Forex NEWS by RTT in partnership with InstaForex

[Katerine]

Obama Asks Congress For USD100 Bn IMF Boost

President Barack Obama Monday sought the Congress' backing for a proposed USD100 billion U.S. loan for the expansion of an International Monetary Fund (IMF) emergency fund by USD 500 billion, reports say.

The USD100 billion is part of the plan agreed at this month's Group of 20 summit in London to triple IMF resources to a total of $750 billion to help the Fund respond to crises in emerging market economies as a result of the global financial crisis and economic downturn.

Obama made the request Monday in several letters to two Democrats: House of Representatives speaker Nancy Pelosi and Senate Majority leader Harry Reid; and Republican House leader John Boehner and Senate Minority leader Mitch McConnell.

"Our proposal to increase U.S. participation in the NAB by up to USD 100 billion as part of an overall increase of 500 billion dollars was warmly endorsed by the G20 Leaders," the letters said.

The president pointed out the funding does not represent a budgetary expenditure or any increase in the deficit since it effectively represents an exchange of assets.

The transfer funds to the IMF under the program, known as an expansion of the New Arrangements to Borrow (NA will allow member-countries to provide credit to the IMF to deal with crises that may threaten the stability of the global financial system. In turn the donor nations would receive interest bearing assets in return, backed up by IMF resources including gold stocks.

Obama said countries were looking to the U.S. to deliver on its G-20 commitment, which could spur other governments to contribute to the IMF.

Noting that the NAB was "woefully inadequate" to deal with the severe economic and financial crisis, Obama said the deteriorating conditions threaten to worsen the recessions in the emerging economies and could cause currencies to collapse.

Asserting that rapid progress is essential to the restoration of confidence in the global economy and financial system so that the global economy can emerge from recession to recovery and to sustained growth, Obama appealed for help to deliver on the U.S. commitment by supporting inclusion of the NAB and related IMF proposals in the most timely legislative vehicle that will enable the United States to act quickly.

He said an enlargement of the NAB facility would allow for increased participation by emerging market economies, in particular China and India. Beijing has already indicated that it plans to contribute USD 40 billion to the IMF through a bond issued to its central bank by the Fund.

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[IFX Darika]

Wednesday, UK's Chancellor of Exchequer Alistair Darling is set to announce his second budget statement at 7.30am ET.

According to the findings of the Operational Efficiency Programme released by the HM Treasury on Tuesday, there is a scope for GBP 15 billion of efficiency savings. In its pre-budget report, the government had increased the target for the current spending review period to GBP 35 billion savings.

Economists expect government borrowings in the range of GBP 150 billion to GBP 175 billion. This would lift borrowings to 12% of GDP for each of the coming two years.

Darling is also expected to downwardly revise the GDP forecast for the British economy.

At 3.30am ET, Dutch consumer confidence is due. Consumer confidence is forecast to rise to minus 33 in April from minus 34 last month.

Thereafter, the Bank of England minutes and the UK labor market statistics are due at 4.30am ET. At the end of two-day rate setting meeting, the Monetary Policy Committee of the BoE held the interest rate at historical low of 0.5%. A preliminary M4 money supply report is expected at the same time. After rising 1.4% in February, M4 money supply is expected to increase 1.2% on a monthly basis in March.

The number of people claiming jobless benefits in the UK is expected to increase 116,000 in March after reporting a record monthly increase in February. The claimant count rate is seen at 4.6%, up from 4.3% in February. Meanwhile, the ILO jobless rate for three months to February is forecast to increase to 6.7% from 6.5%.

In the meantime, the Office for National Statistics is also scheduled to issue UK's Public Sector Finance data. The public sector net cash requirement is seen at GBP 18 billion in March compared to GBP 4.4 billion in February.

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[IFX Darika]

The dollar was mixed versus other major currencies Wednesday morning in New York, holding most of its recent gains versus the euro while coming under modest pressure against the yen. With little first-tier economic data for traders to consider, attention will turn to how equities markets behave amid the release of another flurry of key corporate earnings results.

Boeing, AT&T, Wells Fargo and McDonalds are just out with quarterly earnings. US stock futures continued to point to a lackluster open as traders weighed those results.

In news from the housing sector, mortgage applications in the U.S. rose last week as lower interest rates encouraged refinancing. The Mortgage Bankers Association's index of applications rose 5.3 percent to 1,172.2 in the week ended April 17, from 1,113.2 the week before.

On Tuesday, Treasury Secretary Tim Geithner said that the "vast majority" of U.S. banks have enough capital and hinted that the credit markets may be thawing following their deep freeze.

Geithner will again take center stage this morning, speaking about the recession at 9 am ET.

The dollar was range-bound versus the euro Wednesday morning, clinging to its gains from a recent run-up. The buck hovered between 1.2900 and 1.3000 in early dealing, moving to the lower end of that range approaching 8 am ET. On Monday, the dollar hit a monthly high of 1.2887.

Meanwhile, the dollar was weaker against the sterling this morning as traders reacted to the release of the minutes of the latest Bank of England policy meeting. The dollar slipped to 1.4650, giving back its gains from the previous session and moving back towards last week's multi-month low near 1.5000.

Wednesday, the minutes of the Monetary Policy Committee meeting of the Bank of England held on April 8 and 9 showed that policymakers voted unanimously to hold the Bank Rate at a historical low of 0.5%.

The minutes also revealed that all the nine members of the MPC stood united while deciding to continue with the initial asset purchase plan worth GBP 75 billion.

Also, the jobless rate in the UK was 6.7% for the three months to February 2009, up from revised 6.1% in the previous quarter, the Office for National Statistics said Wednesday. That was in line with economists' expectations.

The dollar eased a bit versus the yen this morning, slipping to 97.73 before finding support near Monday's 3-week low of 97.64. The buck has leveled off since hitting a 3-month high of 101.43 earlier this month.

Export-driven Japan's trade balance for fiscal 2008 suffered its first annual deficit in nearly three decades, data released Wednesday showed. The Ministry of Finance said Japanese exports plunged a record 16.4% to Y71.14 trillion during the fiscal year ended in March.

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[IFX Darika]

Extending morning deal's downtrend, the Mexican peso weakened against its US counterpart during New York afternoon trading on Monday. At present, the peso is trading near a 26-day low of 13.9755 versus the greenback, compared to Friday's North American session close of 13.3398. The next downside target level for the Mexican currency is seen at 14.20. The peso plummeted on concern that the outbreak of the swine flu will deepen the country's economic slump.

The flu outbreak may slow dollar flows from tourism and curb consumer spending at restaurants, theaters and other venues where crowds gather. Suspected deaths in Mexico have risen to 103 from the 81 announced earlier, Health Minister Jose Cordova said yesterday.

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[IFX Darika]

The euro showed mixed trading against its major counterparts after a preliminary report from the German statistical office showed that consumer price annual inflation rose to 0.7% in April from 0.5% recorded in March. While, the euro gained slightly against the pound it moved sideways against the rest of majors. As of now, the euro is trading at 0.8916 against the pound, 1.3076 against the greenback and 126.26 versus the yen.

On a monthly basis, the consumer price index, or CPI, was flat. Economists had forecast the CPI to climb 0.8% annually and 0.1% month-on-month.

The harmonized index of consumer prices, or HICP, climbed 0.7% year-on-year after rising 0.4% in March, while the consensus forecast was for a 0.8% increase. Compared to March, the HICP was flat.

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News are provided by InstaForex in partnership with RTT.

[IFX Darika]

The German government is expected to slash its economic forecasts for 2009, reports said Wednesday, citing sources close to the government.

Gross domestic product, or GDP, is expected to decline 6% in 2009, the worst contraction since the World War II. The forecast was cut from a 2.25% fall predicted in January. Economy Minister Karl-Theodor zu Guttenberg will announce the latest set of forecasts at 7.00am ET.

Last week, a group of German economic think tanks jointly lowered their forecast for the biggest Eurozone economy. They now expect Germany to contract 6% in 2009, quicker than a 2.25% fall estimated previously. For 2010, the forecast group does not expect a dramatic recovery. GDP should decline 0.5%. Unemployment was forecast to rise to an average of 3.7 million this year and to 4.7 million next year.

In March, seasonally adjusted unemployed persons in Germany rose 69,000, bigger than 50,000 increased in February.

The International Monetary Fund forecasts the German economy to contract 5.6% in 2009 and 1% in 2010. Meanwhile, the Commmerzbank expects Germany to shrink 6%-7% this year.

On April 27, European Central Bank Governing Council member Axel Weber told German newspaper Franfurter Allgemeine that the German economy is unlikely to grow before the second half of the next year.

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News are provided by InstaForex in partnership with RTT.

[IFX Darika]

Thursday, the Irish Exporters Association, or IEA, said the country's exports in the first quarter fell 9.6% year-on-year hit by global economic downturn. The association warned that unemployment in the sector would increase substantially if the government does not provide additional stimulus for the sector.

Total exports for the first quarter stood at EUR 33.78 billion, down from EUR 37.38 billion in the same period last year. The association forecasts exports to fall 13% in 2009, with a loss of export revenue worth EUR 20.2 billion and direct job losses of some 91,000.

John Whelan, Chief Executive of the IEA said, "The knock-on effect of job losses on this scale on the economy, however, is much greater as each export job supports two other jobs in the community."

Merchandise exports showed a decline of 3.4% in the first quarter, while exports of services fell 18%.


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[IFX Darika]

In further signs that the worst of the recession is over, the decline in Eurozone service sector activities eased further in May, reports said Wednesday, citing data released by the Markit Economics.

The purchasing managers' index or PMI for the Eurozone service sector rose to 44.8 in May from a flash reading of 44.7 and 43.8 in April. The PMI thus reached to a seven-month high. However, the headline index is still below the 50-mark that divides expansion and contraction. The expectations index for the service sector rose to a 15-month high of 59.1 from April's 54.4.

The composite index that contains both service and manufacturing PMIs was at 44, an increase from previous month's 41.1 and the flash reading of 43.9.

The PMI for Germany's service sector increased to 45.2 from 43.8 in April and that for France stood at an eight-month high of 48.3, up from 46.5 in April and 47.6 initially estimated. The Italian services PMI climbed to 43.1 from 42 in the previous month. However, in Spain, the activity contracted notably. The PMI fell to 39.1 from 42.3.

Out of the euro area, the CIPS/Markit PMI for the British service sector unexpectedly moved above the 50-mark to record a growth for the first time in a year. The indicator rose to 51.7 in May from 48.7 in April, while forecast was for a reading of 49.5. That was the sixth consecutive gain.


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News are provided by InstaForex in partnership with RTT.

[IFX Darika]

Extending its recent rally, the UK's sterling rallied strongly higher against its major rivals on Tuesday morning in Asia. The pound rose to a 5-day high of 158.6 against the Japanese yen and 1.7548 against the Swiss franc by 8:00 pm ET. The pound also ticked up to 1.6102 against the US dollar and 0.8656 against the euro during this time.

Traders mulled reports showing the average asking price for houses in Great Britain came in at -44.1 in May, the Royal Institute of Chartered Surveyors said today, posting an 18-month index high. The score beat analyst expectations for -50.0 following the revised -58.7 in April for the highest reading since November 2007.

At the same time, the British Retail Consortium report showed today that same-store sales in May were down 0.8 percent on year. Overall sales, including those from newly opened stores, were up 0.8 percent on year.

The next upside target levels for the pound are seen at 1.773 against the franc, 161 versus the yen, 1.61 against the buck and 0.865 against the euro. At Monday's North American session, the pound closed deals at 0.8663 against the euro, 1.7525 versus the franc, 1.6053 against the greenback and 158.14 against the yen.

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[IFX Darika]

Crude oil inventories fell sharply in the recent week, according to Energy Information Administration data released Wednesday morning. Gasoline stockpiles also declined.

U.S. commercial crude oil inventories decreased by 4.4 million barrels from the previous week. At 361.6 million barrels, U.S. crude oil inventories remained above the upper boundary of the average range for this time of year.

The report backed the American Petroleum Institute data revealed Tuesday, showing crude supplies dropped 5.96 million barrels last week. Participation in the API survey is voluntary, so the EIA report is more closely watched.

Total motor gasoline inventories decreased by 1.6 million barrels last week, distillate fuel inventories slipped by 300,000 barrels and propane/propylene inventories increased by 1.4 million barrels.

Over the last four weeks, motor gasoline demand has increased by 0.4 percent from the same period last year, distillate fuel demand has declined 8.4 percent from the same period last year and jet fuel demand is 14.3 percent lower.

Crude oil maintained its early gains following the report. Light sweet crude moved to $70.71, up 90 cents for the session. Oil touched as high as $71.79 shortly after the data was announced but quickly cooled off.


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