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Employment disappoints investors

Published: Apr 1, 2010 by admin Filed under: Market Snapshot
The U.S. ADP employment report signaled the worst ahead of the non-farm payrolls, where the ADP employment signaled that jobs were lost through March rather than added.

The ADP employment change showed that the private sector shed 23,000 jobs in March, following the prior revised estimate which signaled that 24,000 jobs were also lost in February; the figures contradict median estimates, which signaled that the private sector should have added 40,000 jobs in March.

Possible Rate Hikes

Published: Mar 9, 2010 by admin Filed under: Market Snapshot
The latest Fed discount rate hike to 0.75%, a 25-basis-point increase - which is the interest rate at which banks borrow from the Fed's discount window on Thursday 20th of February directed most U.S. economists to expect that the Fed would raise its benchmark interest rates.

According to a survey released on Monday economist expected this rise within six months by between a quarter and a half percentage points.

A majority of economists in the National Association of Business Economists' semiannual survey found the Fed's current stance of rates near zero percent is appropriate. Some number of economists believes that the current Fed policy by keeping the inertest rate at a historical low for a long period of time is exaggerated.

"A majority believes that a rise in interest rates is both likely and appropriate in the next several months," said NABE President Lynn Reaser.

The Fed has defended his stimulus policy by pointing at the continued high rates of unemployment and low inflation warrant holding rates exceptionally low for an extended period.

Still, reports show the economy is recovering gradually, and some policy makers believe the Fed should begin to prepare markets for the beginning of the process of tightening financial conditions.

The Fed is on track to end a program of buying $1.25 trillion in mortgage-backed securities at the end of this month. The program was launched to provide extra support for the economy after policy-makers chopped rates to near zero.

Dollar Falls Vs Euro

Published: Mar 3, 2010 by admin Filed under: Market Snapshot
 The U.S. dollar dropped versus the euro and other major currencies. The Euro reached $1.3735 on Wednesday; up from $1.3608 in North American trade late Tuesday.

The market was deeply affected by Greece outlining its tax changes and budget cuts in an attempt to reduce its deficit, easing concerns about a debt-fueled crisis and reducing the relative appeal of the U.S. currency.

Relief about Greece's outlook, as well as reasonably good economic data out of the U.S., reduced the appeal of the greenback as a relatively safe investment.

Dollar Regains After a GDP Increase

Published: Feb 28, 2010 by admin Filed under: Market Snapshot
The dollar regained some ground on Friday after a report showed U.S. real gross domestic product increased at a 5.9% seasonally adjusted annualized pace in the final three months of 2009, revised up from 5.7% estimated last month.

The U.S. economy grew slightly faster than previously reported in the fourth quarter, the Commerce Department estimated Friday, but details of the revision to gross domestic product show final sales in the United States were actually weaker than reported a month ago.

Identifying Systematic Risk

Published: Feb 19, 2010 by admin Filed under: Market Snapshot
<div style="margin: 1ex;"><div><img src="http://www.learning-forex.com/uploads/articles/cc259f06.jpg" align="left" alt="" border="0" height="265" hspace="" vspace="" width="400"><font size="3" face="Times New Roman">In trying to reach the moon, the US government wants to oversee the bank system in a way that would check for the kind of systemic problems that froze the credit markets in late 2008 and nearly ruined the financial industry in America.</font> <p><font size="3" face="Times New Roman">The New York Times </font><a href="http://www.nytimes.com/2010/02/18/business/18regulate.html?hp" target="_blank"><font size="3" face="Times New Roman">reports </font></a><font size="3" face="Times New Roman">“The Senate and the Obama administration are nearing agreement on forming a council of regulators, led by the Treasury secretary, to identify systemic risk to the nation’s financial system.”</font></p> <p><font size="3" face="Times New Roman">It has yet to be&nbsp;determined how the newly formed group would differentiate between risks which is “local” and that which could disrupt the entire financial system. The government’s plan&nbsp;is to&nbsp;keep an especially sharp eye on the major money center banks&nbsp;such as&nbsp;Bank of America, Citigroup, investment banks&nbsp;including&nbsp;Goldman Sachs, and Morgan Stanley.</font></p> <p><font size="3" face="Times New Roman">That may work to some extent if the new council tracks the proprietary trades and creation of derivatives, but it still raises the question of&nbsp;what kind of trading and leveraged instruments are dangerous and which are not.</font></p><hr> <p><font size="3" face="Times New Roman"> Not all derivatives produce unpredictable investment results. Forecasting which ones will; is difficult.</font></p> <p><font size="3" face="Times New Roman">The S&amp;L crisis of the 1980s and South American sovereign debt crisis of the 1970s were due to risks that fell outside trading and derivatives. It was nearly impossible to predict that Brazil, Argentina, and Mexico could threaten to default on their debt the same way that it would have been improbable that US regulators could have forecast the&nbsp;sovereign debt problems in Greece two years ago. </font></p> <p><font size="3" face="Times New Roman">In other words, systemic risk often sits well outside the&nbsp;purview and anticipation US federal regulators. The next systemic crisis in the financial and credit markets may be from an inability&nbsp;of Greece or Dubai to pay their debt obligations.</font></p> </div> </div><br>
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