U.S. Currency Rates And Charts

If the chart currency US department wants discretion, the principal desk may not be the right choice. The bank knows which side the department is on, his style and how often he's correct. The principal then trades off this information. Parker says because of this, the principal knows it must perform.

“At the end of the day, we have better price efficiency,” Parker says. “We cut out the middleman.” Trading style is a determining factor. For the discretionary CTA, the agency desk has appeal if a trade needs to be worked. The principal's research, however, may be an incentive for a discretionary trader. When a CTA receives an allocation from a bank, often the bank's desk will give the CTA the best deal because he's virtually trading the bank's money. But in the end, the decision depends on style, circumstance and timing.

“No one group has a distinct advantage hands down over another,” Basso says. “At one time or another FCM dealer, a bank dealer or an agency desk has ended up at the top of my list.” Another decision currency traders might face is what changes, if any, will be prompted by the Euro. Several CTAs feel the adjustment will be minor and that the D-mark simply will receive a new name. Instead of the three major currencies being the Deutsche mark, yen and dollar, they will be the Euro, yen and dollar.

The dollar continued its upward climb last week, a development that is good for George Bush but may be bad for the U.S. trade deficit. Policy-makers in the United States and Japan, many analysts contend, are playing a high-risk game of trying to stabilize U.S. financial markets in the hort-term, while risking even greater instability in the months ahead. At all costs, policy-makers in the United States and Japan want to avoid a dollar crisis before the election, noted Derek Walker, an economist with Midland Bank PLC. The problem is what the current policies could mean for the U.S. trade deficit later in the year.

If the dollar goes much higher, there could be a resurgence of Japanese imports into the United States, Mr. Walker said. In the last five months, the dollar has rallied from 125.50 yen and 1.71 deutsche marks to 135.40 yen and 1.87 deutsche marks.

The big news last week was announcement of the $ 10.9 billion U.S. trade deficit for May, an increase of about $ 600 million from April's revised level, but a figure that was within market expectations. Despite the fact the deficit widened in May, traders viewed the figure favorably because, on closer analysis, they concluded that the trend toward smaller monthly trade deficits remains intact. If you construct a moving average of the recent deficits, it's clear the trend remains down, Mr. Walker said.

The solid May trade figure should provide more fuel for the dollar, although the question remains at what levels the Bank of Japan will seek to quell the dollar rally. Except for central bank intervention, traders see little in the offing that will weaken the dollar, barring a significant change in U.S. economic fundamentals.