Forex Market Update

Fed Chairman Ben Bernanke didn’t drop more hints yesterday in his speech to GW University students.  Unlike Monday’s talk where he outlined the need for further stimulus to boost employment growth, Bernanke stayed the course with the subject content, and discussed how the Fed has assisted the US economy in the last few years. Bernanke defended the Fed’s Asset Purchases and near 0.0% interest levels as being beneficial for the overall US economy.

Aussie Seeing No Love

After a great start to 2012, the AUDUSD has been taken out to the woodshed in March.  At just above 1.0300 on Thursday, the pair is down over 5.0% from its late February high of 1.0850.  Triggering the downturn has been the combination of an overall US dollar rally, worries of a slowdown in Chinese economic growth, and the effects of the ongoing EU financial crisis on the global economy. Specifically, Forex traders are worried that although prices of precious metals may stay strong, overall commodity purchases may decrease.  This fear has caused firms in the mining sector to issue negative forecasts as they factor a drop in demand for 2012.

Will Low Iranian Oil Supplies Trigger Higher Prices?

Will Low Iranian Oil Supplies Trigger Higher Prices? That’s been one of the big questions as an embargo on Iranian Oil from EU nations is soon set to take place.  The embargo comes as Iran has already unilateraly decided not to ship oil to those countries.  Overall, Iranian supplies have dropped by 14%.  So far, the drop in supply has been made up by other oil producing countries. However, as talk of more sanction against Iran has heated up, Oil traders expect Iranian output to continue to decrease with the potential of higher prices.

GBPUSD Battle of the Banks

One of the great things about Forex trading is the various opinions on any Forex pair.  Chat rooms and forums will rarely see much of a consensus, with traders battling it out with their opinions.  Currently, we have such a battle in the GBPSUD from two leading banks in Europe.  On one side, Danish firm Danske Bank has recommended to clients to be buyers of the GBPUSD on nay dips with a target above 1.6000.  Contrasting their statements is German Commerzbank which believes the GBPUSD will see weakness as it tested but failed to cross above the 1.6000 figure. 

QE3 To Be Or Not To Be

The question for traders around the world is just how serious Fed Chairman Ben Bernanke was with his hints that the Fed was going to apply new stimulus to spur faster jobs growth.  After the initial spike in equity and commodity prices on Monday, follow through momentum failed to hold on Tuesday.  As a result, traders are now looking ahead to Wednesday’s Durable Goods Orders report for clues towards the US’s economy.  As a leading indicator of economic activity, a worse than expected Durable Goods figure may “seal the deal” for the Fed and lead to imminent easing actions.  Overall, trading in currencies, commodities, and sticks coukld be range bound over the short term until further clarity towards QE3 emerges.

Deutsche Bank Loves Risk

Just because every financial institution prints a risk disclaimer on the footer of every web page, email, brochure etc, about risk,  it doesn’t stop them from heeding their own advice.  This was obviously a problem for the likes of Lehman Bros, AIG, and Bear Stearns to name a few.  But now, a new member of the “financial gambling” party has emerged.  According to a recent report from Bloomberg, Deutsche Bank has recently surpassed BNP Paribas for the biggest bank in Europe in terms of balance sheet.  The companies assets have now hit $2.88 trillion; that’s nearly the size of all of Germany’s GDP.

Dollar Weakness Continues

The dollar is weaker this morning as momentum from yesterday’s dovish comments from Fed Chairman Ben Bernanke continues.  Currently, the dollar index has fallen to 78.80 from close to 80.00 yesterday.  Overall, Forex traders view yesterday’s comments as pretty surprising as they were directed to a conference that was against the FED initiating another round of QE now.  In addition, with US economic news showing steady improvement, the timing of Bernanke’s remarks were surprising.