Can G20 Finance Ministers Prevent Currency Wars?

Market Leader informed

Today, on 22 October, South Korea is hosting an important meeting of G20 finance ministers intended to prevent ‘a currency war’ worldwide. The meeting of the world’s leading countries such as the US, Canada, Russia, Germany, France, Japan, China, India, Brazil and others traditionally chaired by the host country’s Minister of Finance is convened to analyze reasons of the currency war that has broken out and main contradictions among G20 leading nations in the war and adopt a summary document drafted, as unofficially reported by Dow Jones, a US-based agency, to include text that the West’s wealthy nations and rapidly developing countries with emerging markets will assume mutual obligations of ‘refraining from competition in the area of devaluation of national currencies’.

What does a currency war mean in the context of a crisis? According to our experts at the Masterforex-V Trading Academy, a currency war, under global crisis algorithms by MF, is intended to devalue national currencies and gain a more beneficial position against competitors in terms of exports of goods in global markets. As a result, national states are actually involved in protectionism favoring their own manufacturer, creating most advantageous competition conditions in global markets for them. This protectionism in the context of a de-facto currency war can cause a currency collapse in the global financial system when all world’s currencies start suddenly losing their value.

Toyota Recalling 1.5 Million Cars. How Will This Affect its Stocks?

Market Leader informed

Toyota made a decision to recall an average of 1.53 million of its vehicles worldwide for additional maintenance inspection and repair. Reasons included faulty brake cylinders and fuel pumps. Free services of the service company will be available primarily to models in the American market where experts discovered most faults.

Recalls mainly affect Japan and the United States of America. In general, these will include 600,000 faulty Toyota vehicles in Japan (mainly Lexus GS, Crown, and Lexus IS) and 740,000 vehicles in the US (mainly Highlander, Avalon, IS250, IS350 and Lexus GS300). Most recalls will involve cars produced between 2003-2006.

In their official report to the Japanese government, Toyota’s management points out that the vehicles to be recalled generally have faults either with their fuel pump or the engine and, in isolated cases – with both. The US-based unit of the car manufacturer reported its own diagnosis:

The US Wants No ‘Currency War’ or… Sees No Benefit in It?

Market Leader informed

The issues of ‘currency wars’ are probably as topical today as the issue of the impending global crisis was a few years ago because if China is followed by a few other countries starting to actively devalue their currencies this will result in real trade wars. Unfortunately…
Obviously, the US, directly affected by this problem, doesn’t want them, either. For example, US Secretary of the Treasury, Timothy Geithner, indirectly referred to his eagerness to implement amicable currency policies. In particular, in his interview to The Wall Street Journal, a popular American publication, he pointed out that in his opinion, major global currencies – the dollar, euro and yen – are currently placed in identical circumstances, i.e. they are to a certain degree aligned with each other. Moreover, given this situation, Washington does not intend to take any action to devalue its own currency. However, many analysts tend to believe that in this way Timothy Geithner implies that the US is unlikely to weaken the dollar in the near future though this doesn’t mean that the country ‘has taken no measures’ to devalue its national currency, according to the Secretary. Indeed, Geithner’s words have been supported so far by that fact that the US dollar has gained ground in the global market, rising by a few levels. On the other hand, experts point out that the dollar's growth against the euro (as of today) has been affected primarily by speech the US Secretary of the Treasury following which investors rushed in a crowd to buy US dollars…

Loonie is declining versus US dollar

Market Leader informed

Canadian dollar lost 2.2% versus its American counterpart since October 14 when it reached the parity with the greenback. Loonie was declining as the price of crude oil dropped and also due to the expectations that the Bank of Canada won’t raise its benchmark interest rate until 2011.

Elizabeth Belugina, an analyst of FBS brokerage company, claims that the main factor that’s making pressure on Canada’s currency is the dynamics of US dollar. According to her, it happens as weak US dollar provides an opportunity for short covering ahead of the Federal Reserve meeting scheduled on November 2-3.

British Pound in the light of austerity measures

Market Leader informed

Market uncertainty over GBPUSD forced George Osborne, the Chancellor of the Exchequer of the United Kingdom, to make a range of optimistic but radical statements.

According to him, Great Britain is able to maintain the army in Afghanistan, London police and to successfully combat the global terrorism without critical spending.

Moreover, he promised to allocate more funds for schools and protracted constructions. The austerity measures will be applied to a range of social benefits. Yet the major saving will result from the reduction of bureaucracy. It won’t affect the economic growth as public institutions will undergo considerable optimization.

GBPUSD: Volatility forecast for October 22th 2010

Market Leader informed

The downtrend of the British Pound, started last Friday, has slowed down as the market participants are perplexed with contradictory events: China has raised its interest rate; there is a chance that the Bank of Japan may continue market interventions; G20 meeting is to be held soon. US Secretary of the Treasury Timothy Franz Geithner indicated the reluctance to devalue USD. Yesterday the downward movement of GBPUSD was sluggish and ambiguous. On its way down GBPUSD has an important option barrier at 1.5700. If the price crosses and settles below it the next support level is 1.5600. The uptrend is restrained with 1.5900 (an option level).
Today’s volatility of GBPUSD (Oct 22nd) will be conditioned mostly by the news on the EU as today GB offers no news. At 8.00 GMT Germany releases IFO - Business Climate, reflecting the sentiments of Germany’s major manufacturing, construction and wholesale companies for the next 6 months.

Singapore Dollar: will the “sea lion” reverse?

Market Leader informed

Not many of us know that Singapore (a city, an island and a state) consists of 2 words: singa (lion) and pore (city). Yet Singapore’s most prominent symbol is a sea lion.
For several days this flourishing part of the planet has been suffering from a regional-scale disaster – forest fires in Sumatra. The smoke density has led to a range of problems.
Is it the reason why at the end of the last week SGD stopped growing against USD at 1.2891 and formed an H8 wave against the trend at the beginning of the current week?
Moreover there is a retracement of at least level H4 against the mentioned H8 wave. During Friday’s Asian session USDSGD completed an upward h1 wave. Currently the price is forming a hidden H1 FZR*.

6ECONT and EURUSD are still uncertain about further trend

Market Leader informed

The common European currency keeps staying flat within the 1.4020 – 1.3920 range without indicating any specific tendency.
Investors remain uncertain as well as there is a huge information flow which needs reasoning – spending in GB, China’s interest rate increase, perspectives of further market intervention by the Bank of Japan, the probability of QE2, ambiguity of the released macroeconomic data. No wonder that it is difficult to make any investment decision or forecast, even though most factors speak in favor of USD weakness. There are few news releases expected for today: the

Golden fever won’t last long… Is it time to take profit?

 Market Leader informed

Nothing can last forever, especially a natural economic process… This is a law. That is why, considering the urgency of the current investments in gold, we strongly recommend: “Don’t be risky. Don’t invest in gold”.

The weak US dollar has allowed gold to become less expensive for those investors who use other currencies than USD, stimulating the demand for gold for a long time. However it is impossible to deceive the law of demand and supply. Owing to the growth of gold delivery volume from gold-mining companies and secondary sources, the market has become saturated. The considerable decline in demand for gold by jewelry manufacturers and other final consumers makes the gold market retrace as well.

That is why gold is very likely to get cheaper in the short run. How considerable is the fall going to be? It depends on investors’ purchasing power and their desire to close the “long” positions.

If the market of gold doesn’t face major Chinese or Indian market interventions, the price will be gradually falling down to $1300 per ounce. After the price reaches the level the investors will start taking profit. If any intervention occurs the $1350 level will become

What US banks gained biggest profit?

Market Leader informed

In the 3rd quarter the major US banks gained the biggest profits from investment banking while retail banking was loss-making.
Thereby, Bank of America, the leading bank in terms of retail banking, lost more than $10B. It happened as there were some commission limitations. At the same time the Investment Banking Division of Goldman Sachs earned $1.899B of net profit.

On Monday Citigroup released its quarterly report indicating $2,2B profit. The data exceeded all the analytic forecasts, which made the analysts expect that the reports of other banks would also be positive.