Latin American Currencies Bounce Back

Currencies in Latin American nations recovered yesterday due to the weak retail sales statistics of the Unites States which affected the US dollar.

This helped end a three-day decline in the region's FOREX markets.

Meanwhile, equities were generally lower owing to gains of Brazilian mining company Vale and energy giant Petrobras. These led to the positive performance of the MSCI stock index in Latin American.

The USD was also hurt by the announcement of downward adjustments for American economic growth made by the International Monetary Fund.

The Brazilian real recovered over 1.4 percent and wiped out previous losses to trade close to 3.07 per US dollar.

It was also propelled by news that state-managed Petrobras will be releasing audited figures within April. Company shares, which entice many overseas investors looking for opportunities in Brazil exposure, have been adversely affected by an ongoing probe of corruption charges.

Release of the investigation’s results can alleviate concerns about the company’s condition.

Preferred shares of the company increased two percent while those of Vale SA were almost four percent higher Meanwhile, the BOVESPA stock index decreased lower to some extent after a five percent decline in beef shares of producer JBS SA.

Weak data from the US can drive investors into riskier assets like LATAM securities on speculations that a prolonged period of low US rates will sustain the pursuit of higher returns in upcoming markets.

Aussie Currency Recovers

The AUD rallied following the release of the National Australia Bank’s business survey which implied at recovery of local enterprises.

The AUD and USD pair traded at 0.7612 which was up 0.30 percent. On the other hand, the USD and JPY swapped hands at 119.94 which went down 0.16 percent.

Meanwhile, EUR and USD registered an increase of 0.02 percent at 1.0569.

The National Australia Bank Survey on Business Confidence and Conditions for Australia perceived conditions at positive six last month from plus two in February. Business confidence went up to plus three from a flat mark last February.

The Reserve Bank of Australia observed the increase of capital expenditure intentions in the survey which has higher weight for non-mining sector investments.

In another part of the world, the Monetary Authority of Singapore announced it adhere to its present position on monetary policy which allows additional moderate and slow but sure appreciation of the Singapore currency as progress and inflation look headed toward the expected direction.

The decision surprised many analysts who were expecting the Monetary Authority to opt for another policy easing in three months.

The verdict of the Indonesian Central Bank is also due today in Jakarta.

In China, data releases are also scheduled for first quarter currency reserves, new loans and monetary supply. The dollar index of the United States was listed at 99.74.

Demand for the USD is supported by hopes for higher cash rates as market investors became more confident the American economy will continue to get better after recent reports indicated a slowdown at the beginning of 2015.

Gold Futures Cut Back on Losses

Gold futures capped losses yesterday following a weak recovery of US retail sales last month although it still remained at the lowest level as market players watched closely at the probability of the Fed’s interest rate increase.

Gold for settlement this June at COMEX decreased $6.70 (0.6 percent) to remain at $1,192.60 per ounce. This is said to be the lowest futures price payment since March 31. Silver also dropped 13 cents (0.8 percent) to $16.161 per ounce.

According to a group of financial consultants, outlook on gold is very bearish even if the decline of oil prices which is beneficial to the mining sector is being disregarded.

The US Department of Commerce announced retail sales in March increased 0.9 percent which is the strongest in one year but still fell short of the 1.1 percent growth expected by economic experts, based on a Market Watch survey.

Producers’ prices went up 0.2 percent after four consecutive months of degeneration.

Meanwhile, the common currency traded at 1.0659 against the US dollar on Tuesday.

For other precious metals, platinum for July dropped 20 cents to $1,153.70 per ounce. On the other hand, palladium for June gave up $8.90 (1.2 percent) to $762.50 per ounce.

Copper for May settlement declined 1.9 cents (0.7 percent) to $2.70 per pound.

Russia’s FOREX Law

The Bank of Russia is finalizing the country’s foreign exchange legislation as it will also act as mega regulator in charge of supervision of this particular market segment.

Working sessions were conducted at the central bank with the participation of the Securities Market and Commodity Market Department head as well as representatives from the country’s FX industry.

The primary objective of this forum is to agree on necessary amendments to regulations since statues and secondary acts must be forged and published before greater part of FOREX law provisions are implemented within the year.

The short announcement regarding the meeting on the CRFIN website did not specify the type of revisions that were discussed. However, issues such as accounts of nominees; maximum leverage (supposed to be 1:50) although many think this ratio should be higher; banks that do not offer retail FOREX services; foreign currency dealers barred from offering Contract for Differences (CFD) trading; and, accounting as well as reporting policies for FOREX dealers.

CRFIN is a self-regulating and non-profit organization to enhance transparency levels and uphold growth for the over-the-counter FOREX market through an effective regulatory structure.

Meanwhile, the Central Bank of Russia announced that it cold around $3 billion during a one-year FOREX repo auction yesterday with demand going beyond $4 billion. It arranged the papers at an average yearly cost of 2.5955 percent with cut-off rate at 2.56 percent.

Euro Currency Falls against US Dollar

The euro dropped to $1.05 yesterday reaching its lowest in four weeks as the US dollar continued to increase on speculations the US central bank will move up interest rates within the next few months.

The Australian dollar also gave up 1.7 percent and headed towards a six-year trough after tightening of exports from China fuelled apprehensions of feeble growth in the second-biggest economy.

The shared currency went down 0.8 percent versus the USD and traded at $1.05205 near a 12-year slump of $1.0457.

The euro also touched a two and one-half month trough versus the Swiss note at 1.0368 francs.

Meanwhile, the USD climbed 0.6 percent against its major peers and reached 99.986 which are the highest in a month.

Majority of large banking institutions expect the USD to continue rising against the euro. Morgan Stanley was one of those to modify its projection for the euro and predicted that the currency will come to $0.98 by the end of 2015. On the other hand, the Aussie dollar declined to $0.7553 which is close to the six-year slump of $0.7534 which was posted during the early part of April.

The World Bank also reduced its growth forecasts for this year as far as developing nations in East Asia including China and issued warnings of major risks from global vagueness.

These provide a downbeat picture for the AUD particularly as current data was influenced by regression in exports, according to the European FOREX strategy head of Morgan Stanley (London).

The UK pound sterling touched a five-year low ($1.4567) with less than one month before the British parliamentary elections take place.

Greece Considers Debt Default

Athens is looking at debt non-payment unless the government manages to strike an agreement with creditors by April. Greece must repay €2.4 billion in Treasury bills after paying back a loan worth €460 million to the IMF.

It decided to hold back another €2.5 billion of payments to the IMF for May and June if the euro zone refuses to make available the bailout fund.

The Greek government is running out of cash to pay salaries and pensions for public sector employees. However, the finance ministry reiterated the government's commitment to arrive at a reciprocally beneficial solution compliant with its charter.

Greek officials have already recommenced technical discussions with representatives of the IMF, World Bank and ECB both in Athens and Brussels regarding monetary measures, budget goals and privatization. Creditors say they will not give out funds to settle debt installments.

The problem arose after €7.2 billion in rescue money which was supposed to have been released to Greece in 2014 was withheld due to differences of opinion between Athens and European/IMF lenders over economic reforms.

Among these are changes in the pension system, cuts in payments given to Greek pensioners, and procedures to allow mass firings by employers in the private sector.

JPY and USD

The Japanese yen gained versus the US dollar as the Bank of Japan maintained its policy. The pair of USD and JPY swapped hands at 119.76. It was down 0.45 percent. On the other hand, AUD and USD traded at 0.7674. It was up 0.54 percent.

The Bank of Japan voted 8 to 1 vote to just keep the policy mark untouched while the only dissenter (Takahide Kiuchi) who opposed the October 31 easing wanted a lower target than that one prior to the last easing.

That board member said the central bank should continue this excessive degree of easing only from April 4, 2013 up to the two-year period so it will not be exaggerated. He also insisted policy target prior to the October 31 easing was proper.

Kuichi suggested that the central bank must perform money market operations along with asset acquisition so the monetary source and unsettled amount outside of JGB holdings will grow annually at about ¥45 trillion.

The board rejected his proposition.

Meanwhile, the US Dollar Index was recorded at 97.82. It was down 0.43 percent in Asian trading.

The MARKIT Euro Zone Services Business Activity Index went up from 53.7 (February) to 54.2 (March).

Growth in Germany, Spain and Italy accelerated development while the UK’s PMI service sector reached a peak of 58.9 reaching a multi-month high.

Price discounting in the euro region pushed growth in the rest of the European continent.

OPEC Must Reduce Oil Supply

The Organization of Petroleum Exporting Countries needs to make a turnaround and cut down supply by at least 800,000 barrels daily to avert the return of Iranian oil from hampering crude prices, according to the OPEC governor from Libya.

Samir Kamal, who is also planning head of Libya’s Oil Ministry, insisted that OPEC bloc members must review their strategies carefully.

Kamal said it is important to agree in reducing production levels especially after Iran has declared to increase oil production.

The oil exports of Tehran have been cut back by nearly ½ since 2012 because of sanctions by Western powers.

Kamal speaks for Libya as member of the board of governors. However, this group only influences but it does not make OPEC policy decisions.

When OPEC met last November, Libya was one of the member-nations that called for a reduction of oil production. The organization will reconvene on June 5 to formulate policies.

OPEC members like Venezuela and Iran did not dispute the bloc's no-cut decision in 2014. Yet, they had qualms regarding this verdict and supported supply reduction.

Meanwhile, 18 oil producers from Africa are pushing for output controls to boost prices which have allegedly dropped to levels that can set off social unrest.

These nations are not members of OPEC. However, they do not have the backing of Saudi Arabia and OPEC members from the Gulf region.

Saudi Arabia already boosted production to a record high while Kuwait declared OPEC will stick to its present policy during the bloc’s next meeting.

Russia-China Natural Gas Deal

It took nearly 10 years before Russia and China were able to finalize their accord which provides that the former will supply the latter with natural gas amounting to $400 billion.

Government-owned GAZPROM is intent in firming up this deal despite the fact crude oil has plunged nearly 40 percent in the last six months and weakened the bargaining power of the oil firm.

This has reduced available funds for a second pipeline from Russia to China.

According to a senior researcher from the Oxford Institute for Energy Studies, the Russian government can give priority to another pipeline which is cheaper and faster to construct. However, this could be less useful for the Chinese government which is fully aware that they have the leverage.

The two nations signed the covenant on the second 30-year gas concord which involves building a conduit from West Siberia. This can deliver a maximum of 30 billion cubic meters of gas annually. This is an addition to the 38 billion cubic meters indicated in the first agreement.

Meanwhile, Brent crude oil has went down to around $58 per barrel from $92 due to oversupply.

However, the head of the company’s export division said weak crude prices will not last eternally.

GAZPROM realizes the interest of Beijing in this project. Hence, the jointly satisfactory solutions for its execution will be accomplished.

China’s demand for gas is increasing. In fact, it needs to import no less than 150 billion cubic meters of gas yearly for the next 15 years even if the economy continues to become lethargic.

Time Stamps for UK FOREX Trades

The treasury department of the United Kingdom has advised the Bank of England to use time stamps for FOREX transactions. This is one reform that advocates claim will ensure that banks cannot take advantage of clients.

However, the BOE is indifferent to the suggestion which raised concerns as to how thorough the central bank will be in its desire to mend London’s tainted reputation as a result of several FOREX scandals.

According to its proponents, time stamps can generate an auditing system trail and allow bank clients to perceive currency rates during the transaction period.

Time stamps are used extensively in wholesale foreign exchange markets but not for retail spot trades and institutional market investors.

The UK Treasury says the Bank of England must mull over how time stamps function in its Fair and Effective Markets Review. Observers say it can boost financial transparency especially with the recent manipulation of Libor as well as international currency benchmarks.

The treasury office spearheads the Bank’s Fair and Effective Markets Review, which wants to increase financial transparency after a string of City scandals such as some banks’ rigging of the Libor and foreign exchange benchmarks.

The Bank of England was not spared from these indignities as it has been probed on the possibility that certain officials were aware of alleged manipulation of FOREX transactions and pricing. Bank officials did not comment on this allegation but it vowed to be more responsible under the stewardship of BOE Governor Mark Carney.

ASIC to Probe Spike in AUD

The Australian Securities and Investments Commission (ASIC) declared in a statement it will investigate market trades as the AUD was trading at US76.99 cents after adding up another one percent.

This is prior to the monetary policy decision of the Reserve Bank of Australia.

The Commission is also looking into FOREX movements just before the RBA released its statements in February and March of this year.

It appears that FOREX again anticipated the RBA’s decision with the AUD going up just before the central bank’s declaration pre-empting the policy meeting’s outcome and prompting scrutiny of ASIC.

The RBA claimed additional cuts were possible and rates may be reduced in May.

The rally of the Australian currency defied the RBA’s formal easing partiality. Compounding the central banks uneasiness with the AUD is proof that the US went through a difficult first-quarter that means the US Fed will stick to zero longer. ANZ currency strategists emphasized the currency only got along with a mid- limit value due to negative US payrolls data and the RBA’s on-hold verdict.

In view of the Reserve Bank of India's judgment to maintain rates at 7.5 percent on the same date, central banks appear headed toward interest rate stability before the Fed decision. Meanwhile, possibility of parity versus the NZD was left out temporarily after the pair was 21 basis points short of being even right before the RBA move.

Strategists do not put the same emphasis on the connotation of headline events like currency parity or crucial trading levels.

Crude and Brent Oil Update

As traders and the financial world reacted to the decreasing value of the dollar on one hand as well as Iran’s announcement last week on the other hand, crude oil prices went up. Brent and crude oil both priced at a profit of $1.67 to trade and $56.62 and $50.81 a barrel respectively. There seems a strategy of bump and dump one – prices are pushed up and then stock selling to get a profit.

The oil market was not so high at closing time Friday last week. There was a fall in the electronic oil trade due to the reports of an Iranian nuclear deal. But this did not continue at the start of the week when oil prices started recovering as analysts foresee that Iranian crude oil exports cannot rise immediately and will have to wait after several months.

During the weekend, Saudi Arabia increased its crude oil prices for the Asian market for May buyers. This lift backs the strong refining gains in the Asian region with a strong Dubai oil standard. This conclusion was made by Singaporean traders.

Dollar Weakens After Release of US Jobs Data

The dollar went further down on after the release of the US jobs data. The information that was released has resulted in speculations that the Federal Reserve is more likely not raising interest rates until the second half of the year.

Last Friday, the employment data was closely monitored and showed that US non-farm payrolls increase by 126,000 in March. This figure was the smallest increase since December 2013 and way below the forecasted 245,000 value. The only positive data that came out was that hourly earnings had a gain of 0.3%.

This latest employment information is a chain of indicators that shows the US economy is not really doing so well and this makes the Fed more careful in decisions regarding raising interest rates.

The dollar deteriorated as U.S. Treasury values decreased as a result of the soft jobs data last Friday though the thin trading might also be due to the Good Friday holiday. The standard 10-year note yield dropped to a 2-month low of 1.8% last Friday. The final figure was 1.83%.

Saudi Arabia Increases Crude Prices for Asian Sales

OPEC giant Saudi Arabia increased May prices for all May crude sales to Asian countries after the nation’s oil minister noticed improvement of global demand.

Saudi is the biggest crude exporter in the whole world.

Government-owned Saudi ARAMCO reduced the markdown for Arab Light grade crude making May pricing higher by 30 cents higher than April. It also raised prices of four other grades it exports to Asia.

In a forum at Riyadh last March 23, Oil Minister Ali al-Naimi Global declared demand for crude is improving and his country can fulfill demand from any nation. Saudi Arabia was pumping an almost exceptional level of roughly 10 million barrels daily.

ARAMCO as well as other oil producers in the Middle East reduced pricing to Asia so it can compete with Africa, Latin America and Russia. As a rule, gulf countries sell to Asian refiners under long-term contracts through a premium or price cut to the standard of regional benchmarks such as Dubai and Oman oil.

According to oil market analysts from Kuwait, Saudi Arabia has developed substantial market share in the region and are not bothered by competition from other crude oil suppliers. It is the main reason why Saudis can bring up selling prices to a certain extent.

However, the country should be prepared to fortify its status in Asia because producers from Latin America also have the capacity to ship more oil to the region.

There are other alternatives for Asia in terms of sourcing oil supply, analysts added. The market share of Saudi Arabia can drop by 2020 in case it does not augment exports to Asia.

Life Insurers in Taiwan Now Faces Higher FOREX Risks

The Taiwan Ratings Corp. released a report that life insurance firms are going to face bigger risks than the Taiwanese banks. The report said that this is because insurance companies in this country have bigger amounts of assets that are in foreign currencies.

The report called “Taiwan's Life Insurers Face Higher Foreign Exchange Risks than Banks,” Taiwan Ratings reported that interest rates have remained low and profits for the financial sectors have stagnated thus many life insurance firms and banks look for more assets outside the country. The unfavourable economic condition of Taiwan is causing this to happen.

The released report said that Taiwanese life insurance providers have a big amount of cash because of the premium they have locally and that they are more interested to invest outside the country to get more earnings.

Stated in the report is that banks in Taiwan are less sensitive to foreign currencies and that they are more cautious of the risks involved when getting into such investments.

Taiwan Ratings is a local holding firm of a U.S.-based credit rating agency Standard & Poor's.

AUD and NZD Pair Outlook

There is a probability of a 1:1 exchange rate between Australia and New Zealand as the currency pair is trading at a lower and steadier path.

AUD and NZD peaked at 1.0798 and even went up 1.0108 although parity is seen within the next few weeks.

Market experts say a rate reduction by the Reserve Bank of Australia will certainly push the currency pair towards parity as interest rate differential between the two will continue to expand.

This may be a problem for both economies but more for New Zealand which is confronted with lower demand because of declining prices of milk. The appreciating currency can affect growth of other export products.

Meanwhile, the Reserve Bank of New Zealand is expected to react to the Aussie dollar and Kiwi exchange rate just like in the past.

Analysts say the RBNZ may even intervene if the Aussie central bank cuts rates next week to prevent a freefall of the AUD and NZD exchange rate. They believe that FOREX markets will obtain momentum and price moves can be extremely unstable surpassing fundamental drivers.

The problem is contesting a currency’s escalation may be difficult prospect and the Kiwi seems to merit high valuation. Economic forecasts have pointed out that steady for the rest of this year while the Australian currency must become stronger on its own.

However, observers maintain there is inadequate economic momentum that can lead to a stronger Australian dollar. Nevertheless, stakeholders still see parity between these two currencies.

Iran Continues Oil Production

Iran, a member of the Organization of Petroleum Exporting Countries, is expected to restore oil production after finally reaching a nuclear pact with Western powers.

The initial agreement formulated on Thursday indicates the Gulf country may resume exports in a few months after negotiations are finalized by the end of June, according to sources from COMMERZ Bank and UBS AG. Overseas consignments from Iran have been decreased 50 percent by sanctions imposed during the middle part of 2012.

Iran’s return to the world oil market hints at crude price recovery which other OPEC members expect within 2015. Minutes after the accord was published, Brent oil dropped to as much as 5.4 percent.

Under this treaty, European Union nations and the US will lift economic restrictions after International Atomic Energy Agency inspectors confirm Iran’s compliance with restraints on its nuclear agenda.

Brent declined by more than ½ from a one year-month high last June due to global oversupply. Oil futures for delivery in May prolonged losses following the announcement of the concord in Lausanne, Switzerland. It ended at $2.15 or $54.95 per barrel at ICE Futures European exchange in London.

Additional price losses could be checked since there is no assurance a final deal will be completed by June 30, according to top officers of BNP Paribas SA.

The structure was settled between Iran and the United States, United Kingdom, Germany, France, Russia, and China. The framework prescribes a timetable for Iran’s enhancement of uranium and confines it one location. It also allows global monitoring during the next 25 years.

Meanwhile, OPEC Secretary-General (Abdalla El-Badri) forecasted that international oil markets will attain a balance within the second half of this year.

Analysts also pointed out Iranian output may increase twofold current existing surplus and push Brent oil back to a 5 and ½ year trough.

GBP and EUR Currency Pair

Outlook remains unstable for the pair of UK pound sterling and euro although the recent weakness may have come to an ending. However, investors preferring the British currency should expect a large movement in the sterling’s volatility going towards the general elections in May. Stability will only rule as soon as a new government comes to power, according to analysts.

The economic calendar of the United Kingdom was overshadowed by the Bank of England’s final Gross Domestic Product report for 2014. GDP came in at 0.6 percent which is more than the projection of 0.5 percent made by economists. In other words, GDP in its entirety increased at 2.8 percent during the previous year. This is the most significant growth since 2006 primarily helped by positive export data which pushed the pound sterling forward.

Meanwhile, figures for business investments were quite unsatisfactory coming in 0.9 percent lower compared to the reading last quarter. GBP and EUR pair was volatile the whole day due to upbeat growth which touched a high of 1.3837 and broke resistance point of 1.3799. GBP and EUR pair is now trading at 1.3788.

On the other hand, the UK pound and US dollar moved on a parallel trend and climbed from a low of 1.4754 before increasing to a high of 1.4844. The pair is presently trading at 1.4818.

The shared currency gave up more than one percent versus the dollar because of the face-off between the Greek Government and its creditors regarding the new debt reform structure.

According to the European Central Bank, there was decrease in the jobless rate from 11.4 to 11.3 percent. Lowest rates were posted by Greece with 26 percent followed by Spain with 23.2 percent and Germany with 4.8 percent.

Canada also disseminated its GDP numbers (decline from 0.3 to 0.1 percent) from January which frustrated the market. GBP and CAD increased roughly one percent because of said release and currently trading at 1.8795.

FOREX Reserves of Emerging Economies Dwindle

FOREX reserves of upcoming economies declined in 2014 after 20 years as emergent economies were beleaguered by decreasing competition, capital depletion and concerns about US fiscal policies.

Economic observers say the downfall can impede the capacity of emerging markets to continue acquiring US and Euro Zone liabilities. This trend has accelerated growth in the region during the past decade.

Majority of market experts agree emerging markets went through the stage of high reserves and may see their stockpile of foreign currency decline within the next few months.

Meanwhile, the International Monetary Fund disclosed aggregate FOREX reserves in emerging economies dropped from $114.5 billion in 2014 to $7.74 trillion. This is the initial yearly drop since IMF data progression started in 1995. During their highest point, up-and-coming market reserves touched $8.06 trillion in May of 2014.

According to statistics from the ING Financial Services based in Holland, debility for the 15 rising economies pointed out this regression picked up the pace during the first two months of this year when reserves shrunk by $299.7 billion. Growth of emerging market reserves from $1.7 trillion in 2004 is the cornerstone of international economies for the last 10 years.

Substantial capital emerging markets gained from trade excess, portfolio inflows and direct investments were reprocessed into Euro and US debt markets to subsidize debt-spurred progress in developed economies.

In case emerging markets cannot build up FOREX reserves, savings surplus worldwide may be deceptive instead of being real.

Denmark Continues T Bill Auctions on Easing of Kroner Peg to the Euro

The Danish Government recommenced public sale of Treasury bills as pressure on the kroner’s ceiling to the single currency eased. The website of Denmark’s central bank published an announcement that DKR 100 million worth of T-bills due this June 1st were auctioned at a yield equal to (negative) 0.9 percent.

Meanwhile, DKR 1 billion for September 1 were sold at a yield equal to (negative) 0.75 percent. This may be an indication that severe pressure on the kroner’s cap to the euro has gone down even as negative profit would have been anticipated following the decision of the central bank to fix negative benchmark rates in July of 2012.

The central bank used up billions of dollars to defend the ceiling. Speculators presumed that this would be removed after the Swiss National Bank removed its cap versus the euro last January.

It pushed down the deposit rate further forcing the government to put on hold bond sales and intervened assertively in FOREX markets in answer to this assumption. Foreign reserves increased to a record high.

Earlier in March, an economic team from Goldman Sachs helped alleviate speculations stating that Denmark has the capability to defend the shared currency’s peg.

Euro Plunges versus US Dollar

The euro currency fell versus the US dollar due to apprehensions that Greece will run out of money before any aid is released by the troika of creditors.

Nevertheless, the Greek government was positive about the negotiations for the rescue package.

The shared currency was behind 0.7 percent against the US currency dollar at $1.0813. However, it performed better than the yen going up 0.2 percent at 129.94 Japanese yen.

The quarterly regression reached 10.6 percent which is said to be the biggest since the last quarter of 1992.

The euro fared better versus the yen, up 0.2 percent at 129.94 yen.

Economic sentiment index of the European Commission scaled up to a peak of 103.9 this month bolstered by low energy prices and the ECB’s stimulus agenda.

Meanwhile, the US dollar index increased 98.054 following continuous losses in previous weeks. The greenback was up 0.9 percent against the yen at 120.18 yen, while the sterling was down 0.6 percent against the dollar at $1.4796.

Concerns were softened by upbeat data in the Euro region. A recent report underscored confidence in the European economy climbing to the highest since July of 2011. Likewise, there is affirmative reading on German inflation increasing hopes the region can stay away from deflation.

Market analysts say the euro is weighed down by different policy paths undertaken by the European Central Bank and US Federal Reserve. They also believe the EU currency will be in equivalence with that of its US counterpart within the year.

UK Pound Sterling to US Dollar

There will be highs and lows for the pair of UK Pound Sterling and US Dollar this week influenced by publication of US data such as personal income, spending and consumption expenditures along with home sales.

Statistics on US consumer confidence are expected to decline from 96.4 to 96.3 this month. Even statements of US Fed officials can affect exchange rates of USD and GBP, USD and EUR as well as USD and CAD.

There will be pressure on USD with the publication of MARKIT PMI for manufacturing, ISM Prices Paid and Manufacturing, MBA Mortgage Applications, and Employment Change.

Meanwhile, statistics about the national economy are also expected this week. The US Dollar movement can have effects on the market. Also to be released are initial unemployment and continuing claims, trade balance and factory orders.

Improvements in the labor market will likely cause a rally of the US currency as the central bank said before that tightening in unemployment can propel interest rate increases.

However, the jobless rate is not expected to move which can turn out as an upbeat development. Trading on the US dollar trading will surely be influenced by changes in Non-Farm Payrolls, average hourly earnings, and changes in household employment.

Gold Declines for Second Day

Gold plunged for the second day after going up to a three week peak until March 26 after the statement of Fed chair Janet Yellen that she is expecting rates to go up in 2015.

Prices increased previously after Saudi Arabia led airstrikes on Shiite insurgents in Yemen which spurred haven demand for gold on apprehensions hostilities may upset oil supplies. Meanwhile, gold holdings scaled up for the seventh week, according to data provided by Commodity Futures Trading Commission.

Bullion for immediate settlement dropped 0.2 percent to $1,195.91 per ounce. It was recorded at $1,197.50 in Singapore. The precious metal gave up 0.5 percent to stop the longest stretch of profits since 2012. However, it is still expected to achieve the first quarterly growth since June of last year.

Meanwhile, silver also retreated and Shanghai gold declined for the second day.

The Australia and New Zealand Banking Group also observed the regression of gold due to economic and political developments. Gold for delivery in June lost 0.3 percent to $1,196.80 at the COMEX. On the other hand, bullion (99.99 percent purity) gave up 0.3 percent to 239.80 Yuan per gram or $1,200.10 per ounce at the Shanghai Gold Exchange.

Silver for prompt delivery plunged 0.2 percent to $16.9194 per ounce. It is expected to go up 7.6 percent within the quarter. Platinum had no significant change at $1,136.75 per ounce and was headed for a third consecutive quarterly loss. Palladium metal also declined 0.3 percent to $739.25 per ounce.

Japanese Yen Gains versus US Dollar

The Japanese yen erased past losses against the US dollar in Asian trading and remained unaffected above 119 handle as investors ignored lackluster macro data from Japan and awaited the GDP report of the US.

The currency pair of USD and JPY traded flat at the 119.20 level and bounced off session highs of 119.41 during the initial session. This pair wiped out previous gains as traders absorbed the weak Consumer Price Index of Japan while retail sales brought about new losses. Investors are expected to look for new incentives henceforth.

In addition, weak treasury yields for both 10-year and 2-year notes also pulled down the USD and JPY. US dollar index traded even at the 97.62 level.

The next resistance is seen at 119.41 levels and can possibly extend gains to 119.85. On the downside, immediate support is perceived at 119 below the 118.65 levels.

Traders are now focusing on vital US macro figures which include gross domestic product along with consumer sentiment statistics for further direction related to the pair.

Greece Submits New List of Reforms to Creditors

Athens drafted a new list of structural reforms which is submitted to creditors yesterday even as the Greek government said it will ceases fulfilling debt commitments if negotiations faltered and no assistance is given to the hard-pressed nation.

Minister for International Economic Affairs Euclid Tsakalotos stated his country was seeking an accord and could exit the Union in case of negative outcome. However, they are always amenable to a compromise.

Representatives of the European Union, ECB and IMF are expected to study the proposed reforms closely.

Greece has come up with 18 items in its revised package of transformation that will hopefully release £7.2billion worth of financial assistance.

The minister said Athens will not give up its anti-austerity stance and instead focus on payment of wages and pensions.

An unidentified Greek official insisted the reform-for-cash arrangement does not contain recessionary measures.

On the other hand, lenders were adamant that such measures are inevitable if Greece wants its economy to recover.

The proposal projected a GDP growth of 1.4 percent for 2015 and reduction of primary surplus which is anticipated to reach 1.5 percent this year.

The Euro working group will be responding to this new package on Monday.

Meanwhile, Fitch Ratings relegated long-term foreign as well as domestic currency default ratings of Greece from “B” to "CCC". Likewise, ratings on primary unsecured overseas and local currency bonds were also reduced to "CCC". Temporary FOREX IDR was downgraded from “B” to "C"

The next schedule for review (Fitch sovereign rating on Greece) is on May 15.

Oil Prices Surge as Saudi Launches Air Strikes in Yemen

Prices of crude oil climbed up after Saudi Arabia let loose air strikes against Iran and its allies in Yemen. Oil prices surged particularly in Asia as air forces of the Saudi Arabian coalition made up of 10 countries started bombing selected targets.

Brent crude practically touched 60 while WTI broke resistance to almost 50.00 and for a short time touched 52.00. However, the two benchmarks recovered later during Asian trading.

At the start, markets were apprehensive regarding possible supply interruptions along with likelihood that hostilities will spread to the rest of the Middle East.

Yet some of these worries eased after Asian importers said supply disruptions did not bother them at all.

These offered support to the usual safe bets in the FOREX markets like the yen and Swiss franc.

Meanwhile, the dollar dropped to 118.33 yen which is the weakest since February 20 before rallying to 118.73. It also reached a low versus the franc (0.9491 francs).

The bombing of Yemen is expected to heighten the conflict with Iran even if Yemen is not a principal producer of crude oil. At any rate, the global market was shaken because Saudi Arabia is the biggest oil exporter in the whole world.

Analysts are also concerned with the approach of the euro zone in handling this situation since Saudi Arabia exports oil to Europe through the shoreline of Yemen. Hence, the continent’s importers will most likely be affected than Asian traders.

Gold Gains on Middle East Tension

Gold reached a high in more than three weeks as conflicts in the Middle East continue to rise with currencies and stocks dropping and investors gong for low risk assets like the precious metal.

Spot gold went up to as much as $1,219.40 per ounce. It moved up 0.7 percent at $1,203 per ounce. Gold for delivery in April settled at $7.80. It was higher at $1,204.80.

Commodity analysts are convinced that prices will continue to go up if the situation does not improve. Gold looks headed for seven successive session gains which is the longest run 2012.

In Yemen, prices rose two percent but this is not seen to affect gold.

Just 10 days ago, the yellow metal fell to a four-month trough when markets were expecting the US Fed would increase interest rates.

Nonetheless, traders were still wary about gold's outlook with ongoing outflows coming from SPDR Gold Trust. Holdings of the biggest gold-backed exchange-traded fund in the world declined 0.2 percent to 743.21 tons.

Premiums in China, which indicated demand, eased to the range of $2 to $3 per ounce versus $6 to $7 last week.

The country is the second-largest consumer of gold worldwide.

. Meanwhile, data showed that gold imports by of China from Hong Kong decreased last month because of slow purchases.

Euro Climbs against US Dollar

The single currency went up to $1.10 versus the US dollar egged on by the positive German business confidence poll which contributed to prospects that economic recovery in Europe is building up.

Traders believe that with the 1.1 trillion euro asset acquisition agenda of the ECB ready, abbreviated euro region bond profits will possibly be restricted and keep gains restricted.

The IFO Business Climate index (based on the monthly survey of 7,000 companies) soared to 107.9 this month from 106.8 last month.

This is higher than the common projection of 107.3 and strongest interpretation since July of 2014. It also followed the upbeat survey of ZEW on robust data of purchasing managers index which was circulated last Tuesday. Regional business surveys came out positive with the European composite flash PMI increasing to a peak of almost four years.

The euro went up to 0.3 percent (1.0955) after significant swings last week. This was ahead of a 12-year slump of $1.0457 established on March 16.

Investors reduced long dollar positions after the US central bank assumed a dovish position on cash rates sending the currency to multi-year peaks.

Index for the US dollar remained at 96.981 after setting a two-week trough of 96.387 which was down approximately four percent from close to a 12-year peak of 100.39 this month.

Analysts said among the primary consensus trades that will be subjected to pressure are the common currency.

IMF to Accept China’s Yuan as Major Currency

The International Monetary Fund is planning to take on board the Chinese Yuan into the aggregate that comprises its international FOREX benchmark.

This is what economists from Bank of America Merrill Lynch say. They are convinced the IMF will take in the Asian currency as among the notes composing SDR or “Special Drawing Rights” this October. It is a form of meta-currency for IMF transactions. The other currencies are USD, EUR, GBP, and JPY.

Economists say this will legitimize the Yuan as reserve currency. Moreover, the benefit for Beijing is that it can possibly lessen the nation’s foreign borrowing expenditures and offer more leverage in subsidizing current account arrears for the future. The People’s Bank of China has been advocating inclusion of the currency in the SDR for so long.

As reserve currency, its weight in the SDR system will probably be higher than pound sterling and yen. Based on forecasts from Merrill Lynch, central banks worldwide have an aggregate of over $80 billion in terms of Chinese government bonds making it the seventh biggest reserve currency globally.

Meanwhile, the China Construction Bank Corporation opened the first-ever money-market fund denominated in the Chinese currency which is based in the euro zone. It is considered a landmark in the Yuan’s emergence as primary force in world FOREX markets. This is a new exchange-traded fund included in the London Stock Exchange. It is also available to traders across the EU as well as the first product that provides Western investors access to securities in the interbank bond market of China. The fund is known as CommerzBank CCBI RQFII (Money Market UCITS-ETF) and began trading yesterday.

Said ETF may be the first of numerous Chinese currency funds to be launched in developed economies to entice investors with higher returns.

US Currency Recovers while Aussie Currency Slips

The US dollar achieved moderate gains early today. This turn-about in less than one day indicates at least tentatively that the latest sell-off may be over for now.

It rallied to 119.73 Japanese yen from a slump of 119.22 and expected to reach 120.00.

Meanwhile, the euro remained at $1.0915 from a peak of $1.10295. Traders said failure to go over the post-central bank policy meeting peak of $1.10625 caused said reversal.

According to analysts, the pair of EUR and USD was not able to keep up the test higher than 1.10 with somewhat better-than- estimated consumer price index data leading to the sharp rebound of the dollar.

They said price action has matched market expectations that long-term market participants are inclined to purchase the USD above $1.10.

Notwithstanding this scenario, the euro was ahead of a 12-year trough ($1.0457) set last March 16.

The dollar also performed better versus commodity currencies like the Australian dollar which slipped below 79 cents from a two-month high of $0.7939.

US Treasury yields declined because of firm demand for two-year note sale.

The Reserve Bank of Australia will also come out with the twice a year report about the status of the nation’s banking industry today.

Greece Faces Huge Cash Problems

Reliable sources claim Greece can possibly run out risks of money by the third week of April unless it obtains additional funding earlier.

The truth is Athens has almost no time left to persuade its creditors that it is serious in implementing economic changes. Nevertheless, Prime Minister Alexis Tsipras stated his government is presenting a set of reforms to its partners in the euro region by Monday to stay away from defaulting.

On the other hand, German Chancellor Angela Merkel did not disclose details of her meetings with the Greek President. All she said was that Greece must collaborate with the triumvirate of creditors to release the cash infusion.

Remarks made by the foreign minister of Germany as well as chair of euro area finance ministers suggested the probability that this matter will be resolved soon.

Athens expects to get approval for its list and facilitate the return of nearly 1.9 billion euro in profits incurred by the European Central Bank from Greek bonds, sources revealed.

Greek officials contend their own bank rescue source should have given back only 9.7 billion euro instead of 10.9 billion euro considering it spent its own cash reserves and not EFSF bonds for recapitalization.

Greek officials did not give any details about the latest reforms but hinted it contained structural modifications and not recessionary measures.

Financial markets in Athens recovered as the two-year bond yield declined almost two percentage points to less than 20 percent. A person speaking for the European Financial Stability Facility rescue program said the Euro Group head asked for an assessment of cash refund case.

Various Factors Affect Supply and Demand for Oil

Demand and supply for world crude is currently being affected by OPEC’s production agenda, the treaty on nuclear relations with Iraq, rig oil counts in the United States, and current turmoil in Libya.

At the same time, oil traders have watching retail investors closely in recent weeks. Meanwhile, there are also factors shaping stabilization of crude prices. These include reversal of price reduction; investments in exchange traded products worth billions of dollars; market investors; and, hedge funds.

Concerns regarding storage capacity in the US generated a renewed decline during the past week. At the same time, investors have poured more cash into financial commodities supported by oil futures.

Yet, there are possibilities their bets can send oil prices dropping once more due to a market collection where spot prices may go lower.

Observers believe the US benchmark can slip from the current $47 to $20.

Holdings in ETF products have climbed up since the start of 2015 such as the highly-leveraged Velocity Shares and Long Crude Oil ETN.

At present, US Oil Fund holds roughly 60,000 contracts for oil futures which are over 10 percent (open interest) at the New York Mercantile Exchange.

However, investors may have to shell out additional costs as they wait for the markets to recover.

When the US Oil Fund unleashed its shares, the contract cost effectively downsized holders of investors.

Market analysts say these investors may withdraw as a group if they lack the resources to sustain their positions through price changes.

Although funds like the USO may be expensive for retail investors, hedge funds may utilize exchange traded commodities as a means of managing momentary exposure to the crude oil market.

UK Pound Sterling Stumbles

The British Pound Sterling declined due to apprehensions of economic slowdown as the United Kingdom appeared to be heading towards depression. The currency touched a three-week low versus the common currency and scaled down by more than one percent. Market traders were also cautious about the forthcoming general elections. The pound touched a three-week slump versus the euro (€1.3664). Meanwhile, the dollar dropped to under $1.48 which is near a five-year low of $1.46 after the release of minutes by the Bank of England Monetary Policy Committee.

The decrease of the pound follows a weak industrial trends report by the Confederation of British Industry. CBI data disclosed orders for exports this month went down to their lowest level in over two years. Total orders for book balance decreased to zero this month compared to +10 last month.

Investors are also looking at the most recent inflation data from the UK which the Office of National Statistics will publish tomorrow.

Those are expected to show consumer price inflation has dropped to almost zero thanks to shrinking food prices and a drop in the oil price back to $56 a barrel.

The CBI poll for this month indicates UK manufacturers are being restrained by dismal export orders. Export orders balance dropped sharply to a 26-month slump of -26 percent in March from -8 per cent during the previous month. According to Howard Archer, head economist of IHS Global, the survey is unacceptable though the weakness is focused on export demand.

ASIC to Reduce Retail FOREX Trading Controls

The Australian Securities and Investments Commission (ASIC) may bring down the leverage for retail foreign currency trading. Australia intends to go after the United States, Japan, the US and other areas in putting a ceiling on maximum leverage presented to traders within the span of 50 to 100.

The issue on leverage ratios was reopened by regulators after exposure to negative account balances experienced by FOREX brokerages brought about by the Swiss National Bank’s abandonment of the 1.20 cap on the common currency last January.

Excessively high leveraged trades are very uncertain for clients.

Nonetheless, there is a new outlook with regards to FX brokerages that offer high leverage.

ASIC chairman Greg Medcalf declared Australia is preferred by online FOREX brokers which function under ASIC with maximum leverage of 1:500 compared to Western nations like the United States which have restricted leverage to drastically lower levels.

The commission is very moderate when it comes to FX brokerages and warned clients on the consequences of trading retail currency through online platforms.

Australia is said to be a preferred destination Western FOREX companies partly due to the country’s systematized business environment and excellent regulatory supervision.

It is also near the Asia-Pacific region and boasts of the capability to provide investors from China with high leverage and appealing terms. Australia has strong trade relations with Asian nations whose trading population as a rule do not manifest the same adherence to middle-of-the-road trading practices compared to investors from Japan.

US Oil Drillers Deplore Fed Rules

Oil rig drillers in the United States have condemned new Fed laws on hydraulic drilling or fracking calling these unwarranted and costly. They immediately opted for legal remedies.

The US Interior Department announced drillers on government property must reveal the kind of chemicals they use, comply with construction benchmarks for wells and get rid of contaminated water using safe measures.

According to a legal counsel of an industry alliance of drilling companies, this policy made by the Bureau of Land Management will just aggravate departure from federal and ancestral lands to private property administered by more conventional state laws.

The law firm’s spokesperson also said it will adversely affect domestic employment and federal revenues.

The company (Baker & Hostetler) represents Western Energy Alliance as well as Independent Petroleum Association of America in a court case challenging said regulation in a federal court in Wyoming. The lawsuit stated that rule was based on unproven concerns.

Research conducted on behalf of Western Energy Alliance disclosed the federal regulation will put in $97,000 to the cost of one oil well.

On the other hand, Interior Secretary Sally Jewell told media representatives that the new law protects government land resources and guarantee responsible development.

There are over 100,000 oil wells located on federal property and comprise 11 percent of natural gas output and five percent of crude production. 90 percent of these companies use hydraulic fracturing.

The government estimated compliance cost at $5,500 for each well. The shale well costs roughly $7 million. This rule will be effective after three months.

Euro Currency to Lose Value by 2017

Analysts from Goldman Sachs the shared currency will lose ¼ of its value from present levels and set new lows at $0.80 during the last quarter of 2017.

This was countered by economists from HSBC who insist that the euro is going to increase in value to $1.20 or 15 percent during the same period.

Said estimates border on extremes as against current speculation which is generally for more weakness of the currency which is now trading at $1.06. Yet, both opinions are anchored on concrete arguments depending on how the international economy progresses.

The perspective of Goldman Sachs depends on prospects that US monetary guidelines will stabilize. In other words, the US central bank will finally increase its principal interest rate from the close to zero levels as the economy gets better. Once the Federal Reserve tightens, the scenario is for the European Central Bank to maintain monetary policy. Hence, investors will transfer money from euro zone assets to the US.

Goldman says while the US dollar is strong, money flows failed to keep in step with ubiquitous views. Company analysts assert domestic demand will increase in the euro region and shove the euro downward. They project the fair value of the euro at approximately $1.20.

The Fed is watching the dollar’s appreciation with intent. Since the US is a closed economy, the exchange rate has less bearing on the domestic market compared to the United Kingdom.

In the interim, the escalating dollar has exerted downward weight on prices of commodities which pushed down inflation as well.

Latest Moves of Central Banks Worldwide

The Reserve Bank of New Zealand maintained its policy on interest rates but said it looked forward to more considerable decline for the kiwi.

RBNZ officials also stated the exchange rate is still baseless with reference to existing economic conditions.

The central bank of Hungary hinted at easier policy in the future after unexpected policy changes made by central banks of Switzerland, Denmark, India, and Canada during the first part of this month.

Singapore’s Monetary Authority also surprised markets by a shift in policy for slower pace in currency escalation.

This trend continues and adds more volatility to FOREX markets, according to currency strategists.

The US currency benefited from these actions as well as easy policies. In 2015, the dollar went up by almost seven percent versus euro, over seven percent against the CAD and six percent against the kiwi.

The dollar also strengthened over 20 percent against the currencies of Sweden and Norway.

Numerous economists, strategists and the Treasury market read that more risk factors indicate a higher bar for increasing interest rates.

In spite of this, the US dollar was able to get back quickly.

The Australian dollar has weakened due to decreasing prices of iron ore and crude oil. Speculators say the Reserve Bank of Australia may trim interest rates during the institution’s policy meeting next week.

Likewise, central banks of Mexico and South Africa will release their respective policy decisions on Thursday with stakeholders forecasting that the South African Reserve Bank will defer any increases.

The Mexican central bank is also expected to retain policy rates.

Analysts also believe the Bank of Korea will recommence easing in a little while and follow the worldwide trend of looser fiscal policy.

Swiss Franc Forecasts and Updates

Exchange rate for the Swiss currency fluctuated versus its peers due to mixed figures and apprehensions that the Swiss National Bank could modify policies to devalue the strong franc.

Earlier this week, the national retail report bared a (negative) 0.3 percent yearly slide last January after the adjusted increase of 1.9 percent in December. Import Price and Producer Index also dropped more than projections.

This data was followed by the ZEW survey one expectations. Sentiment measure got better from (negative) 73 to (negative) 37.9.

The gain was solid but not impressive enough as economists expected. Trade surplus narrowed down from 3.41 billion in January to 2.47 in February (CHF). This was brought about by a (negative) 2.8 percent monthly drop in exports and 3.1 percent increase for imports.

UK pound sterling to CHF was listed at 1.459. CHF to EUR came in at 0.947 while CHF to USD was 1.025 dollar.

The franc was softer versus the pound and dollar following the decision of the SNB on interest rates. Sight deposit rate remained at (negative) 0.75 percent as the central bank reduced its growth position and projected a sharp slide of prices because of the robust domestic currency. Central bank officials said it will be active in the FOREX market if required. The franc declined against the pound after the SNB came up with its decision.

The currency pair (CHF and GBP) traded within the range of 1.0084. The single currency showed a 0.3 percent drop versus the franc at 0.9418. Meanwhile, the CHF and USD traded at 1.0092. It was down by nearly one percent

GBP and USD Trading

The pair of GBP and USD dropped within the 100-hour moving average during the last 11 hours in trading sessions. The moving average came in at 1.4792 while low for that day was 1.47944. The level rebounded in morning trading at London. Traders banked on this level to delineate and reduce risks. This gamble paid off for them.

Corrective high off that low (as traders from New York joined the trading) was more than the 200-hour moving average at 1.4924 against the 1.4900 for the 200-hour median.

However, this extension was rejected due to volatility. 50 percent of this also came close to the 200-hour MA (1.4999). Meanwhile, GBP and USD pulled away from a low of 1.4796 to 1.4895 in euro region trading although it was still down by 0.58 percent.

The UK pound sterling declined to practically five-year lows versus the US dollar on Wednesday following the declaration made by the Office for National Statistics (United Kingdom) that the jobless rate remained at 5.7 percent during the first three months which failed expectations for a decrease of 5.6 percent.

Likewise, minutes of the policy meeting of the Bank of England pointed out that all members of the Monetary Policy Committee preferred to maintain interest rate at 0.5 percent along with the £375 billion asset-purchasing agenda. The UK pound was higher versus the shred currency as EUR and GBP stumble 1.18 percent to 0.7168.

Bank of New York Mellon in FOREX Settlement

Bank of New York (Mellon) management agreed to a number of settlements over deceptive FOREX practices and agreed to pay $714 million for resolution of these cases.

Offices of concerned New York Attorney Generals gave statements said bank will settle with the US Departments of Justice and Labor; New York Attorney General; US Securities and Exchange Commission as well as private class lawsuits.

BNY Mellon acknowledged it promised to provide clients with a very fair interbank price of the day on FOREX transactions. On the contrary, they were given the worst price, the attorney general’s office said.

BNY Mellon owned up the fraud and announced it would fire bank executives who were part of these transgressions. The bank also vowed to improve its practices and be transparent with information for clients.

For these settlements, bank officials stated the justice department and New York Attorney General's office would each be given $167.5 million. On the other hand, the amount of $335 million will go to customer class action litigation.

In addition, government prosecutors said market investors rely on banking institutions to be truthful as to how their investments are being handled. Yet, the bank misinformed customers and made trades to their detriment.

The settlement simply proves that banks and individuals liable for deceiving investors will have to accept severe consequences for their unlawful activity.

Japanese Yen Surges Ahead

The Japanese yen climbed up and contained gains for stock shares.

NIKKEI Stock Average moved back by (negative 0.62 percent) or 0.4 percent lower. On the other hand, the TOPIX index absorbed a loss of 0.3 percent. However, the scope of retreat was limited to some extent after US stocks also rallied overnight.

USD and JPY pair scaled down more than one yen to ¥119.73 after the US Fed seemed to be taking time in bringing up cash rates. Meanwhile, US Fed officials reduced median projections for the rate of federal funds at the end of this year to approximately 0.625 percent compared with estimates of 1.125 last December. Median forecasts for 2016 decreased from 2.5 to 1.875 percent, based on the quarterly review of economic projections made by the Federal Open Market Committee.

The FOMC downplayed its evaluation claiming that growth tones down a bit after January.

Japanese analysts say that it will be hard to see any rate hike this June and the schedule will probably be postponed. The comparative strength index was pegged at 79 in Tokyo above the 70 cap that traders watch as indication that stocks have gone up rapidly and too far.

Negative Currency Effects Bring Losses to European and North American Firms

Many companies in the Euro Region and North American have already incurred revenue losses amounting to billions of dollars because of impacts cause by negative currencies based on recent studies.

They lost $39.54 billion with North American corporations’ losses increasing by 53 percent to $27.13 billion last year while European institutions reported $12.41bn shortfall due to this development.

Overall negative currency impact went up more than twice during the fourth quarter as these enterprises gave up $20.18 billion during that period as against only $8 billion in the previous quarter.

During the last quarter of 2014, the US currency climbed up four percent versus the euro with North American companies reporting FOREX impacts reaching $18.66 billion which is the biggest since the peak of the economic crisis in Europe.

The report made the recommendation that said companies need to reset their respective budget rates or modify their guidance considering the persistent instability in foreign exchange rates.

Monetary officials all over the world say foreign exchange rates are priorities amidst the background of the highest volatility in the last two decades.

Canadian Dollar and Euro Currency

The Canadian Dollar moderated against most of its peers due to the significant decline of oil prices. However, there is a clear sign of recovery even as the price remains below $44 per barrel.

EUR and CAD pair is trading within the 1.3524 range.

Since the Canadian dollar is a commodity asset, it is easily affected by any changes in prices of crude.

Canadian economic figures were positive although there was minimal impact because of the effect from low crude prices. International Securities Transactions showed a surplus of approximately 5.73 billion last January which eclipsed median market projection of a trade shortfall which is -2.00 billion.

Depleted oil price in the market will possibly cause the Canadian currency to trend lower. As a result, Euro to CAD exchange rate is expected to remain as it is for the time being.

However, it is also likely that there will be instability in the EUR/CAD mainly because of the release of important data in the euro region.

Euro to Canadian Dollar exchange rate went up to a peak of 1.3569 yesterday.

Russian Currency Strengthens

The Russian ruble got a lift from currency sales which market analysts credited to exporters preparing for the tax period before March ends.

A break in the surge of the US dollar, which affected currencies of emerging economies, also fortified the Russian note. The ruble was 0.7 percent stronger versus the dollar (61.77) and earned 0.3 percent to trade at 65.58 against the shared currency.

FOREX sales balanced the negative effect of oil prices’ decline which is the main driver for Russian assets. Brent crude traded at approximately $53 per barrel which is 1.6 percent lower compared to the previous finish.

The country’s economic officials are keeping track of exporters' currency sales to prevent another collapse of the ruble which took place last December.

The currency already recovered over 12 percent versus the US dollar since last month.

This was facilitated by increasing crude oil prices, improved current account excess and central bank loans bolstering foreign currency liquidity. It allowed the central bank to reduce cash rates and stimulate the local economy.

In its recent report, ING Bank stated it believes the ruble will be approximately 52 to the US dollar in one year.

On the other hand, Russian shares bounced back after dropping with oil prices earlier this week.

The RTS index increased 1.5 percent to 824 points. Meanwhile, the ruble-based MICEX was 0.5 percent up at 1,617 points.

GBP Exchange Rate Remains Unstable

The UK pound sterling (GBP) is projected to remain volatile as British citizens cast their votes this year. Given this political situation, the GBP/EUR exchange rate will definitely remain shaky these coming months.

According to research made by HIFX currency broker, the rate of GBP versus EUR increased in terms of volatility by 40 percent during the previous seven general polls.

Instability was the highest in 2010 as it soared to 156 percent when the coalition government came to power. Meanwhile, the pair of EUR and GBP was trading 0.42 percent higher day-to-day at 0.7148. On the other hand, the pair of EUR and USD traded higher at 0.87 percent on a daily basis.

On the other hand, outlook for the common currency exchange rate is expected to be undercut as demands of investors for currency hedges remains higher.

Insignificant data in the Euro Zone allowed the euro some room for recovery.

The German DAX touched new records due to increasing demand for Euro area stocks which is seen as key for further weakness of the EU currency.

At the same time the head analyst for markets at Danske Bank said demand of global investors to hedge their exposure to assets in Europe will pave the way for a lower EU currency.

Momentum continues to be lower in EUR and USD with the cross reaching 1.05 within the week.

Negative euro rate along with excess liquidity is expected to drive traders to risky assets like euro stocks and peripheral bonds.

FSMA in Belgium Warns of New FOREX Fraud Scheme

The Financial Services and Markets Authority in Belgium warned of another fraudulent scheme in FOREX and binary options. This regulator said anonymous groups are returning funds allegedly to ill-fated traders after they lose cash deposits. The FSMA says unscrupulous individuals and companies claim to be law firms or financial services entities with different fictitious identities.

They connive with unregulated and clandestine currency and binary options brokers using databases obtained from clients to go on cold calls offering their help after finding out the victim lost money.

Another scheme is more of the usual information collection tactic used in the Internet. There were instances when unidentified groups ask for personal email addresses and contact information through web-based forums and blog posts.

This illicit practice has become popular and is now dubbed as ‘recovery room”.

Victims are contacted after being scammed. The caller pretends to help the victim recover but the real motive is to extort more cash.

The FSMA has cautioned the public to ignore uncalled-for offers of services purportedly to recoup losses due to currency trading. It also urged traders, who have already lost money against transferring funds to banks or mysterious payment services accounts.