How Does an Oil Crisis Impact the US Dollar?

Oil prices are rising and the US dollar is falling, but is this the natural relationship between these two assets? Taking a look back at the two prominent oil shocks of the past four decades (1973 and 1979), we see that this is not necessarily the case.
1973 Oil Crisis: Initially Dollar [...]

Bank of Canada Must Lower Rates

According to one index, commodity prices have risen 40% over the last twelve months. One would therefore expect the Canadian economy to be commensurately strong. According to the most current economic data, however, just the opposite is true. Wholesale manufacturing...

Problems With Blog

Unfortunately I am experiencing problems with my blog today. Can’t upload anything and the pages are broken. New posts will go up when things get fixed.
In the meantime, for currency comments, please go to DailyFX.com

Parity Party

Only last year, the idea that the Australian Dollar would ever reach parity with the USD was laughable. Then, earlier this year, it became plausible. Now, according to an informal poll of analysts, it is not only possible, but likely....

Australian Dollar: Parity Within Reach

This is a great article authored by one of my currency analysts at DailyFX
Who could have imagined that the value of one Australian dollar could be equal to one US Dollar? As recently as the beginning of this year, parity or an exchange rate of 1.0 still seemed like a far fetched idea because at [...]

Hungarian Forint Nears 3-Year High

Raise your hand if you've ever heard of the Hungarian Forint. I didn't think so. The Forint is Hungary's currency, and it is performing quite well, having surged 2.5% against the Euro this month alone en route to a three-year...

In the Financial Papers: Today’s Top Forex News 05.21.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 5:14 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
Fed Chairman Kohn Paints Dour Picture
Japan Weighs Releasing Rice Reserves
Vietnam Considers Ending Rice Export Curbs
Is Inflation NExt Fight for the Fed?
UK Rentals See Boom as [...]

EU Economy Weakens

While the credit crisis has ravaged the economies of the US and the UK, the EU has largely been spared. First quarter GDP grew at a healthy annualized rate of 2.8%, helped by a whopping 6% expansion in Germany. However,...

3 Reasons Why the Fed Can Afford to Pause in June

Why the Fed Can Afford to Pause

This morning, Federal Reserve Vice Chairman Kohn made the most explicit comment that we have heard from a central bank official to date about pausing in June. He said that the “economy, markets should gradually improve” and “monetary policy appears to be appropriately calibrated for now to promote [...]

In the Financial Papers: Today’s Top Forex News 05.20.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 6:14 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
Fed Vice Chairman Signals Pause
US Producer Prices Mixed
German PPI vs. ZEW
Australia RBA minutes indicate concerns on high inflation, growth uncertainty, hawkish stance
Bank of Japan Kept [...]

It Could be A Good Week for the Dollar

The US dollar has started the week strong thanks to the better than expected leading indicators report. For the second month in a row, leading indicators increased, suggesting that the US economy may not be in a recession. Although the numbers are definitely encouraging, I believe that recession or no recession is just [...]

US Treasury: China Still Not Manipulating RMB

In its semiannual report to Congress, the US Treasury Department once again did not cite China as a currency manipulator. For as long as the Forex Blog has been covering this issue, various interest groups have been pressing the Bush...

In the Financial Papers: Today’s Top Forex News 05.19.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 5:31 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 

Fed is Downbeat on Economy

Yesterday's release of the minutes from the Federal Reserve Bank's April meeting sent shock waves through the investing community. The text revealed that the Fed Board of Governors has become significantly more bearish on the outlook of the US economy,...

In the Financial Papers: Today’s Top Forex News 05.16.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 7:39 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
Housing Starts in U.S. Rise; Single-Family Construction Hits 17-Year Low
Fed, BOE Foreshadow End of Rate Cuts as Prices Rise
Oil Rises to Record Above $127 on [...]

Dollar Rally & Intervention

After the G7 meeting, during which officials finally commented on the "volatility" in forex markets, the Dollar rapidly appreciated over 5%. Analysts had previously ascribed this rally to a variety of factors, both technical and fundamental. For example, the Dollar...

Isn’t the Weak Dollar Suppose to Help Manufacturing?

Since the beginning of the year, the US dollar has fallen 5.9 percent against the Euro and 6.7 percent against the Japanese Yen.
For many countries, including the US, a weak dollar has caused major problems ranging from deteriorating export growth to inflation. The one good thing that the weaker dollar was supposed [...]

Central Banks Defend Krona

In the early months of 2008, the Icelandic Krona continued its downward slide, ultimately losing 26% of its value. Inflation is nearing 12%, the economy is in tatters, and there is a crisis of confidence affecting the banking sector. Having...

In the Financial Papers: Today’s Top Forex News 05.15.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 5:43minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
New Zealand Dollar, One of the Weakest Pairs in the FX Market
Eurozone GDP Numbers
Factories Won’t Save the Day
Manufacturing in NY Unexpectedly Contracts
Industrial Production Weakens
US Consumer Prices
High [...]

AUD Draws Closer to Parity

The Australian Dollar is rapidly approaching parity with the USD, having risen 12.8% in the year-to-date. In fact, it recently notched a 24-year high against the Dollar. The currency's strength is connected closely with the US-Australia interest rate differential, which...

US Subprime and Housing Crisis 101

Here’s a secret, I am a BIG FAN of the Public Radio show This American Life.
This past week Ira Glass shares stories about how the sub-prime crisis has affected Americans and he provides an easy to understand rundown of how the sub-prime crisis unfolded.
Definitely worth a listen and hopefully you will become a fan as [...]

Dow Slides As Oil Reaches Record High

Goldman Sachs (GS: 185.41 -1.73 -0.92%) the investment bank that forecast a surge in oil prices back in 2005, has once again said oil will rise, this time to over $141/barrel in the second half of this year. And since oil traders are rallying on any possible good news, this forecast pushed oil up to [...]

Is Risk Appetite Returning to the Markets?

Since last Thursday, carry trades have performed very well. USD/JPY has risen over 250 pips and the Dow appears to be carving out a near term bottom. This has led some investors to wonder whether whether risk appetite has returned.
The stock and credit markets have been stabilizing over the past few [...]

Correlation or Causation

The slight recovery of the USD has been accompanied by a couple of other interesting trends: falling gold and oil prices, and rising equity and bond prices. What is the connection here? With regard to gold and commodity prices, the...

Weak Dollar Affects Study Abroad Programs

Yesterday I talked about how the weak dollar has affected the Film Industry. Today, the Wall Street Journal has an article about how the weak dollar is affecting study abroad programs.
With the greenback down 20% against the Danish krone and up 4% against the Argentine peso in the past two years, there [...]

UK: No rate Cuts for 2 Years

The US Federal Reserve Bank is known for ambiguity and vagueness. The Bank of England, it appears, is not trying to emulate this approach. The Bank put an end to speculation about its near-term monetary policy by announcing that it...

In the Financial Papers: Today’s Top Forex News 05.14.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 5:33 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
CPI Growth Weaker than Expected
Foreclosures in U.S. Climbed 65% in April to Record as Home Prices Dropped
Recession? Not So Fast, Say Some
Why Inflation wil not [...]

Canadian Dollar Spurred by Oil

Just a few weeks ago, the Central bank of Canada aggressively cut interest rates in order to slow the spread of the US economic downturn to Canada. Accordingly, investors were quite bearish on the Canadian Dollar. With the price of...

Old Gas Pumps Can’t Keep Up With Rising Prices

Found this great article online

REARDAN, Wash. (AP) — Mom-and-pop service stations are running into a problem as gasoline marches toward $4 a gallon: Thousands of old-fashioned pumps can’t register more than $3.99 on their spinning mechanical dials.
The pumps, throwbacks to a bygone era on the American road, are difficult and expensive to upgrade, and [...]

Daily Market Analysis

Today’s US Dollar Trading
• USD extends rally during New York
• Flows described as light and disorderly
Overnight Preview
• Look for book-squaring
• USD may have gotten ahead of itself
Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 8:30am USD Core CPI m/m 0.2%
• 8:30am USD CPI m/m 0.3%
• 9:15am USD Fed Governor Kroszner Speaks
• 10:30am USD Crude Oil [...]

Weak Job Growth Does Not Always Equal Weak Retail Sales

The biggest event risk for the US dollar this week will be the April retail sales report. Since hitting a record low against the Euro the middle of last month, the greenback has strengthened significantly. However as the market finally latches onto the recent strength of the dollar, we are actually beginning to [...]

Q1: Dollar Down 4%

Although the first quarter of 2008 ended on March 31, it wasn't until last week that the Federal Reserve Bank finally finished tallying all of the data and released its obligatory report on the performance of the Dollar. On a...

Out of the Office Until Friday

I am headed out to California to speak at a conference of Investment Advisors. Therefore I will be out of the office until Friday.
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Yen Falls on Risk Aversion

"The credit crisis is over! No it's not! Yes it is!" Such back and forth represents the tenor of the debate currently transpiring in the financial markets. Every day seems to bring new economic data, which is quickly seized upon...

In the Financial Papers: Today’s Top Forex News 05.05.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 5:15 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
Greenspan Says U.S. Is in a `Pale Recession’ That May Extend Through Year
Economy May Face Prolonged Pain
UBS May Eliminate 8,000 Jobs as First-Quarter Net Loss [...]

Positive Tone For Metals

A firm note tracked the Gold price overnight and it is currently $888.90. Closing above $880 adds to that positive tone and the next resistance level stands at $897. The London AM Gold Fix at 1030 GMT this morning was at $887.25, £453.906 and €573.604 (from $872.25, £445.48 and €568.61 yesterday).
Inflation still remains the main [...]

Be Selective With Buying the US Dollar

Since the beginning of the week, I have warned of a potential dollar rally. At the time, we were basing our argument primarily on the flip in the FXCM Speculative Sentiment Index, technicals and a turn in Eurozone economic data.
However now we can add to that list a turn in US economic [...]

Jim Rogers Wants You To Buy US Dollars

Renowned investor Jim Rogers said today that he is expecting a US dollar rally in the currency markets. The Singapore-based Rogers, who predicted correctly the current commodities boom, said at the launch of the Barclays Global Agriculture Delta Fund in Singapore today he expects a “nice rally” in the US dollar because many people including [...]

Forex Signals Over +1100 Pips Since Jan - Track Record (Updated!)

**We banked another winning trade for +115 pips (see what we did below). Our track record, equity curve, testimonials and trades have been updated
Why You Should Join BKForex Advisor:
1. Over +1100 Pips Since the Beginning of the Year
2. 80% Accuracy on Trade Calls
3. 31 out of 39 Winning Trades Since January
4. 35 out of [...]

New Forex ETFs

WisdomTree and Dreyfus Funds recently unveiled five new currency ETFs in order to fill a broad gap in the emerging markets category. Previously, investors were limited to such mainstay currencies as the US Dollar, Euro, Japanese Yen, British Pound, Australian...

April Non-Farm Payrolls Helps Carve Out Near Term Bottom in US Dollar

To the relief of dollar bulls, US corporations cut only 20k jobs in the month of April compared to the market’s -75k expectations. The unemployment rate also dropped from 5.1 to 5.0 percent, triggering a widespread dollar rally. The better than expected NFP number will help to confirm the near term bottom in the US [...]

Chinese Exporters Dump Dollar

The anecdotal evidence that China is diversifying its forex exposure away from the Dollar continues to mount. To date, most of the focus has centered around the Central Bank of China, which is passively diversifying its reserves into European and...

In the Financial Papers: Today’s Top Forex News 05.02.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 6:46 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
Non-Farm Payrolls Fall by 20,000 in April; Unemployment Rate Unexpectedly Falls to 5%
Fed Raises Emergency Auctions to $75 Billion to Counter Liquidity Shortage
Euro’s Bull Run [...]

Commentary: The Dollar Conundrum

The Dollar is currently teetering on the edge of a precipice. Many analysts are predicting that, having recently retreated from a record low against the Euro, the Dollar's best days are still in front of it. On the other hand,...

Will Non-Farm Payrolls Recover?

You can also read this non-farm payrolls preview on DailyFX.com
The Federal Reserve cut interest rates by 25bp yesterday and hinted that they will pause when they meet again in June. In response to this shift, the market immediately priced in an 85 percent chance that interest rates will be left at 2 percent at [...]

CNBC Holds Million Dollar Trading Contest

FXCM, the online currency trading broker, has joined with CNBC as the Official Currency Trading Sponsor of the CNBC.com Million Dollar Portfolio Challenge. The Challenge, a virtual trading competition that was previously limited to stock trading only, will now feature both stock trading and currency trading. Competitors will be allocated $100,000 in “CNBC Bucks” to [...]

Kathy Lien on Fox Business

I was on Fox Business this morning with Alexis Glick talking about inflation in the rest of the world.
Not really relevant to us trading G-10 currencies, but nonetheless fun and interesting.
Hit the play button and the video will load

Korean Won is Worst in Asia

In the year-to-date, the Korean Won has recorded the worst performance of any currency in Asia, having recently fallen to a 6-week low. The story is being driven as much by Dollar strength is by Won weakness. US equities have...

Fed’s FOMC Statements Are Getting Longer and Longer

**Catch me on Fox Business around 8:30am ET tomorrow (May 1)
The Federal Reserve cut interest rates by 25bp to 2 percent, which was right in line with the market’s expectations. However the US dollar sold off because the market was disappointed that the central bank did not give them more. This appears to [...]

Strong Rise In US Consumer Spending Lifts Dollar

The broad performer of the day in the currency markets is the US dollar, which got a lift in sentiment from mostly better-than-forecast economic data and the Fed’s hint of a rate cut pause. First of all, US consumer spending rose 0.4% in March, twice market’s expectations. This is an encouraging sign even as personal [...]

Kathy Lien on CNBC Power Lunch

I was on CNBC Power Lunch earlier this afternoon. Click on the video to watch!
I’m a short term dollar bull, long term dollar bear =)

Fed Lowers Rates

The Federal Reserve Bank recently lowered interest rates for the seventh, and perhaps final, time, bringing its benchmark federal funds rate to 2.0%. Since inflation is still hovering around the 4% mark, the Fed will probably be reluctant to lower...

In the Financial Papers: Today’s Top Forex News 04.30.08

**Catch me on CNBC Power Lunch today. I should be on sometime between 1:00-1:45pm ET!
Here is the “In the Financial Papers Radio Broadcast” (Length: 7:27 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
Federal Reserve FOMC Rate Decision
US GDP and Chicago PMI Better [...]

Turkish Lira Set for Decline

2007 was a banner year for the Turkish Lira, which appreciated 21% against the US Dollar. However, in the year-to-date, the currency has returned nearly 10% of this gain, making it the third worst performing currency in the world. Turkey...

The Federal Reserve Needs to Pause

No one wants to be in the shoes of the Federal Reserve today as they begin their 2 day monetary policy meeting. Fed officials face a tough decision as they weigh the risk of deteriorating growth with the risk of rising inflation.
Unfortunately for the Fed, the problems with growth and inflation have only escalated [...]

April Marks Dollar Turnaround

Earlier this week, the Forex Blog speculated that the tide was turning on the Euro, which had retreated from the $1.60 threshold. Sure enough, the month of April saw the best monthly performance by the Dollar in over two years....

In the Financial Papers: Today’s Top Forex News 04.28.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 5:46 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
















 
Podcast Covers:
FOMC Rate Decision vs. Non-Farm Payrolls
Federal Reserve Faces a Tough Decision
Bernanke May Have to Start Thinking Like Volcker
Euro and Oil at Crossroads
Japanese Inflation Coming
EoS: Fourth [...]

Forwards Gain Retail Appeal

The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of...