NZ dollar gains on GDP data, bonds lower

WELLINGTON, Sept 26 (Reuters) - The New Zealand dollar gained as better-than-expected data suggested the economy will only suffer a shallow recession, while the U.S. dollar dipped as talks on a financial sector rescue package stalled.


* NZ dollar gains around half a cent to a high of $0.6880 after data showed the NZ economy was in recession in the first half of the year, but the contraction was not as big as feared.

* U.S. dollar falls against the yen and the euro as wrangling between lawmakers over the U.S. government's proposed $700 billion bailout plan continued.

* NZ second-quarter gross domestic product data showed activity fell by a less-than-expected 0.2 percent against market expectations of 0.5 percent.

* Data raises hopes the recession will be a shallow one with another quarter of weakness likely before a return to growth in fourth quarter.

* GDP data not seen altering the outlook for further Reserve Bank of NZ rate cuts given the more pressing impact of the global financial turmoil. A rate cut of at least 25 basis points seen certain at October rate review, with significant risk of a 50 basis point cut.

* NZ Finance Minister Michael Cullen says economy likely to resume growth again by the end of the year.

* Short-term support for the NZ dollar seen at $0.6820 with resistance at $0.6900.

* NZ data calendar thin next week with August trade, building consents, and latest National Bank of NZ confidence survey.

* New Zealand bonds turn soft, partly on the better-than-expected GDP data, with yields up to three basis points higher.

* NZ two-year swap rate at 6.98/7.01 percent compared with Thursday's 7.0 percent.

* NZ goes onto daylight saving on Sept. 28, with clocks going forward one hour to be 13 hours ahead of GMT.

Forex News

SEOUL, Sept 26 (Reuters) - The South Korean won gave up its limited early gains against the dollar by midday on Friday, with traders remaining cautious over the uncertainty surrounding a proposed $700 billion lifeline for the U.S. financial sector.

The country's finance minister on Friday issued a renewed pledge to help ease dollar funding shortages and another ministry official said the authorities would inject at least $10 billion into the swap market over the coming weeks.

The costs of dollar funding in the local swap market continued to fall after the remarks, but lingering doubts about an early implementation of the proposed $700 billion U.S. financial bailout plan kept undermining the won.

The won was quoted at 1,158.2/9.0 per dollar at 0300 GMT, unchanged from Thursday's domestic close of 1,158.2, after rising to as high as 1,148.8.

'The market's players as a whole remain worried about where the global markets are headed, and the won is not expected to make a major turnaround soon,' said a foreign bank dealer.

The Seoul stock market's benchmark KOSPI dipped 1.6 percent due to persistent concerns about the U.S. and global financial markets, with foreign investors net sellers of more than 100 billion won worth of local shares

Forex Training

Forex Market Overview How the forex market has developed, why it presents an outstanding trading opportunity, and how it compares to futures markets.

Trading Strategy and Decision Making Fundamentals of developing a basic trading strategy, including examples of some of the most common techniques.

Controlling Risk One of the most fundamental factors in successful trading is controlling risk. Learn how to limit downside both strategically and mechanically.

Currency Options Trading Learn about options fundamentals and how to trade options on GCI's online trading platform.

Glossary and Definitions and Terms Definitions of the most common foreign exchange terms, including technical studies and currency pairs.

GCI Daily Market Research Stay informed of current market conditions, support and resistance levels, and fundamental commentary on the major currencies.

GCI Forex Resources

FOREX-Dollar dips on U.S. bailout plan uncertainty

TOKYO, Sept 26 (Reuters) - The dollar fell against the yen and the euro on Friday as a deal to rescue the U.S. financial system stalled, souring hopes for an imminent agreement to resolve the banking crisis.

U.S. lawmakers had appeared close to a final agreement on Thursday on a massive $700 billion bailout to save the financial system, but things spun off course during an emergency White House meeting between Congressional leaders with U.S. President George W. Bush.

Negotiations toward a Wall Street bailout fell into disarray late on Thursday after Republican president candidate Sen. John McCain backed a new plan differing markedly from the one that has been under discussion.[ID:nN25133375]

Congressional leaders said an agreement could take until the weekend or longer, sending U.S. stock futures down sharply in Asian trading, hurting the dollar.

'The change in the mood about the imminent agreement on the U.S. bailout plan is adding to the weakness of the dollar against the yen,' said a trader at a Japanese bank.

News that Washington Mutual was closed by U.S. authorities and its assets sold in America's biggest ever bank failure also hurt the sentiment towards the greenback.

The third-largest U.S. bank JPMorgan Chase & Co said it bought the deposits of Washington Mutual which has seen its stock price virtually wiped out because of massive amounts of bad mortgages.[ID:nSP335584]

The dollar fell 0.6 percent to 105.87 yen, near day's low, but stayed in a rough range of 105-108 yen this week.

Traders said selling came mostly from speculators who create and close positions in the short term, while many investors avoided big directional bets in recent volatile sessions

Mini Forex

Rapid and fair trade execution. Market orders are confirmed within seconds at prices clicked on or accepted by the client. Furthermore, GCI has a "zero slippage guarantee" for all Forex Stop and Entry Stop orders that are placed at least one minute before the market reaches your specified price.

Zero commissions for all accounts. Client trading performance is enhanced by eliminating all commissions.

State-of-the-art trading software. The GCI trading software provides real-time prices in 23 major currencies, 5 equity indices, plus gold, silver, and crude oil. Live charts, and real-time P&L and account equity tracking are fully integrated into the free software. Windows-based and Java-based versions are available.

USD or Euro Denominated Trading Accounts. GCI clients can now choose to maintain their account balance and P&L in either USD or Euros. Select the Base Currency you want for your account on the account application.

Tight 3 - 4 pip spreads. Clients can trade on 3 - 4 pip spreads in major currencies and crosses, 24 hours a day.

Broad offering of financial products. In addition to currencies, you can trade mini versions of Dow Jones, Gold, S&P 500, other equity indices from your Mini Forex account. Trading opportunities and profit potential are that much higher. Click here for a full list of products and specifications.

$2000 minimum account balance. GCI provides access to spot forex trading for individuals as well as institutions. Margin requirements are $50 per lot.

Risk is limited to deposited funds. GCI's sophisticated margin and dealing procedures mean that clients can never lose more than their funds on deposit.

Hedging Capability. Clients can open positions in the same currency in opposite directions, without the positions offsetting and without using additional margin.

Tools for successful trading. GCI clients benefit from a wide array of resources to improve their trading results, including market analysis and research, real-time charts, and free Forex trading signals

Example Trade in your life..

Assume you have a trading account at a broker that requires a 1% margin deposit for every trade. The current quote for EUR/USD is 1.3225/28 and you want to place a market order to buy 1 standard lot of 100,000 Euros at 1.3228, for a total value of US$132,280 (100,000 * $1.3228). The broker requires you to deposit 1% of the total, or $1322.80 to open the trade. At the same time you place a take-profit order at 1.3278, 50 pips above your order price. In taking this trade you expect the Euro to strengthen against the U.S. dollar.

As you expected, the Euro strengthens against the U.S. dollar and you take your profit at 1.3278, closing out the trade. As each pip is worth US$10, your total profit for this trade is $500, for a total return of 38%

Margin

The deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to maintain or open a position, whereas free margin is the opposite. With $1,000 in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to $100,000. This allows a trader to leverage his account by up to 100 times or 100:1. If your account falls to below the minimum amount required to maintain an open position, you will receive a "margin call" requiring you to either add more money into your account or close the open position. Most brokers will automatically close your open positions when the margin balance falls below the amount required to maintain the open position. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.