US Dollar Will continue Collapse Even with Temporary Reprieve

The decision by the Federal Reserve Thursday has ended up producing upheaval in the Forex market Friday, as heads of central banks around the world reiterated their concerns over U.S. policy, with Asians unsurprisingly voicing their opposition the most.

The USD is plummeted around the globe, although rebounded Friday afternoon on the news jobs created in the U.S. were higher than anticipated.

With the promise by the Federal Reserve to inflate again through acquiring more government debt to the tune of $75 billion a month over the next eight months, the stock market took off, as many believed it would.

Gold prices have also soared, closing in on the $1,400 an ounce mark, which it will reach sometime within the week. Gold went against the grain again as the U.S. dollar rose, although the Euro only managed a slight gain because of a huge increase in CDS and cash spreads within Europe. The battle is beginning by nations against the move by the Fed, as they must defend their currencies against the fall in value of the U.S. dollar. That's great news for gold, as it remains the only real alternative as a currency, rising against many currencies around the world, one of the more overlooked, but important metrics to watch. Other commodities should continue to do well going forward as well with the misguided practices of the Federal Reserve continuing on.

Incredibly, the hapless Ben Bernanke, chairman of the Federal Reserve, continues to spew his unprovable assertion that the first round of quantitative easing or inflating saved the U.S. economy, when in fact things are as bad as they have ever been.

Saying the economy would have been worse is another way of admitting QE was an abysmal failure. You can't prove something that can't be measured, and you can't measure an economy that did nothing by saying it was the intervention of the Fed that protected it from getting worse, even as it didn't get better.

Bernanke knows this, but is playing games with those that don't understand how it all works, and who assume the printing of all that money had to have had some positive effect.

The truth is Bernanke admits, in spite of his other assertions, the first round of QE didn't work, which is why there is now a second round being enacted. His saying he wants inflation to be higher during this round of QE shows it failed the first time, generating the question as to how it's going to be different this time.

No matter what one may think in regard to this, the US dollar is in for a rough ride, and the Forex will be interesting to watch as countries implement measures to protect their currencies and exports.

Citigroup (NYSE:C) Nabs Former Goldman (NYSE:GS) Forex Trader

Citigroup (NYSE:C), in an internal email to employees, told them they hired former Goldman Sachs (NYSE:GS) forex trader - Jo Narita.

The email said:

"Jo Narita, one of the preeminent traders in [foreign exchange], not only in Japan but globally, has joined the bank after eight years at Goldman Sachs in Japan."

Narita will be charged with growing the forex business in Japan, and also enlarge their overall trading business in the Asian country.

He starts at Citi Tokyo next Monday as head of FX trading.

Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS) Part of New Currency Body

Saying they want to promote a more efficient currency exchange, sixteen giant banks have formed a new organization out of the Association for Financial Markets in Europe, or AFME. Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) are among those that will be part of the new group, which will be called AFME FX.

AFME said this in a statement, "The AFME FX division will support efforts to promote an efficient global [foreign exchange] market, help develop market best practice, and monitor developments in public policy and regulation that could affect the [currencies] markets."

The 16 banks account for approximately 85 percent of worldwide currency flows in the foreign exchange market.

other major banks to be part of the AFME FX representative body are Deutsche Bank AG (DB), UBS AG (UBS), Barclays Capital (BARC.LN), the Royal Bank of Scotland (RBS), HSBC (HBC) and Credit Suisse (CS).

Chile Peso in Earthquake Aftermath

Trading Chile Peso

As relief efforts from agencies outside the country send a windfall of U.S. dollars their way, the Chilean peso is expected to experience a nice upward push in value against the dollar during that time.

In 2009 the Chilean peso grew in value against the U.S. dollar by close to 20 percent. It was dropping against the greenback in the first two months of 2010 based on new currency reserve requirements in the country concerning private pension funds.

This temporary situation could be a good play going forward for currency traders looking for some degree of predictability in their forex trading.

Trading Chile Peso

Major Currency Updates around the web

The U.S. dollar continues to be all over the place against currencies, but continues to weaken against the majors. In Latin America it did find some strength today, as it gained against a number of currencies from south of the border.

Here's some links to major currency stories today:

Forex - US Dollar Edges Higher Versus Latin American Currencies

The US dollar was relatively strong against its Latin American counterparts on Tuesday's New York deals. The dollar recovered from an initial pull back against the Latin American majors during afternoon deals today.

Can Currency Moves Predict Commodity Prices?

If you want to know where commodity prices are going, you can dive down the rabbit hole of raw-materials supply and demand, trying to figure out everything from how the weather in Saskatchewan will affect wheat crops to what the surging Indian economy will do to demand for gold.

Or, you can just watch the currency market.

BSP’s dollar stock outside GIR hits record $13B

The central bank, Bangko Sentral ng Pilipinas (BSP), has built up a record $13-billion stock of foreign exchange outside its official foreign reserves as of end-January, up $2.3 billion from the end-December level, according to its official data.

ICE Futures US Crossrate Currencies Futs Vol/Open Int - Mar 4

Mexico's Peso Closes Weaker As Stocks Sink; MXN10.7230/Dlr

Mexico's peso softened against the dollar Tuesday as local stocks fell on profit taking following big gains the previous session.

The peso was quoted in Mexico City as closing at MXN10.7230, compared with MXN10.6940 at the opening and MXN10.7075 at Monday's close.

FOREX-Yen gains broadly as risk aversion rises

The yen rose on Tuesday as weaker global equities encouraged investors to unwind carry trades, while the euro paused against the dollar after European officials voiced concerns about its latest rally.

Dollar slips against euro on eurozone inflation fears

The dollar slipped against the euro Tuesday in the face of fresh inflation fears in the eurozone and a call by the US Federal Reserve chief for tough action to stem US mortgage foreclosures.

Forex - Euro edges higher as dollar recovery loses momentum

The euro edged higher against the dollar as the US currency's recovery overnight began to lose momentum.