FOREX TRADING

No Call For A New Reserve Currency From The G-20

Growth will come from multiple sources

USD traded mixed Monday as the G-20 meeting ends without a fresh call to replace the USD as the world’s reserve currency. G-20 officials announced Friday that the G-20 will supplant the G-8 as the international economic council and include developing nations like China, Brazil and India. The G-20 proposes a comprehensive approach to rebalancing the global economy which will include assessments of fiscal and monetary policies, trade and Forex. The G-20 also pledged to increase representation of emerging market and developing countries. The G-20 communiqué made no mention of USD reserve status. World Bank President Robert Zoellick says the US should not take for granted USD status as the world’s reserve currency. Zoellick said there are a number of options emerging and that the G-20 meeting presents a good start towards increased global cooperation. According to Zoellick forces are shifting and now is the time to prepare for the fact that growth will come from multiple sources. Reuters reports that Zoellick said ‘we need a system of international political economy that reflects a new multi polarity of growth.’ (more…)

September Blow-Out Top

As has been previously reported in recent LFB headlines, the month of September equity trade is 50/50 at best in regard to ending in the green. “The Stock Market handbook goes back to the time that dirt was young, and records September as a poor month in equities” TheLFB Trade Team said. “$1000 invested just in September since 1919 was worth $800 in the year 2000, and interestingly, the first week or so is not so bad, it is weeks three and four that have done the damage” they added.

At this time the Japanese fiscal half year-ends, (September is the final month of Japan’s fiscal first half), and is when Japanese corporations have accounting incentives to repatriate funds back to Japan from overseas investment. This is also the time of year that the U.S. Mutual Fund year end on October 31st comes into focus. “Outside of historical trends, we start to see reasons behind the pattern of trade” TheLFB Trade team said.

“The fact that we go into September at yearly highs may help in regard to forward momentum, but the moment greed is replaced with fear of loss, the automated sell button tends to get jammed down.”

There is nothing that a 95% automated trading environment likes more than to overshoot a target, just for good measure, and with liquidity still being kept in very tight circles, there is a high probability chance that a blow-out reversal day is coming. “Hopefully it will be a one-off, and things quickly stabilize.” they added.

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The Greenback fell to its lowest levels this year on Monday after the Institute for Supply Management’s index on U.S. manufacturing improved more than expected in July. Along with some better earnings reports from foreign banks, the data supported equity markets and spelled trouble for the U.S. currency because investors no longer desire its safe-haven status. (more…)