The Forex Daily Digest - June 18, 2009

It was a historic day in Washington DC as President Obama created a new government role for the financial regulatory system which rivals the reorganization that was enacted in the aftermath of the Great Depression in the 1930s. To avoid another economic collapse, the President said that financial regulatory reform is needed to ensure that another credit crisis does not occur again.

Key aspects of the Obama's financial regulatory reform proposals include the Fed becoming a systemic risk regulator for the entire financial system, the creation of a multi-agency council to identify emerging risks in firms and market activities, a proposal to set up a process that would unwind failed major financial institutions, the Consumer Products Safety Commission would approve or reject mortgage products, issuers of complex mortgage products must maintain a five percent stake in the securities they sell, and a Treasury working group will conduct a study on regulatory capital by December 31, 2009.

Fundamental financial news of this type will definitely have an effect on the trading of the USD around the world. Dollar bonds sold by the largest emerging-market countries are outperforming debt traded in yuan, even after all the criticism of the USD by leaders of the BRIC nations. Bonds that sold in USD have crushed domestic debt partly because Russia and China manage the ruble and yuan. But those that are denominated in the USD can trade more freely; giving fund managers assurance they can sell the securities and get their money, when needed.

The Canadian dollar gained some ground for the first time in the past week as crude oil rose and U.S. stocks showed some losses, triggering investors to exchange the safe haven of the USD for questionable assets like commodity-linked currencies. The CAD had dropped to the lowest level in almost a month as crude and stocks fell. The Canadian government sold C$3.5 billion ($3.1 billion) in two-year notes.

Here’s something to watch. The Fed is scheduled to undertake a 28-day $75 billion Term Securities Lending Facility auction starting on Thursday, accepting Schedule 2 collateral in exchange for Treasuries. Dealers can lend out the Treasuries in exchange for short-term cash loans in the U.S. repurchase market, to help shore up balance sheets that have been eroded by the global credit crisis.

The dollar extended losses against the yen on Wednesday as a lower-than-expected rise in U.S. inflation added to growing optimism about a global recovery and expectations that U.S. interest rates will remain low for some time. On Thursday, look for the Initial Jobless Claims report for the week ending June 12th.

The GBP posted losses against the major currencies after a bearish day in the stock market followed by an increase in British unemployment figures. This dampened demand for the U.K. currency. A number of economic issues brought the pound sterling down this week after Bank of England policy makers voted for the continuance of a asset-purchasing program, asserting that it must last until its effectiveness is determined. The number of unemployed people in Great Britain rose, as claims for benefits hit 39,300 during the past month, making the total number to reach 1.53 million.

Now is the time to make sure you have all the information you need to make some critical decisions as it pertains to your Forex trading activity. There are so many things happening worldwide that will affect your trading accounts. Don’t get caught unaware. I urge you to listen to the JDfn traders each and every day and learn from their experience. Every morning they offer potential setups forming in the Forex market and I assure you that this is information you need to become successful in your trading account. JDfn traders are here for you – take advantage of their expertise.

Happy Trading-

James Dicks