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New Zealand Dollar Thriving in Obscurity
July 9, 2010It’s understandable that forex investors basically ignore New Zealand. Its economy is around 10% the size of its neighbor Australia, its currency is less liquid, and spreads are higher. Given that its performance closely tracks the Australian Dollar, meanwhile, why pay it any attention? To be sure, the new currencies from Down Under trade in [...]
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US Dollar Paradigm Shift
July 7, 2010Since the inception of the financial crisis, the Dollar has been treated as a safe haven currency. Simply, when there was a surge in the level of risk-aversion, the Dollar rose proportionally. When risk aversion gave way to risk appetite, the Dollar fell. It was as simple as that. Lately, this notion has manifested itself [...]
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Markets Confused about Canadian Dollar
July 2, 2010On a trade-weighted basis, the Canadian Dollar (aka Loonie) has appreciated nearly 10% in 2010. At the same time, it has fallen 8% against the Dollar since the beginning of May. This contradiction is reflected in an explosion in volatility: “CAD has been very volatile – the average intraday spread between the high and low [...]
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Emerging Markets Rally, Despite Eurozone Debt Crisis
June 29, 2010It looks like emerging market investors took my last post (“Investors” Shouldn’
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“Investors” Shouldn’t Worry about the Euro
June 26, 2010With today’s post, I want to take off my currency trader hat and put on my investor hat. You might be tempted to argue: But wait, these two aren’t mutually exclusive. Isn’t it possible to wear both hats? While it’s theoretically plausible for a trader to take a long-term view of the markets based on [...]
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China Revalues RMB….by .4%
June 24, 2010It was only last week that I mused about “Further Delays in RMB Revaluation.” Lo and behold, over the weekend, the Central Bank finally budged, by pledging to the members of the G20 that it would ” ‘proceed further with reform‘ of the exchange rate and ‘enhance’ flexibility.” Upon reading this, I suppose I should [...]
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SNB Abandons Intervention
June 22, 2010The Swiss National Bank (SNB) has apparently admitted (temporary) defeat in its battle to hold down the value of the Franc. ” ‘The SNB has reached its limits and if the market wants to see a franc at 1.35 versus the euro, they won’
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Euro Rally only Temporary
June 19, 2010Something incredible has happened: The Euro has reversed is 16.5% decline (from peak to trough), and since bottoming on June 7 at $1.1876, it has risen by an impressive 4%. I guess that means the Euro has been rescued from parity (which I characterized as “inevitable” on June 5)? Not exactly. While financial journalists have [...]
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Further Delays in RMB Appreciation
June 17, 2010Throughout 2010, I have continuously reported on the apparent inevitability of the Chinese Yuan appreciation. That the currency still remains firmly fixed in place against the Dollar is a testament not only to the unpredictability of forex, but also to the doggedness of Chinese officials. It seemed that China’s policymakers were all but set in [...]
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No US Rate Hike in 2010
June 16, 2010In the midst of the Eurozone debt crisis, forex investors have largely stopped paying attention to interest rate differentials and focused the brunt of their attention on risk. Soon enough, however, there will be a resurgence in the carry trade, at which point interest rates will return to the forefront of investors consciousness. From the standpoint [...]
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Risk Aversion Hits Australian Dollar
June 13, 2010These days, I feel like you could take that title and substitute pretty much any currency for the Australian Dollar. Let’s face it- the EU sovereign debt crisis has hit a number of currencies extremely hard, as investors have fled anything and everything risky, in favor of the US Dollar, Swiss Franc, Japanese Yen, and [...]
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Interview with Claus Vistesen: “The Eurozone is Shaky”
June 10, 2010Today we bring you an interview with hedge fund manager Claus Vistesen, of Alpha.Sources and Beta.Sources. Claus is a Danish economist who specialises in macroeconomics. He is currently pursuing post grad studies alongside his commercial endeavors. His primary research interests include demographics, macroeconomics and international finance. Below, Claus discusses his perspective on the forex markets, [...]
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EU Crisis Punishes Korean Won
June 8, 2010The South Korean Won has been one of the biggest losers from the EU sovereign debt crisis. After a stellar 2009, the Won is off to a shaky start in 2010, and has lost 12% of its value in the last month alone. According to analysts, The won is “most sensitive to risk aversion” of [...]
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EUR/USD: The Next Benchmark is Parity
June 5, 2010The Euro has now declined for six consecutive months against the Dollar. It is down 25% from its 2008 high and 15% in the year-to-date. It declined 8% in the month of May alone. En route to a four year low, the Euro also fell below the 50% retracement level ($1.21) of its rally from [...]
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Japanese Yen: 90 or 95?
June 3, 2010After a healthy appreciation against the Dollar in 2009, the Yen has backed off slightly in 2010, hovering around the level of 90 USD/JPY. Still, every time the Yen falls, traders quickly push it back up to 90. One has to wonder: Will the Yen ever fall? Analysts attribute the Yen’s resilience to a series [...]
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Brazil is Booming, but Real is In Trouble
May 31, 2010Generally speaking, investors are bullish about Brazil. The emerging market superstar emerged from the credit crisis essentially unscathed, and some believe that ‘
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Chinese Yuan as Reserve Currency
May 22, 2010Even before the sovereign debt crisis in Europe damped confidence in the world’s second most important reserve currency, the Chinese Yuan was on the cusp of being accepted as a global reserve currency. We’re all familiar with the arguments attacking the Yuan in this context: its currency is pegged, its capital controls are rigid, and [...]
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Failed Euro Bailout Would Buoy Yen
May 19, 2010Given that only a week has passed since the bailout of Greece was formally unveiled, it’s still too early to determine whether the plan will be success. Regardless of how it ultimately plays out, though, the bailout (not too mention the concomitant crisis) is shaping up to be THE big market mover of 2009. As [...]
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When Will Attention Shift to the Dollar?
May 17, 2010The fiscal crisis ravaging the Euro and the Pound has sent the Dollar skyward. On the one hand, the prospect of continued uncertainty and dissolution of the Euro would seem to be an excellent harbinger for continued appreciation in the Dollar. On the other hand, it should only be a matter of time before investors [...]
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Is There Any Hope for the Pound?
May 14, 2010Compared to the Euro, the Pound is Gold (figuratively speaking). Compared to everything else, well, the Pound is probably closer to linoleum. Bad geology metaphors notwithstanding, there really isn’t much to get excited about when looking at the Pound. Let’s take the election, for example. Originally billed as a chance for a fresh start, politically, [...]