Non-bank Foreign Exchange Companies

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account.

It is estimated that in the UK, 14% of currency transfers/payments^[10] are made via Foreign Exchange Companies.^[11] These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.

http://en.wikipedia.org/wiki/Forex

Retail foreign exchange brokers

There are two types of retail brokers offering the opportunity for speculative trading: retail foreign exchange brokers and market makers. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated by the CFTC and NFA might be subject to foreign exchange scams.^[8][9] At present, the NFA and CFTC are imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone. It is not widely understood that retail brokers and market makers typically trade against their clients and frequently take the other side of their trades. This can often create a potential conflict of interest and give rise to some of the unpleasant experiences some traders have had. A move toward NDD (No Dealing Desk) and STP (Straight Through Processing) has helped to resolve some of these concerns and restore trader confidence, but caution is still advised in ensuring that all is as it is presented.

http://en.wikipedia.org/wiki/Forex

Investment management firms

nvestment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

http://en.wikipedia.org/wiki/Forex

Hedge funds as speculators

About 70% to 90%^{[citation needed]} of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars ofequity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.http://en.wikipedia.org/wiki/Forex

Central banks

National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank.^[7] Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.http://en.wikipedia.org/wiki/Forex

Commercial companies

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.

http://en.wikipedia.org/wiki/Forex

Trading characteristics

There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded. This implies that there is not a single exchange rate but rather a number of different rates (prices), depending on what bank or market maker is trading, and where it is. In practice the rates are often very close, otherwise they could be exploited by arbitrageursinstantaneously. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. A joint venture of theChicago Mercantile Exchange and Reuters, called Fxmarketspace opened in 2007 and aspired but failed to the role of a central market clearing mechanism.

The main trading center is London, but New York, Tokyo, Hong Kong andSingapore are all important centers as well. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.

Fluctuations in exchange rates are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes ingross domestic product (GDP) growth, inflation (purchasing power parity theory), interest rates (interest rate parity, Domestic Fisher effect, International Fisher effect), budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXXYYY or YYY/XXX, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EURUSD or USD/EUR is the price of theeuro expressed in US dollars, as in 1 euro = 1.5465 dollar. Out of convention, the first currency in the pair, the "base" currency, was the stronger currency at the creation of the pair. The second currency, counter currency or "term" currency, was the weaker currency at the creation of the pair. Currencies are occasionally incorrectly quoted with the pairs inverted e.g. EUR/USD but this is incorrect. The "/" acts the same as the divide mathematical operator and derives the actual exchange rate. e.g. an amount of $140,000 equates to €100,000. $140,000/€100,000 = $/€ = USD/EUR = a rate of 1.4 hence EURUSD or USD/EUR. See Exchange_rate

The factors affecting XXX will affect both XXXYYY and XXXZZZ. This causes positive currency correlation between XXXYYY and XXXZZZ.

On the spot market, according to the BIS study, the most heavily traded products were:

• EURUSD: 27%
• USDJPY: 13%
• GBPUSD (also called sterling or cable): 12%

and the US currency was involved in 86.3% of transactions, followed by the euro (37.0%), the yen (17.0%), and sterling (15.0%) (see table). Note that volume percentages should add up to 200%: 100% for all the sellers and 100% for all the buyers.

Trading in the euro has grown considerably since the currency's creation in January 1999, and how long the foreign exchange market will remain dollar-centered is open to debate. Until recently, trading the euro versus a non-European currency ZZZ would have usually involved two trades: EURUSD and USDZZZ. The exception to this is EURJPY, which is an established traded currency pair in the interbank spot market. As the dollar's value has eroded during 2008, interest in using the euro as reference currency for prices in commodities (such as oil), as well as a larger component of foreign reserves by banks, has increased dramatically. Transactions in the currencies of commodity-producing countries, such as AUD, NZD, CAD, have also increased.

http://en.wikipedia.org/wiki/Forex

Money Transfer/Remittance Companies

Money transfer companies/remittance companies perform high-volume low-value transfers generally by economic migrants back to their home country. In 2007, the Aite Group estimated that there were $369 billion of remittances (an increase of 8% on the previous year). The four largest markets (India, China, Mexico and the Philippines) receive $95 billion. The largest and best known provider is Western Union with 345,000 agents globally.

http://en.wikipedia.org/wiki/Forex

Non-bank Foreign Exchange Companies

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account.

It is estimated that in the UK, 14% of currency transfers/payments^[10] are made via Foreign Exchange Companies.^[11] These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.

http://en.wikipedia.org/wiki/Forex

Retail foreign exchange brokers

There are two types of retail brokers offering the opportunity for speculative trading: retail foreign exchange brokers and market makers. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated by the CFTC and NFA might be subject to foreign exchange scams.^[8][9] At present, the NFA and CFTC are imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone. It is not widely understood that retail brokers and market makers typically trade against their clients and frequently take the other side of their trades. This can often create a potential conflict of interest and give rise to some of the unpleasant experiences some traders have had. A move toward NDD (No Dealing Desk) and STP (Straight Through Processing) has helped to resolve some of these concerns and restore trader confidence, but caution is still advised in ensuring that all is as it is presented.

http://en.wikipedia.org/wiki/Forex

Investment management firms

Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

http://en.wikipedia.org/wiki/Forex

Hedge funds as speculators

bout 70% to 90%^{[citation needed]} of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars ofequity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.

http://en.wikipedia.org/wiki/Forex

Central banks

National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank.^[7] Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.

Commercial companies

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.

http://en.wikipedia.org/wiki/Forex

Banks

he interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

http://en.wikipedia.org/wiki/Forex

Market participants

nlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.

e foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies. ^[1]

The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

• its trading volumes,
• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 22:00 UTCon Sunday until 22:00 UTC Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of leverage

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.

As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements,^[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange

The Forex Factory Blog

As you may have noticed, Chinese data releases are gradually having a more pronounced impact on the currency markets. Presently their influence can rival high-profile G7 indicators, especially in regard to the yen and commodity currencies. It has long been evident that we needed to add the Chinese yuan (CNY) to the calendar, and early this year the Forex Factory economists set out to tackle the project.

The sources for Chinese data are far less transparent and less reliable than we are used to dealing with on the calendar, which is why we had avoided CNY for so long. It took our team five months of research, source gathering, release monitoring, and beta-testing to report the data with the same quality and reliability that we strive for on the calendar.

We cannot change how Chinese sources release and schedule data, but we can implement procedures that will bring clarity and consistency to our coverage. We have made several ‘FF Notes’ (see the Detail View by clicking the icon) to inform you of special circumstances you might expect to see, and we created a new set of ‘FF Alerts’ (see the inside the Detail View, where applicable) that will be used keep you abreast of scheduling issues as they happen. For the least reliable release schedules we opted to set the event’s default time to ‘Tentative’ to make you aware that we don’t know the exact release time. With all CNY data you should be prepared to see surprise early releases, leaked data later retracted, and data being delayed for days - we will do our best to inform you of these issues with the FF Alert function. Finally, we ask that you be slightly more forgiving of our mistakes as we become further acquainted with the new coverage.

We will report our first live CNY data in about 24 hours… see you there!

http://blog.forexfactory.com/

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Board of Directors

GAIN's Board of Directors brings a wide range of experience and knowledge to the Company. It is the paramount duty of the Board of Directors to oversee the CEO and other senior management in the competent and ethical operation of the Company on a day-to-day basis, to monitor GAIN's financial performance and to evaluate overall corporate strategy. To satisfy this duty, the directors take a proactive, focused approach to their position, and set standards to ensure that the Company is committed to business success through maintenance of the highest standards of responsibility and ethics.

Mark Galant - Chairman and Founder
The founder of GAIN Capital Group, Mark Galant served as chief executive officer of the Company from its inception in October, 1999 until June, 2007. Mr. Galant's strategic vision and entrepreneurial energy propelled the firm from concept to a market leader in the rapidly growing and highly competitive online forex industry. Under his leadership, the firm achieved top line growth of 65% or more for six consecutive years (2001-2006).

Prior to forming GAIN Capital, Mr. Galant was the number two executive at FNX Limited, an international provider of trading and risk management systems. During his six year tenure, Mr. Galant was instrumental in transforming FNX into a world-class software and services firm and, according to Inc. Magazine, one of the 500 fastest-growing companies in the U.S. in 1996, 1997 and 1998. Before joining FNX in 1994, Mr. Galant served as global head of foreign exchange options trading at Credit Suisse. There, he expanded a small regional operation into one of the world's largest and most respected global foreign exchange options trading organizations, trading $4 billion per day. Prior to Credit Suisse, he ran the foreign exchange options desk at Chemical Bank. He also traded all financial products as a money manager for Paul Tudor Jones at Tudor Investment Corporation. During his early years on Wall Street, Mr. Galant was a floor trader, successfully trading his own account on several of New York's commodities exchanges. He holds a BS in Finance from the University of Virginia and an MBA from Harvard Business School. Mr. Galant currently serves on the board of directors of Scivantage and is a member of the University of Virginia's McIntire School of Commerce Advisory Board.

Glenn Stevens - Chief Executive Officer
Glenn Stevens joined GAIN Capital Group in February 2000 as a founding partner and managing director, and assumed the CEO role in June, 2007. Previously, he was managing director, head of North American sales and trading at Natwest Bank. In this role, Mr. Stevens directly managed a staff of over 50 trading and sales professionals and also served as a senior member of Natwest's North American Management Committee. From 1990 to 1997, Mr. Stevens was at Merrill Lynch and Co., hired as a USD/JPY trader and eventually promoted to the bank's management team as managing director and chief dealer for Spot and Forward FX. While at Merrill Lynch, he developed the investment bank's emerging markets currency trading desk and increased profitability threefold in 2 years. During this time, he also served as the Federal Reserve Bank's FX representative for investment banks. Mr. Steven's Wall Street career began in 1984 at Bankers Trust Company. Mr. Stevens holds a BS in Finance from Bucknell University and an MBA in Finance from Columbia University.

Peter Quick, Former President, American Stock Exchange
Peter Quick is the former President of the American Stock Exchange® (2000-2005) and formerly served on its Board of Governors. Prior to his appointment at the American Stock Exchange®, Mr. Quick had been President and Chief Executive Officer of Quick & Reilly, Inc., a leading national discount brokerage firm, which was acquired by Fleet Bank (now Bank of America) for $1.6 Billion in 1998. Mr. Quick is currently the lead Independent Director of Reckson Associates Realty Corp. (NYSE: RA) and also sits on the Board of Medicure (AMEX: MCU). Mr. Quick has served on the Board of Governors of the Chicago Stock Exchange and was Chairman of the Midwest Securities Trust Company. He has also been a Director of The Options Clearing Corporation, CUSIP, the Depository Trust & Clearing Corporation, the NASD Insurance Agency, and Alliance Money Market Fund. Mr. Quick received a Bachelor of Science degree in Civil Engineering from the University of Virginia and attended Stanford University's graduate school of Petroleum Engineering.

Joseph A. Schenk, former Chief Financial Officer, Jefferies Group
Mr. Schenk served as chief financial officer and executive vice president at Jefferies Group (NYSE: JEF), a full-service investment bank and institutional securities firm focused on capital markets and asset management, from January 2000 to December 2007. Mr. Schenk's responsibilities at Jefferies included oversight for finance, accounting, risk, treasury, internal audit, investor relations, tax and accounting policy matters. Prior to his appointment as CFO, Mr. Schenk held various positions within Jefferies, including senior vice president, responsible for corporate services, from September 1997 to January 2000, and senior institutional account executive from September 1993 through March 1996. Prior to Jefferies, Mr. Schenk served as a senior vice president at Zimbalist Smith, a boutique investment research firm. Mr. Schenk had previously held management positions at Deloitte Haskins & Sells and Price Waterhouse. Mr. Schenk currently serves on the boards of ConvergEx Holdings and Talk.com. Mr. Schenk received a Bachelor of Science degree in Accounting from the University of Detroit, where he graduated summa cum laude.

Susanne D. Lyons, former Chief Marketing Officer, Visa USA
A retail financial services industry veteran, Susanne Lyons most recently served as executive vice president and chief marketing officer at Visa USA. While at Charles Schwab & Co. from 1992-2001, Ms. Lyons held a variety of senior marketing and general management roles, culminating in the position of chief marketing officer. At Fidelity Investments from 1982-1992, Ms. Lyons was responsible for marketing multiple business lines including brokerage, domestic and international growth funds and retirement products. She has been recognized for her business leadership in several significant forums, including San Francisco Financial Woman's Association "Woman of the Year" in 1999 and as one of Ad Age's Top 50 Marketers. Ms. Lyons served on the board of CNET Networks, Inc. (Nasdaq:CNET), a global interactive media company, until its recent acquisition by CBS, and is also on the advisory boards of Marketo and Epoch, as well as the board of WildCare, a not for profit organization. She received a Bachelor of Arts degree from Vassar College and a Master's degree in Business Administration from Boston University.

Roger Tarika, Former Global Head of Foreign Exchange Sales, Morgan Stanley
A 25-year veteran of the FX markets, Roger Tarika's career began in 1979 with First National Bank of Boston. In 1984, Mr. Tarika joined Morgan Stanley & Co where he began his 17 year tenure running various spot FX trading desks. In 1992, Mr. Tarika was appointed head of trading for the New York spot/forward desk and in 1995 was appointed to run the FX desk in London, managing 50 sales and trading professionals. His most recent position at Morgan Stanley was Managing Director, Global FX Sales Manager. Mr. Tarika received a BS from Duke University and an MBA from Harvard Business School.

Gerry McCrory, Managing Director, Cross Atlantic Capital Partners
Gerry McCrory is a founder and managing director of Cross Atlantic. In 1998, Mr. McCrory founded Crucible Corporation, an early stage venture capital fund headquartered in Dublin, Ireland. Prior to starting Crucible, Mr. McCrory was the managing director of Cambridge Technology Partners (Ireland). Prior to that, he started his own software services company, Information Mosaic, and held various senior commercial responsibilities at Cap Gemini-Hoskyns in Ireland, Great Britain, and the United States. He also worked as an accountant with Coopers & Lybrand in both Ireland and the Cayman Islands. Mr. McCrory holds a degree in Economics from the University of Ulster and an MBA from University College Dublin.

Chris Sugden, General Partner, Edison Venture Fund
Chris Sugden is a successful entrepreneur and technology company executive, experienced in finance, capital raising, strategy, product management and sales and marketing. Prior to joining Edison, Mr. Sugden served as Princeton eCom's EVP of the Electronic Billing Division. As CFO he led the business development, finance and accounting departments. Earlier in his career, he was Director of Finance and Operations for two magazine start-ups and Internet businesses funded by Freedom Communications. A certified public accountant, Mr. Sugden also spent over four years with PricewaterhouseCoopers in the entrepreneurial services group. Mr. Sugden received a BA in Accounting and Finance from Michigan State University.

Jim Mills, Managing Director, VantagePoint Venture Partners
Jim Mills is a member of the Information Technology Group at VantagePoint Venture Partners, focusing specifically on software and financial technology companies. Mr. Mills has 18 years of technology, operating, and investment experience, including management positions with both start-up and industry-leading technology companies, including Webvan Group, Oracle Corporation, and Crescendo Communications (acquired by Cisco). Mr. Mills began his investment career with Battery Ventures followed by Blum Capital Partners. He graduated magna cum laude and Phi Beta Kappa from Dartmouth College (BA in Engineering Sciences) and is also a graduate of Stanford University (MBA).

Ken Hanau, Managing Partner, 3i
Ken Hanau is the Managing Partner of 3i US. As part of the FTSE 100, 3i is one of the world's largest growth capital investors deploying over $2bn annually in established businesses across Europe, Asia and the US. Prior to joining 3i, Mr. Hanau held senior positions with Weiss Peck and Greer and Halyard Capital. In addition to his private equity experience, Mr. Hanau worked in investment banking at Morgan Stanley and at K&H Corrugated Case Corporation. Mr. Hanau is a CPA and began his career with Coopers and Lybrand. Mr. Hanau received his B.A. with honors from Amherst College and his M.B.A. from Harvard Business School.

http://www.forex.com/company_board.html

Research Note: July 29 Fed Beige Book Release

Summary Outlook: Tomorrow at 1400EDT/1800GMT, the Fed will release its Beige Book summary of US economic developments ahead of the August 12 FOMC meeting. We think the overall tone of the report is likely to further undermine short-term sentiment, given the rather meager improvements in recent data and the overhang of weak longer-term components, such as unemployment and consumer spending (see Research Analysis below). We think the Beige Book will lead to further selling of so-called risky assets (e.g. stocks, commodities, and the JPY-crosses, such as EUR/JPY, AUD/JPY, etc.). However, weaker than expected US July consumer confidence released on Tuesday has already seen a significant unwinding of long risk trades, especially in the JPY-crosses. The drop in the JPY-crosses comes against the backdrop of overweight 'long-risk' positioning (i.e. long JPY-crosses), so we think the downside shake-out has more room to run. On the technical front, EUR/JPY and GBP/JPY have fallen back inside their Ichimoku clouds, suggesting a failure from above the cloud and a rejection lower. They have also broken below trendline support for the move up since July 13.

Trading Strategy: Rather than chase the JPY-crosses lower after Tuesday's sell-off, we will look to use remaining strength to establish short positions prior to the Beige Book, focusing on EUR/JPY and GBP/JPY.

EUR/JPY: We look to sell between 134.30/80; stop loss above 135.20; take profit between 132.00/50.

GBP/JPY: We look to sell between 155.80/156.50; stop loss above 157.00; take profit between 153.50/154.00

Research Analysis: The current Beige Book will cover economic activity from early June through late July and here is how we expect some of the more important components to have evolved.

US consumer spending remains depressed. The June retail sales report showed a -0.1% monthly decline in "control" retail sales. This number strips out the volatile gasoline, building materials and auto dealer components and offers a clearer picture of the underlying trend. The three-month annual rate plunged to a dismal -2.7% from -0.3% and was the worst since February. More recent data suggest no change in the downward trend. Chain-store sales were running at a dreadful -5.6% annual rate as of July 25 and this is down from a -4.4% pace at the end of June. Furthermore, the recent decline in consumer confidence - to 46.6 from 49.3 last month - points to continued weakness in the months ahead.

The employment situation is showing little signs of improvement. While initial jobless claims have corrected sharply lower in the first few weeks of July, the reports were riddled with statistical adjustment problems. The earlier than usual auto layoffs in June meant that July witnessed much smaller seasonal declines in that space. This threw a wrench in the government's adjustment process and thus the better numbers are merely a mirage. The potential for a rebound back above the 600K level is extremely likely in the weeks ahead. More evidence of continued deterioration came from the Conference Board's consumer survey. The labor differential--which measures jobs plentiful minus jobs hard to get-- slipped to -44.5 in July from -40.3 the prior month and is the lowest now in 17 years. Indeed, the evidence continues to point to an unemployment rate above 10% sooner rather than later.

Credit markets are still on the mend and the improvement will be duly noted. Interbank lending is well back to normal and the TED spread (3-month Treasury/3-month Libor spread) has collapsed down to just 31 basis points. This is well below the two-decade average of 49 basis points and miles away from the 464 crisis highs. Corporate lending is still troubled and the spread between Baa corporate paper and Treasuries remains high at 351 basis points, well above a normal 220 - thus it is still expensive for businesses to borrow. In an environment where revenues are underperforming this is not a welcome development. Consumer lending likely remained subdued both from tight lending standards and an overall lack of borrowing demand as households repair balance sheets.


Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

http://www.forex.com/09-07-28-bb.html

Today's Market Update

London Session
Published: July 31, 2009 6:09 AM

Risk appetite has failed to sustain upward momentum in European hours, stocks have pushed lower on jitters about the economic outlook ahead of the release of the US Q2 GDP data this afternoon. Overnight in Asia, rallying stock market has lent support to 'risk' currencies. EUR/USD hit a high of 1.4144 at the London open and has since sunk back to around 1.4100. Similarly, the AUD, the NZD and the CAD have given back some of their gains. Sterling is clinging on to its gains vs the EUR made on news that UK consumer confidence is held at -25, the best level since April 2008.

Today's UK confidence data adds to the optimism sparked by yesterday's Nationwide survey which suggested that UK house prices have now risen for three consecutive months. The UK consumer confidence data, however, was weaker than expected. Nevertheless, signs of stabilisation in confidence and the housing market have promoted the view that the BoE may not increase the size of its current QE plan at next week's policy meeting. Yesterday the Bank announced that it has completed buying all the gilts in the GBP 125 bln program announced to date. In reply to concerns that companies are still suffering from a lack of availability of credit, yesterday the Bank also announced that it will start buying short-term corporate debt. This hints that the focus of the asset purchasing plan is switching and strengthens the view that perhaps the BoE will not be purchasing more gilts. An extension of the GBP125 bln program next week would be sterling negative.

Today's price action in EUR/USD proves that stock markets remain a primary driver. However, noticeable is that EUR/USD failed to break above 1.4300 this week despite the continued upward direction in equity indices. The EUR's inability to climb into a new trading range was supported by yesterday's comments from the IMF which put the EUR overvalued by 0-15% this spring; this is in contrast with its previous leaning which focused on USD overvaluation. The failure of EUR/USD to break higher will feed talk that the USD may draw support this year from an earlier return to growth relative to the Eurozone. Today's US GDP data will be key in determining whether the US economy is in a position to post a positive GDP number in Q4. Note, however, that the GDP series announced today will have been subjected to a comprehensive revision which may alter previous quarters' data.

Sweden announced better than expected Q2 GDP data today (flat q/q) boosting the SEK. The NOK sold off vs the EUR as joblessness reached 3 year highs at 3.1%. However, this number was better than expected. Norwegian employment may already be seeing support from fiscal packages. In view of Norway's 'sticky' CPI data, the Norges Bank could be the first central bank in Europe to hike rates this cycle. EUR/NOK found sellers below 8.7650.

In addition to US Q2 GDP, Canada's May GDP data is also due for release this afternoon. Chicago July PMI will also be released.

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