Forex Bazaar

21st March 2011

Mon, 21 Mar 2011 21:21:00 +0000

Due to theUK’s CPI (Consumer Price Index) expected to be reported as an increase from 4.0to 4.2% on Tuesday, Sterling has started the week off strong achieving a two week high against thegreenback to around $1.6344. It also madegains against the Euro that fell 0.2% to 87.16 pence.

Although itslipped against Sterling, the Euro also enjoyed gains against the USD due tothe latest US data on Existing Home Sales. The Euro rose to $1.4232 against the USD. In fact, the USD is performing weakly againstmost major currencies including the Australian Dollar, with the AUD/USDrallying to 1.0050.

Asmentioned previously, the Yen continues to dominate market news due to therecent stabilisation exercise performed in cooperation with the G7. Also, as the apparent nuclear risk starts tolessen within the country, the Japanese currency decreased to around 81.06versus the USD.

19th March 2011

Sat, 19 Mar 2011 23:34:00 +0000

It has been a while now and we will start the articles again. Let’s begin with this past week and Sterling, which continued its slide against the Euro as a result of investors speculating the Bank of England will be slower to raise rates in comparison to its European counterparts. Sterling slid by over 1% against to the Euro to 87.38 pence. Against the USD it closed just over $1.62.

The Euro also strengthened as it appeared thatin the past week the Eurozone has reached a pact to coordinate economic policies in the form of the new European Stability Mechanism.

The most interesting story of the week, however, was the G7 intervening into the rapid increase of the Yen sparked by investors as a result of the uncertainties stemming from the recent natural disasters plaguing the country. In order to reverse this inflation, the G7countries agreed to an aggressive Yen sell off so that the Japanese economy cannot only support the country’s desperate need for recovery but also keep its fragile economy in a healthy state.

We genuinely hope the country recovers from its misfortunes soon.

10th January 2011

Mon, 10 Jan 2011 21:48:00 +0000

Miss us? I am sureyou did. After a bit of a break sortingout a variety of things, we are back for this new year and Happy New Year andall the best in 2011!

So, how have we started this new year? Let’s get into the USD which, as we mentionedin 2010, looks like it is on the rebound albeit on gradual and slow one. Against the CAD, which dropped then regainedground at 99.30 cents. The loonie isbeing affected by what is currently going on in the European Union, namelyPortugal may need a bailout. This lateston poor financial management from certain EU countries follows last month’sIrish admission that the country also held out on accepting a bailout. Where have these countries been the last twoyears when the whole planet was suffering a recession, huh? As a result the Euro fell as well andregained some ground to $1.2925.

The Euro may become the new weak currency in 2011 (or atleast for the first quarter of the year) taking over from the greenback in 2010as the debt issue not only plagues Portugal, but also Spain and Italy. As aresult, Sterling hit a 4 month high against the currency with the Europurchasing only 82.85 pence. The GBPfell and then rebounded against the USD, purchasing $1.5530; however,inflationary pressures may force the Bank of England to raise the interest ratefrom the currently low 0.5%.

Finally, the general movement of the currencies recentlyalong with the generally positive reports coming out of North America and theUnited Kingdom has caused the Yen to remain low at 80.982 against the dollar.

3rd November 2010

Wed, 03 Nov 2010 23:01:00 +0000

After a very event driven week in the United States, the question now is how is the USD doing? First we had the outcome of the Mid Term Elections that saw the Republicans regain control of the House and up their share of the Senate, amplifying the country’s growing disapproval of President Obama. Then we had the recent announcement of the government starting the Quantitative Easing program. What happened was the market reacted and the dollar fell sharply at first but then as the plan was read into more and more, the greenback made some recovery. Was it enough? Unfortunately not at Sterling traded at $1.6095 the Euro broke the $1.40 mark and climbed to $1.4122, it purchase less CHF at 0.9707 and finally – and most notable – the ICE Dollar Index slipped to 76.396.

Again, we firmly stand by the opinion that the greenback will show its recovery signs in 2011. To the north, the CAD came closer to parity with the USD as the American currency purchased only $1.0115 CAD.

With the United Kingdom’s better than expected services PMI data, sterling hit a high today of $1.6133 USD before closing the day at the previously mentioned price. It also performed well with the Euro only affording 87.06 pence.

Finally, as a result of China’s recent services PMI data and Australia’s high interest rate, the AUD enjoyed a 28 year record breaking high when is broke parity with the USD today to hit $1.0057 USD and then settling back down to $1.0035 USD.

Until the United States economy can fully recover, it is difficult to spot the trend for the remainder of 2010 at this current stage. One trend we can predict, however, is a boost in tourism to the United States. With the dollar being at an all time low against major currencies, the USA is now a great travel destination spot.

1st November 2010

Mon, 01 Nov 2010 22:24:00 +0000

Finally, a break for the greenback today as the UnitesStates reported not only optimistic manufacturing data but also that theQuantitative Easing policy –originally thought to be following in itspredecessor’s aggressive footsteps – may now be executed in a toned down manner. Such positive news allowed the USD to regainits ground against the Euro being valued at $1.3885 and hindering the Europeancommon currency’s hopes for smashing & maintaining the above $1.40 markanytime soon. Also with regards to theYen it was up to 80.60 Yen and finally against the Swiss Franc, 1 USD purchasedCHF 0.9931 almost bring the pair to parity.

Sterling also enjoyed some promising gains today based onthe positive boost the United Kingdom received from its better-than-expected UKmanufacturing data whose Purchasing Managers' Index (PMI) rose to 54.9 inOctober which was higher than what was originally expected (in fact afall was predicted instead). With somuch recent good news from the United Kingdom, the requirement for a strongresurgence of the Quantitative Easing program may be reduced or scrapped altogether. As a result GBP was at 80.48 Euro Cents and tradedover the $1.60 USD mark at a comfortable $1.6040 USD going along the lines withearlier forecast that GBP will finish 2010 at a strong plus $1.60 USD level.

Finally, the dollar’s boost knocked down the AUD’s push forparity to 98.57 US cents. The AUD alsopurchased 61.35 Pence and 70.97 Euro cents.

All good news for the major currencies that just a few weeksago were on a downward spiral; however, we still feel that with all the items takingplace in the United States at the moment – including tomorrow’s Mid TermElections – this currency is still in a volatile state but perhaps not asinsane as it was a month ago.

28th October 2010

Thu, 28 Oct 2010 21:11:00 +0000

Today we saw Sterling jump back up against major currencieseven after data released today suggested that the UK’s house prices fell for athird month by 0.7%. The recent strongGDP report, however, with the addition of a renewed confidence in the currencyhelped prop up Sterling to nearly breaking the $1.60 USD at $1.5935 USD andagainst the Euro, its success was no different holding a solid position at €1.1488.

We already know how the dollar did against its British counterpart;however, revived fears of nextWednesday’s anticipated Quantitative Easing policy announcement are hinderingall progress for the greenback, dropping its index (DXY) to 77.255. More specifically, it has allowed the Euro tocontinue its claw back to $1.3939 and the only reason it gained slightlyagainst the Yen was due to the Bank of Japan’s lack of change to its interestrate policy making the dollar worth 80.98 Yen. The hope is that the Republican party wins a majority in next Tuesday’smid-term elections and manage to change policy.

The Eurozone’s healthy economic outlook, combined withCanada’s positive data regarding earnings on a province by province basis,continues to make the CAD flirt with parity with the USD with the dollar buying$1.0210 CAD.

Finally, the NZD was one of the strongest performers, withthe kiwi rising to 75.39 US cents after the Reserve Bank of New Zealandmaintained its 3% official cash rate.

26th October 2010

Tue, 26 Oct 2010 22:21:00 +0000

Welcome back Sterling! Well, it is still not time to pop the bubbly but this week, the UnitedKingdom announced that its Q3 GDP increased over target (by 0.4%) to 0.8%allowing the GBP to reverse its decline against the USD to $1.5897 and tradingat 87.46 Pence against the Euro. AlsoStandard & Poor’s secured the UK’s triple A rating when it changed itsoutlook for the nation from ‘negative’ to a more favourable ‘stable’.

What about the poor US Dollar. It has recently been taking a beating so howhas it started this week? Well, it hasreversed its slide but by not much. Infact, only commodities such as Crude and Gold suffered from lack of gains,whereas we have already seen how it performed against the GBP. Against the Euro, not much different, it stole the coveted $1.40 mark from theEuropean single currency but one Euro still buys $1.3850 USD and this pair hasbeen volatile, fighting what is seen as the inevitable: the Euro maintaining anabove $1.40 USD stance.

The Yen also slid against the greenback to 81.49 but stillthe USD is performing a dangerous tango with the major currencies where it isappearing to be the weaker partner and will eventually get trampled upon. We still feel that a change will come but notuntil early 2011. For the USD, 2010 isover.

20th October 2010

Wed, 20 Oct 2010 21:59:00 +0000

Today, the much waited for budget cuts were announced in theUK and boy was the axe chopping. It kindof makes you ask, why did the country wait until everything went down thetoilet before implementing the changes? So how did the country’s currency fare against the others? Actually, not too bad at all. The cuts globally were seen as a seriouseffort to stem the downward economic spiral that the UK economy has been experiencing;however, an additional vote today for the Quantitative Easing policy is makingthis option an increasingly realistic one and, as a result, has negated some ofthe positive results for Sterling. Sterling rose by 0.9% to $1.5856 against thegreenback but it slid a bit against the Euro to by around 0.8% to 99.09pence. Still not too bad when comparedto a certain other currency ...

... That’s right the dollar slipped again against the majorcurrencies such as the Euro returning closer to its sought after $1.40 mark at$1.3950. Against the Yen, it fell to aslow as 80.85 Yen and we already saw what happened against the Pound. I am starting to sound like a broken recordbut seriously, the American currency is still suffering because of the UnitesStates’ desire to re-launch its Quantitative Easing campaign as well. Unfortunately, due to the dollar still beingthe global currency and many other currencies being pegged to it, its economicstimulus plan has a stronger negative effect than the UK’s does on its currency(that along with the UK appearing to head in the right direction more quickly).

Finally, China’s Yuan continues to fall after the countrydid its first rate increase since December 2007. The appreciating Yuan is meant to help fightinflation by making imports cheaper but it will take further time to see justwhat the expected impact will be.

19th October 2010

Tue, 19 Oct 2010 21:51:00 +0000

Continuing the battle of the losers, today Sterling took a hit after it was revealed that the UK’s factory output was lower than expected. Add to the mix the [now well known] topic of this week’s government spending cut announcements and it is evident that this week, the British currency may lose some of it s recent gains. The GBP was trading at its lowest since the end of September against the USD at $1.5697 but changed little against the Eurozone’s currency at 87.75 Pence.

In North America, The USD (always heavily influence by the Yuan) rose due to China’s rate hike and is the only performer from financial markets based in the US as the country continues to face issues such as the recent Bank of America mortgage scandal. The Euro moved away from crossing the $1.40 mark. We also know how Sterling fared against the greenback and the Yen fell only slightly to 81.44 to the dollar; however, do not be fooled: the Japanese government have admitted their economy is slowing down and that a re-entry into a recession may be inevitable.

Moving on, due to the Bank of Canada’s decision to maintain the 1.0% rate, the Loonie continued to lose ground trading at $1.0350 to the USD. Finally, the AUD/USD pair continues to flirt with parity at 0.9693.

Ladies and gentlemen, sadly there is no winner in this bunch still. Is the Australian economy doing that well? Well, not really, but the US is significantly worse. There are no winning pairs at the moment it seems and the hope is that all these stimulus packages truly get the economies out of their hole for 2011.

18th October 2010

Mon, 18 Oct 2010 22:12:00 +0000

Ahhh ... the poor US dollar continue its weak position thisweek. Adding to its woes is a few of theCentral Bank’s members – including Chairman Ben Bernanke – are supporting the purchaseof bonds in order to stimulate borrowing by decreasing the interest rate. Although this initiative may be seen as apositive step towards boosting the ailing US economy, it also applies anegative pressure on the currency itself. It is no surprise, therefore, that the dollar stayed low today. The Euro rose to $1.3998 almost breaking thecoveted $1.40 benchmark again. It isexpected that the Euro will break and maintain this point over the comingweeks.

Sterling fell to $1.5936 however it is still staying aroundthe $1.60 mark and it should break this point and maintain it easily before theend of the year. Sterling’s slight fallcan be attributed to the expected monetary easing policy. It also fell against the Euro to 0.8778pence.

The AUD gained as reports showed an increase in automotivesales resulting in the AUD / USD pair trading at 0.9873 and the CAD lost itsnear parity performance with the US currency after it appeared that the Bank ofCanada will decide to maintain its 1.0% interest rate shifting the focus to thecountry’s global economic forecasts now. As it is expected to not be exciting for Canada, the fall has startedwith the CAD dropping to $1.0229 against the USD.

Finally the Yen increased in value against the USD. The American currency only bought 81.21 Yen. None of the economies are faring too well it seems(with Australia being the exception); however, the currency battle is now beingdetermined based on who is king of the poor bunch. The remainder of 2010 appears to be focusedon economic stimulus across the board as getting out of the recession isproving to be not so easy after all, forcing the world powerhouses to usedrastic measure in order to avoid the feared double-dip recession.