Hot Forex News Today - 12 Dec 2007

Forex - Asia currency summary

Asian currency rates against the US dollar as of 0850 GMT (vs previous late levels):
-Australian dollar: 1.1348 (1.1273)
-Hong Kong dollar: 7.7981 (7.7986)
-Indian rupee: 39.375 (39.375)
-Indonesian rupiah: 9,303.0 ( 9,279.0)
-Japanese yen: 111.28 (112.07)
-Korean won: 924.00 (923.50)
-Malaysian ringgit: 3.3145 (3.3125)
-Philippine peso: 41.275 (42.190)
-Singapore dollar: 1.4426 (1.4420)
-Taiwan dollar: 32.375 (32.345)
-Thai baht: 30.350 (30.350)

Dollar Forward Rates

New York 1 mth 24.51 - 23.76 prm 3 mths 68.50 - 67.50 prm 6 mths 137.70 - 136.20 prm 12 mths 282.25 - 279.25 prm

Dollar gives up gains made in wake of Fed rate cut

The dollar lost the gains it had temporarily made after the Federal Reserve last night cut interest rates by only 25 basis points, disappointing minority expectations for a more aggressive cut. There was one dissenting vote at the Fed for a greater 50 point cut, while the discount rate -- at which banks borrow from the Fed, determining liquidity levels -- was also cut by only 25 points, against market expectations for a 50-point cut.

While the smaller-than-expected cut initially boosted the dollar, this rise was short-lived as markets believe the Fed is acting behind the curve and will eventually have to lower rates more in the future. The Fed acknowledged in its statement that both growth and inflation risks had increased, suggesting it does not yet know which side the balance is going to tip.

'The Fed is expressing uncertainty at a time when financial markets require leadership,' said Hans Redeker at BNP Paribas. He said the price pressures in the economy mean the Fed is unable to operate ahead of the curve, so 'the Fed will have to sacrifice more economic growth to bring inflation down.' Although the moderate rate decision has cleared the risk of a sharp dollar sell-off into the new year, the Fed's policy will continue to be highly data and market-dependent, analysts said.

'We believe slower growth, tight credit conditions and a comforting core inflation reading will encourage the Fed to implement further insurance easing to protect against the downside risks to growth, and we look for two 25-point reductions in Q1 of 2008,' said Daragh Maher at Calyon. Meanwhile, the euro was mildly stronger against the yen and pound, with investors looking to data for more direction.

Euro zone industrial output is expected to rise 0.2 pct on the month in October after a 0.7 pct decline in September. The yearly rate is expected to pick up to 3.9 pct from 3.5 pct. In the UK, the pound will be similarly data-driven today, with the focus firmly on the labour market data. The claimant count is predicted to show a 5,000 decrease, half the 9,900 decrease recorded in October.

More importantly, average earnings growth will be watched for pipeline inflationary pressures in the labour market. The headline rate is expected to accelerate somewhat in October, to an annual rate of 4.2 pct from 4.1 pct in September. Excluding bonuses, however, earnings growth is forecast to remain at 3.7 pct.

London 0905 GMT Hong Kong 0500 GMT US dollar 111.31 yen up from 110.92 yen 1.1323 sfr up from 1.1309 sfr Euro 1.4682 usd up from 1.4658 usd 163.43 yen up from 162.64 yen 1.6624 sfr up from 1.6582 sfr 0.7185 stg down from 0.7195 stg Sterling 2.0435 usd up from 2.0369 usd 227.46 yen up from 225.96 yen 2.3138 sfr up from 2.3037 sfr Australian dollar 0.8810 usd up from 0.8756 usd 0.4322 stg up from 0.4299 stg 98.05 yen up from 97.14 yen.

Forex Calendar at Thu - 13 Dec 2007

Forex Calendar for Tomorrow Thu - 13 Dec 2007

Time(GMT):	Currency:	Event:	Forecast:	Previous:
12:01am	GBP	RICS House Price Balance	-28.5%	-22.2%
H O T	The Royal Institution of Chartered Surveyors (RICS) House Price Balance measures the price change of homes in the UK. This leading indicator represents the percentage of chartered surveyors reporting a price rise in their designated area. For instance, a reading of 50% means that 50% more surveyors reported a rise than reported a fall in prices.
8:30am	CHF	Interest Rate Statement	2.75%	2.75%
H O T	Four times per year the Swiss National Bank (SNB) Governing Board meets to set the nation's short term interest rate (i.e., "three-month libor"). Shortly after the meeting they release a statement that contains the decided rate, a brief commentary of the economic conditions that effected their decision, and most importantly, clues regarding the outcome of future meetings. A rising trend in interest rates has a positive effect on the nation's currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best "risk-free" return on their money, which can dramatically increases demand for the nation's currency. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down.
11.00am	GBP	CBI Industrial Trends Orders	4	8
H O T	The Confederation of British Industry (CBI) Industrial Trends Orders measures the value of new purchase orders placed with domestic manufacturers. A rising trend has a positive effect on the nation's currency. A busy manufacturing industry is a positive sign that the economy is expanding, and this survey points to how busy manufacturers will be in the months to come as they work to fill new orders.
1:30pm	USD	Core Retail Sales m/m	0.6%	0.2%
H O T	Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.
1:30pm	USD	PPI m/m	1.6%	0.1%
H O T	The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.
1:30pm	CAD	Labor Productivity q/q	0.1%	0.2%
	Measures the annualized quarterly growth in labor efficiency for producing goods and services outside the farming sector. A falling trend has a positive effect on the nation's currency because a decrease in efficiency is comparable to an increase in wages. When businesses pay more for labor, they are likely to pass the higher costs to the consumer, so traders view wage inflation as a leading indicator of consumer inflation.
11:50pm	JPY	Tankan Large Manufacturers Index	21	23
H O T	Measures the general business conditions of large manufacturers. The index is derived from a quarterly survey that asks respondents to rate subjects such as general business conditions, supply and demand conditions for products and inventories, prices, sales, and employment conditions. A rising trend has a positive effect on the nation's currency. The Tankan is released four times per year and is one of the nation's most respected gauges of economic health because manufacturers play a vital role in the large export industry. Traders pay special attention to the Tankan survey because it's one of the few growth indicators that is produced directly by the Bank of Japan.

Forex Calendar at Wed - 12 Dec 2007

Forex Calendar for Tomorrow Wed - 12 Dec 2007

Time(GMT):	Currency:	Event:	Forecast:	Previous:
9:30am	GBP	Average Earnings Index +Bonus q/y	4.2%	4.1%
H O T	The Average Earnings Index (AEI) measures the average wage, including bonuses, paid to employees. The indicator reading represents the change in the current quarter when compared to the same quarter in the previous year.
9:30am	GBP	Claimant Count Change	-5.0%	-9.9%
H O T	Measures the change in number of people claiming unemployment related benefits during the previous month. A falling trend has a positive effect on the nation's currency because working people tend to spend more money, and consumer spending makes up a large portion of GDP.
10.00am	EUR	Employment Change q/q		0.5%
H O T	Measures the change in number of employed people during the previous quarter. A rising trend has a positive effect on the nation's currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP.
1:30pm	USD	Trade Balance	-57.3B	-56.5B
H O T	Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.
1:30pm	USD	Import Price Index m/m	2.0%	1.8%
	Measures the monthly rate of inflation for imported goods.
1:30pm	CAD	Trade Balance	2.3B	2.6B
H O T	Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.
9:45pm	NZD	Retail Sales m/m	0.0%	1.0%
H O T	Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.