eToro – Forex Trading Forum

[santoshtiwari]

Hi ,

A question to the fellow traders-


what do you think will be impact on USD in response to this news?

http://www.reuters.com/article/businessNews/idUSSP21695020080819?feedType=RSS&feedName=businessNews


SINGAPORE (Reuters) - The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

"The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference.

"We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund's chief economist from 2001 to 2004.

"We have to see more consolidation in the financial sector before this is over," he said, when asked for early signs of an end to the crisis.

"Probably Fannie Mae and Freddie Mac -- despite what U.S. Treasury Secretary Hank Paulson said -- these giant mortgage guarantee agencies are not going to exist in their present form in a few years."

Rogoff's comments come as investors dumped shares of the largest U.S. home funding companies Fannie Mae and Freddie Mac on Monday after a newspaper report said government officials may have no choice but to effectively nationalize the U.S. housing finance titans.

A government move to recapitalize the two companies by injecting funds could wipe out existing common stock holders, the weekend Barron's story said. Preferred shareholders and even holders of the two government-sponsored entities' $19 billion of subordinated debt would also suffer losses.

Rogoff said multi-billion dollar investments by sovereign wealth funds from Asia and the Middle East in western financial firms may not necessarily result in large profits because they had not taken into account the broader market conditions that the industry faces

[BlueinGreen]

what do you mean? the impact on USD in response to this specific news article or in response to " what if" all that is said in that article turns out to be the truth?

[santoshtiwari]

in response to the news article . I am trying to see how statements like that affect the market. Last example for Marvin King's Statement on GBP. Do you think it is just panic on the statements coming from a credible authority or would the market will behave exactly the same irrespective of the statemen

[BlueinGreen]

A news article can be a market mover if the source providing the information or the opinion is of high rank in the financial arena.
Just a few weeks ago I remember a French news paper that had an interview with Jean-Claude Trichet (head of ECB) there he stated his opinion on inflation. After the article was published, it was thought among traders ( and was even mentioned on Bloomberg) that the EUR was bought based on things that were said in that article.

but … it was really hard to assess the impact of that specific article on the market- how big it was – how long was the affect- and when exactly was it happening? So how could you trade in reaction to it ?

You see- if Trichet would speak right now on T.V – and say something that might move the market- than it is easier to assess how it would impact the market and thus to trade on.


The views on the article you presented are shared by many – not necessarily forex traders, ( U.S is not out of the woods ext. ).
If you share this view as well – you might want to short the USD eventually, when the really bad signs will start showing up again.

bottom line- it’s the biggest market in the world, assessing the impact of one news article on it in not an easy job ( and most of the times –an impossible job)