Currency-Trading Revival May Take Years After Slide

July 28 (Bloomberg) -- Currency-trading volumes may take years to recover after a plunge in risk appetite sparked by the global financial crisis drove away hedge funds and speculators, according to foreign-exchange analysts.

Daily trading in London dropped 25 percent in April from a year earlier, with volumes in North America slumping 26 percent, according to surveys released yesterday by the Bank of England and Federal Reserve Bank of New York. Trade in Tokyo slid 16 percent, data compiled by the Foreign Exchange Market Committee in Tokyo showed.

The collapse of Lehman Brothers Holdings Inc. in September sent markets into a tailspin, prompting a flight from higher- yielding assets into currencies considered a refuge such as the dollar and the yen. While risk appetite is reviving on speculation the worst of the recession is over, a return to pre- crisis volumes won’t happen soon, said Geoff Kendrick at UBS AG.

“It’s probably going to be a multi-year adjustment process,” said Kendrick, a strategist in London at the bank, the world’s second-biggest currency trader, according to Euromoney Institutional Investor Plc. “Hedge funds have been impacted the most.”

The drop in London trading was “largely accounted” for by a 28 percent decline in spot trading, the Bank of England said.

U.K. Trading

The dollar was the most heavily traded currency with an 84 percent share of U.K. turnover in April, according to the Bank of England survey. The euro’s share declined to 45 percent from 48.6 in October, while the pound’s proportion was unchanged at 18.7 percent. As two currencies are involved in the transactions, the sum of the proportions totals 200 percent, the bank said.

Foreign-exchange trading rose to .2 trillion a day on average in the three years prior to the Bank for International Settlements’ September 2007 triennial survey.

Lower volumes in foreign-exchange markets contributed to bigger price swings as liquidity dropped, according to Ulrich Leuchtmann, head of foreign-exchange research in Frankfurt at Commerzbank AG, Germany’s second-biggest lender.

Currency trading may be reviving, said Satoru Ogasawara, a foreign-exchange analyst and economist at Credit Suisse Group AG, the largest Swiss bank by market value.

“Trade is gradually improving, which should be very supportive of the foreign-exchange market,” said Ogasawara in Tokyo. “The worst period is over and the decline in volume in foreign-exchange trading has hit bottom.”

Source | Forex Update | http://adeel-forex-update.blogspot.com/2009/07/currency-trading-revival-may-take-years.html

Pound/Euro rates climb after good GDP data

Monday 29th October 2012
Good morning. The Pound/Euro rates climbed nicely last week when UK GDP figures confirmed we are out of recession. Today I'll have a look back at the events of last week, look at what might happen with exchange rates going forwards, and as usual round up the weekly economic data that could affect exchange rates in the short term.

In this week’s Report: 

•  Pound/Euro rates hit 3-week high 


• UK finally out of recession – GDP grows 1% 


• A volatile week for the Pound/Dollar cross 


• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

The pound surged last week on the back of a hugely better than expected GDP swing of 1.6% quarter on quarter, showing an initial estimate of a full 1% growth in the UK for Q3 2012. Though this figure is sure to change as the final figures are more accurately calculated, the realisation that the UK had exited recession was more than enough to send its currency on a rally.

This caused Pound/Euro rates to surge nicely at the end of last week.



Forecasters still expect a Euro rally in the wake of any request by the Spanish Government for financial assistance from the EU, but as yet this still hasn’t happened. In the absence of serious support for the Euro as the Spanish continue to tap-dance around the bailout, the pound was free to strengthen nearly 2.5 cents unabated in a day and a half after the GDP report.

This quick movement shows how easily gains can be made and lost on the currency market; those who were holding off selling their Euros whilst waiting for the Spanish Bailout lost nearly £3000 on an average second home sale price of €180,000. Of course one man’s loss is another’s gain with those looking to buy in the Euro zone have benefited from this sharp spike.

Experience teaches us that spikes are often just that, with correcting movements seeing rates move the opposite way very quickly.

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Weekly Economic Data that may affect exchange rates 

Monday – A relatively quiet day for data releases to start the week. We have Net Lending figures from the UK along with inflation figures from both Germany and the US. 

Tuesday – A quiet day for data releases in the UK today. In Europe, the president of the ECB Mario Draghi gives a speech. We also have a ten-year Italian bond auction. It may be an interesting day for the GBP/EUR cross. From the States we have consumer confidence measures. 

Wednesday –We have consumer confidence figures from the UK today and a raft of inconsequential data from the Eurozone, including the general unemployment rate and inflation measures, both of which should have little impact on exchange rates. 

Thursday –As was the case last week, Thursday will be an interesting day for data releases. We have manufacturing PMI from China, the States and the UK along with unemployment figures from the US and house price data from the UK. 

Friday – We end the week with Canadian and American unemployment figures along with Spanish and Italian PMI data.
 

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Source | Foreign Exchange Rate Forecasts | http://foremostcurrencygroup.blogspot.com/2012/10/poundeuro-rates-climb-after-good-gdp.html

Oil Falls After Industry Report Shows Gain in Crude Inventories

Oil for September delivery in New York fell for the first time in six days after a report showed crude supplies rose in the U.S., the largest energy user.
U.S. stockpiles rose last week for the first time since April, the industry-funded American Petroleum Institute reported late yesterday. A Bloomberg News survey of analysts is expecting a government report today to show crude inventories dropped 2.1 million barrels. Oil imports by China, the world’s second- largest consumer, fell 2.8 percent in June from May, customs data showed.
“Inventories should be going down because this is the demand season for the U.S.,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “Instead, the inventories are up. This implies that the demand isn’t as strong as expected.”
Crude oil for September delivery dropped as much as 86 cents, or 1.3 percent, to .75 a barrel on the New York Mercantile Exchange, and was at .22 at 1:05 p.m. Singapore time. Yesterday, it rose 32 cents to end the session at .61. The August contract expired at .72 a barrel yesterday.
Crude prices climbed 8.7 percent from July 14 to July 21 as investors bought futures on expectations of higher fuel demand. Optimism that the worst of the global recession is over followed gains in U.S. leading economic indicators and as financial service companies said earnings climbed.
China’s crude imports in June fell to 16.6 million tons, or about 4.1 million barrels a day, from 17.1 million tons in May, the customs data showed.
‘Weak Fundamentals’
U.S. crude supplies climbed 3.1 million barrels to 349.9 million barrels in the week ending July 17, the API said. The group also reported that refinery utilization fell to 84 percent of capacity from 86 percent.
Oil-supply figures from the institute and the energy department moved in the same direction for the past six weeks and 76 percent of the time in the past four years, according to data compiled by Bloomberg.
“It is going to be difficult for oil to forge higher if we continue to get indications of weak fundamentals,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. If the API report is “any indication of how the DOE numbers are going to come in tonight, it’s a pretty bearish picture,” he said.
Inventories of gasoline rose 1.3 million barrels to 213.6 million, the API report said. The Energy Department is expected to say supplies increased by 650,000 barrels in the week ended July 17, according to the analyst survey.
Gasoline Prices
“Rising product inventories don’t bode well for demand for crude,” Hassall said. “Sixty dollars to is a probable range for the short term.”
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the energy Department for its weekly survey.
Gasoline for August delivery dropped as much as 2.19 cents, or 1.2 percent, to .7901 a gallon. Yesterday, it climbed 2.26 cents, or 1.3 percent, to .812, the highest settlement since July 1.
U.S. stockpiles of distillate fuel, a category that includes diesel and heating oil, probably rose 1.5 million barrels, according to the analyst survey.
The department is scheduled to release its Weekly Petroleum Status Report today at 10:30 a.m. in Washington.
Brent crude for September settlement fell as much as 61 cents, or 0.9 percent, to .26 a barrel, on London’s ICE Futures Europe Exchange. It was at .60 a barrel at 12:46 p.m. Singapore time.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/oil-falls-after-industry-report-shows.html