currency
Is Bernanke Hiding A Smoking Gun?
Jul 1st
A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernanke covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.
Sen. Jim Bunning (R-Ky.), a Bernanke critic, said on CNBC that he has seen documents showing that Bernanke overruled such a recommendation. If that’s the case, it raises questions about whether bailing out AIG was actually necessary, and what Bernanke’s motives were.
Fed Made Taxpayers Junk-Bond Buyers
Jul 1st
Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They didn’t share everything the Fed knew about the money.
The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified. The government also became the owner of $16 billion of credit-default swaps, and taxpayers wound up guaranteeing high-yield, high-risk junk bonds.
Read more about the Federal Reserve’s junk bonds…
US Lobby Group Formed For High-Frequency Traders
Jul 1st
The Futures Industry Association on Wednesday said it formed a new lobby group to represent high-frequency trading firms that have come under heightened scrutiny for trading practices that may have contributed to Wall Street’s May 6 “flash crash.”
The lobby, the Principal Traders Group (PTG), represents a who’s who of high-frequency traders, including Getco LLC and Allston Trading. It is chaired by Donald Wilson, who heads top Chicago futures trading firms DRW Trading. Most of the 24 member firms are based in Chicago.
The group’s formation is in response to “the demonization of speculation,” said FIA President John Damgard. FIA, which represents banks, exchanges and others in the futures industry, is the umbrella organization for the new lobby, but will not run it day to day.
Read more about high-frequency trading…
Liquidnet Promoting Dark Pool in New Zealand
Jul 1st
A US firm which specialises in “dark pools” trading is hoping to increase the number of international fund managers trading in New Zealand listed securities by bringing its electronic trading service here.
The type of trading is called “dark pools” because it allows investors to trade anonymously with prices only made public once trading is complete.
Liquidnet, which already operates in 36 markets including Australia, will open its New Zealand business next Tuesday allowing institutional investors who trade large blocks of shares to be connected with its 650 global members.
GBP/USD Hits Fresh 3-Day Low
Jul 1st
The pound fell to a fresh 3-day low against the U.S. dollar on Wednesday, after official data showed that U.S. private sector employment fell more than expected in June.
GBP/USD hit 1.4965 during European afternoon trade, the pair’s lowest since June 25; the pair subsequently consolidated at 1.4970, shedding 0.62%.
USD/JPY Tests Daily Lows
Jul 1st
USD/JPY moved away from 88.70 and fell to test daily lows around 88.35 after Moody’s put on review Spain’s Aaa rating. The pair is still moving in a narrow range between 88.70 and 88.35 but weakened after the Yen gained momentum across the board following the announcement and a decline in US stocks.
Read more about the Dollar and the Yen…
EUR/USD Retreating Again
Jul 1st
Having reached an intraday high around 1.2297 in the past hour, EUR/USD is again retreating from the 1.2300 area, despite market is on risk aversion mood.
Strength of the common currency comes from crosses such as EUR/CHF and EUR/GBP short covering, after past journeys’ slump, pulled them to multi years or even historical lows.
Some profit taking of sellers amid strong gains reached yesterday are supporting the case. However, euro is still unable to overcome static resistance against greenback, the above mentioned 1.2300 zone.
