Free Friday’s Forex

By Rita Lasker

November, 18 - 25

Do you happen to know that euro pared gains after Fitch

Ratings cut Portugal credit ranking to below investment grade

due to the country’s weakening economy?

“There’s still money to be shifted away from the euro and into the

dollar, yen and other currencies,” said Neil Jones, head of

European hedge-fund sales at Mizuho Corporate Bank Ltd. in

London.

Yes, Forex market depends on the financial and macroeconomic statistics.

Nothing compares to seeing the actual effects of the news.

That is why we decided to share the Forex news with you having not only facts in store

but real figures.

And before we start talking about the last week events, let me say few words about…

* Fitch downgraded Portugal's credit rating to junk status

Fitch downgraded Portugal's credit rating to junk

status on Thursday. The ratings agency cut Portugal to

BB+ from BBB-, which is still one notch higher than

Moody's rating of Ba2.

S&P still rates Portugal investment grade.

Fitch said a deepening recession makes it "much more challenging" for the

government to cut the budget deficit but it still expects fiscal goals to be met both this

year and next. "However, the risk of slippage - either from worse macroeconomic

outturns or insufficient expenditure controls - is large."

Portugal's 10-year bond prices plunged, sending yields

surging more than 100 basis points to 13.85 percent -- the

second highest level in the euro zone after Greece. The

spread to German Bunds also rose more than 100 basis

points to 1,168.

The downgrade of Portugal came after the dramatic deterioration of the

euro zone crisis in recent weeks as it spread to bigger countries like Italy and

Spain.

Portugal sought a 78-billion-euro bailout from the

European Union and *IMF earlier this year and has adopted

sweeping austerity measures to bring public accounts under

controls.

Under the loan program Portugal must cut the budget

deficit to 5.9 percent of gross domestic product this year from

around 10 percent in 2010. Next year it must cut the deficit

further to 4.5 percent.

The government hopes to return raising debt in financial markets at the end of

2013.

* The International Monetary Fund (IMF) is an organization of

187 countries, working to foster global monetary cooperation, secure

financial stability, facilitate international trade, promote high

employment and sustainable economic growth, and reduce poverty

around the world.

*Japan ‘May Be’ Close to a Downgrade: S&P S&P has had Japan on a negative outlook since April.

Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said the nation

needs a “comprehensive approach” to containing its debt burden, which the

government projects will exceed 1 quadrillion yen ($13 trillion) in the year through

March as the nation pays for reconstruction.

Standard & Poor’s said Japanese Prime Minister

Yoshihiko Noda’s administration hasn’t made progress in

tackling the public debt burden, an indication it may be

preparing to lower the nation’s sovereign grade.

“Japan’s finances are getting worse and worse every day, every second,”

mentioned Takahira Ogawa. Asked if that means he’s closer to cutting Japan, he said it

“may be right in saying that we’re closer to a downgrade. But the deterioration has

been gradual so far, and it’s not like we’re going to move today.”

Meanwhile at Forex yen continues to strengthen, in spite of efforts by Japanese

leaders to keep the currency weak against the dollar.

Japanese manufacturers are trying to figure out how

they can remain competitive in a world where the Japanese

yen simply won’t remain lower against the US dollar. A

weaker yen offers a competitive advantage in the world of

global trade — an advantage that has been slipping away.

As a result, many companies are moving their manufacturing operations overseas

at an increased pace. While Japanese leaders think how to weaken the yen (multiple

interventions in 2011, and a low interest rate, haven’t done it), it continues to show

strength against the US dollar.

And finally more trading news of the last week

November, 18 – Small Relief for Swiss Franc

The Swiss franc had a small relief today, rising after four consecutive sessions of

losses, but it’s unlikely that the currency could profit from worries about Europe.

The franc was falling for four straight days against the dollar and the yen, touching

yesterday the lowest level since October 10. The movement against the euro was

sideways this week, but today the Swiss currency also rose a little, following the drop

yesterday.

Today’s rally is most likely just a bounce in the bearish movement. One may ask

for a reason of such outlook and the answer is simple: the euro-peg. The Swiss

National Bank tied the franc to the euro on September 6 and since that intervention

Switzerland’s currency had a hard time to work its way to the upside.

USD/CHF was down to 0.9160 from 0.9218 today as of 8:53 GMT, following

yesterday’s rally from 0.9191 to the daily high of 0.9233. CHF/JPY went up from 83.44

to 83.76 after yesterday the currency pair dropped from 83.73 to the low of 83.31.

Meanwhile, EUR/CHF ticked down from 1.2404 to 1.2372 today.

November, 18 – Euro Rises on Optimism, Mario Draghi’s EFSF Prodding

Euro is heading higher today, gaining after four days of losses. Forex traders hope

that the ECB’s buying of Spanish and Italian bonds will slow yield rises. Additionally,

traders are optimistic as Mario Draghi, the new ECB President, urges eurozone

countries to implement changes to the EFSF.

With all this optimism, the euro is heading higher in Forex trading, gaining against

its major counterparts, including the Japanese yen and the US dollar.

At 15:34 GMT EUR/USD is higher at 1.3575, up from the open at 1.3463. EUR/GBP

is higher at 0.8575, up from the open at 0.8543. EUR/JPY is up to 121.3695 from the

open at 121.2845.

November, 18 – Yen Remains Strong Against the US Dollar

Japanese yen is higher today against the US dollar, a situation that has many

companies in Japan increasing their efforts to shift overseas.

Right now, the yen is up against the US dollar, as well as up against the Great

Britain pound. Euro, though, is higher against the yen today as a degree of eurozone

optimism is introduced into the markets. For now, it looks as though Japanese yen

strength — at least against the dollar — is here to stay.

At 15:02 GMT USD/JPY is lower, down to 76.8500 from the open at 76.9830.

EUR/JPY is higher at 103.9539, up from the open at 103.6260. GBP/JPY is lower at

121.2560, down from the open at 121.2845.

November, 19 – Pound Climbs on the good data from the USA

The Great Britain pound advanced yesterday on the good macroeconomic data

from the USA and the speculation the Federal Reserve is going to make the monetary

policy even more accommodative.

The US leading index was up 0.9 percent in October, following the 0.1 percent

increase in September. This report together with other data, like rising building permits

and falling unemployment claims, pictures the US economy as strong and recovering.

The Standard & Poor’s 500 Index reacted positively to the data and rose 0.5 percent.

GBP/USD closed at 1.5802 after opening at 1.5752 and reaching the daily

maximum of 1.5887 yesterday. GBP/JPY was up from 121.23 to 121.49.

November, 19 – Another Week of Risk-Off, Yen in Demand

The Japanese yen was rising through this week as concerns about the European

debt crisis returned to markets with new strength, reassuring that safe assets would be

in high demand.

The surging borrowing costs of the European nations refueled doubts and fears

among traders, driving them to the safety of the yen. There aren’t many choices for

traders seeking for ”safe” currency as the franc basically lost its “safe haven” status

after the Swiss central bank pegged it to the euro, while the dollar is under threat of

more quantitative easing that would weaken the currency.

The Japanese currency rallied for the whole week, but the rally stalled on Friday.

The performance of the Japanese currency against the dollar demonstrated a different

picture. The greenback was also advancing during this week, but demand for the yen

was higher, resulting of almost unstoppable drop of USD/JPY.

EUR/JPY opened at 106.68, fell to the weekly low of 103.39 and closed at 104.01.

GBP/JPY was down from 124.24 to 121.49 and AUD/JPY fell from 79.88 to 76.95 this

week. USD/JPY declined from 77.24 to 76.87.

November, 21 – Yen Profits from Debt Problems of Europe & USA

The Japanese yen rose against the euro and fluctuated versus the dollar as

concerns about the US debt added to uncertainty caused by the European crisis.

USD/JPY traded near its opening rate of 76.85 as of 12:31 GMT today after rising

to the high of 76.94 and falling to the low of 76.75. EUR/JPY was down from 103.84 to

103.38.

November, 21 – Pound Slumps as House Prices Decline

The Great Britain pound dropped today and dropped heavily as the house prices in

Britain tumbled, reinforcing the negative outlook for the UK economy.

The House Price Index was down by 3.1 percent in November from October,

following the increase by 2.8 percent in October from the preceding month. That was

the biggest drop since November 2010. The drop of the prices was attributed to the

negative impact of the European crisis on the confidence of consumers and

businessmen.

GBP/USD sank from 1.5794 to 1.5642 and GBP/JPY slid from 121.36 to 120.18 as

of 13:49 GMT today.

November, 21 – US Dollar Mostly Higher, Even on Deficit Panel Failure

A bi-partisan committee designed to find a solution to the debt crisis in the US has

failed. As a result, US stocks are in free fall today. The US dollar, though, is mostly

higher in Forex trading.

For now, the US dollar is gaining, even on the uncertain economic and budgetary

future for the US. Things could change, but, for now, with all of the economic concerns

and uncertainty, safe haven status is likely to help the dollar.

At 16:26 GMT EUR/USD is lower at 1.3509, down slightly from the open at 1.3515.

GBP/USD is lower, dropping to 1.5651 from the open at 1.5793. USD/JOY is higher at

76.9640, up from the open at 76.8820.

November, 22 – Euro Higher for Now, But Debt Remains a Problem

Euro is higher right now, gaining as some Forex traders engage in short covering.

However, the 17-nation currency is still vulnerable to debt problems — in the eurozone

and in the US.

For now, euro is getting a bit of a boost after some choppy trading yesterday, and

a flight to safety for markets. Middle East demand has helped support the euro up until

now in today’s Forex trading, but that could easily fade. Indeed, many expect that as

the US session approaches, the euro will find it harder and harder to hold on to gains.

At 14:07 local time, EUR/USD is up slightly from the open at 1.3490, moving to

1.3503. EUR/GBP is higher, up to 0.8653, up from the open at 0.8624. EUR/JPY is also

higher, moving up to 104.0900, from the open at 103.7095.

November, 22 – US Dollar Fluctuates on Mixed Macroeconomic Reports

The US dollar was rising today, but now declines after the reports showed that the

US economic growth were less than previously estimated, but the conditions for the US

manufacturers improved.

The US gross domestic product rose 2.0 percent in the third quarter, according to

the preliminary estimate of the Bureau of Economic Analysis. That’s worse than the

previous estimate of 2.5 percent, but better than the 1.3 percent increase in the

second quarter. Most indicators showed a modest improvement of the manufacturing

activity in November, the Federal Reserve Bank of Richmond reported, resulting in the

increase of the Manufacturing Index to 0 from -6 in the previous month.

EUR/USD rose from 1.3490 to 1.3518 today as of 17:50 GMT, while the daily high

was 1.3567. USD/JPY traded near 77.01 after rising from 76.86 to 77.32.

November, 23 – Euro Continues to Tumble

Euro continues to tumble in Forex trading, dropping as the news out of Europe

continues to disappoint traders everywhere. Yesterday, euro showed some spunk, but,

once again, the 17-nation currency has been able to hold on to any gains.

As nearly everyone is becoming accustomed to, the news is of a failure to come to

an agreement about how to handle sovereign debt in the eurozone. Once again, talks

amongst European leaders have resulted in nothing substantial.

At 14:28 GMT EUR/USD is lower, falling to 1.3381 from the open at 1.3506.

EUR/GBP is also lower, down to 0.8597 from the open at 0.8638. EUR/JPY has dropped

to 103.4055 from the open at 103.9695.

November, 23 – US Dollar Rises as German Auction Confirmed Problems

The US dollar rose today as the German bond auction could be considered a

disaster, fueling fears of the European debt contagion, while the US economy showed

the signs of recovery.

Germany auctioned its debt today and missed its maximum target by 35 percent,

sending yield higher and reinforcing the negative outlook for the future of the European

economy. Economists explained that the bad outcome of the auction doesn’t mean that

the German economy is bad, but rather shows that investors are reluctant to deal with

any European economy, even such powerful as Germany. The fundamental data from

Europe was mixed today, making it hard to asses the state of Europe’s economic

health.

The data from the United States was also mixed, but showed positive tendencies.

The unemployment claims rose a little, but the personal spending rose and the

consumer sentiment improved. The US currency is still threatened by the impasse in

talks among the US politicians about the debt reducing measures and the potential

third round of quantitative easing, but traders left such concerns for tomorrow and

today the greenback emerged a winner.

EUR/USD dropped from 1.3504 to 1.3347 and GBP/USD went down from 1.5631

to 1.5535 as of 23:34 GMT today. USD/JPY rose from 76.95 to 77.27 and touched the

daily high of 77.57 today.

November, 24 – Japanese Yen Gains as Eurozone Troubles Continue

Japanese yen is gaining against the euro and the pound as eurozone troubles

continue. Additionally, the yen is getting a boost as Asian companies cut their earnings

outlooks.

Right now, yen is even gaining against the US dollar. As one of the most stable

currencies in the world, the yen is considered a safe haven. It will be interesting to see

whether or not Japanese leaders intervene again, in an attempt to slow its

appreciation, since a higher yen puts Japanese exports at a disadvantage.

At 5:04 GMT USD/JPY is lower, down to 77.0639 from the open at 77.3060.

EUR/JPY is down to 103.0395 from the open at 103.1610. GBP/JPY is also lower,

dropping to 119.8475 from the open at 120.0150.

November, 24 – UK Pound Down Against Dollar

As Europe’s troubles cause more unease amongst Forex traders, and as concerns

about what’s next for Asia (especially China) weigh on hopes for the global economy,

high beta currencies are heading lower. Forex traders are looking for safety and

stability, and that means the US dollar and the Japanese yen.

However, when the pound is compared to other European currencies, it’s doing

better. Britain’s fundamentals have more going for them than the eurozone’s. Even

though Britain has been struggling with its own budget issues, it has managed to

implement austerity measures, and it still expanded at 0.5% in 2011 Quarter 3, as

opposed to the eurozone’s 0.2% expansion.

Sterling is also beating the Swiss franc, since there is concern that intervention will

weaken the franc; the SNB has shown that it’s not afraid to deliberately sink the value

of the franc. With the SNB trying to move the franc away from safe haven status in

recent years, it appears as though the pound may be poised to step in.

At 14:52 GMT, GBP/USD is lower at 1.5489, down from the open at 1.5525.

GBP/JPY is also lower, dropping to 119.4855 from the open at 120.0150. EUR/GBP is

higher at 0.8604, but the pound is strengthening.

November, 24 – Merkel, Sarkozy and Monti Comments Sink Euro

Euro was a little higher earlier as some hope for joint euro bonds was floated.

However, a press conference with three European leaders today scuttled that hope and

sent the euro lower in Forex trading.

Angela Merkel, Nicolas Sarkozy, and Mario Monti held a press conference today,

and made it clear that their countries weren’t going to pressure the ECB into doing

something to alleviate the sovereign debt crisis. Merkel even went so far as to say that

joint euro bonds would send the wrong signal, and are, essentially, off the table.

After that conference, the euro began sliding, and is now down against the US

dollar, even though EUR/USD touched above 1.3400 earlier. Now, of course, euro is

well below that level.

At 15:58 local time EUR/USD is down to 1.3323 from the open at 1.3341.

EUR/GBP has slipped to 0.8588 from the open at 0.8594. EUR/JPY is down to 102.7305

from the open at 103.1610.

November, 25 – The euro fell to seven-week lows

The euro fell to seven-week lows against a buoyant dollar on Friday and was set to

weaken further as disagreement on how to tackle the debt crisis drove borrowing costs

to new euro-era highs and boosted demand for liquid assets. The Japanese yen was

rising through this week as concerns about the European debt crisis returned to

markets with new strength, reassuring that safe assets would be in high demand.

Talks by the heads of Germany, France and Italy on Thursday were overshadowed

by German Chancellor Angela Merkel's determined opposition to a joint euro zone bond

and a bigger role for the European Central Bank to deal with the crisis.

The euro was down 0.7 percent on the day to $1.3249 in European trade, its

lowest since Oct. 6. Traders said option-related bids were helping to slow the euro's

descent after a Scandinavian bank sold the currency aggressively.

The dollar rose to a seven-week high versus a currency basket as investors sought

the liquidity and perceived safety of the U.S. currency.

The euro has shed nearly two percent so far this week, coming under pressure

after demand at a German bond auction on Wednesday stirred fears the debt crisis now

entering its third year might threaten even Europe's biggest economy.

What should we expect from the coming week:

Date Event GMT EST5EDT

26-Nov Sat CNY Leading Index

27-Nov Sun NZD NBNZ Activity Outlook 00:00 19:00

GBP Lloyds Business Barometer/ Housing Survey 00:01 19:01

28-Nov Mon JPY Small Business Confidence 05:00 00:00

EUR German GfK Consumer Confidence Survey 07:00 02:00 EUR Euro-Zone M3 s.a. 09:00 04:00 EUR EC OECD November Economic Outlook 10:00 05:00 GBP CBI Reported Sales 11:00 06:00 USD New Home Sales 15:00 10:00 JPY Household Spending (YoY) 23:30 18:30 JPY Jobless Rate 23:30 18:30 JPY Retail Trade (YoY) 23:50 18:50 JPY Large Retailers' Sales 23:50 18:50 EUR German Consumer Price Index (MoM)

EUR German Consumer Price Index - EU Harmonised (YoY)

GBP Nationwide House Prices n.s.a. (YoY)

29-Nov Tue CHF UBS Consumption Indicator 07:00 02:00

GBP Net Consumer Credit 09:30 04:30 GBP Net Lending Sec. on Dwellings 09:30 04:30 EUR Euro-Zone Business Climate Indicator 10:00 05:00 EUR Euro-Zone Services Confidence 10:00 05:00

GBP Osborne Makes Autumn Statement to Commons 12:00 07:00

USD Consumer Confidence 15:00 10:00 USD House Price Index / Purchase Index 15:00 10:00

JPY Nomura/JMMA Manufacturing Purchasing Manager Index 23:15 18:15

JPY Industrial Production (YoY) 23:50 18:50 GBP GfK Consumer Confidence Survey 00:01 19:01 JPY Labor Cash Earnings (YoY) 01:30 20:30 JPY Vehicle Production (YoY) 04:00 23:00

30-Nov Wed USD Fed's Beige Book 05:00 00:00

*Summary of Commentary on Current Economic Conditions by Federal Reserve

Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.

JPY Annualized Housing Starts 05:00 00:00 JPY Housing Starts (YoY) 05:00 00:00 EUR German Unemployment Change 08:55 03:55 EUR German Unemployment Rate s.a. 08:55 03:55

EUR Euro-Zone Consumer Price Index Estimate (YoY) 10:00 05:00

CHF KOF Swiss Leading Indicator 10:30 05:30 USD ADP Employment Change 13:15 08:15

CAD Quarterly Gross Domestic Product Annualized 13:30 08:30

USD Unit Labor Costs 13:30 08:30 CAD Gross Domestic Product (YoY) 13:30 08:30 USD Pending Home Sales (YoY) 15:00 10:00

USD Fed Releases Beige Book Economic Survey 19:00 14:00

CNY PMI Manufacturing 01:00 20:00 CNY HSBC Manufacturing PMI 02:30 21:30

01-Dec Thu JPY Official Reserve Assets 05:00 00:00

CHF Gross Domestic Product (QoQ) 06:45 01:45

EUR German Purchasing Manager Index Manufacturing 08:55 03:55

EUR Euro-Zone Purchasing Manager Index Manufacturing 09:00 04:00

GBP Purchasing Manager Index Manufacturing 09:30 04:30 USD Construction Spending (MoM) 15:00 10:00 USD ISM Manufacturing 15:00 10:00 USD ISM Prices Paid 15:00 10:00 JPY Capital Spending excl Software 23:50 18:50 JPY Capital Spending 23:50 18:50

02-Dec Fri CHF Retail Sales (Real) (YoY) 08:15 03:15

GBP Purchasing Manager Index Construction 09:30 04:30 EUR Euro-Zone Producer Price Index (MoM) 10:00 05:00 EUR Euro-Zone Producer Price Index (YoY) 10:00 05:00 CAD Unemployment Rate 12:00 07:00 CAD Net Change in Employment 12:00 07:00 USD Change in Non-farm Payrolls 13:30 08:30 USD Change in Private Payrolls 13:30 08:30 USD Unemployment Rate 13:30 08:30 USD Underemployment Rate (U6) 13:30 08:30 USD Average Hourly Earning (YoY) 13:30 08:30 CNY China Non-manufacturing PMI 01:00 20:00

In conclusion

The biggest issue, as one might expect, is sovereign debt. Eurozone debt remains

out of control, and there is no good plan to solve the debt crisis. On top of that, budget

concerns in the US have many worried about what’s next for the world’s largest

economy.

All of this uncertainty means that the short covering that is helping the euro is

unlikely to last as Forex traders look for safe haven soon. With politicians in Europe and

the US refusing to get serious about debt issues, it will be awhile before Forex traders

feel really safe.

The rating agencies keep on downgrading the countries in Eurozone and Forex

traders look for stability and safe haven. All bonds in the eurozone seem to be taking a

hit right now, no matter what country it is. The latest German bund auction was

considered a failure, and underscored the eurozone troubles.

For now, the main market driver remains the same, though we all hope that the

situation is going to change in the future.

And I hope now, you would not only see the movement of the price but also the reason behind it.

If you have any questions, please feel free to ask our support team by sending an Email to: support@ritalasker.com We will do our best to help you.

Yours,

Rita Lasker & Green Forex Group.

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