Currencies
Has the US Dollar Hit Bottom?
In April, I declared that the dollar would rally when QE2 ended. That date – June 30 – is now only a few weeks away, which means it won’t be long before we know whether I was right. Meanwhile, the dollar is close to pre-credit crisis levels on a composite basis, and has already fallen [...]
Continue reading...Emerging Market Currencies Still Look Good for the Long-Term
10 June 2011 – 8:30 am PDT
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In my previous update on emerging market currencies, I wrote that in the short-term, it’s important not to lump them all together; high-yielding currencies must be distinguished from low-yielding ones. In this post, I’m going to backpedal a bit and argue that over the medium-term and long-term, emerging market currencies as an asset class are [...]
Continue reading...Currency Correlations, Part II: Canadian Dollar Begins its Decline
8 June 2011 – 7:38 am PDT
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In April, I wrote a post entitled, “Economic Theory Implies Canadian Dollar will Fall,” in which I argued that the currency’s impressive rise was belied by fundamentals. It seems the gods of forex read that post; since then, the Loonie has fallen 3% against the US dollar alone. Based on my reading of the tea [...]
Continue reading...How to Trade the Franc-Yen-Dollar Correlation
6 June 2011 – 9:48 am PDT
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Last week, the Wall Street Journal published an article entitled, “Currency Correlations Lose Their Way for Now.” My response: It depends on which currencies you’re looking at. I, too, recently posted about the break-down of multi-year correlations, specifically involving the Australian Dollar and the New Zealand Dollar. However, one has to look no further than [...]
Continue reading...Interview with FXStreet CEO Francesc Riverola: “Forex Spreads Should go Down to Zeroâ€
3 June 2011 – 6:50 am PDT
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Today’s interview is with the esteemed Francesc Riverola, CEO of FXStreet. Below, Francesc shares his thoughts on the future of the retail forex industry, government regulation, declining spreads, and how he became CEO of one of the biggest online brands in forex without ever making a single forex trade. Forex Blog: Could you briefly discuss [...]
Continue reading...Is the Chinese Yuan the Most Reliable Forex Trade?
2 June 2011 – 6:50 am PDT
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Over the last six years, the appreciation of the Chinese Yuan has been as reliable as a clock. Since 2005, when China tweaked the Yuan-Dollar peg, it has risen by 28%, which works out to 4.5% per year. If you subtract out the two year period from 2008-2010 during which the Yuan was frozen in [...]
Continue reading...Aussie is Breaking Away from Kiwi
31 May 2011 – 4:29 pm PDT
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The correlation between the Australian Dollar and New Zealand Dollar is among the strongest that exists between two currencies. Given their regional bond and similar dependence on commodities to drive economic growth, perhaps this is no wonder. Over the last year, however, the Aussie has slowly broken away from the Kiwi. While the correlation between [...]
Continue reading...New Zealand Dollar: Come Back to Earth!
30 May 2011 – 7:56 pm PDT
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In March, I wondered aloud about whether the New Zealand Dollar might be the most overvalued currency in the world. Since then, it has continued its unlikely ascent, rising 10% on a correlation-weighted basis and 3% against the US Dollar, hitting a 26-year high in the process. While there are signs that the New Zealand [...]
Continue reading...High-Frequency Traders Descend onto Forex Markets
28 May 2011 – 9:42 pm PDT
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According to a recent report by the Wall Street Journal, high-speed traders are quickly establishing themselves as the main force in forex markets. Just like in other financial markets, a significant portion of trading volume is dominated by computerized trading, in which huge blocks of currency can change hands multiple times in mere milliseconds. While [...]
Continue reading...Swiss Franc at Record Highs
27 May 2011 – 9:43 am PDT
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This month, the Swiss Franc touched a record high against not one, but two currencies: the US dollar and the Euro. Having risen by more than 30% against the former and 20% against the latter, the franc might just be the world’s best performing currency over the last twelve months. Let’s look at the prospects [...]
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11 June 2011 – 9:17 am PDT
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