Uncertainty on Worldwide FOREX Policy

ufx.com - forex trading systemThe suggestion to restructure the FX market by developing a central platform may not succeed following the misgivings raised by industry stakeholders regarding the format’s practicality.

A good number of banking institutions and lobby groups have been at odds regarding compliance with regulatory agencies.

This has something to do with the idea of building an international platform to complement the process of fixing orders. It could hinder competition and innovation as well as produce risks and increase prices.
A central utility will generate huge single point-of-failure hazards, according to an industry umbrella organisation. This was in answer to its reaction to proposed policies contained in a particular consultation paper of the Financial Stability Board.

The Deutsche Bank believes that regulatory support for the infrastructure may be disadvantageous to potential solutions, risk management and competitive pricing. The bank is among the largest dealers in the $5.3 trillion daily global foreign exchange market.

The plan is part of the 15 preliminary recommendations on reform that came from the umbrella regulatory group in July. It came after reports and accusations of fixing in the FOREX market. The FSB says creation of a utility to handle fixing orders from all over the world will bring down the ability for manipulation.
It belittles the bank’s role in daily rate manipulation determined by averaging price orders of different market-makers.

Reactions to the FSB indicate support for the central order matching scheme among certain companies and lobbyists such as ANZ, NAB and Commerz Bank while other respondents put emphasis more on technical hurdles.

Precious Metals Update

Gold broke its key support last Friday morning reaching nearly $1240 while it was all but dashed as it stands over. From the technical point of view, the situation of support for gold is difficult the area is another $50 lower at $1180.

According to Mark Hulbert, gold is now at the lowest sentiment level since it was at the bottom in June 2013..

Today one of the scariest looking charts in the world is Silver. Precious metal, gold doe not also look good itself and the possibility that silver could drop back all the way from $6 to $8 and maintain a bull trend term. Most posts created valid technical and fundamental level point gold, with the falling of silver to about $6 that is alarming by any interpretation. The situation assists in highlighting  an extreme bearish attitude that is prevalent after a demanding decline of precious metals.

It is a fact that human beings have the tendency to become alarmist and fearful as the price is nearing bottoms. A number of respectable gold-market observers are also holding a relatively careful stand at the moment.

With the belief that the US is in full economic recovery and there will soon be higher interest rates just around the corner, gold stays under pressure.

Spectators Lower Bullish Expectations

ufx.com - USD NewsLast Friday, Commitment of Traders (COT) most recent weekly data reported by the Commodity Futures Trading Commission (CFTC) presented large numbers of Forex traders and speculators pulling back on their overall bullish bets after three straight weeks’ rise bringing the bullish levels to the greater height after since the middle of 2013.

According to non-commercial large futures traders, hedge funds and large speculators, as of Thursday, CFTC’s latest report and Reuter’s dollar amount calculations, US dollar has an overall position totaling $31.63 billion.

The weekly change of -$4.25 billion based on calculation of Reuters from the $35.88 billion total long position that was registered on September 2nd. It totals the contracts of green bucks against the overall contracts of all monetary currency as Australian dollarD, British pound, Canadian dollar, euro, Japanese yen and the Swiss franc.

Gross US dollar bullish position had been gaining for three straight weeks and for the last six out of the previous seven weeks before it started to retreat last week’s positions. USD index has achieved its highest level starting July of 2013 when it leaped over the threshold of 84.00 this week.

EUR and USD Updates

The common currency increased against the US dollar following the circulation of optimistic retail sales data from the United States.

However, profits were expected to be stable in the midst of speculations that the US will jack up interest rates earlier than usual.

The EUR/USD currency pair was recorded at 1.2955 during afternoon trading in European stock markets.

The pair later strengthened at 1.2952and grew 0.23%.

It will probably find support at 1.2858.

Official data revealed that retail sales in the US went up 0.6 percent in August. This is in accordance with market expectations. Retail sales in July showed a 0.3 percent gain from an approximate flat reading.

This data was publicized in the wake of hopes for an early increase of interest rates in the country.

The Federal Reserve is expected to reduce its asset purchase program by $10 billion during the next policy meeting.

Official data also underscored that production in the euro zone industrial production grew 1.0 percent in July. This surpassed expectations for a 0.5 percent gain after falling 0.3 percent three months ago.

Reactions on the euro varied after the ECB reduced rates across the euro zone last week.