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Commodities Briefing - Category | Currencies more

Greenback remains best currency bet, says BNP

Posted on 16 April 2015 by VRS  |  Email |Print

The US dollar remains the best bet in currency markets this year as the Federal Reserve splits from global peers and moves closer to raising interest rates, according to BNP Paribas.
“It is still a dollar-bull story, in spite of the fact that the economic data in the US has softened,” Robert McAdie, head of research and strategy at BNP Paribas, said in New York on Wednesday. “You have a global environment in which other central banks are trying to keep their currencies competitive, and they’re going to cut.”……………………………………….Full Article: Source

A New Competitor for Bitcoin Aims to Be Faster and Safer

Posted on 16 April 2015 by VRS  |  Email |Print

A Stanford professor claims to have invented a Bitcoin-like system that can handle payments faster and with more security. The total value of the digital currency Bitcoin is now approximately $3.4 billion, and many companies and investors are working to prove that the technology can make financial services cheaper and more useful.
But Stanford professor David Mazières thinks he has a faster, more flexible, and more secure alternative. If Mazières is correct, his technology could make digital payments and other transactions cheaper, safer, and easier—particularly across borders. He released the design for his system in a white paper last Wednesday………………………………………..Full Article: Source

IMF says currency shifts support global economic growth

Posted on 15 April 2015 by VRS  |  Email |Print

Recent shifts in exchange rates should help the global economy, boosting Japan and Europe in particular, amid increasing divergence in the growth paths of the world’s major economies, the International Monetary Fund said on Tuesday.
The Washington-based institution kept its global growth forecasts unchanged, with faster economic expansion in the euro zone and India expected to be offset by diminished prospects in other key emerging markets such as Russia and Brazil. But it cautioned that the economic recovery remains “moderate and uneven,” beset by greater uncertainty and a host of risks, including geopolitical tensions and financial volatility………………………………………..Full Article: Source

Russian ruble becomes world’s best-performing currency

Posted on 15 April 2015 by VRS  |  Email |Print

Between early February and early April 2015, the Russian ruble gained 22.3 percent against key benchmarks, making it the world’s best-performing currency. Experts are not yet convinced that this impressive strengthening of the ruble will become a long-term trend: in December 2014, the Russian currency lost about half of its value against the US dollar and the euro.
Between early February and early April 2015, the Russian ruble gained 22.3 percent, making it the world’s best-performing currency, UFS IC chief analyst Alexei Kozlov has told RIR………………………………………..Full Article: Source

5 myths about currency manipulation and exchange rates

Posted on 14 April 2015 by VRS  |  Email |Print

Most observers overestimate the importance of currency policy. This month, the International Monetary Fund (IMF) may name China’s yuan as one of its reserve currencies. Also this month, Congress could vote on whether to give Trade Promotion Authority (TPA) to President Obama. Then another vote looms on the Trans-Pacific Partnership (TPP).
In these instances and others, currency manipulation will be treated as vital despite the fact that it is not particularly important to the United States. Dispelling myths about exchange rates makes this clearer………………………………………..Full Article: Source

Australia currency union more politics than economics

Posted on 13 April 2015 by VRS  |  Email |Print

With NZ dollar approaching parity with the Australian dollar, the topic of a currency union with our Trans-Tasman cousins has once again emerged. This seems to be a debate that occurs around every fifteen years. The last time it captured the local imagination was just before the euro was formed in 1999. Around that time, Helen Clark said joining a currency union with Australia was “inevitable”.
There are clear pros and cons of going down the path of irrevocably fixing your exchange rate with a large neighbour. On the plus side, importers and exporters to Australia would no longer have to manage the uncertainty of exchange rate volatility………………………………………..Full Article: Source

The curious case of the cash-rate currency trades

Posted on 13 April 2015 by VRS  |  Email |Print

One could almost hear the groans from Martin Place a few seconds before the 2.30pm on Tuesday when the Australian dollar jumped ahead of the Reserve Bank’s atomically precise interest rate decision.
The mysterious trades in the Australian dollar around the RBA’s rates decisions were already a national curiosity and the subject of a two-month-long investigation by the Australian Securities Commission. So when it happened again, the plot thickened – to the frustration of the central bank’s staff………………………………………..Full Article: Source

Currency traders rush to price in UK election uncertainty

Posted on 10 April 2015 by VRS  |  Email |Print

Uncertainty over the outcome of the most closely fought general election in a generation has prompted signs of concern in financial markets, with investors buying up insurance against sharp swings in the value of the pound.
With less than a month to go and little separating the two main parties in the polls, the currency market has registered a pronounced rise in volatility, suggesting investors are preparing for a period of elevated political uncertainty………………………………………..Full Article: Source

Currency Fluctuations Weigh On Asset Bases Of Global Custody Banks

Posted on 10 April 2015 by VRS  |  Email |Print

Global custody banks have had a strong run in recent years, as the slew of stricter rules in the aftermath of the economic downturn has boosted demand for their services. This is because more financial institutions are now turning to custody banks to take care of accounting, back-office and middle-office activities in light of the added complexity in compliance and reporting requirements.
This in turn has helped the assets under custody for the world’s largest custodians grow steadily – earning them handsome fee revenues in the process. However, the size of assets under custody for most custodians took a hit over the last two quarters of 2014 as volatile equity market conditions and the negative impact of marked changes in foreign exchange rates hurt asset valuations in terms of U.S. dollars………………………………………..Full Article: Source

Should You Invest In A Currency-Hedged International Equity ETF?

Posted on 09 April 2015 by VRS  |  Email |Print

In the United States, most international equity funds do not hedge their foreign currency exposure. This long exposure to foreign currencies contributed to the performance of these funds in the past decade, as the U.S. dollar weakened against major currencies.
More recently, currency movements have reversed, starting with a sharp decline of the yen over the past three years, and the more recent gradual decline of the euro versus the U.S. dollar. This trend is now weighing on the returns of currency-unhedged international equity funds. Not surprisingly, these currency movements have prompted strong flows into currency-hedged exchange-traded funds over the past two years………………………………………..Full Article: Source

Currency wars: is the US the new victim?

Posted on 09 April 2015 by VRS  |  Email |Print

What goes around comes around. In September 2010, Guido Mantega, then Brazil’s finance minister, popularised the term “currency wars”. He claimed governments around the world — led by the US — were engaging in competitive devaluations of their currencies . Brazil and other emerging markets, which were doing better at the time, suffered overvalued currencies as a result.
Fast forward to today and the US dollar has appreciated on a trade-weighted basis at a faster pace for the past eight months than during any similar period since the end of the Bretton Woods system in 1971. This year, more than 20 central banks have eased monetary policy, including the European Central Bank, which at long last launched its quantitative easing programme………………………………………..Full Article: Source

Currency Hedging? Individual Investors Shouldn’t Bother

Posted on 09 April 2015 by VRS  |  Email |Print

As it has been so frequently noted in the financial press, last year the U.S. dollar appreciated significantly against most foreign currencies, including the widely quoted benchmark euro. For investors with a portion of their portfolio in unhedged international stocks, this caused some short-term pain.
For illustrative purposes, let’s expand the discussion beyond the euro to examine a broader basket of foreign currencies against which to assess the U.S. dollar’s movement relative to foreign currencies. Going back to 1998 with MSCI data, you can observe wide swings–in both directions–on an annual basis………………………………………..Full Article: Source

Denmark Stays Out of Currency Market

Posted on 08 April 2015 by VRS  |  Email |Print

Denmark’s central bank refrained from intervening in the foreign-exchange market in March, in a sign that the national currency has stabilized against the euro following weeks of volatility brought on by the European Central Bank’s stimulus efforts.
The Danish central bank has been battling to stabilize the exchange rate, its core task, since January, when the ECB announced a vast program of bond purchases, intended to bring economic growth, that sent the euro plummeting against other currencies………………………………………..Full Article: Source

Are Currency Swings Worth the Worrying?

Posted on 08 April 2015 by VRS  |  Email |Print

Most mutual-fund investors pay little attention to swings in exchange rates, but for investors in international stock or bond funds, recent moves in the currency markets have been hard to ignore. The question for investors: Should they do anything about it?
Consider the first-quarter rally in the core European stock markets. Germany’s DAX rose 22%, and France’s CAC-40 gained nearly 18%. Markets in Spain, Belgium and Ireland were also up well into the double digits………………………………………..Full Article: Source

Hottest ETFs are currency hedges, non-US funds

Posted on 07 April 2015 by VRS  |  Email |Print

Exchange-traded funds have surged in popularity in 2015, but it’s not U.S. equities that are leading the charge. Investors poured $97.2 billion into various ETFs and other similar products in the first quarter, marking the $2.9 trillion industry’s biggest start ever despite a wobbly U.S. stock market and a testy geopolitical climate, according to data from BlackRock, the world’s largest provider of such funds. (U.S.-based ETFs have about $2.1 trillion in assets.)
There essentially have been three major investment themes this year, and players in the exchange-traded market have made each work: A quest for investment themes outside the U.S.; the offshoot of that, which has seen domestic attention turn away from large caps and toward mid- and small-sized companies, and capitalizing on the big moves in currency markets, particularly an appreciation of the U.S. dollar and the decline of its global competitors………………………………………..Full Article: Source

Vexed questions on currency hedging

Posted on 07 April 2015 by VRS  |  Email |Print

To hedge or not to hedge? That is not the only question regarding the currency risks that come with investing across borders. If one gets past the “whether to hedge” question, there is also the “when” and the “how”. Investors in a popular exchange traded fund may not be so much hedged against a rising dollar as leveraged to it, something that could become apparent if the dollar rally runs out of steam.
These have become increasingly vexatious questions for equity investors. It has become a mantra for advisers that clients should be diversified geographically as well as by sector, even though most stock markets contain enough multinational companies to provide exposure to the global economy beyond domestic borders………………………………………..Full Article: Source

Once Over $12 Trillion, the World’s Currency Reserves Are Now Shrinking

Posted on 07 April 2015 by VRS  |  Email |Print

The decade-long surge in foreign-currency reserves held by the world’s central banks is coming to an end. Global reserves declined to $11.6 trillion in March from a record $12.03 trillion in August 2014, halting a five-fold increase that began in 2004, according to data compiled by Bloomberg.
While the drop may be overstated because the strengthening dollar reduced the value of other reserve currencies such as the euro, it still underlines a shift after central banks — with most of them located in developing nations like China and Russia — added an average $824 billion to reserves each year over the past decade. Beyond being emblematic of the dollar’s return to its role as the world’s undisputed dominant currency, the drop in reserves has several potential implications for global markets………………………………………..Full Article: Source

Currency union unlikely in near future - expert

Posted on 07 April 2015 by VRS  |  Email |Print

The New Zealand dollar is approaching parity with its Australian counterpart and could be worth more by the end of today. The NZ dollar was worth about 99.4 Australian cents this morning and over the weekend went as high as 99.7c.
The Reserve Bank of Australia is expected to drop its benchmark interest rate today, which could see the Aussie drop further. The New Zealand dollar is at its highest level since 1985, when the dollar was floated. “It makes in incredibly cheap to go to Australia but exporters to Australia are being hurt badly by this,” said Derek Rankin, of Rankin Treasury Advisory………………………………………..Full Article: Source

Europe’s Currency Manipulation

Posted on 02 April 2015 by VRS  |  Email |Print

The Transatlantic Trade and Investment Partnership (TTIP), which the European Union and the United States currently are negotiating, would, studies say, boost welfare and reduce unemployment in both economies, as well as in other countries. At the same time, the TTIP could help to restore confidence in Europe and the transatlantic community. But there is one major barrier to realizing these benefits: the euro.
The problem stems from currency manipulation. Over the past three decades, the US has de facto tolerated currency manipulation by its major Asian trading partners, which built up large trade and current-account surpluses by suppressing the value of their currencies………………………………………..Full Article: Source

China not quite ready for IMF currency basket

Posted on 01 April 2015 by VRS  |  Email |Print

The United States feels China’s yuan does not yet meet the standards for inclusion in the International Monetary Fund’s basket of global currencies, Treasury Secretary Jack Lew said on Tuesday. The yuan’s inclusion in the basket, which defines the value of the IMF’s reserve assets, would add to China’s global status while encouraging more central banks to hold the currency.
Currently the basket includes the dollar, the yen, the euro and the pound, and the IMF is reviewing the composition of the basket this year. Officials at the international lender look for a currency to be used heavily in international trade as well as freely convertible. Lew said that China had more work to do………………………………………..Full Article: Source

Eurozone: Welcome to your currency board future

Posted on 01 April 2015 by VRS  |  Email |Print

Citi’s Chief Economist Willem Buiter spent some time with FT Alphaville explaining why he believes Draghi’s concession on profit and loss sharing among ECB member national central banks turns, in all likelihood, the single monetary unit into nothing more than a glorified currency board.
Quick background: The ECB’s profit-and-loss sharing mechanism became a key negotiating point ahead of European QE. For the Bundesbank, QE was only viable if NCBs assumed most of the responsibility for losses on assets they brought into the consolidated balance sheet. In the end Draghi acquiesced by reducing risk-sharing to only 20 per cent of assets………………………………………..Full Article: Source

Use of China’s Yuan as Global Payment Currency Falls

Posted on 31 March 2015 by VRS  |  Email |Print

China suffered a second setback in as many weeks in its drive to boost the use of its currency abroad, even as the country steps up efforts to open up its capital account. The use of the Chinese yuan as a currency for world payments fell two places to seventh in February, with a share of 1.81%, according to the Society for Worldwide Interbank Financial Telecommunication, or Swift, in a report Monday.
That compares with a record-high 2.17% in December, according to the organization that is used by banks to coordinate international transactions. The 20.4% drop compared with January is a reversal from November when the yuan broke into the top five of world payment currencies last year, overtaking the Canadian dollar and Australian dollar by value………………………………………..Full Article: Source

Currency Wars: The Swiss Case

Posted on 31 March 2015 by VRS  |  Email |Print

This past January, the Swiss National Bank caused panic in the world of central banking when it announced that it would no longer hold the euro at a fixed exchange rate with the Swiss franc. On January 14, one euro was equivalent to 1.2 Swiss francs; after the statement was made the following day, the euro drastically dropped to just 0.85 to the franc.
Switzerland’s economy is highly reliant on its exports, meaning that a higher value of the franc over foreign currency means losses for the country and its industries. The removal of the peg did indeed cause huge losses for hedge fund holders across the world, and it also triggered the start of the collapse of the Swiss stock market………………………………………..Full Article: Source

Why Brazil’s currency is having a real tough time

Posted on 30 March 2015 by VRS  |  Email |Print

The Brazilian real moved sharply lower Friday after a gross domestic product report showed Brazil’s economy contracted in the fourth quarter compared with the same period a year earlier. The real traded at 3.23 to the U.S. dollar, compared with 3.19 Thursday.
The plight of the real, which has lost 18% of its value against the dollar since the beginning of the year, shows how important policy makers’ credibility can be to sustaining foreign investment and economic growth in an emerging market. A recent scandal involving kickbacks at its state-controlled energy company Petrobras, hasn’t helped restore investors’ faith in its economy………………………………………..Full Article: Source

Currency derivatives trading gains momentum

Posted on 30 March 2015 by VRS  |  Email |Print

Volumes in the currency derivatives space are up 80 per cent, compared with that at the start of the financial year. So far in March, the average daily volume for all exchanges combined stood at Rs 32,611 crore, compared with Rs 17,012 crore in April 2014. During this period, the open interest, too, has increased four-fold.
Market players attribute the lifting of trading curbs and stability in the currency as reasons for the gradual uptick in volumes seen in 2014-15. “We have seen a huge build-up of option positions. Regular trading interest in the currency derivatives has improved because of the expansion in the positional limits by the RBI (Reserve Bank of India). Volatility in the currency market has also been low,” said Kishore Narne, associate director and head (commodity and currency) at Motilal Oswal Commodity Broker………………………………………..Full Article: Source

Yuan and Gold: Old Enemies Should Finally Become Friends

Posted on 27 March 2015 by VRS  |  Email |Print

The Communist Party had good reason to avoid the use of gold when it set up China’s financial system, but having a reserve of the metal offers a range of benefits. We’ll never know if there really were 200 chests of gold on the steamer Taiping, as depicted in John Woo’s recent movie The Crossing, but we can verify that 1,317 cases of central bank records were sunk with the ship in 1949.
These documents, including the Draft Agreement on Gold, were the only legal basis the government of the Republic of China had to move the former central bank’s gold reserves to Taiwan so they could be used to “pre-pay military expenses.” With the situation on the mainland growing dire at the end of 1948, Chiang Kai-shek began planning to move all treasury assets to Taiwan, including gold reserves intended to back “jinyuanquan,” the paper money issued by the ROC government in 1948………………………………………..Full Article: Source

Global Currency Trading Principles Said to Be Ready for Release

Posted on 27 March 2015 by VRS  |  Email |Print

Central banks in the world’s biggest currency markets will publish on Monday principles of behavior and ethics for foreign-exchange trading, according to a person familiar with the document. The “Global Preamble: Codes of Best Market Practice and Shared Global Principles,” inspired by a Financial Stability Board proposal in September, was ratified after consultations in eight markets around the world, according to the person, who asked not to be identified because the talks are private.
The global move to improve standards of behavior is part of an overhaul after allegations traders colluded to rig rates in the $5.3 trillion-a-day currency market………………………………………..Full Article: Source

Russian currency rallies to strongest this year

Posted on 26 March 2015 by VRS  |  Email |Print

No more rouble trouble? Russia’s rouble is heading for its seventh consecutive day of robust gains versus the dollar, taking the currency to its strongest level this year, as oil prices have stabilised and a fragile truce in eastern Ukraine continues to hold.
Russia was facing a full-blown currency crisis last year, with the rouble sliding to new record lows almost every day – at one point collapsing to almost 80 per dollar, from about 33 at the start of 2014 – as oil prices dived and the west tightened sanctions against Moscow over its support for Ukrainian separatists………………………………………..Full Article: Source

Give China a Reserve Currency

Posted on 26 March 2015 by VRS  |  Email |Print

As former U.S. Secretary of State Colin Powell famously advised, China favors “overwhelming force” in its campaigns, military or otherwise. Most recently, in a direct challenge to the global economic architecture established by the U.S. and its allies after World War II, Beijing has pledged nearly $200 billion to various new lending institutions and funds — to bolster trade with Europe, establish a footprint in the Indian Ocean, build infrastructure across Asia and generally increase the mainland’s influence worldwide.
A new push to establish the renminbi as one of the world’s reserve currencies adds to this campaign. The move would confer prestige, take America down a peg and attract more investment………………………………………..Full Article: Source

The astounding rise of China’s currency: Don Pittis

Posted on 25 March 2015 by VRS  |  Email |Print

I sometimes wonder how the Communist revolutionary leader Mao Zedong, who warned against taking “the capitalist road,” would feel about his face on all those Chinese bills being traded around the world these days. As of this week, the renminbi is being traded in a major way in Canada as well, after Finance Minister Joe Oliver opened North America’s first Chinese currency trading hub Monday night in Toronto.
The currency has come a long way since the Chinese Communists began printing their own money in 1948 while the People’s Liberation Army was still battling nationalist forces for control of the country. Shortly after that, China officially named the currency the renminbi, using the characters for people and money. (As the BBC has explained, the currency is called the renminbi, while its unit is the yuan.)……………………………………….Full Article: Source

The Worst Performing Currencies Of 2015

Posted on 25 March 2015 by VRS  |  Email |Print

Speculators, hedgers and investors alike utilize currency markets. International corporations or those companies that import and export must also pay careful attention to fluctuations in foreign exchange (FOREX) rates. Typically, currency prices exhibit low volatility; however, as the first quarter of 2015 draws to a close, it is worthwhile to take a look at the worst performing currencies year to date.
As the U.S. economy recovers, the dollar has strengthened, making it one of the best performers over the last year. This is how other world currencies have fared vs. the dollar. The Russian Ruble was hit hard in 2014, losing nearly 40% of its value following economic sanctions by the West and low oil prices………………………………………..Full Article: Source

Why Currency Weakness Could Pave the Road To Growth

Posted on 24 March 2015 by VRS  |  Email |Print

Is it a coincidence that the U.S. economy’s post-crisis recovery came hand in hand with a weak dollar? Could the U.K.’s rebound have something to do with sterling’s 2007-08 crash? And is there any connection between the fact that both the British and American economies seem to be running out of steam just as their currencies strengthen? Or that the eurozone is simultaneously recovering?
Maybe a lot of the story of post-crisis economics boils down to currency moves. Between January 2009, when the U.S. was in the thick of recession, and the summer of 2011 when the recovery was finally getting under way, the dollar fell nearly 20% relative to other currencies based on how much trade other countries did with the U.S………………………………………..Full Article: Source

Why China Wants Yuan to Be the World’s 5th Reserve Currency

Posted on 24 March 2015 by VRS  |  Email |Print

China is a step closer to obtaining Special Drawing Rights status for its currency from the International Monetary Fund, a move that would see the yuan joining the greenback, euro, yen and British pound.
At a forum on Sunday, central bank Governor Zhou Xiaochuan swapped the topic of a panel discussion so he could pitch the renminbi’s readiness for reserve status to his co-speaker, IMF Managing Director Christine Lagarde. Premier Li Keqiang told Lagarde in a meeting Monday that China hopes to get the IMF’s seal of approval, according to the government. It may have worked………………………………………..Full Article: Source

Does Putin’s Proposed Eurasian Currency Union Make Sense?

Posted on 24 March 2015 by VRS  |  Email |Print

At a meeting in Kazakhstan last week, Russian President Vladimir Putin proposed a currency union for the members of the Eurasian Economic Union (EAEU). Russia, Kazakhstan, Belarus, and Armenia are the current members, and Kyrgyzstan is scheduled to join later this spring. Does a common currency for the EAEU make sense? Not in economic terms, but perhaps there is a political subtext that makes the proposal more understandable.
A currency union is simply a group of countries that share a common currency. The Eurozone (EZ) is the best-known example. The much smaller Common Monetary Area, based on the South African Rand, is another. The 50 states of the United States are sometimes viewed as a currency union for economic purposes, even though the members are not sovereign countries………………………………………..Full Article: Source

Canada Hub Aims to Boost Deals in China Currency

Posted on 23 March 2015 by VRS  |  Email |Print

Canada’s launch of a trading hub Monday will make it easier for companies in the Western Hemisphere to do business in Chinese currency, part of a larger effort to boost trade with the world’s second-largest economy and give its money an expanded role on the world stage.
China’s central bank is backing the new Renminbi Trading Hub for the Americas, which will allow firms in numerous countries to conduct their renminbi transactions through Canadian banks. The system is expected to save companies time and fees while creating new revenue for the Canadian financial institutions that act as hub gatekeepers. Industrial and Commercial Bank of China’s Canadian subsidiary will clear the transactions………………………………………..Full Article: Source

Currency hedging takes on new importance for global stock funds

Posted on 23 March 2015 by VRS  |  Email |Print

As the dollar surged in the last 12 months, David Marcus, head of the Evermore Global Value fund, steadily increased his stake in Europe. He now has 60 percent of his portfolio invested in companies in the euro zone, the largest stake among any global fund tracked by Lipper.
The gains in those stocks wouldn’t matter if the fund wasn’t actively hedging against euro weakness, which it is, helping the fund rise 8.8 percent so far in 2015, putting it among the top-performing global stock funds this year. “We’re stockpickers, and by hedging currencies we can be pure stockpickers without the currency risk,” said Marcus………………………………………..Full Article: Source

Vladimir Putin calls for ‘Eurasia’ currency union

Posted on 23 March 2015 by VRS  |  Email |Print

Has the time come for Russia to dump the rouble and create it’s vision for their own Eastern European economic and monetary block? Back in May, LeapRate reported the on formal signing of partnership of the new ‘Eurasian Union’, which includes Russia, Belarus and Kazakhstan. The partnership, which has been effective from the start of the year, will implement tariff and non-tariff regulations.
The report back in may stated that the newly formed ‘Eurasian Union’ will “gradually align” their currency and monetary policies. Well, 3 months into 2015, the Russian leader is looking to speed things along on the monetary front, especially as the rouble has been battered within the last year………………………………………..Full Article: Source

Four dangerous currency exchange myths

Posted on 23 March 2015 by VRS  |  Email |Print

Being apathetic about currency exchanges rates can be very damaging for your business. Let’s look at some of the dangerous myths that people cling to, to justify keeping their head in the sand.1. What goes up must come down: Or the reverse: that a sinking currency must recover eventually. History tells us that movements in many markets tend to have cycles, but there’s no way of knowing when the tide may turn your way again.
2. Market consensus is pretty reliable: Market consensus a year ago was for AUD/USD to be around 85c by year end. It actually finished 2014 nearer 80c. There were also several predictions for the Aussie to fall below 70c by mid-2014. Again they were wrong: it’s still well above that level now, as we approach Q2 2015………………………………………..Full Article: Source

Sen. Grassley: Time to stand up to China on currency

Posted on 20 March 2015 by VRS  |  Email |Print

Both Democrats and Republicans have exercised too much caution in dealing with China on the issue of currency manipulation, Sen. Chuck Grassley, R-Iowa, said on Thursday. “We’ve never wanted to charge them with manipulation and I think our caution has been to the disadvantage of the American consumer, to the disadvantage of our producers in this country,” he said.
Chinese officials have leaned on the excuse that American concerns about currency manipulation amount to interference in China’s domestic policy, said Grassley, who sits on the Senate’s Committee on Finance and the Joint Committee on Taxation………………………………………..Full Article: Source

Fed Inspired Currency Volatility Seen Weighing on Liquidity

Posted on 20 March 2015 by VRS  |  Email |Print

Foreign-exchange traders better get used to wider swings in exchange rates and less liquidity as the Federal Reserve keeps markets guessing while moving closer to raising interest rates.
Volatility for the dollar jumped to the highest level in 14 years Wednesday after the U.S. central bank indicated the pace of rate increases will be slower than it previously predicted while not ruling out tightening as soon as June. Credit Suisse Group AG said in a note Thursday that “traders described liquidity as being appallingly thin.”……………………………………….Full Article: Source

In boon for bitcoin, UK to regulate digital currency exchanges

Posted on 19 March 2015 by VRS  |  Email |Print

Britain took a significant step towards becoming a global bitcoin hub on Wednesday as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.
Already the center of the $5-trillion-a-day market for traditional currencies, the UK is fast emerging as a center for digital currencies too, cementing its place as European’s financial technology, or “FinTech”, capital………………………………………..Full Article: Source

Sweden’s Krona Tumbles After Riksbank’s ‘Currency War’ Rate Cut

Posted on 19 March 2015 by VRS  |  Email |Print

Sweden’s krona weakened the most in 16 months against the euro after the nation’s central bank cut interest rates and expanded its government-bond purchase plan outside of its schedule for policy decisions.
The Swedish currency depreciated to a six-year low against the dollar as the Riksbank took further steps to combat low consumer price growth, after it exited deflation in February for the first time in seven months. Central banks from the euro area to Denmark are easing monetary policy to revive their economies and prevent significant currency appreciation using measures that include buying public debt and imposing negative interest rates………………………………………..Full Article: Source

Why currency-hedged ETFs are hot

Posted on 18 March 2015 by VRS  |  Email |Print

My colleague Michelle Caruso-Cabrera made some very good points on air today concerning investing overseas: because of enormous moves in currency, buying stocks overseas—including ETFs—can be perilous.
As an example, she notes the German DAX index is up 22 percent this year, but the iShares Germany ETF, which measures the performance of the German equity market, is up only 8 percent in U.S. dollars, thanks to the tremendous drop in the euro (down almost 13 percent against the dollar)………………………………………..Full Article: Source

Commodity Dollars Near Lows Amid Bets Fed Patience Growing Thin

Posted on 18 March 2015 by VRS  |  Email |Print

The currencies of commodity-exporting nations including Australia and New Zealand traded near the lowest in at least four years as traders braced for a Federal Reserve statement that may indicate it’s ready to raise interest rates.
The Australian dollar was less than one U.S. cent away from its lowest since May 2009, while the New Zealand currency was weighed down by a disappointing dairy auction. The U.S. currency dropped for a second day against the euro on Tuesday and slid from the highest since at least 2004 against a basket of major peers after housing starts lagged behind forecasts………………………………………..Full Article: Source

Brazil’s Real Gains as Weak U.S. Data Damp Fed Increase Outlook

Posted on 18 March 2015 by VRS  |  Email |Print

Brazil’s real climbed from a 12-year low as speculation the Federal Reserve will signal it’s in no hurry to raise borrowing costs buoyed emerging-market assets.
The real appreciated 0.2 percent to 3.2397 per dollar at the end of trade in Sao Paulo after dropping to the weakest intraday level since April 2003. Three-month implied volatility on options for the real, reflecting projected shifts in the exchange rate, was the highest among 16 major currencies………………………………………..Full Article: Source

U.S. Dollar Takes Gold ETFs For A Ride

Posted on 17 March 2015 by VRS  |  Email |Print

Gold and bullion-related exchange traded funds have exhibited an inverse relationship against the U.S. dollar, but the moves this time around may not be as severe. Over the past year, the SPDR Gold Shares (NYSEArca: GLD) has declined 16.1%, whereas the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) jumped 24.2%.
Gold has shown a history of moving inversely with the USD. In 1971, U.S. President Richard Nixon ended the U.S. dollar to gold conversion, sending the dollar into a free fall and lifting gold prices to a peak of $850 per ounce, reports Henry Sanderson for the Financial Times………………………………………..Full Article: Source

Goodbye dollar? Here’s the currency of the future

Posted on 17 March 2015 by VRS  |  Email |Print

How will you pay for groceries or gasoline in the future? According to Kabir Sehgal, author of the new book “Coined,” it might not be the old familiar greenback. As technology advances, so do currencies and payment systems.
“Look at Amazon (AMZN) points, Starbucks (SBUX) points. These are effectively the new currencies,” he says. “There are more frequent flyer miles in circulation than dollars, so it’s one of the biggest currencies in the world.” Sehgal believes that the future of money may involve the linking of corporate currencies………………………………………..Full Article: Source

Currency Volatility Damage to Earnings Seen Worsening in Quarter

Posted on 17 March 2015 by VRS  |  Email |Print

After doubling in the fourth quarter, the negative impact of swings in foreign-exchange rates on corporate earnings is likely to worsen in the three months ending March 31. That’s the outlook of FiREapps, a Scottsdale, Arizona-based company that advises businesses on reducing the impact of currency volatility.
For the 846 North American companies monitored by FiREapps during the final three months of 2014, the average negative currency impact was 6 cents per share, more than double the average of 2 to 3 cents for the prior two years………………………………………..Full Article: Source

Commodities fall to 12-year low as dollar rises amid surplus

Posted on 16 March 2015 by VRS  |  Email |Print

Slumping energy prices led commodities to a 12-year low as the dollar’s best rally since 2008 reduced the investment appeal of raw materials amid surpluses of everything from oil to sugar. The Bloomberg Commodity Index fell 1.4 per cent to 97.5777, the lowest level since August 2002, dragged down by crude oil and raw sugar.
The Bloomberg Dollar Spot Index, tracking the greenback against 10 currencies, is set to climb the most since 2008 this quarter and reached the highest level in data going back to the end of 2004. A stronger dollar tends to deter investment in raw materials. Commodities are tumbling as economies expand in the US and cool in other nations, driving the dollar higher. The Federal Reserve will hold a policy meeting this coming week as strength in the US labour market fuels speculation that the central bank will lay the groundwork for higher borrowing costs………………………………………..Full Article: Source

No, We’re Not in a Currency War

Posted on 16 March 2015 by VRS  |  Email |Print

Anyone paying attention to the financial media could easily get the impression that the world is hellbent on stealing the U.S. economic recovery. Central banks from Frankfurt to Beijing, the story goes, are pushing down their currencies’ exchange rates against the dollar — and against one another — in a craven effort to make their exports cheaper.
Lest this “currency war” meme lead politicians to do anything inadvisable, let’s be clear: It’s a load of baloney. True, there has been a lot of action lately in foreign-exchange markets. Even as the U.S. Federal Reserve has moved toward raising interest rates, policy makers in other major economies — Europe, Japan and China — have been pushing rates down, sometimes into negative territory………………………………………..Full Article: Source

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