Saudi Forex Reserves Reach $250 Billion

By some measures, Saudi Arabia’s reserves are the fastest growing in the world. The country’s reserves recently crossed the $250 Billion threshold, and are now growing at a pace equivalent to nearly 40% per year. The source of the reserves should be a mystery to no one: oil. Oil prices have surged over the last five years, bestowing a windfall of profits to the entire Middle East region. Plus, as summer gets underway, oil prices are sure to climb further, which will ensure continued growth in Saudi forex reserves. Fortunately for the US, the majority of the world’s oil contracts are settled in USD, which means the boom in oil prices has actually stabilized the USD, despite its contribution to the US trade deficit. In addition, Saudi Arabia is one of the world’s most reliable investors in US capital markets, which means Dollar bulls can breathe a cautious sigh of relief that reserve “diversification” will probably be given short shrift by the Sauds

US Dollar Strong in Monday Asian Trade

Reports from Tokyo indicate that the US dollar is holding steady in Asia as of Monday morning. After receiving promising reports from the west, recent fears about the US credit problems have alleviated and risky trades have resumed in Asia. Since then, the dollar has strengthened considerably. The Philippine Star reports:
The better US economic news slightly pared back market expectations that the US Federal Reserve will cut its benchmark interest rate next month, dealers said.

Promising Survey Strengthens Pound

Although the British pound suffered earlier in the week from a large Bank of England loan, the currency has been lifted due to a survey taken by UK manufacturers. The results of the survey, which inquired about their order books, showed that manufacturers were more successful this month than they've been in over a decade. Analysts did not expect such a promising report, as it proved that the UK is handling global credit problems better than most countries. According to Forbes:
The Confederation of British Industry revealed that a balance of +9 pct of firms polled reported that their order books were above normal in August - the highest level for more than 12 years.

Forex Trading - Foreign Exchange

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Pakistan: Gold price surges in local, Int’l markets

Slight increase in gold prices was recorded in local and international markets today. The gold on Thursday reached the price of Rs 33,500 per tola, up Rs 50 across the country including Karachi. Gold price reached Rs 28,714 with an addition of Rs 43. In international market, gold price increased by $1 per ounce and reached $1,055.

Chinas growth ups to 8.9 percent in 3Q

SHANGHAI: China's economy expanded a blistering 8.9 percent in the third quarter, fueled by lavish government stimulus spending that has helped the nation spearhead recovery from the global recession.

The world's third-largest economy expanded 8.9 percent from a year earlier, speeding up from 7.9 percent growth in the second quarter, the National Statistics Bureau said Thursday. Growth for the first nine months of the year was 7.7 percent and officials have said they expect the economy to at least reach the annual growth target of 8 percent.

China has countered the global downturn with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending on infrastructure such as rail and roads to pump up the domestic economy as exports slumped.

Investment in factories, construction and other fixed assets rose by one third in January-September to a record 15.5 trillion yuan ($2.27 trillion).

"Investment played an important and positive role in maintaining relatively fast growth and reversing the slowdown," said Statistics Bureau spokesman Li Xiaochao. Meanwhile, domestic consumption such as consumer spending contributed nearly a third of the growth in economic activity, he said.

The mixture of liberal credit, strong government backing for massive public works and incentives for domestic industries like autos have enabled China's economy to quickly rebound while the U.S., Japan and Europe continue to flounder.

A mild rebound in orders from overseas markets is restoring some of the millions of jobs lost late last year when factories closed by the thousands as plunging global demand slammed exports.

Despite surging share and property prices, consumer prices fell, with inflation at negative 1.1 percent so far this year, the statistics bureau said.

"China's doing fine. They threw so much money at it that if it wasn't, it would be surprising," said Standard Chartered Bank economist Stephen Green.

"We'll see strong growth from China for the next six months, possibly another year," he said. "The problem is what happens after another year and a half. What will be the growth driver then."

China's economic stimulus plan remains on track, but greater efforts will be made to curb industrial overcapacity, promote new industries, maintain liquidity and lower unemployment, it said.

Industrial output rose 8.7 percent in the first three quarters of the year, and 12.4 percent in July-September — signaling accelerating demand, the statistics bureau said.

KSE ends lower; rupee weakens

Karachi Stock Exchange ended one percent down on Thursday but off day lows as investors sold shares amid worsening national security, dealers said.

The KSE's benchmark 100-share index fell 1.01 percent, or 93.78 points, to 9,154.00 on turnover of 161.25 million shares.

KSE has gained 56.07 percent this year after losing 58.3 percent last year.

"Before the close of today's session, the market recovered sharply amid support from local institutions," said Furqan Punjani, an analyst at Topline Securities.

Dealers said the fundamentals of the market were strong and investors are expecting strong corporate earnings to be announced in coming days, but confidence had dampened due to the worsening security situation.

Pakistan State Oil and MCB Bank are due to announce their results tomorrow for the quarter ended Sept. 30.

Dealers said investors were also worried that worsening security was forcing selling by foreign investors, who have been active buyers in the market in recent weeks.

In the currency market, the rupee ended the day at 83.28/29 to the dollar, compared with Wednesday's close of 83.23/34. Dealers said a worsening security situation can have a negative impact on the currency.

The rupee has been supported by remittances from Pakistanis working overseas, but dealers expect pressure from importers will weaken the currency.

World markets drop on China growth worries

LONDON: World stock markets fell sharply Thursday as investor optimism was dented by a broker downgrade of U.S. bank Wells Fargo and concerns about future Chinese economic growth.

In Europe, the FTSE 100 index of leading British shares was down 75.01 points, or 1.4 percent, at 5,182.84 while Germany's DAX fell 97.13 points, or 1.7 percent, to 5,736.36. The CAC-40 in France was 67.36 points, or 1.7 percent, lower at 3,805.86.

Earlier in Asia, markets tracked Wall Street lower after influential banking analyst Dick Bove downgraded Wells Fargo over concerns about its loan book.

"After a good earnings season for the banks so far this served to remind investors that we shouldn't be reaching for the Champagne bottles just yet as there are still lingering problems in our financial system," said Tom Salmon, a trader at Spreadex.

And though government figures showed that China grew by a year high of 8.9 percent in the third quarter of 2009, investors were worried that much of the growth stemmed from a domestic stimulus package that can't last forever. Exports and private investment continued to lag.

"Disappointment on the back of this numbers this morning was sufficient to bring risk appetite off the boil," said Jane Foley, research director at Forex.com.

The Chinese growth figures came after the country's Premier Wen Jiabao told a Cabinet meeting Wednesday that policy will focus on balancing economic growth while managing inflation — raising worries the government may cut back on its lavish stimulus efforts.

China has been the world's major driver through the recession and any suggestion that it won't be growing as fast in the months ahead could spook investors, especially if the global recovery is not as strong as many in the markets have been expecting.

The rally in stocks since March's lows have been predicated on hopes that the global economic recovery will be quicker and more substantial than valuations were implying. So far, most U.S. companies have reported better-than-expected earnings and painted a fairly rosy picture for the coming months, helping major indexes push back above the levels they were over a year ago before Lehman Brothers collapsed.
Many now think that the valuations could be too optimistic, especially if governments and central banks think their job is done and start withdrawing some of the stimulus measures they have enacted over the last year or so.
"There's no escaping the simple fact that stocks have been starting to look increasingly overbought for some time now.," said Ben Potter, research analyst at IG Markets. "As always the question is just how protracted any sell-off will be."
The sell-off is set to continue when Wall Street opens. Dow futures were 21 points, or 0.2 percent, lower to 9,880 while the broader Standard & Poor's 500 futures fell 3.5 points, or 0.3 percent, to 1,074.60. On Wednesday, the two main U.S. indexes fell around 1 percent.

Once again, the focus of attention in the markets will be on the latest batch of third-quarter U.S. corporate earnings. Among those due to report later are Amazon, American Express, AT&T and Merck.
Earlier in Asia, Japan's Nikkei 225 stock average fell 66.22, or 0.6 percent, to 10,267.17, and Hong Kong's Hang Seng dropped 107.59 points, or 0.5 percent, to 22,210.52.
In China, the Shanghai index lost 19.18 points, or 0.6 percent, to 3,051.41. South Korea's benchmark fell 1.4 percent, Australia's index was off 0.5 percent and India's market shed 1.2 percent.
Oil prices slipped to near $80 a barrel Thursday as a wobbly U.S. dollar steadied. Benchmark crude for December delivery fell $1.24 to $80.13 a barrel. The contract jumped $2.25 overnight after the dollar fell to a 14-month low against the euro.
The fall in stocks has provided the dollar with some relief Thursday. As investors grow more willing to take on risk, stocks have rallied and the dollar has dropped against the euro. Conversely, when shares have fallen, the dollar has tended to rise as it is widely considered a safe haven asset
The euro was down 0.1 percent at $1.4979 while the dollar rose 0.3 percent to 91.23 yen.

Pakistan: Forex reserves rise to $14.48bn

KARACHI: Foreign exchange reserves rose to $14.48 billion in the week that ended on Oct. 17 compared with $14.46 billion the previous week, the State Bank of Pakistan (SBP) said on Thursday.
Reserves held by the SBP were $10.91 billion, compared with $10.89 billion a week earlier, while those held by commercial banks were flat at $3.57 billion compared with a week earlier, the SBP said in a statement.
Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November last year, largely because of a soaring import bill.
An International Monetary Fund (IMF) emergency loan package of $7.6 billion agreed in November helped avert a balance of payments crisis and shore up reserves.
The IMF, which increased the loan to $11.3 billion in July, has disbursed over $5 billion.

Use Of Forex Trading System

While several novel forex trading systems are dependent on difficult mathematical market analysis forms, a few of the most successful forex trading strategies are as well the simplest. One of these easy and very much successful strategies is trend trading, where you just observe which way the forex market is trending in and next you trade in that trend.
If you were trading the euro to dollar currency pair, the method that you could recognize the course of the trend is to start up the daily forex charts and cover an easy moving average on the chart. If the way of the moving average is high, next the pair is placed in an uptrend; if the moving average line is downward, there is a downtrend; and if the line is horizontal next there may possibly be no trend.
Trend trading is a verified method to make profits in the forex market as it is a recognized truth supported by decades of market investigation that currency pairs go in trends.
If the trend is on high next it creates logic to purchase, if the trend is downward next it creates logic to sell, and if there is no trend after that it may possibly not be a best time to trade. The most excellent method to obtain an exact sense of the on the whole trend is to glance at a long-term price chart like a daily, weekly, or monthly chart and observe which way the moving average line is pointing.

Forex - Dollar selling continues; euro breaks above 1.32 usd mark

LONDON (AFX) - Dollar selling continued into the afternoon, with the euro breaking through the 1.32 usd mark for the first time in over five weeksThe selling was sparked in Asian trade overnight after reports yesterday that the Korean central bank plans to diversify its reserves away from the US dollar. A spokesman for the Bank of Korea was quoted as saying in a report to parliament that as foreign exchange reserves increase, the central bank "will expand its investment into non-government papers, which carry relatively high yields, and diversify the currencies in which it invests"

EUR & CHF: Correlations in Cash and Futures

Currency markets continue to witness the highly negative correlations between the EUR/USD and USD/CHF exchange rates (one goes up, the other nearly always goes down and vice versa). A product of the dollar’s similar rate of change vis-a-vis the euro and the Swiss franc, this relation has continued to hold much before and after the September 11 attacks, when the Swiss franc’s safe haven status was firmly re-established. More importantly, an almost perfectly inverse relation between the EUR/USD and USD/CHF does not necessarily imply a similar performance of the dollar against the franc and the euro. As we have identified in previous studies, it took the US dollar 37 days to recover all of its losses incurred against the euro after September 11, breaking even on October 19, 2001. But it took the US dollar 103 days to properly recover all of its post September 11 losses against the Swiss franc, starting to gain on December 24, 2001. This suggests that while the dollar’s behavior against both currencies may be similar in direction, it is far from different in magnitude. The differential in magnitude explains the time lag of the dollar’s behavior vs the franc behind that of its performance against the euro.

Why Trade Currencies?

Forex is the world's largest market. With about 3.2 trillion US dollars in daily volume and 24-hour market action, we believe it is a true "step above" the equities market for the serious trader. Some key differences are:
Many firms don't charge commissions – you pay only the bid/ask spreads.
There's 24 hour trading – you dictate when to trade and how to trade.
You can trade on leverage, but this can magnify potential gains and losses.
You can focus on picking from a few currencies rather then from 5000 stocks.
Forex is accessible – you don’t need a lot of money to get started.

Example of a Forex Trade:

The EUR/USD rate represents the number of US Dollars one Euro can purchase. If you believe that the Euro will increase in value against the US Dollar, you will buy Euros with US Dollars. If the exchange rate rises, you will sell the Euros back, making a profit. Please keep in mind that forex trading involves a high risk of loss.

How Forex Works

The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.

Currency trading is when you buy and sell currency on the foreign exchange (or "Forex") market with the intent to make money.