The financial crisis: End or beginning?

The final communiqué adopted at the end of the G8 summit, held after four months at most stabilize the financial markets is likely to formally end the financial crisis. If so, what lessons can be learned and what conclusions can be guided by identifying further economic and financial policies? The history of the crisis, as outlined in the next few paragraphs will likely differ from the standard interpretation, adopted by most commentators and economists, but in light of recent events, she has a right to exist. Gross errors, which last autumn led to a financial crisis, have no connection with the alleged inflationary monetary policies of Alan Greenspan, and financial waste, Gordon Brown, or the lack of practical marketing experience, Mervyn King, or mercantile approach to foreign currencies and export of Hu Jintao. These and many other factors contributed to the growing vulnerability of the global economy, but none of them could lead to this crash occurring last fall. We have an obligation to unintentional mistakes by Henry Paulson, the former Minister of Finance of the United States and the former Chairman of Goldman Sachs, who resides in blissful oblivion, since he quietly left his post earlier this year.

In order to understand how local financial problem of one segment of the U.S. mortgage market could become a practical collapse of the global financial system, it is necessary to recall the astonishing abuse of Mr. Paulson accounting standards, current prices for the purpose of expropriation of property rights at the shareholders' Fannie Mae, and then bankruptcy Lehman Brothers. In the crown it all, he was unable to understand the systemic consequences of their actions. Those who doubt the significance of the individual in economic history, it should be recalled that the worst day of the financial crisis last fall, is based on increasing risk spreads on interbank loans, to 23 September. to this day, Mr. Paulson appeared before the Senate Finance Committee to explain what he intends to spend the amount requested from Congress in the $ 700 billion this at this point everyone realized that the most powerful in the world of economics, in fact, do not know what the .

So, we understand that the identity and financial policies are critical. Not surprisingly, the situation began to improve almost immediately after the Finance Minister, Mr. Paulson was replaced by Timothy Gaytner. The fall in equity prices on Wall Street, led to the bankruptcy of Lehman Brothers in September last year, finished just a day after President Obama, responding to attacks on the personal integrity of Mr. Gaytnera, he had strong support. A week later suicidal accounting standards, current prices have been eliminated. And the fact that the financial crisis, at least in America and Britain, in fact, ended during the week does not match. Since then, the U.S. government itself was surprised to receive tens of billions of dollars in debt allegedly insolvent banks. Without any compulsion to nationalize almost every bank and have no means to refinance toxic assets - such as economists had predicted panicked Nobel Prize winners - The Ministry of Finance of the U.S. is in disarray, not knowing what to do with the hundreds of billions of dollars in the budget to maintain the banking system, which is no longer in need of public support.

That is the history of the crisis. What all this has for economic policy coming months? First, loans to U.S. and British governments - whether in their own country's citizens, or from China - do not stand in the list of the main causes of the crisis. This does not mean that excessive government spending does not harm the long-term productivity growth and do not affect the standard of living in Britain, America and much of Europe. However, the need for tighter fiscal policy is not to suggest that it is the lack of decisive action has been commenced in the cause of the crisis last year. In fact, the financial crisis has led to huge budget deficits, rather than vice versa. Therefore, before you in the next few years to carry out the reduction of state government spending, it is important to wait until the moment when the national economy will return to proper growth.

The same is true of monetary policy. Began last year, the crisis is not a consequence of the monetary policies of Alan Greenspan after the economic recession of 2001. Nothing has happened should not prevent the Fed and other central worldwide maintain interest rates at record low levels until growth is restored and the unemployment rate did not reach satisfactory levels. In fact, the best that can now make the Central Bank is to maintain interest rates at extremely low levels for much longer than most people expect the market participants. As a result, they will be able to establish conditions under which the Government will be able to tighten fiscal policy, without the risk of economic growth. If the Central Bank decides to raise interest rates at the same time with the way the Government will increase taxes or reduce government spending, the case will end the economic suicide and would be counterproductive from a financial point of view - this is reflected in the 15-year experience in Japan.

And finally, the issue of regulation. Perhaps the most obvious lesson of this crisis, unless, of course, monetary authorities will want to acknowledge this, is that regulation should have a clear purpose and be more reasonable than wider. Rather than penetrate into other spheres of the economy, for example, in case the hedge funds which have nothing to do with the financial crisis, regulators must ensure that the backbone of banks capital adequacy and risk of government bonds or the reserves of central banks to cope with the outflow of liquidity. In addition, regulators should prevent any repetition of the debacle in such areas as accounting, current prices, requirements for capital adequacy, taking into account the risk and the extent to which models of private rating agencies. All of these errors call into question the ideology of market fundamentalism, that markets are always right.

If the markets were always right, the regulation would not be required, but such a phenomenon as the financial crisis in general would never have arisen. In fact, the market is right in most cases, but sometimes he commits the fatal error. The task of governments and central banks is to evaluate and monitor the situation, deciding when the market is not to interfere and when to conduct sound and meaningful regulation. A good start will be an objective analysis of errors the past 12 months.

Anatole Kaletsky

JPMorgan: Euro remains potential for further growth

Bulls on the euro once again met with rebuff near $ 1.4150/40, and failing to overcome Ofer located in this area were once again forced to withdraw, leaving the single currency is now trading near $ 1.4112, the risk of further correction towards $ 1.4075/70, and and then to $ 1.4040. Currency strategists JPMorgan, however, the bulls are advised not to lose hope and continue to consider attempts to reduce the euro / dollar as an opportunity to resume purchases. The Bank draws attention to the fact that the euro has recently continued to be traded in the range, while the latter is becoming narrower. JPMorgan strategists believe that the current technical picture remains positive for the bulls, and a confident break above $ 1.4140 would signal a new wave of growth.

BoA-ML: bulls on the U.S. need to be negative data

Bookmark this on stock markets in Europe today is difficult to name a positive, but, while in the past few weeks, several major stock indexes have passed the position, the movement still seemed quite natural, given the active recovery with the minimum of March, and the dramatic deterioration in the appetite for risk has been None. In the absence of such investors, according to currency strategists Bank of America - Merrill Lynch, may continue to show demand for assets in emerging markets that will contribute to a negative for the U.S. currency cash flows. In addition, the bank draws attention to the fact that the bulls of the oil is not willing to give up, and now force in "black gold" to a fresh peak of about $ 73.40 a barrel, which is also an adverse factor for the dollar. Evidence from the UK, published today, have made investors a negative impression, and provide some support for the dollar, and the BoA-ML indicate that the market needed fresh negative reports, but otherwise, further weakening the U.S. currency looks quite realistic scenario.

News from Great Britain alienated the zeal of the bulls on the pound

If Nationwide data on prices of housing today, showed a slowdown in the fall and have better forecasts, subsequent reports from the UK certainly do not have a reason to continue buying the pound. For current account deficit in the first quarter was significantly higher than forecast in stg6.5 billion and reached stg8.5 billion, while data for the previous quarter have been revised to stg7.7 billion to billion stg8.8 Meanwhile, much worse predictions turned on investments in the first quarter, while a significant adjustment of GDP for the period from -2.1% quarter / quarter and -4.3% y / y to -2.4% quarter / quarter and -4.9% y / y was the most an unpleasant surprise for the bulls of the British currency. Pound / dollar feeling the pressure even before the publication of reports, however, against the backdrop of negative news on earnings fixation long positions increased, resulting in the pair fell from levels near $ 1.6636 to bidam in the region of the figure. Here, however, retained an interest in buying, and now the pound / dollar held near $ 1.6634, while dealers noted that Ofer is now seen around $ 1.6640 and $ 1.6660. They note that the positive mood somewhat weakened, and they would not have been new attempts to exclude the reduction in the direction of $ 1.6600, or perhaps to $ 1.6580 and $ 1.6550/40.

RBS expects the restoration of the Canadian currency

The Canadian currency may be somewhat behind in the growth of other commodity currencies. However, analysts believe RBS, the Canadian dollar will certainly catch their colleagues in the workshop. The bank noted that the currency of Canada would benefit from growth in exports in the country and the rise in oil prices to yearly highs. And any talk of that at the end of the month the dollar will be in demand from institutional investors, will not be able to prevent this. Negative cash flows of mergers and acquisitions also will not have on the Canadian currency, a significant pressure.

Inflation: an old song on the new mood

Astronomers are confident that before the explosion of the space, which progremel almost 14 billion years ago, the universe was compact size. Since then, it gradually cools and expands. If in terms of astronomy in the expansion there is nothing wrong, the lenders and investors believe the expansion, or inflation, by force, destroying the value of their capital. Some astronomers have read that the universe will eventually cease to grow and then, after billions of years, again sduetsya "and become a compact, what a powerful explosion followed by another. When six months ago, an avalanche of financial systems, investors and lenders were afraid of deflation. It seems that policy is successfully coped with the task of getting rid of the fear of deflation that is now a trend of non-risky assets again threatens its emergence. The current situation has had a strong influence on psychology and asset prices. The financial and economic crisis has fundamentally different from the "Great lull" in the last quarter century, when, it seemed, was able to tame the business cycle and the role of the state was for the most part limited. It seems that in the psychology of investors have been parallel changes. Against the background of expectations of rising inflation and the dollar fluctuated more strongly than usual.

What does not entitle them to sleep

Given the above, my unscientific survey of investors and investment managers indicated that they did not sleep at night because of fear of inflation. Some believe that inflation is derived from the monetary and fiscal policies. Another situation appears even more grim, as the consumers to the ears mired in debt, and the public sector should be inflationary policies to alleviate the burden of debts and simulate default. Recently in the U.S. went out on price indexes of consumers and producers. Given the prevailing concern, they must be carefully analyzed. Economists and politicians often pay attention to core inflation, which does not include energy and food, not because people do not consume these goods, but because they are generally volatile in the short term. However, the overall inflation over time, becomes the base, rather than vice versa.

In May, core producer prices fell by 0.1%. This is the first decline in October 2006 if the total annualized rate fell to 5%, the base went up by 3%. Nevertheless, there is reason to believe that in the coming months, the overall rate could start to recover, as a base - to decline. Rising oil prices suggests that energy will continue to have a strong impact on prices. At the base level of growth has declined sharply. In the past (annualized) - almost double. Overall consumer prices rose by 0.0096%, while core consumer prices increased by 0.0145%, both can be rounded up to 0.1%. Over the past year, overall consumer prices fell by 1.3%. Against the backdrop of growth in energy prices lower inflation, a point behind us. Over the past three and six months, the overall inflation rate remained unchanged. Benchmark annualized at 1.8% corresponds exactly to its six-month average.

In the next couple of months, possibly lowering the benchmark. There are at least three proofs of this development. The most insignificant of them is the fact that, according to Government estimates, in May, prices for cars have increased, while sales remained weak, and other indicators point to the dealer issues related to the sale of past collections. These price increases could become uncontrollable. Secondly, the excise tax on tobacco products has helped to raise the benchmark in March and April, but the trend of increase is no longer valid. In the third place, a role played by the comparison. Last June and July of basic consumer prices grew by 0.3% in each month. Such good performance is likely to have to be replaced by a more modest figures. So, in the third quarter of the final core CPI may come down to 1.5%, and even below.

Where is the money?

Different credit spreads, such as the LIBOR-OIS and TED talk about the dramatic improvement in capital markets. This is confirmed by the increase in the stock market, in addition, a number of banks returned the money received under the program of TARP. But the problem is that magical tool for the creation of credit is still severely damaged. Recognize this is partly agree with the other reason for exaggerating the threat of inflation. The balance of the Federal Reserve has increased from $ 871 billion last May to $ 2.055 trillion. This is due to two factors. Issue of additional Treasury Bills Finance United States, which, in fact, the Fed passed, and the establishment of additional reserves, or printing money. " These factors are considered by many to pose a risk of inflation. According to the proponents of monetarism, reserves in excess of the required size, are called "excess reserves" and fuel inflation. The main importance is what banks do with these reserves. The answer sounds short: nothing. Figuratively speaking, the banks are sitting on the mountain of excess reserves held with their creator, that is from the Fed itself. According to the most recent data, the surplus reached almost $ 800 billion - that little bit more of all funds for anti-crisis program TARP. Before the crisis, excess reserves has been minimal - only a couple of billion dollars. This means that two-thirds razduvshegosya the balance of the Fed, which was so concerned about investors, the Fed is in itself. This is not a race for assets or goods, as He is not involved in the circulation of capital. In fact, the risk of inflation exaggerated because the exaggerated "real effective" increase in the balance of the Fed.

FOMC

Last week the Operations Committee on the open market, the Fed held a regular two-day meeting. As expected, he left the target rate for federal funds at the current level of 0-25 bp In an accompanying statement, investors have found confirmation that the Fed fulfills two of its obligations. The first is that for some time to keep rates low. Since late May, the effective rate on federal funds shifted closer to the top of the range. After a recent meeting of the Committee stated that, according to his expectations, the economic environment will require that the federal funds rate to remain low over a long period of time. There are rumors that officials may enhance the effect by setting a fixed period of time, as did several other central banks. For example, they may say do not expect a raise rates to 2 second quarter of 2010 associated with the purchase of treasury bonds for the $ 300 billion by the end of the third quarter. Despite expectations, the leadership of the Central Bank is not reported an increase in the size of the transaction or the extension of the program. So what now for investors, all hope is only at the August meeting, FOMC, which will be the last before completing purchases. However, officials from the Federal Reserve should keep to convince all that these deals are not aimed at a certain interest rate. Of course, it is expected to increase after the completion of the free fall of the economy, easing the credit crisis and prevent the frightening of deflation. Meanwhile, the Fed has to mark time. At the same time, if the Bank has announced the extension of transactions for the purchase of long-term assets, this silence signals expected by investors to determine a reasonable exit strategy.


Marc Chandler, Brown Brothers Harriman

The dollar and the yen may close next quarter day decline

At the auction on Tuesday the dollar and the yen may continue to decline, which began after the publication of good data on consumer confidence in the euro area. "Appetite for risk of global investors is increasing again," - notes Samarzhit Shankar, director of currency strategy for Bank of New York Mellon Corp. in Boston. Recall that the current quarter was a record for a number of tools. For example, the Australian and New Zealand dollar showed a maximum strengthening against the U.S. currency over the past 24 years, and the SP500 stock market index has not seen the rally, like the current, since 1998.

JPMorgan: enhancing appetite for risk will have a negative impact on the dollar

The American dollar may decline against other major currencies, given that corporate earnings will probably come much better than expectations, leading to an increase in stocks and encourage investors to buy more profitable foreign assets. According to currency strategists JPMorgan, given that data on economic activity continued to exceed projections, the profit of American corporations is also likely to prepodnesut pleasant surprises. This will enhance the appetite for risk, leading to increased demand for foreign equities and high yield currencies, with both means negative for the dollar cash flows. Because the basic data on the income will go towards the end of July, in the next three weeks, the dollar is likely to remain in current ranges in pairs with the major currencies, and then begin reducing the U.S. currency. During June, the U.S. paired with the Euro trading in the range 1.4338 - 1.3749. Now a pair of Euro / dollar was at 1.4055.

Deutsche Bank predicted a collapse in the EURUSD 17% by year-end

Currency strategists Deutsche Bank, forecasts that this year so far are the most accurate, expect EURUSD decline by 17% before the end of 2009, which would be subject to more rapid recovery of the U.S. economy, rather than continental Europe. The average forecast of four U.S. banks, at the beginning of the year to predict the course of EURUSD at June 26, with accuracy up to 1-2 cents, (CIBC World Markets Plc, Deutsche Bank AG, Bank of America Corp. And Wells Fargo & Co), on average, is +4% in the period until 31 December. However, one of whom - Deutsche Bank AG - looks at the prospects for the U.S. currency, especially positive. "I set to bychi, and I have every reason to do so," - said Henrik Gullberg, currency strategist at Deutsche Bank London. - "If you look at the macro-economic data in recent weeks, it becomes evident that U.S. overtaking Europe for one or two quarters." The bank, earlier this year stated that the rate of EURUSD on 30 June will be $ 1.40, now expects its decline to 17% to $ 1.20 by year-end. If that happens, the last two quarters of this year will be better for the dollar over the past 28 years.

Scotia Capital: U.S. / Canada is still in the range

Rate U.S. / Canada is not changed too. Given that in both countries (U.S. and Canada) this week will be public holidays, trading activity is not too high, and therefore, the Canadian dollar finished the month decline. In the period from May 29, when the pair closed at 1.0915, to this day decline against the Canadian dollar the U.S. currency was approximately 5.5%. According to analysts of Scotia Capital, in the short run, a pair of dollar / Canada is unlikely to be defined with a clear direction, and will continue to trade in the range of 1.14 - 1.16. At this time, a pair of dollar / Canada is at a level of 1.1550.

CIBC: U.S. / Canada retains upside potential

Upward movement dollar / Canada in the last few days, stalled, given the proximity of the trend line with highs in March, however, while the bulls met a good response when trying to break above the desire of couples to move to lower only attracted fresh interest in the purchase. The ability of the U.S. refrain from supporting a breakthrough in 23.6% of the growth with a minimum this year is a positive sign for the bulls, and in the next couple of days of continued consolidation in the range is quite likely. Currency analysts CIBC World Markets noted that the favorable development for the bulls is also a continuation of trading above 40-day moving average, the intersection of which in the past provided a fairly reliable signals about the future prospects of the movement. The bank believes that while it makes sense to attempt to reduce the use of C $ 1.1400/30 shopping dollar / Canada with the foot below the 40-day moving average (approx. Forexpf.Ru: today around C $ 1.1361), and the expectation of a return to the recent peak, with a break above C $ 1.1625 will open the way for further growth of a pair of C $ 1.18.

Commerzbank: flexibility of the American economy makes the dollar benefits

According to analysts of Commerzbank, the U.S. dollar is likely to grow relative to European currencies, because the United States will emerge from the economic downturn before the European Union. According to the bank, the U.S. would support the fact that the U.S. economy is likely to come out of a recession in one or two quarters before the euro. In the end, the high flexibility of the U.S. economy will have a positive impact on the American currency. The pair euro / dollar for the time being traded at 1.4060.

Rabobank: euro / dollar reduction in waiting

The American currency has continued to consolidate in a couple of euros in an attempt to determine the direction for further movement, and, while the growth of new attempts by the euro / dollar should not be ruled out, Rabobank currency strategists say with great skepticism on the potential for upward movement pair. The bank noted that the market is maturing in the sense that the U.S. economic recovery will be significantly faster than in the euro area, and a confirmation of this point will have a positive impact on the dynamics of the dollar. In Rabobank also note that the theme of the new reserve currency is unlikely to kanet into oblivion, and the statements of officials of the desire for such development will continue to exert pressure on the American currency, but the bank believes that the effect of such statements will be limited. The bank expects that over time among market participants will increase awareness that the use of the dollar will gradually decline, but they believe that central banks are unlikely to restructure its current reserves and rather prefer to follow the path of passive diversification. At Rabobank, thus, expect that in the coming months the major driver for the market will question what kind of country, however, quickly begins to recover after the crisis, and here at the bank saw the potential to strengthen the American currency and the expected reduction in euro / dollar to $ 1.30 - $ 1.27 in the second half of this year.

Barclays Capital: non Bank of Switzerland is not in the hands of the euro / franc

Barclays Capital analysts believe that in the absence of intervention, the Swiss National Bank a couple of euro / franc expects decline - while the euro / franc kept below the March maximum of 1.5455, the bank had a neutral-negative medium-term prognosis. It is believed at Barclays Capital, intervention leads to decreasing returns, and if the Central does not continue to buy the currency in July, a pair of Euro / Franc rushed back to the bottom of the range at 1.5010. At this time, a pair of euro / franc traded at 1.5263.

UBS has revised forecasts for the dollar

Currency strategists UBS, long kept in the ranks of the bulls on the U.S. currency, today reported that, while they continue to rely on further improving its dynamics in the near future, more long-term prospects for the dollar now was not as positive. The bank noted that the combination of changes in revenue, trade flows and external imbalances would help reduce the dollar in the next few years. Earlier, the Swiss bank's strategists had expected the fall of the euro / dollar to $ 1.20 by the end of this year, but is now subjected to the adjustment and the forecast is $ 1.30, while UBS expected the further development of the ascending trend in the pair and its growth to $ 1.40 by the end of next year and to $ 1.50 by the end of 2011. In addition, UBS reported a change in the forecast for the dollar / yen at the end of this year from Y95 to Y100, while maintaining the projection at the end of next year at the same level in Y95.

Analysts appreciate prospects Pounds

According to analysts of BNP Paribas, the main drag in a couple of pound / dollar rate in favor 1.6550 - still below the pair holds the mark, possibly reducing the pound / dollar to a level of 1.6375. However, in the case of strong resistance 1.6550 breakthrough and then the old maximum of 1.6665, the couple rushed to the goal at 1.70, and possibly continue up to 1.74. Currency strategists from Barclays Capital also positively consider the prospects for the British pound and believes that among the major currency the pound is in the best position to carry out a breakthrough. The bank believes that if a couple of pound / dollar could rise above the recent maximum of 1.6625, it was rushed to a level of 1.6830. With regard to the pound in a couple of euro, it has cross-rate is kept below 0.8605 resistance, it is likely further decline in euro / pound to levels of 0.84 and 0.8315. Now a pair of pound / dollar was at 1.6524, euro / pound traded at around 0.8484.

Commerzbank expects the restoration of the dollar / yen

The pair dollar / yen is trying to penetrate the ground vnutrinedelnogo range limits at the levels of 95.10 and 98.00. According to analysts of Commerzbank, a breakthrough in the case below, the dollar / yen rush to the next significant support level at 94.00. However, in general, at the bank declined to the couple is likely to be restored to the top of the range near the 98.00 level, encountering obstacles in their path at levels 96.55 and 97.20. As a strategy for Commerzbank prefer to open long positions on the current exchange rate with the foot at 94.65. Now a pair of dollar / yen is at around 95.40.

Derivative Expert: Comment on the evening trading session FORTS

The players do not feel a "trend
Last Friday trading on the Russian sites began largely in the green zone. However, closer to the end of the trading situation has turned around, despite the oil price. The reason was the increase in optimism in anticipation of the opening of American playgrounds. RTS Index on the day increased by 0.84% to 955.45 point, the MICEX index was 960.16 points (-0.10%), RTSI_Derex index closed at 945.46 points (-0.08%).
The market FORTS in the afternoon session had little podrasti oil and commodity futures. A marked trend was observed in the short trades contracts on shares of Gazprom, they had grown up on 1,16%. The greatest volume of trades in futures for shares fell, as usual, the paper Sberbank, they fell by 1.9%. The market option in the afternoon session could mark a significant fluctuation of market volatility on options on the September futures for shares of Sberbank, smile at the end of the day session down. Futures on the RTS index showed a significant bekvordatsiyu. At the evening session, the majority of quotations fell despite a positive U.S. statistics. Futures fell below the Bank in 4000 rub. / lot. As a result of short-futures trades on the RTS index was 93105 Point point, traffic on them was only 4.1 billion rubles. In general, the trend to lower the volume of trades on the index indicates the complete absence of the players' ideas for the future. The market option any significant momentum in the evening session was not available.
U.S. indexes closed slightly in the red. Futures oil brand Brent desheveyut now. Is expected to open with gepom index down to 1.2%.

Obama feeds economic monsters steroids

At a time when the Ministry of Finance of the U.S. refueled Bob Rubin and Larry Summers, and financial crises were considered to be the lot of developing countries, organizations applying for the title of international government, love of the need to reflect the reorganization of the global financial architecture. " The first trial on the nib architectural assignment was agreement Basle II (Note Profinance.ru: a document entitled "International convergence of capital measurement and capital standards: the new approaches developed by the Basel Committee on Banking Supervision), the so-called standard system for assessing the adequacy of bank capital taking into account the baseline risk. Banks are quickly adjusted and easy movement of the hands of all risky assets are removed from the balance sheets.

What's next?

Last week, newly architects of the Obama administration decided that it was time to go back to the drawing board and create a draft of a new regulatory system for financial institutions. However, the project is not without controversy. One of them - is the creation of a body regulating systemic risk, giving Fedrezerva powers necessary to control all financial companies, not just on the banks, the size, extent of the use of borrowed funds and interdependence which, in the case kollapasa may pose a threat to stability financial system. In other words, it is anticipated that the guys, promorgavshie approaching the heaviest crisis since the Great Depression, or at least did nothing to prevent it, exactly, all bound and sure will be able to predict the next. Well, well. But this is not the most interesting. Rather than get rid of the doctrine of "too big to fall", which inadvertently encouraged by the availability of state support, the plan of Obama gives her a clear formulation expands and gives legal status. "All of us, important for the stability of the system will be subjected to more rigorous monitoring by the regulatory authorities", - said Peter Uollison, former Chief Adviser to the Ministry of Finance and senior researcher at the American Enterprise Institute (American Enterprise Institute). "What does this mean? This means that they are too big to allow them to collapse."

Previously, companies were divided into too big and not too big to fall, depending on the preferences of those who gave an evaluation: a process reminiscent of guesses. Last year, the federal government in such a way nagadalo luck Fannie Mae and Freddie Mac, 19-ty's largest banks, the two car giants, and one insurance company to include them in members' club is too big. " "We should cease to think in terms of" too big to fall ", - said Allan Meltzer, professor of political economy at Carnegie pittsburgskom University (Carnegie Mellon University)." This concept enhances the system where bankers profit and the state loses. We need to shift the responsibility on the shoulders of bankers. "However, the amount will not be the only condition for obtaining a release from risk. Published last week, a document, the so-called White Book, explains the provisions of the standard, under which must, among other things, fall, and too dependent borrowed funds, and too interconnected companies. The problem is that nowhere, either in one of the 88 pages of this work is not given a clear definition of "too".

Wrong diagnosis

Companies that will be declared "too big", will be able to borrow at low interest, using their advantage to destroy the small-scale credit institutions. Not surprisingly, small banks have expressed their outrage over the plan, which, indeed, is a delayed-action bomb that can "destroy the competition in every corner of the economy, which is" too big "," - added Uollison. Some economists have criticized Obama prepared the document "New foundations: Building a new financial regulation and supervision" over the lack of solid foundation. Based on the analysis conducted by the Administration, it is possible to think that the crisis arose because of the lack of regulation for a number of companies ", - writes Arnold Kling, a member of the Working Group on Financial Markets at the University of George Mason (George Mason University). Meanwhile, holders of risky debt securities subject to regulation and supervision. In particular, it relates to Fannie Mae, Freddie Mac and banks. They have committed thoughtless and risky transactions just under the nose of the controlling bodies. Before you assign a treatment plan is needed to properly diagnose. Without this, any attempt to change the regulation of the financial system will have a political flavor that can only exacerbate the situation.

The White Paper changes color

According to Meltzer, another weak point plan Obama - is the inability to resolve the issue with the parastatal entities Fannie Mae and Freddie Mac. "We will try and close the Fannie Mae and Freddie Mac, even if the Congress will include the amount of compensation to the budget." Well, if Congress wants to fund the purchase of housing for people with low income - good. Only let this compensation in the budget will be transparent. In addition to the establishment of a regulatory body for control of systemic risk, the plan involves the abolition of authority to supervise the theft, the creation of the agency to protect consumers from unscrupulous lending practices, the regulation of OTC derivatives and the abolition of authority Fed as lender of last resort. The agencies issuing debt securities and carrying out sekyuritizatsiyu should remain at 5% of the combined pool of assets. It is anticipated that this will stimulate a more cautious approach. "I would have increased this proportion to 20%," - said Paul O'Neill, the Minister of Finance in the Bush administration - he has set a mandatory initial payment for any mortgage is not less than 20% - of the past era. "Why not make sure to save the financial system from similar problems in the future? Especially given the fact that the American economy to its knees just have too aderraytinga free standard mortgages?

Answer: Because it's unpopular policy measure.

According to an article published in the Wall Street Journal earlier this week, some politicians have already turned to Fannie and Freddie with a request to weaken lending standards for mortgages to purchase housing in new apartment houses. Chairman of the Committee on Financial Services Congress, Barney Frank, a representative of the Democratic Party of Massachusetts and former proponent of the creation of parastatals, wrote a letter to the executive directors of both companies, urging them to ease the recent tightening of lending conditions. You can imagine where all this will lead, but there Kongerss not yet been adopted for the detailed study of the White Paper!

Caroline Baum
Bloomberg

The dollar is increasing against a background of positive comments from Beijing

At the auction on Monday EURUSD cheaper for the first time in 3 days against the backdrop of statements by Chinese officials that the country has no plans to unexpected changes in the structure of its foreign exchange reserves. After the Central Bank of China Governor Zhou Ksiaochuana ( "policy of our foreign exchange reserves are always stable"), the dollar strengthened against 14 of the 16 major currencies. "The dollar will retain its status as reserve currency", - said Kojo Fukayya, senior currency strategist at Deutsche Bank AG Tokyo. - "Sales of the major CB in the near future is not expected, therefore, pressure on the U.S. currency weakened."

Forex. A brief overview of the key events of the week

Last week turned out to be quite rich in events. So, on Tuesday showed a record EURUSD for the past month, the day after the growth of China repeating the call for the creation of a new reserve currency and as a result of the intervention SNB, which took place in three phases, the Swiss Franc finished week decline against the dollar and euro. A number of analysts, once again, expressed concern about the stability of the dollar, while the specialists from the other camp did not see in the foreseeable future, decent alternatives to the U.S. currency. "The status of the dollar as reserve currency, is in doubt," - said Benedict Germaner, currency strategist at UBS AG Stamford. - "I see no valid reason for its sale." However, in view of David Woo, the heads of foreign exchange strategy for Barclays Capital in London, is not so dramatic: "This is not the first statement by China on the subject, and I will not be surprised if such statements continued. In the medium term I expect the dollar decline, but Even so, looking around, I do not see any decent alternative as a reserve currency. Anyway, so far. As for the prospects of the RMB, then, to begin with, it is necessary that his course has been freely floating, and in the near future we do not anticipated. "

Scalping Strategy Using Linear Regression

Greg Veytsman

Within-day Scalping market can vary quite a different traders. It may be 10 - 20 deals with several points during the day, 3 - 4 deals with a dozen points or something mean? By educating traders, I always emphasize that the rule - regardless of what system or method of a trader wants to use, it must be compatible with its risk tolerance. Simply put, this means that if a trader does not have the patience to allow the transaction to promote the movement of a few tens or even hundreds of items, which will take a whole day and not just one, and it should not use methods with the corresponding approach.

On the other hand, if a trader seeks to avoid over-trading and focus on better deals, it does not make sense to use a strategy of rapid skalpirovaniya to trade many times a day with a small profit.

Therefore, knowing yourself as a trader, and understanding their tolerance of risk, both in money (ie, how far can be set to stop) and psychologically (ie, how long you are willing to stick to the deal before accepting the loss) is critical in the choice of trading method or system.

There are methods of intra-day skalpirovaniya, which are based on a trader's risk tolerance and the number of transactions, it would make for one trading day. Commercial installation and time settings can be changed to adapt them to a particular style and preferences of the trader. The proposed method uses the 2 main trading tool, which can be intuitively easy to follow, as well as using graphics software.

Tools

Linear regression

Using a statistical technique called the method of least squares, linear regression builds a line that best corresponds to a series of data points, where the data points deviate less. Regression of trying to predict future prices by using the continuation of this line. Can then be constructed regression channel, by placing the bands above and below the center line, using the standard deviation. Fortunately, today's traders should not be experts in statistical analysis to perform this procedure, because most graphics programs can automatically build a line of linear regression channels. For the purposes of this article, we will use the channel of linear regression as the primary indicator of trend.

Channel linear regression (slope of the channel shows the direction of the trend)

Teak

Teak is a market indicator that shows the latest price and, thus, reflects the interaction of supply and demand in the market. For the purposes of this article, we will use the drill as our main indicator of market sentiment.

Example teak graphics (meaning the price can quickly move between extrema)

Stochastics

Then, we use Stochastics as an indicator of momentum. However, we replace in the calculation of the price of the drill. While teak is a very valuable dimension to the sale of instant purchase, surveillance bare znycheny can be a challenge, and even build it for 1 -, 5-minute schedule can sometimes make it difficult to read, because the values are rapidly gyrate between the extrema. Using Stochastics through teak gives us a good picture of market sentiment, as the momentum is increasing or decreasing. We will use Stochastics on the basis of teak, to confirm that the momentum is moving in our favor when we enter the market.

Retail Installation

We'll trade the installation, using a 5-minute schedule ES E-mini S & P. However, as noted above, these parameters can be modified (accelerated or slowed), depending on the preferences of the trader. The concept behind this method is to install 2 channel linear regression, we call them external and internal bands.

Local bands
At 5-minute schedule of E-mini S & P installed 90-channel periodny regression line of 1.5 standard deviations.

Current band
At 5-minute schedule of E-mini S & P installed 90-channel periodny regression line of 2.00 standard deviations.

The graph is set Stochastics on the basis of teak settings 8/5/3.

Terms of Trade
Minimum range: Make sure you have a fairly decent range between the upper and lower inner stripe inner stripe, otherwise, the transaction will not be able to give you a sufficient return to risk ratio.

Tilt: bidding in the direction of the channel slope of regression. Even though you can see the opportunities to trade against the trend, a safer trade is in the direction of the trend.

Renewed momentum: Use Stochastics on the basis of teak as a confirmation of the momentum turns in your direction. Traders performing Scalping, buy when the tick is low and sell when the drill high. Look for the appropriate movement Stochastics.

Enter a long way: Buy a lower inner lane when tilted upward channel. See, when the price touches or move outside the inner band, but keeps within the boundaries of foreign bands.

Entrance to the short side: Sell at the top inner lane when tilted downward channel. See, when the price touches or move outside the inner band, but keeps within the boundaries of foreign bands.

Ideally, it would be displayed Stochastics on the basis of teak directly to the price schedule in a temporary structure in which you sell. Some graphics programs allow to do it directly, while others require little additional programming.

5-minute schedule ES (arrow shows the entrance to the longest side)

Varieties
As mentioned above, the advantage of this technique is that it is not limited to 5-minute schedule or the 90-periodnoy linear regression. For example, a more aggressive trader might prefer to use 1-minute schedule and 50-channel periodny linear regression.

However, the concept remains the same. We are looking for an opportunity to trade in the direction of the trend determined by the channel bend. This trend can be determined at any time scale, which a trader chooses, based on their risk tolerance and the number of transactions that it intends to enter into.

1-minute schedule for ES, 50-channel regression periodny (trade executed in the direction of slope)

Similarly, the standard deviation can be expanded or reduced, depending on the preferences of the trader. However, we must be careful to reject the expansion or lengthening of the periods so badly that no transaction will not be subject to the conditions necessary to carry out a transaction or, alternatively, the excessive narrowing of departures or reduction of periods prior to such an extent that would be too many signals.

Forex Magazine
based on www.esignaluniversity.com

When The Market Goes Against You

Eyb Kofnas is president of an educational Web site for traders forex market - Learn4x.com. The greatest challenge for the trader with trading on the FOREX market there, when he opened the position, and the market begins to move in another direction. Responses to emerging situations are the true test of endurance and intelligence trader.

This paper is dedicated to offer a few strategies that can help in such cases.

Here are the traditional methods of limiting the losses:

1. Stop order: The freeze order shall establish control over the passive losses. When you open a position, you can immediately place a stop order. One of the rules for placing stop orders for the purchase, for example, it would be a stop-order on the previous wage, or at the level of support. When selling, you have to stop a warrant for a previous maximum or on the level of resistance. This allows you to control the loss against extreme movements. However, this does not guarantee the exact performance, because, depending on your broker, the majority of stop orders become market orders when they are activated. In extreme movements, your stop order will be activated, and in fact met, when the price may be too far away. The negative feature of stop orders that recent levels of support and resistance is often tested with a view to increasing the stop-orders. Many faced with a situation where the position is closed by a stop-order, and then the market started to move in a direction which was originally expected.

2. Stop-turn: In this option, you open the position to buy or sell and post stoporder with an additional lot. For example, when buying a lot of euro 86.50, you place an order for the sale of two lots of Euro 85 95. This strategy keeps you in the market, and expands your position. Of course, this does not protect you from possible re-turn the market in the initial direction in which you will find yourself on the wrong side.

3. There is no stop-orders. You open a position and leave her alone. This strategy allows the market to work. There are two disadvantages: a) when the market intensely moving, you remain attached to the wrong side. b) you have to test their patience. A bit long, people may look at the position, which continues to build up their losses. The advantage is that the currency pairs fluctuate over time and have a wide range. If you focus on the longer time scale, the price will tend to remain in the direction of the trend, which is dominant.

Fortunately, there are alternatives to these strategies. Traders are not limited to these three strategies. We'll call this new technique for risk management - Simultaneous buying and selling. Some companies that provide services in the FOREX market offers this feature. Company "FXSOL" is one of the brokers and their trading platform podserkivaet it. We recently spoke with Tom rafts from "FXSOl" on this approach.

"There are several reasons to open a multidirectional stand on the same currency pair," said Raft. First - this is the psychological advantage of the fact that to always be involved in the market. Even though the position zahedzhirovana, and the customer can not lose money because of adverse market movements, it is still emotionally involved in the market and can tailor the hedge in accordance with how the situation develops in the market. The second relates to the ability to remain involved in the market during a limited range of the market. It helps a trader to avoid quick turn, are worst enemies of traders. "

In this strategy you open a position and, if the market moves against you, then you open an opposite position. They will not vzaimozakryvat each other. The position on the purchase, there is the account in conjunction with the position to sell. What makes this really - fix the situation and allow the trader is not the time to manage risk. Say, for example, the position moves in for the purchase of lucrative direction. You can leave a position to sell as is and add to positions on a purchase.

If the market starts to move back, the position on the sale can be closed when it becomes profitable. The advantage of this approach is that it allows the trader quietly assess market conditions and does not become hostage to these conditions. Trader can choose how to balance between these positions. A full hedge occurs when a position in the buying and selling equivalent. This freezes the ratio of profits to losses. But it does not freeze position.

If the profit from the position at one side quickly reaches a certain level, they may be closed for a fixed profit. You can add more to one side and to increase one direction than another.

One of the best applications of this technique is possible when trading ranges. When there is no certain clarity in which direction to go, you can open the position to buy and to sell and let the market come to you for help. To do this, you do not need to test its strength.

While it is not absolutely oshibkoustoychivoy technology, it certainly deserves attention. Ability to be on both sides of the market at the same time is rarely used, but probably could be applied more effectively by most traders.

Forex Magazine
based on www.futuresmag.com

Paradoxes of Risk

This may be willing to comprehend that if people are frantically seeking remuneration for the physical, they're also easy to retreat, as their ultimate aim is the pleasure, which means that the achievement of this goal should be quick and easy, or problems with obtaining the pay would be more than the reward. Their prevailing mood, then, becomes a passionate, then relaxed, the fierce, the prostrate. Death is often less afraid of them than perseverance in continuous efforts in motion to the same result.

Alexis de Tocqueville

From an early age, we all learned our family, school, and indeed any other social-shaping force in our society that we avoid risk. Inappropriate risk; play that safely - advice for which we are accustomed from childhood. In conventional wisdom, the risk is asymmetric - it is only one bad side. From my experience - and I suppose that any other - this is the usual presentation of the risk is shortsighted and often just wrong.

My first observation is that successful people understand that risk, properly conceived, is often very productive, rather than something which should be avoided. They estimate that the risk is an advantage that should be used rather than a trap that must be circumvented. Such people understand that taking calculated risks is very different from that associated with recklessness. This idea of risk is not only unorthodox, it is ironic - the first of several paradoxes that I'm going to present to you in this article. This can be rephrased to read - risk is a dangerous game. Much more often than you may imagine, a real risk in life is connected with the refusal of risk. In other words, in fact, most threatening dangers usually occurs when you're evading a confrontation with the fact that only seems to be most at risk. What is widely regarded as a safe game, is not safe. What I propose here is not unambiguously guaranteed formula for success. This formula simply does not exist and never will be. If anyone ever tries to sell you a formula, it is better to leave their money with them. In life, first of all, there is a risk. I do not try to dispel this risk with the help of a magical elixir. I can only give you a little food for thought. I have a few suggestions. You might not agree with them. But if you even think about them, I felt that the time we spent together was not spent in vain. We all know that modern civilization has much to ancient Greeks. Since the 20th century ended, it is difficult to call the Greek thinker, who spoke more directly to us than Garaklit. Everything flows, everything changes - Heraclitus said about 2,500 years ago. Nothing can withstand the test of time, everything changed.

Most of us agrees with the postulate that nothing withstands the test of time, everything changes, but the conclusions following from it still deserves some explanation. Obviously, if the change is a fundamental rule of life, then resistance to change is foolish and doomed to defeat. Just as obviously, if the change is a constant, the uncertainty is an unavoidable part of our lives. Uncertainty is inevitable, life is unpredictable. The very essence of life is an unexpected and unintended, unexpected turns, we can metaphorically ascribe fate or Providence. Consequently, if we do not want to be like a shipwreck on the waves of the inevitable changes, we must take place in the middle of change.

We must learn to go on stream changes, rather than swim against it - even people who do not perceive the problem to learn how the world really works, would be to think that we are doing exactly the opposite. In other words, the risk is usually thought of as a movement against the flow, the selection of the difficult road to the highest chances. However, in a world of constant change, in a world that Heraclitus said that "it is impossible to enter into one and the same river twice", the assumption of risk is the adoption of the flow of change and movement along with it. Remember the first paradox - just like the risk of ill-exposure risk. For those who understand the reality, the risk is actually the safest way to cope with the changing, uncertain world. Adoption of the risk in fact is a dive into the circumstances that we can not completely control. But the fact that the circumstances in this life that we can totally control, are so small and so trivial, that are barely any effort. In addition, the lack of absolute control, which is impossible in any case, does not entail the absence of any control or substantial control. Here again there is a paradox - in a world of constant change, the risk is actually a form of security, because it takes such a world, what it is. In line with traditional values, safe, where indeed there is a danger, because it denies and resists the world.

I believe that you understand that when I say that the risk of actually safe, I'm talking about a specific form of risk. I do not advise you that you jumped from a skyscraper in the hope that the ongoing changes in the law of gravity will deploy in mid-flight. I speak rather of some form of risk that you actually adjusts to the direction of change.

To be more specific, I am firmly convinced that the kind of risk, which takes a trader in a position to control their lot in a world of continuous change is a risk, which adds some value to this world. To create value, concentrating its efforts on increasing that deserves attention involves (as we see) a sort of risk. And yet, paradoxically, it provides you the greatest control over the changing world and maximize your ability to achieve truly significant personal satisfaction.

Forex Magazine
based on www.turtletrader.com

BTMU predicts decline in euro

According to analysts Bank of Tokyo-Mitsubishi UFJ, within two weeks the European currency may drop to 1-month minimum against the Japanese yen. The fact that the 200-day moving average is still showing a downward trend signals that the euro may decline against the yen to 128 yen. Indicators for the daytime schedules, such as convergence / divergence of moving averages (MACD), also indicate a negative trend of the euro against the Japanese currency. The European currency is likely to drop against the yen to 128.87 - the level represents a 38.2% correction of the growth of a pair of January to June maxima minima. If the couple down below 128.87, the possibility of further reduction of euro / yen to the 200-day moving average at 128.10 - its lowest level since March 18. At this time, a pair of euro / yen trading at around 133.83.

Societe Generale predicts a weakening U.S. dollar

According to analysts of Societe Generale, the U.S. dollar will decline until the end of March next year, given that U.S. financial authorities to continue to maintain interest rates at a record minimum, and the country is increasingly dependent on foreign investors who provide financing to the trade deficit country. The Central Bank should provide a reliable plan to reduce liquidity in the markets following the purchase of state. bonds. The Fed will keep for a long time the interest rate on the extremely low level. In addition, Fedrezerv not going to waive the policy of quantitative easing in the near future, so he was unable to convince investors that he would be able to keep inflation under control. The bank forecast a decline in U.S. currency to around 1.45 - 1.50 dollars per euro by the end of the first quarter of 2010. In Societe Generale added that this summer the dollar is likely to be enhanced somewhat. With regard to future movements in the bank have a negative projection. At the moment, a pair of Euro / dollar traded at 1.4084.

BTMU: yen will continue to weaken

Japanese Yen in the last couple of weeks, a few managed to add in the price against the currencies of major trading partners, but in general, the achievement of the bulls were quite limited, and currency strategists Bank of Tokyo - Mitsubishi UFJ sees risks resume falling. The bank noted that the dominant trend is bear, and in favor of conservation says that the important factor, as investment capital flows. While Japanese assets enjoyed relatively limited demand, the Japanese investors continue to invest abroad, and BTMU believe that, while maintaining the appetite for risk in the coming months they will continue to show interest in the assets with attractive returns. The bank also noted that the weakening of the yen is likely to be less pronounced in the pair with the dollar and more vivid in pairs with other currencies.

UBS: Swiss Bank's intervention will have no lasting effect

After the intervention, likely the Swiss National Bank pair euro / franc remains near the level of 1.53. However, according to analysts UBS, the Swiss Central Bank intervention will have no lasting effect. Against the backdrop of favorable economic fundamentals, believe in UBS, the Swiss National Bank will be very difficult to keep the currency at current levels against the euro over a long period of time. According to analysts of UBS, in the 3 rd quarter of a pair of euro / franc drops to a level of 1.52, while in the 4 th quarter will rise to 1.54. At this time, a pair of euro / franc traded at around 1.5295.

TD Securities: a one-week increase in the dollar / Canada is null and void

A pair of U.S. / Canada today is reduced to a general weakening U.S. dollar, while going back intraday minima. Support of the Canadian currency also have oil prices that have returned to the area of $ 70 per barrel. The pair dollar / Canada is likely to maintain a close relationship with commodity prices. In the absence of any meaningful data for Canada on Friday on the dynamics of couples affects a change in sentiment against the U.S. currency. According to analysts TD Securities, a one-week increase in the dollar / Canada began to lose force, after the couple was not able to secure a breakthrough level of 1.1650, and the currency is the U.S. again looks vulnerable. Now a pair of dollar / Canada is traded at 1.1520.

Analysts recommend buying the Australian dollar against the dollar and yen

According to analyst RBC Capital Markets, Australia's currency may strengthen against the U.S. dollar and Japanese yen, due to the fact that Central Australia is unlikely to lower interest rates. The bank advised investors to buy Australian dollar against the U.S. currency. RBC Capital Markets analysts also believe best buy Australia's currency against the Japanese yen with a growth-pair AUD / JPY to 82.00. Currency strategists from RBS have similar views and also recommend buying the Australian dollar against the Japanese currency with a view at the level of 79.95. At this time, a pair AUD / USD is at 0.8045, pair AUD / JPY traded at 76.65.

Calyon: a positive output statistics from a range of trading markets

According to analysts Calyon, in the next few days, currency markets will continue to range trade. The situation will change only if the data (primarily the U.S.) will come out better than market expectations - this will lead to increased interest in risky assets and will provide an additional downward pressure on U.S. currency. With such developments, believed to joining Calyon, the main advantage will be the New Zealand and Australian dollar and, to a lesser extent, the European currency.

Interest in the AUD / USD will continue to bid in Europe

According to analysts of Commonwealth Bank of Australia, interest in the Australian dollar incurred in the bid in Asia to continue in Europe. However, AUD / USD, most likely will not be able to overcome the immediate area of 0.8100. In broad perspective the Bank expects the consolidation of a pair in the range of 0.7800-0.8200, noting that the stabilization and growth in commodity prices will provide additional support for the Australian currency.

BNP Paribas Recommends buy the euro / dollar on the decline

On Friday, the dollar was under pressure at a modest increase in the level of acceptable risk. However, the main currency is not beyond the limits of the established ranges. According to analysts of BNP Paribas, attitude to risk assets continued to improve through the successful actions of central banks over the past few days. At the beginning of the trading day is most lucky euro, which strengthened above 1.4000 marks yesterday, and broke up at 1.4014. This led to the function of foot, located in the area of 1.4015 and hence further growth. "Euro / dollar will continue to grow, so we see the setbacks as an opportunity to buy" - Analysts said BNP Paribas. "In the mid-term break above 1.4175 would result in the restoration of 1.4360.

Dollar loses its position against the yen

The dollar was sold in mid-trading session in Tokyo. In particular, vendors have been observed among Japanese exporters. But by the end of the session the U.S. currency was able to partially restore the position on the background of improving the levels of acceptable risk. Dollar / yen is back to the 95.96 mark, but, according to dealers, 96.00 it is not yet a formidable task. Meanwhile, euro / yen rose to 134.82, compared with the previous minimum of 134.09.

Barclays Capital expects world economic growth in the 2-m square. 2009

According to analysts Barclays Capital, in the second quarter of 2009, world economic growth is possible. While rapid growth in Asia has already started its way, investors are not yet included in the price recovery in the United States and Europe, apparently because of continuing concerns about the balance sheets of households and businesses. At Barclays Capital believe that these factors may become an obstacle to growth in the medium term, but over the next months, the positive cyclical changes likely will continue to determine the dynamics of the market.

Rising oil prices has supported the Canadian currency

As the rising price of oil has supported commodity currencies, a pair of dollar / Canada fell from the maximum of the session at 1.1634 and is now trading near 1.1600 marks. Currency strategists from RBC Capital Markets put resistance in a pair of U.S. / Canada levels 1.1655, 1.1814 and 1.2007. As a mark of 1.1582 supports mentioned, 1.1477 and 1.1355. At this time, a pair of dollar / Canada is at 1.1590.

Mizuho: reduction in shares gives rise to record profits

The British pound fell against the dollar and euro against the backdrop of decline in equity markets and the statements of Governor of the Bank of England that the restoration of the British economy will slow. As Mervyn King, the way the UK from the economic crisis will be long and exhausting. Following a statement by Mervyn King, the British currency has been steadily declining. Currency Great Britain also fell against the Swiss franc and Australian dollar, because the British FTSE 100 index fell 1.1%. According to analysts Mizuho, market participants have accumulated a large number of long positions on the pound and the decline in the shares provides a good reason for the fixation of profit. Now a pair of pound / dollar was at around 1.6290, euro / pound traded at 0.8560.

UBS: FOMC attitude with regard to inflation, can support the dollar

According to analysts of UBS, a statement of the operations on the open market in respect of inflation can support the American currency. Increased profitability after FOMC statements have contributed to the strengthening dollar, given that increased the attractiveness of returns on the state. bonds is conducive to attracting capital flows. This reaction was a response to a more aggressive attitude FOMC against inflation. In the absence of concern by the State, the dollar will continue to grow at a reduction of the differential yield on U.S. and European 2-year bonds: only for the period from June 4, it fell by 36 points.

Barclays Capital expects volatile trading on the pound / dollar

Couple pound / dollar on Wednesday was not able to close above the trendline at 1.6560, according to the analysts that Barclays Capital, said that the couple caught in a range between 1.62 and 1.66 levels. This development strategy has disappointed some who hoped to sell a couple at the higher levels to 1.6830 in the short term. Barclays Capital analysts are now leaning to the fact that the trade will be quite volatile, and changing the direction of a pair, but any movement below 1.6190 would signal that the rising trend of the pound / dollar has been completed. Now a pair of pound / dollar was at 1.6305.

Westpac expects the Australian dollar decline

Currency strategists Westpac, commenting on the situation in the AUD / USD, noted that would not preclude the growth of new attempts to pair, but they believe that a return to levels near $ 0.8050 will be attractive to open short positions. The Bank believes that in the short-term Australian dollar may continue to be in demand, but they believe that market participants have taken a great interest too much investment in risky assets and if talk about the medium term, the optimism among investors seems redundant. Westpac expected correction in the AUD / USD below and follow the forecast at the end of September at $ 0.76 and $ 0.74 at the end of December.

The dollar may continue to strengthen the euro and yen

The dollar may continue to strengthen against the yen and euro after U.S. Federal Reserve reported on the results of meeting FOMC, that the federal program redemption of bonds and assets in the total amount of 1.75 trillion. U.S. remains unchanged, indicating that the slowing pace of economic decline. In other words, the Fed is not going to increase the yield of treasury bonds by reducing the demand for them. Besides the dollar as the currency is more sensitive to changes in the differential in interest rates than to changes in relative investment risk. It currently provides support for the U.S. currency.

For the first time in 4 days after the publication of statements of FOMC U.S. Treasury bonds fell in price. Yield 10-year bond rose to 0.06% to 3.69%. U.S. assets are more attractive in comparison to comparable German government bonds to them, since the yield of "trezheris" remain above the yield of German "bundesov.

Share optimism about the U.S. economy added yesterday published data on orders for durable goods in May. While economists had expected orders to decline 0.9% compared to the previous month, they increased by 1.8%.

The dollar rose after the publication of FOMC statement

As a result of the completion of 2-day FOMC meeting, it was decided to maintain the rate on federal funds in the trust range from 0 to 0.25%. The decision was taken unanimously by all 10 members of meeting. Also, the Committee on Operations on the open market the U.S. Federal Reserve said that in light of the economic situation in the purchase of the assets would not be any changes. As a term describing the state of the economy, was to use the word "slowdown". Instruction FOMC said that the economy for some time will remain weak. There are signs of gradual recovery. Inflation for some time will remain stable. On the risks of deflation in the instructions are not mentioned.

The dollar rose against the euro after the publication of statements by FOMC. In general, instruction in line with market expectations. However, deleting the phrase on the deflationary risks from the current instruction had a positive impact on growth in the U.S., because market participants expect that the increase in energy prices will lead to the end of year increase inflationary risks and compel the Fed to make rate increase.

Timing Solution - Spectral analysis

Model "SPECTRUM"

In this article I will review the work of the Spektr module. This model is based on fixed cycles. To work effectively with them, the author recommends the use of daily price data, a depth of at least 2 years, although this model gives better results for the ten-year data. On the day the schedule is more than 3500 bars. The weakness of this model is that it is based on fixed cycles, and for an ideal result, these cycles should remain intact condition. In reality, however, invariable cycle is only in theory but in practice, their phases and periods are subject to constant change.

In one article Sergei Tarasov still cycles compared with the orchestra. "Still the cycles can be compared with the orchestra. Usually, he performs good music, but one of the musicians suddenly fell ill and a little son thought his father was now occupied by them, in the end we did not touch the violin at the moment, and as a consequence - to change ringing sound, etc. This case can be compared with the change in period for the fixed cycle. Another musician in the band dispersed, and often confuses the pages in a folder with notes. It may well begin to play Mozart's somewhere in the middle. The analogy shows is subjected to phase change. But in general, the musicians are there to perform the melody. "

Fig. 1 The phase shift through the forecast

Figure 1 shows how this situation is reflected in the line of projection. In the true picture of all time, made some adjustments. To detect such displacements (changes in the periods of cycles), the structure of cycles, it is desirable to check with the help of special tools Wavelet diagram. (Fig. 7) length of a still life-cycle embedded in the peculiarities of the cyclic model (John F. Ehlers, MESA and Trading Market Cycles). After the end of the cycles to change their frequency or disappear. The phases of these cycles can make incredible leaps.

Fig. 2 The idea of predicting the motion in the

Behavioral diagram (Fig. 2) means that we analyze the historical price data, then create a model for the fixed cycles, we check it for stability and further results are used in prediction. For example, I will work with the daily schedule of EURUSD (historical data from 07.04.1989 to 06.05.2005 is 4178 bars, or 16 years). And so it begins with a purpose. We must clear himself represented the end result (Fig. 2) forecasting the line and what we have to decide to do so.

Objective: Get to the afternoon schedule EURUSD predictive line with the horizon in the future on Upcoming two months (May, June) and calendar trading signal buy / sell.

Objectives:
1. Using the Spektr module to get periodogrammu price data selected currency pair.
2. Using "Active charts to choose the working cycles, which can develop further in the next 2 months.
3. Make pre-selected for further cycles of learning Neural networks.
4. Using the module "Neural Net" to select the projection target indicator. Set the time indicator.
5. Set the options for the training of the network.
6. Train the neural networks and to obtain predictive line.
7. By using the editor buy / sell trading signals to obtain the projected area (May, June).

Before an assignment I prepared for example, two drawings from the sinusoid patterns are different time periods. Fig. 3 shows a sinusoid with period 30, as in Fig.4 with a period of 60 and 90. In Fig.3, after computing cycles in the main window appears periodogramma sinusoids with a period of 30, one large peak. With this cycle in the list of "Identified cycles"

Fig.3 Periodogramma sinsoidy with a period of 30

You can look at the "active figure" to visually see how this cycle. In this example, throughout the series chart was red, it means that the cycle for the entire history of excellent work, and will work in future with high probability. In the upper right corner of the figure shows the Wavelet diagram, which for the Y-axis was the horizontal line period cycle of 30 and a broad red stripe on the timeline axis X, which indicates a strong and sustainable cycle.

Now look at Fig. 4 which depicts all the charts for the harmonics with a period of 60 and 90. In the main window is now available, two-cycle and an active figure resembles a washboard. Stability and strength of the cycle with a period of 60 is not constant and Wavelet diagram that shows the variability in detail. After consideration of kachastve example, artificial harmonics (Fig. 3 and 4), one can begin to build a predictive line daily schedule EURUSD.

Step 1: At this point, the program calculates the most part of the cycle and displays them in the main window of the module. These are the cycles of the program found for currency pair EURUSD: 34 / 47 / 75 / 96 / 130 / 167 / 190 / 237 / 262 / 322.

These cycles are translated from the visual to the numeric format and displayed in the lower left window, "revealed cycles"

Step 2: Using the "Active diagrams"

Fig.4 Periodogramma sinusoids with a period of 60 and 90

Fig.5 Periodogramma EURUSD

consider the cycles of history and the possibility of using them for predictions. To be able to browse through all cycles, I combined them into one image (Fig. 6). Figure watch between 2005 and choose the courses that imeeyut red, and the brighter the better. Not hard to notice that the cycles, with their distinctive red color of this year no, but there are a few weak harmonics workers, who are this year pale in color. This indicates that we are approaching the emergence of new cycles, or the active inclusion of older, taking into account the new basic data.

Fig.6 Active Chart cycles

Fig. 7 presents wavelet diagram, which is a detailed pattern of price data EURUSD. In this diagram, you can consider any period of the cycle by selecting it on the scale between Y and see his work on the axis X. If Fig.6 reduced to small sizes, we get rough rice. 7.

Fig.7 Wavelet diagram

Step 3: At the overtonami (broken down cycle), the selected cycles are placed in the "final list of cycles (in the lower right corner of Fig.11).

I will create two models of Neural networks, so in the first model to login Neural networks would cast all the loops, and second only to a selected. This will allow the watch to the new data, which model would be better and more sustainable. I chose the following cycles: 46.9 (low) / 74.5 (good) / 130 (very weak) / 190 (weak) / 322 (weak).

Step 4: trobats loops ready for use as a basis in the event module Neural Net (Fig.11). In this example, I will create a forecast for the oscillator, which is calculated by the formula: (Close - MA (Close, Period = 55)) / MA (Close, Period = 55). This indicator is chosen button Out / EXIT Button Input / input allows the paste from the clipboard transformed data cycles (Fig. 9).

Step 5: In this example, I use the default settings Neural networks, which can be seen in Fig. 8 and change them to better those who are good friends with the theory of neural networks.

Step 6: When you click "teach" the neural network training begins. But immediately the question arises: when to stop training? Manage the process of learning Neural networks can help an information panel Neural Net (Fig.8). Its essential function - visualization processes: we have an opportunity to see how well the currently forecast line corresponds to the price. To stop the learning process, press STOP (Fig.8).

Fig. 8 Stop Learning

When clicking on this button, or understand where to find this very "stopping point"? Much depends on the parameters set by our Neural networks (in other words, the fact that we downloaded at the entrance and exit), and the price data that we analyze. Here there are no rules. There are only general recommendations, when to stop the training process. Click "Stop", if you match these two conditions are met:

1) you see a good correlation between the line of projection and price data in the training interval (cyan region);
2) Line prediction correlates well with price data and the test interval (purple region).

You can also use certain settings for the program itself to determine when to stop learning Neural networks. Click Stop; activate the option "Stop when" (Fig.8). Got 2 from the forecast (see Figure 10). For red

Fig. 9 Module Neural Net

line to the log file all the harmonics, while for the blue line just selected. I would like to draw your attention to the fact that neural networks can see only the data up to March 01, 2005, and it is desirable to recalculate every month, taking into account the new price data received or after the apparent discrepancy rates and projection.

Step 7: The final step, I look through the list of transactions editor of trading signals. In the example, I got two lines pognoza, so the two transactions, the schedule (see Figure 10). For the red line in the upper right corner, while the blue line to the projection in the lower right corner.

The forecast in the light of recent price data
Well, that during the writing of this publication in the market place severe price changes under the influence of fundamental factors, so I had to make new models in the light of recent data. Fig. 10 illustrates the two projection lines, which were built on the data to 01 March 2005, as in Fig. 12 Three Neural networks based on data up to 13 May 2005. Transactions for each model are shown on the left side of the image, border color indicates what lines are the prediction of trading signals.

A comparison shows that the projected line on fig.10 and fig. 12 do not coincide and, consequently, different trading signals. Consequently, the question arises: Which version of the projection used for commercial transactions? To this end, the program module is Back Testing, which allows you to check the model for sustainability in the future. The next publication will be devoted to this module.

Now I want to go back to the latest published fundamental data for May month. Euro Exchange on strong data on employment (NFP), a sharp reduction in the trade deficit and an increase in retail sales in the United States, the sample, a significant support at 1.2870. It was at this point might be expected completion of the formation of the E wave triangle, but now the picture under the influence of fundamental factors greatly changed in favor of the dollar, but if you look at нейросетевой prediction, all 3 models are in the transaction Buy (12.05.05 - 1.2679 at selected cycles ; 11.05.05 - 1.2805 in all cycles). To test

Fig. 11 List of the selected cycles and converted

Fig.12 Projections from 12 in the light of recent data

Neural networks input data for the current forecast takes time, and how he executed depends on the time cycles, which include the work in the next two months. And now, I print out this page with the latest forecasts and trading signals, and paste into your treydersky dnevnichok. To get this program you can download a demo version on the website: http://www.fx.winm.ru/ts.htm

Prepared by Vladislav Antonov (A_Vlad), analyst Viac
email: a_vlad@viac.ru

BBH on the intervention of National Bank of Switzerland

According to analysts of BBH, the National Bank of Switzerland, it seems, has replaced the tactics of intervention. Despite the lack of factual evidence, the Swiss National Bank, apparently, himself or through multi-agency buying other currencies against the franc, contributing thus to the growth of cross Swiss currency. Pair of Euro / Franc Breaks 200-day moving average at 1.5140 and broke option structure dnt, which is rumored to expire on Wednesday or Thursday near the 1.5250 level. The next goal in a pair euro / franc foreign exchange strategists BBH raise the level of 1.53, which is the maximum of the beginning of April, after which growth is possible to couple the maximum 1.5447, established after the introduction of the National Bank of Switzerland measures quantitative easing. Now the euro / franc was at around 1.5200, the dollar / franc - at 1.0830.

Pound continues to be in demand

The British currency is now trading with a very good mood, and, while rumors that SNB intervention in addition to Euro / Franke sold to the Swiss currency and against the American dollar, was forced to pound / dollar to adjust in the direction of $ 1.65, the movement has attracted new customers only , bringing back a couple can be seen around $ 1.6579. Ofer of $ 1.6600/10 remains an obstacle in the way higher, but the break above will open the way for further growth to $ 1.6650/60 with resistance at the intermediate area of $ 1.6630. Preclude attempts to reduce, of course, do not have to, but currency strategists Royal Bank of Scotland note that recent developments in the pair of signals on the possibility of bovine triangle, which indicate the potential for growth in the pound / dollar for $ 1.70 / $ 1.73.

Bank of Tokyo Mitsubishi UFJ sees the risks of lowering the dollar / yen

According to analysts Bank of Tokyo Mitsubishi UFJ, within two weeks of the U.S. dollar may decline against the yen to a four-month minimum at 92.50 after a pair of support at 95.52 Breaks, which is a minimum of 17 June. The fact that the third day, the dollar remained below the 5-day moving average at 95.92, also signals the possibility of further lowering the American currency against the yen. Currency analysts say the bank that the dollar fell below 200-day moving average at 96.14, which means the likelihood of continuing decline. Next support is at 93.86 (a minimum of 22 May). If the pair dollar / yen will not be able to hold above this level, the U.S. dollar could decline to about 92.50 marks. Indicators for the daytime schedules, such as the 14-day RSI and MACD (convergence / divergence of sliding average), also indicate a negative trend of the dollar against the yen. At this time, a pair of dollar / yen trading at around 95.45.