the lowest demand in 27 years may temper any optimism. The data may remind trades of the impact of the slumping industry on the economy and lower expectations for Friday’s NFP print that could fuel risk aversion and add dollar support.
Talking Points
• Japanese Yen: BoJ To Buy Financial Shares
• Pound: Finds Support On Increasing Construction Activity
• Euro: Weighed by A Drop In German Retail Sales and Inflation
• US Dollar: Housing Data On Tap
Euro Falls As German Retail Sales and Producer Prices Decline, Will ECB Cut Rates Again?
The Euro fell to support at 1.2800 on an unexpected 0.2% drop in German retail sales against forecasts of a 0.5% improvement. The single currency was receiving support before the release on the back of risk appetite driven by the BoJ’s announcement that it would buy shares in Japanese banks. Before the central bank’s statements the Euro had been under pressure as forex traders were anticipating the producer price report would show further easing of inflation, which would add pressure for another ECB rate cut. Indeed, markets weren’t disappointed as costs dropped 1.3% in December bringing the annualized rate to 1.8% from 3.3% the month prior.
Falling oil prices continued to be the source of disinflation as the reading stripped of energy costs fell a modest 0.6%. The ECB has forecasted that core prices will begin to stabilize in the second half of 2009, which is expected to allow them to take a measured approach in the monetary policy. The central bank has already signaled that they will keep rates on hold at their meeting on Thursday. However, the weaker German consumption numbers demonstrates that the weakening labor market is weighing on consumption, which could lead to a sharp fall in domestic growth. If unemployment continues to mount across the region we may see country leaders demand for more action from the MPC. We may start to see support for the single currency as markets start to price hold, which became more certain when council member Mario Draghi stated that there was “not much room left” to cut rates.
The BoJ announced today that it would buy 1 trillion yen of shares owned by financial institutions. The central bank will continue purchases until 2010 as they reestablish a practice they ended more than four years ago. That news and the RBA lowering their benchmark by 100 bps helped fuel optimism and helped equity markets turn positive. However, British Petroleum, Europe’s second biggest oil company, reported its first quarterly loss in seven years which has offset the optimism generated by the central banks.
After falling to as low as 1.4150 the Pound found support on the back of better than expected construction PMI reading. Indeed, the indicator rose to 34.5 from 29.3 in December. Nevertheless the BoE is expected to lower their benchmark rate by 50 bps on Thursday, which will remain a weighing factor. Yet, the string of improving data from the region may give the MPC reason to pause which will keep markets guessing and may lead to the continuation of recent volatility for the currency.
The dollar may slip today as fears have slightly eased which may lead to equities trading higher on the day. The fundamental calendar may help fuel risk appetite as the U.S. pending home sales report is expected to show a flat reading for December which will be welcome news for the markets, after the gauge posted three consecutive months of plus 4% declines. However, a Vehicle sales report that is expected to show the lowest demand in 27 years may temper any optimism. The data may remind trades of the impact of the slumping industry on the economy and lower expectations for Friday’s NFP print that could fuel risk aversion and add dollar support.
Today's Market Update
The London session was lackluster early on but the price action picked up on the back of the BOE rate cut. The Bank of England cut rates by the anticipated -50bps to a new record low of just 1.0%. Cable rocketed higher despite the overall dovish statement that suggested a weak 1H 2009 was likely in the works. GBP/USD was sitting about 200 pips higher near 1.46 just ahead of the NY session. The market is hoping that the statement that rate cuts will eventually filter through into the real economy comes to fruition. With the BOE admitting that the transmission mechanism is not functioning, however, we doubt this rally on hope will last. GBP/USD back below 1.45 would be a problem for the pair near-term.
Economic data continued to disappoint out of the eurozone with German factory orders collapsing -6.9% in December. The market was looking for a more modest decline of -2.5% on the back of the -5.3% slip in November. This took the annual rate to -25.1% and suggests the eurozone's largest economy is likely to remain feeble through 1Q 2009. EUR/USD was pretty much unchanged and continued to trade within the tight 1.28/1.29 band ahead of the ECB rate decision and press conference. The market expects no change in rates and ECB President Trichet made it clear that March will be the next important rate meeting. The press conference that follows at 1330GMT should elicit good price action in EUR, however. Look for a good break to either side of the 1.28/1.29 range to be pretty big.
Economic data continued to disappoint out of the eurozone with German factory orders collapsing -6.9% in December. The market was looking for a more modest decline of -2.5% on the back of the -5.3% slip in November. This took the annual rate to -25.1% and suggests the eurozone's largest economy is likely to remain feeble through 1Q 2009. EUR/USD was pretty much unchanged and continued to trade within the tight 1.28/1.29 band ahead of the ECB rate decision and press conference. The market expects no change in rates and ECB President Trichet made it clear that March will be the next important rate meeting. The press conference that follows at 1330GMT should elicit good price action in EUR, however. Look for a good break to either side of the 1.28/1.29 range to be pretty big.
Swiss Unemployment rate increases in January
FXstreet.com (Barcelona) – Swiss unemployment rate has posted a substantial increase in January according to the Swiss Confederation Statistics Office, which shows that 2008 has been a rather negative year for Swiss employment.
Unemployment has increased to 3.3% in January from 3.0% in December in absolute terms, while in seasonally adjusted terms the jobless rate has edged up to 2.9% in January from 2.8% in December.
In the last 12 months, unemployment has posted a 14.8% increase.
Fri, Feb 6 2009, 07:28 GMT
Unemployment has increased to 3.3% in January from 3.0% in December in absolute terms, while in seasonally adjusted terms the jobless rate has edged up to 2.9% in January from 2.8% in December.
In the last 12 months, unemployment has posted a 14.8% increase.
Fri, Feb 6 2009, 07:28 GMT
Dismal Jobs Hurt USD
The greenback was mixed on the Friday session, edging higher against the yen while losing ground versus the euro and sterling.
The January labor report underscored the dire state of the US economy, with the data deteriorating by more than expected. The unemployment rate edged up to its highest level since 1992 to 7.6% in January, versus 7.2% previously. Consensus estimates were anticipating the unemployment rate to edge higher to 7.5%. Non-farm payrolls posted its largest monthly decline since 1974 with payrolls plunging by 598k, sharply worse than the 525k jobs loss expected and considerably higher from 524k from December.
The US equity market shrugged off the dismal jobs data with focus largely shifted toward the results of the latest stimulus plan and whether President Obama will successfully gain Congressional approval. By New York afternoon trading, the Dow Jones and Nasdaq continues to hold onto its gains, both up by over 2.7%.
The January labor report underscored the dire state of the US economy, with the data deteriorating by more than expected. The unemployment rate edged up to its highest level since 1992 to 7.6% in January, versus 7.2% previously. Consensus estimates were anticipating the unemployment rate to edge higher to 7.5%. Non-farm payrolls posted its largest monthly decline since 1974 with payrolls plunging by 598k, sharply worse than the 525k jobs loss expected and considerably higher from 524k from December.
The US equity market shrugged off the dismal jobs data with focus largely shifted toward the results of the latest stimulus plan and whether President Obama will successfully gain Congressional approval. By New York afternoon trading, the Dow Jones and Nasdaq continues to hold onto its gains, both up by over 2.7%.
USD Edges Higher, Awaits BoE, ECB
The greenback edged higher against the euro and sterling in the Wednesday session, rallying to 1.2814 and 1.4327, respectively. US economic data was mixed today, consisting of January ISM non-manufacturing survey and the ADP private sector payrolls report.
The January ISM non-manufacturing survey unexpectedly improved to 44.2, from 38.9 in December. The ADP private sector payrolls report in January was slightly better than expected, revealing a loss of 522k jobs instead of the 530k loss forecasted, and improving from December’s loss of 693k jobs. Traders will look ahead to Friday’s January labor report. The January unemployment rate is expected to edge further 7.4%, up from 7.4% previously, while non-farm payrolls are estimated to improve to 500k versus 524k a month earlier.
The January ISM non-manufacturing survey unexpectedly improved to 44.2, from 38.9 in December. The ADP private sector payrolls report in January was slightly better than expected, revealing a loss of 522k jobs instead of the 530k loss forecasted, and improving from December’s loss of 693k jobs. Traders will look ahead to Friday’s January labor report. The January unemployment rate is expected to edge further 7.4%, up from 7.4% previously, while non-farm payrolls are estimated to improve to 500k versus 524k a month earlier.
Yen Rises on Risk Appetite Decline
The Japanese yen rose by the most in February against the U.S. dollar and posted the considerable gains versus the euro and the pound as the investors and traders became less confident in the U.S. stimulus plans and were reluctant to buying anything else than the yen or the greenback.
The recent uprise of the yen-based currency pairs was connected to the global growth of the stock markets and the elevated optimism of the market participants that believed that the U.S. «bad bank» plan will be soon adopted. Now it seems that the plan is no longer on the U.S. government’s agenda and the liquidity-providing measures will be less interesting.
According to some of the currency analysts, another reason of the Japanese yen’s growth today can be seen in the exporters buying the currency. Perhaps, they have some long-term expectations for its growth and to preserve at least a part of their competitiveness they decide to buy the yen at its current levels.
USD/JPY fell from 92.11 to 91.43 as of 9:47 GMT today. EUR/JPY declined from 119.47 to 118.15 with a daily low at 117.08. GBP/JPY went down from 136.42 to 135.49 after falling as low as 133.60 today.
The recent uprise of the yen-based currency pairs was connected to the global growth of the stock markets and the elevated optimism of the market participants that believed that the U.S. «bad bank» plan will be soon adopted. Now it seems that the plan is no longer on the U.S. government’s agenda and the liquidity-providing measures will be less interesting.
According to some of the currency analysts, another reason of the Japanese yen’s growth today can be seen in the exporters buying the currency. Perhaps, they have some long-term expectations for its growth and to preserve at least a part of their competitiveness they decide to buy the yen at its current levels.
USD/JPY fell from 92.11 to 91.43 as of 9:47 GMT today. EUR/JPY declined from 119.47 to 118.15 with a daily low at 117.08. GBP/JPY went down from 136.42 to 135.49 after falling as low as 133.60 today.
Euro Falls on Europe’s Troubles Worsening
The euro fell against the U.S. dollar and other major currencies, except the pound, as the Russian banks are waiting from their government to negotiate the $400 billion of loans with their mostly European creditors.
The Forex market reacted to such news as to a signal that the problems in the European region are only getting bigger these days and moved to the safer assets that included the U.S. dollar and the Japanese yen. The pound was also gaining against the euro during the early trading session but then lost its positions and went straight down.
On the other hand — the U.S. optimistically trading bulls felt an opportunity to buy the American assets and the currency as they expect that the Obama’s plan will help the world’s largest economy to come out of the recession soon. Analysts see the situation where the European banks are risking to face more troubles and the United States are slowly heading up as the natural reason for the currency traders to sell the euro and shift to the yen and the dollar.
EUR/USD fell from 1.3002 to 1.2923 as of 9:46 GMT today after falling as low as 1.2809 during the early Asian trading session. EUR/JPY declined from 118.92 to 117.79, while EUR/GBP now stays near its open level (0.8728) — at 0.8733 after it had set the daily low at 0.8637.
The Forex market reacted to such news as to a signal that the problems in the European region are only getting bigger these days and moved to the safer assets that included the U.S. dollar and the Japanese yen. The pound was also gaining against the euro during the early trading session but then lost its positions and went straight down.
On the other hand — the U.S. optimistically trading bulls felt an opportunity to buy the American assets and the currency as they expect that the Obama’s plan will help the world’s largest economy to come out of the recession soon. Analysts see the situation where the European banks are risking to face more troubles and the United States are slowly heading up as the natural reason for the currency traders to sell the euro and shift to the yen and the dollar.
EUR/USD fell from 1.3002 to 1.2923 as of 9:46 GMT today after falling as low as 1.2809 during the early Asian trading session. EUR/JPY declined from 118.92 to 117.79, while EUR/GBP now stays near its open level (0.8728) — at 0.8733 after it had set the daily low at 0.8637.
EUR/USD Technical Analysis 13 February 2009
EUR/USD Open 1.2884 High 1.2940 Low 1.2736 Close 1.2860
Over the last week Euro/Dollar is in a consolidation and moves within the 1.2710 - 1.3040. The market continues to seek direction, despite the announcement of incentives for the U.S. economy from the new administration. Published data do not cause the expected positive effects on the stock markets, which affects the forex market. This condition will lead to significant movements of the currency market over the next 1-2 days due to this divergence. Short term support levels are 1.2735, followed by 1.2645. Immediate resistance levels are 1.2980, and then 1.3055. As a quotes compression increases, serious movements can be expected the next few days. On the 4 hour chart there is a formation of an ascending triangle with rising bottoms, and resistance around 1.3070. Probability of a break upwards is high, which corresponds with the high price of gold. An important step towards the realization of this scenario would overcome the SMA, which present a role of resistance. Technical indicators do not provide clarity on the potential movement yet. Boundaries of the Bollinger channel begin to shrink, showing a decline in volatility and preparation for leaving the state of consolidation.
Technical resistance levels: 1.2980 1. 3055 1.3185
Technical support levels: 1.2735 1.2645 1.2615
Trading range: 1.2940 - 1.2880
Trend: Downward
Sell at 1.2930 SL 1.2960 TP 1.2890
Yesterday we made +20 pips profit on EUR/USD from the following signal:
5:48 GMT Sell EUR/USD at 1.2913 SL 1.2939 TP 1.2863 exited at 6:02 GMT
Total yesterday +119, as shown at www.zifx.com/performance.php
Over the last week Euro/Dollar is in a consolidation and moves within the 1.2710 - 1.3040. The market continues to seek direction, despite the announcement of incentives for the U.S. economy from the new administration. Published data do not cause the expected positive effects on the stock markets, which affects the forex market. This condition will lead to significant movements of the currency market over the next 1-2 days due to this divergence. Short term support levels are 1.2735, followed by 1.2645. Immediate resistance levels are 1.2980, and then 1.3055. As a quotes compression increases, serious movements can be expected the next few days. On the 4 hour chart there is a formation of an ascending triangle with rising bottoms, and resistance around 1.3070. Probability of a break upwards is high, which corresponds with the high price of gold. An important step towards the realization of this scenario would overcome the SMA, which present a role of resistance. Technical indicators do not provide clarity on the potential movement yet. Boundaries of the Bollinger channel begin to shrink, showing a decline in volatility and preparation for leaving the state of consolidation.
Technical resistance levels: 1.2980 1. 3055 1.3185
Technical support levels: 1.2735 1.2645 1.2615
Trading range: 1.2940 - 1.2880
Trend: Downward
Sell at 1.2930 SL 1.2960 TP 1.2890
Yesterday we made +20 pips profit on EUR/USD from the following signal:
5:48 GMT Sell EUR/USD at 1.2913 SL 1.2939 TP 1.2863 exited at 6:02 GMT
Total yesterday +119, as shown at www.zifx.com/performance.php
Market Moving News: EUR/USD - Feb 13
Eur/usd - 1.2919...More short-covering was seen in Asia this morning (traders who sold earlier this week are squaring their positions ahead of the G-7 meeting) n euro hit an intra-day high of 1.2943 b4 easing. Bids are tipped at 1.2840/50 n also further out at 1.2800 while on the upside, offers are noted at 1.2950 (fair size) with a mixture of offers n stops likely to emerge at 1.2990/00.
UPDATE 2-Japan economy in biggest dive since 1974
TOKYO, Feb 16 (Reuters) - Japan's economy shrank in the last quarter by its most since the first oil crisis in 1974, hit by an unprecedented slump in exports, which is likely to lead to more calls for extra stimulus.
Japan has not suffered much directly from the bursting of bubbles in U.S. credit and housing markets, but its heavy dependence on exports and persistently soft domestic consumption has led to a sharper contraction than other major economies.
As the rich world faces its worst downturn in decades, the Group of Seven (G7) policymakers pledged at the weekend to do all they could to combat recession.
Japan's economy shrank 3.3 percent, or an annualised 12.7 percent in the fourth quarter of 2008 -- three times the fall in gross domestic product in the same quarter in the United States, at the epicentre of the current global crisis.
With exporters cutting production and laying off staff and many retailers reporting sharp falls in sales, economists saw little hope of a bounce back for Japan.
"The data showed a severe picture of the Japanese economy and highlighted the weakness in exports," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"The January-March quarter is likely to show another minus figure (annualised) in double digits or something close to double digits."
ADDICTION FEAR
Spooked by sliding U.S Treasuries and reports that the heavily indebted Japanese government may be planning further big stimulus spending, March 10-year government bond futures fell a third of a point.
"There's no question that this is the worst recession in the post-war period," Economics Minister Kaoru Yosano told a news conference.
The government had to pursue all options to keep the economy afloat, he said, but he struck a cautious note on large scale spending, saying it could not get "addicted to pain killers".
The Nikkei share average fell 0.2 percent but the yen rose slightly, after the G7 omitted any reference to the currency's strength in its final communique.
The yen's 24 percent against Japan's key trading partners in the quarter has added to the pain for big exporters such as Toyota and Panasonic.
The big slide in Japanese GDP in the October-December quarter was its second-worst in modern times, lagging only a 3.4 percent contraction in 1974, after the first Middle East oil shock.
The contraction was bigger than economists' median forecast of a 3.1 percent fall and also worse than the downturn ensnaring all other major economic powers in the same quarter.
The eurozone GDP shrank 1.5 percent, its deepest contraction on record, while the United States economy shrank just under 1 percent in the quarter (an annual rate of 3.8 percent).
For a comparative graphic, double click:
https://customers.reuters.com/d/graphics/JP_GDPC0209.gif
FACTORIES STALL
A plunge in exports was the main culprit behind the massive Japanese contraction, slashing GDP by 3.0 percentage points in the quarter.
The subsequent build-up in inventories of unsold cars, flat-screen TVs and many other goods has forced Japanese manufacturers to halt factory lines, pushing industrial production off a cliff.
"Given a rise in inventory and a decline in final demand, output adjustments will continue in January-March, paving the way for another big contraction in the first quarter," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities.
"As the U.S. stimulus package will have its effect on Japanese exports, Japan's economy may start picking up from April-June onwards, but it will be a very weak recovery amid a lingering recession. The economy can't avoid a second straight year of contraction in the fiscal year starting in April."
The sharp deterioration has prompted big exporters to cut jobs and threatened their small suppliers, sending company bankruptcies sky-rocketing and raising worries that the country's already fragile consumption could sputter even more.
The government, deeply unpopular with voters and facing an election this year, has so far set out two stimulus packages, and Japanese media said ruling parties were eying a third one that could include up to 30 trillion yen ($327 billion) in fiscal spending.
However, with parts of the previous packages stuck in Japan's deeply fractious parliament and with Prime Minister Taro Aso's popularity in deep decline, doubts are growing over how long he can survive.
The economy minister also said he was wary about the push from the main ruling party, the Liberal Democrats, to spend more.
"The party may have a plan for additional spending worth 30 trillion yen... but we can't think of good ways to spend that much", Yosano said.
Wary of mounting problems for Japan's economy, the BOJ has nudged interest rates down near zero, taken some unconventional steps including buying of commercial paper, and set up a new funding scheme using corporate debt as collateral.
The BOJ, which meets again this week, said last month it expected the economy to contract this fiscal year and in the year from April as consumer prices fall for two years.
($1=91.80 Yen)
Japan has not suffered much directly from the bursting of bubbles in U.S. credit and housing markets, but its heavy dependence on exports and persistently soft domestic consumption has led to a sharper contraction than other major economies.
As the rich world faces its worst downturn in decades, the Group of Seven (G7) policymakers pledged at the weekend to do all they could to combat recession.
Japan's economy shrank 3.3 percent, or an annualised 12.7 percent in the fourth quarter of 2008 -- three times the fall in gross domestic product in the same quarter in the United States, at the epicentre of the current global crisis.
With exporters cutting production and laying off staff and many retailers reporting sharp falls in sales, economists saw little hope of a bounce back for Japan.
"The data showed a severe picture of the Japanese economy and highlighted the weakness in exports," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"The January-March quarter is likely to show another minus figure (annualised) in double digits or something close to double digits."
ADDICTION FEAR
Spooked by sliding U.S Treasuries and reports that the heavily indebted Japanese government may be planning further big stimulus spending, March 10-year government bond futures fell a third of a point.
"There's no question that this is the worst recession in the post-war period," Economics Minister Kaoru Yosano told a news conference.
The government had to pursue all options to keep the economy afloat, he said, but he struck a cautious note on large scale spending, saying it could not get "addicted to pain killers".
The Nikkei share average fell 0.2 percent but the yen rose slightly, after the G7 omitted any reference to the currency's strength in its final communique.
The yen's 24 percent against Japan's key trading partners in the quarter has added to the pain for big exporters such as Toyota and Panasonic.
The big slide in Japanese GDP in the October-December quarter was its second-worst in modern times, lagging only a 3.4 percent contraction in 1974, after the first Middle East oil shock.
The contraction was bigger than economists' median forecast of a 3.1 percent fall and also worse than the downturn ensnaring all other major economic powers in the same quarter.
The eurozone GDP shrank 1.5 percent, its deepest contraction on record, while the United States economy shrank just under 1 percent in the quarter (an annual rate of 3.8 percent).
For a comparative graphic, double click:
https://customers.reuters.com/d/graphics/JP_GDPC0209.gif
FACTORIES STALL
A plunge in exports was the main culprit behind the massive Japanese contraction, slashing GDP by 3.0 percentage points in the quarter.
The subsequent build-up in inventories of unsold cars, flat-screen TVs and many other goods has forced Japanese manufacturers to halt factory lines, pushing industrial production off a cliff.
"Given a rise in inventory and a decline in final demand, output adjustments will continue in January-March, paving the way for another big contraction in the first quarter," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities.
"As the U.S. stimulus package will have its effect on Japanese exports, Japan's economy may start picking up from April-June onwards, but it will be a very weak recovery amid a lingering recession. The economy can't avoid a second straight year of contraction in the fiscal year starting in April."
The sharp deterioration has prompted big exporters to cut jobs and threatened their small suppliers, sending company bankruptcies sky-rocketing and raising worries that the country's already fragile consumption could sputter even more.
The government, deeply unpopular with voters and facing an election this year, has so far set out two stimulus packages, and Japanese media said ruling parties were eying a third one that could include up to 30 trillion yen ($327 billion) in fiscal spending.
However, with parts of the previous packages stuck in Japan's deeply fractious parliament and with Prime Minister Taro Aso's popularity in deep decline, doubts are growing over how long he can survive.
The economy minister also said he was wary about the push from the main ruling party, the Liberal Democrats, to spend more.
"The party may have a plan for additional spending worth 30 trillion yen... but we can't think of good ways to spend that much", Yosano said.
Wary of mounting problems for Japan's economy, the BOJ has nudged interest rates down near zero, taken some unconventional steps including buying of commercial paper, and set up a new funding scheme using corporate debt as collateral.
The BOJ, which meets again this week, said last month it expected the economy to contract this fiscal year and in the year from April as consumer prices fall for two years.
($1=91.80 Yen)
S.Korea revised Jan exports down record 33.8 pct
SEOUL, Feb 16 (Reuters) - South Korean exports in January performed worse than initially estimated as revised figures from the customs agency showed on Monday overseas shipments for the month dropped a record 33.8 percent from a year earlier.
That was worse than a provisional 32.8 percent annual drop reported in provisional figures released on Feb. 2 by the Ministry of Knowledge Economy and follows a 17.9 percent annual fall in December last year.
Imports for January were revised to 31.9 percent less than a year earlier from a provisional 32.1 percent decline, the Korea Customs Service data showed.
Exports to China, South Korea's biggest market, fell a record 38.6 percent in January from a year earlier. Exports to the United States dropped 27.8 percent over a year before, marking the sharpest annual loss since December 2001.
The revised export and import figures produced a trade deficit of $3.36 billion, bigger than a provisional $2.97 billion shortfall reported earlier, the data showed.
The data comes after the central bank slashed interest rates by 50 basis points to a record-low 2.0 percent on Thursday last week, its sixth rate cut in four months aimed at pulling Asia's fourth-largest economy away from a looming recession.
That was worse than a provisional 32.8 percent annual drop reported in provisional figures released on Feb. 2 by the Ministry of Knowledge Economy and follows a 17.9 percent annual fall in December last year.
Imports for January were revised to 31.9 percent less than a year earlier from a provisional 32.1 percent decline, the Korea Customs Service data showed.
Exports to China, South Korea's biggest market, fell a record 38.6 percent in January from a year earlier. Exports to the United States dropped 27.8 percent over a year before, marking the sharpest annual loss since December 2001.
The revised export and import figures produced a trade deficit of $3.36 billion, bigger than a provisional $2.97 billion shortfall reported earlier, the data showed.
The data comes after the central bank slashed interest rates by 50 basis points to a record-low 2.0 percent on Thursday last week, its sixth rate cut in four months aimed at pulling Asia's fourth-largest economy away from a looming recession.
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