Currencies
Speculators Pile Up Against Euro
The Wall Street Journal’s coverage of the Greek dent crisis has focused less on the crisis itself, and more on the markets’ reaction to it. With headlines like “Hedge Funds Try ‘Career Trade’ Against Euro” and “Speculators Bet Record Amount Against Euro For 4th Week” and “Europe Trouble, U.S. Opportunity” – among others – the [...]
Continue reading...Fed Rate Hikes a Distant Prospect
28 February 2010 – 4:39 pm PDT
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Last week, the Fed raised the discount rate by 25 basis points, to .75%. Investors have consistently focused the brunt of their collective monetary attention on the Federal Funds Rate, and the markets (forex included) barely registered a response to the move. Regardless of whether apathy in this particular context was justified, investors who turn [...]
Continue reading...The R in BRIC Stands for….Romania?
28 February 2010 – 4:39 pm PDT
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By now, most investors are well aware of the acronym BRIC, which stands for the emerging market powerhouses of Brazil / Russia / India / China. When the idea was conceived in 2003, it seemed to make a lot of sense, as these four economies were at the top of the GDP ‘league tables,’ year-after-year. [...]
Continue reading...Pound’s Fate Tied to EU Debt Crisis
28 February 2010 – 4:39 pm PDT
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Since the emergence of the debt crisis in Greece, UK policymakers have been once again patting themselves on the back for not joining the Euro. Otherwise, they would currently be in the same awkward position as France and Germany, whose economic might underpins the entire Eurozone and are wondering about if and how they should [...]
Continue reading...CAD/USD Parity: Reality or Illusion?
28 February 2010 – 4:39 pm PDT
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In January, the Canadian Dollar (aka Loonie) registered its worst monthly performance since June. Many analysts pointed to this as proof that its run was over, after coming tantalizingly close to parity. Others insisted that the decline was only a temporary correction, a mere squaring of positions before the Loonie’s next big run. Who’s right? [...]
Continue reading...Could Greece’s Fiscal Problems Really Sink the Euro?
28 February 2010 – 4:39 pm PDT
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Currency markets operate in funny ways. Greece’s fiscal problems are hardly a new development. During years of boom and bust alike, it ran unsustainable budget deficits. Why investors have decided to fret now – as opposed to last year or next year, for example – on the distant possibility of default, is somewhat mysterious. After [...]
Continue reading...Chinese Yuan Expectations Revised Downwards
28 February 2010 – 4:39 pm PDT
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Last month, I reported on how anticipation is (was) building towards a revaluation of the Chinese Yuan (RMB), confidently stating that “The only questions are when, how and to what extent.” While I’m not ready to recant that prediction just yet, I may have to temper it somewhat. On the one hand, the case for [...]
Continue reading...Bernanke and the Dollar…Part Two
28 February 2010 – 4:39 pm PDT
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In December, I posted about Ben Bernanke (Bernanke’s Background and Near-Term US Monetary Policy), specifically about how a basic understanding of Bernanke’s academic background and philosophical approach to monetary policy could be useful for predicting the general direction of interest rates, irrespective of prevailing economic conditions. This post, is somewhere between a follow-up and a [...]
Continue reading...Juris-my-diction Issues in Forex Regulation
28 February 2010 – 4:39 pm PDT
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Kudos to anyone who correctly identifies that reference. But seriously, in light of the proposed changes in forex regulation that have generated a heated response on this blog and elsewhere, I want to offer some insight into a tangential issue: jurisdiction. Part of the problem with existing forex regulation is not that it’s insufficiently strict, [...]
Continue reading...Commodity Currencies Remain in the Spotlight
28 February 2010 – 4:39 pm PDT
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In 2009, so-called commodity currencies – both individually and as a group – registered record-breaking gains. The Brazilian Real and the South African Rand finished up more than 30%, while the Australian and New Zealand Dollars finished up about 25% each, and the Canadian Dollar not far behind. While the outlook for 2010 is slightly [...]
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28 February 2010 – 10:50 pm PDT
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