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Have the Swiss adopted a new currency peg?

Posted on 03 February 2015 by VRS  |  Email |Print

There is growing speculation that the Swiss National Bank (SNB) has set a new target for the country’s currency, as the Swiss franc continues to tick lower against the euro. Swiss newspaper Schweiz am Sonntag reported Sunday that the SNB was aiming to keep the Swissie trading between 1.05 - 1.10 euros ($1.19 - $1.24), citing sources with knowledge of the situation.
It comes after the SNB shocked markets by dropping its three-year-old peg of 1.20 Swiss francs per euro on January 15. Following the decision to scrap the peg, the Swiss franc soared around 30 percent against the euro, as investors piled into the currency which is traditionally seen as a “safe-haven.” ……………………………………….Full Article: Source

Oil rebound lifts commodity currencies, Aussie awaits rate test

Posted on 03 February 2015 by VRS  |  Email |Print

The Canadian dollar and Norwegian crown held onto solid gains early on Tuesday, having rallied on a further rebound in oil prices which also led other commodity currencies higher as well. With the U.S. dollar sidelined for the moment against the yen and euro, it was time for beaten-down currencies to regain some ground. The Canadian dollar rallied to C$1.2557 per USD , well off a near six-year low of C$1.2800.
The Norwegian crown climbed to 7.6142 per USD, up 2.3 percent in the past two sessions. It also rose against the euro, which plumbed a two-month low of 8.6292 crowns at one stage………………………………………..Full Article: Source

The Swiss Currency Shock Explained

Posted on 02 February 2015 by VRS  |  Email |Print

Will the global economy remain global? Are we about to see the global economy fracture into smaller pieces as it was in the past? The latter possibility might sound outlandish at the moment, but it could become a reality at least to a certain extent. The key is to listen to the messages the markets are sending.
One clear message was recently sent by the Swiss National Bank after it scrapped its three-year currency cap of 1.20 francs per euro. That message: We’re not sure the euro is sustainable, and just in case it’s not, we don’t want to be there when it collapses………………………………………..Full Article: Source

Australian dollar tumbles as global currency war expands

Posted on 30 January 2015 by VRS  |  Email |Print

The Australian dollar plunged against the greenback in the early hours of Friday morning, as central banks around the world move to ease monetary policy against the backdrop of potential US interest rate rises. Shortly after 9am the Aussie is fetching US77.67¢, down from US78.75¢ at Thursday’s local close and US78.86¢ on Thursday morning. It fell as low as US77.20c overnight.
The slide in the Australian dollar was accompanied by falls for the New Zealand dollar and Turkish lira as bets increase that the three nations will be next in line to cut interest rates. The US currency gained versus most major counterparts as the fewest Americans in almost 15 years filed applications for unemployment benefits, a day after the Fed raised its assessment of the economy and played down low inflation………………………………………..Full Article: Source

Currency manipulation: not that one again

Posted on 30 January 2015 by VRS  |  Email |Print

It’s been a few years since the guns of the international currency wars fell silent, or at least until the main combatants turned most of their attention to other things. With the strength of the dollar, however, the issue might easily re-emerge. If it does, even if the eurozone and Japan are the main initial targets, emerging markets are unlikely to be able to sit out a renewed burst of hostilities.
Certainly the discontents in the US Congress who want to insert enforceable rules against currency manipulation into the Trans-Pacific Partnership have several emerging markets and particularly China in mind, even though China is not currently a TPP member………………………………………..Full Article: Source

Commodities and currencies: the uneven link

Posted on 29 January 2015 by VRS  |  Email |Print

It’s a common assertion on Wall Street: when the dollar strengthens, commodity prices soften. The logic makes sense. Most internationally traded commodities are priced in US dollars, as are benchmark futures such as Brent crude oil. So, a rise in the dollar increases the value of the same number of tonnes, barrels or bushels, all else equal.
In the real world, it’s not that simple and anyone betting a bullish dollar outlook will uniformly pressure commodities is asking for trouble. Some commodities are more sensitive to the dollar than others. A case in point is gold. Marketed as a hedge against a depreciating dollar, it has gained nearly 3 per cent in the past year, even as the dollar index rose 17 per cent………………………………………..Full Article: Source

China’s yuan breaks into the world’s top five as payment currency

Posted on 29 January 2015 by VRS  |  Email |Print

China’s yuan broke into the top five as a world payment currency in November, overtaking the Canadian dollar and the Australian dollar, global transaction services organisation SWIFT said on Wednesday.
After nearly a year firmly positioned at seventh spot, the yuan reached a record high share of 2.17 percent in global payments by value and is in sight of the Japanese yen, which has a share of 2.69 percent. The U.S. dollar, euro and British pound remain the top three world payment currencies………………………………………..Full Article: Source

The Currency Wars Are Heating Up

Posted on 29 January 2015 by VRS  |  Email |Print

The thing about currency wars is that somebody has to lose them. Singapore’s was merely the latest in a long list of central banks seeking to use the foreign exchange market as a monetary policy lever when overnight it announced it was reducing the pace at which it will allow the Singaporean dollar to appreciate.
Singapore’s move follows on the heels of rate cuts by the Indian, Canadian and Turkish central banks and the European Central Bank’s huge round of bond purchases announced last week. Not to mention the Bank of Japan ’s warning that it could seek to expand its own already vast quantitative easing program………………………………………..Full Article: Source

Currency-Trading Volumes Jump

Posted on 28 January 2015 by VRS  |  Email |Print

Currency-trading volumes soared to records late last year, according to new data released by six central banks, underscoring the profit opportunities created by a series of monetary-policy shifts around the world.
The average amount of money changing hands daily in foreign-exchange markets around the globe jumped 21% in October from a year earlier, to $4.8 trillion. The data came from surveys conducted twice a year by central banks in the U.K., U.S., Canada, Singapore, Australia and Japan and is thought to cover a majority of currency trading………………………………………..Full Article: Source

DuPont Warns of Currency Headwinds

Posted on 28 January 2015 by VRS  |  Email |Print

DuPont Co. gave a disappointing outlook for 2015, warning its profit would take a significant hit from the strengthening U.S. dollar and weakness in its agricultural-seed business. The company, which faces pressure from activist investor Trian Fund Management LP to split itself up, also said it would reach its goal to cut $1 billion in costs well ahead schedule and outlined plans to return more cash to shareholders through the spinoff of a chemicals division.
“The U.S. dollar continues to strengthen against most currencies and will be a substantial headwind for us in 2015,” Chief Financial Officer Nick Fanandakis said on a conference call on Tuesday to discuss DuPont’s fourth-quarter results………………………………………..Full Article: Source

EM currency boost seen as euro weakens

Posted on 27 January 2015 by VRS  |  Email |Print

As the dust settles on the euro in the wake of the European Central Bank’s decision to launch full-blown quantitative easing, investors and analysts are now asking: can the single currency only go down from here?
The fall in the euro’s value has already been substantial. The single currency has dropped nearly 8 per cent this year against the dollar and is down 17 per cent in the past six months, as investors have increasingly priced in the probability that the ECB would eventually buy government bonds to help stimulate the struggling eurozone economy………………………………………..Full Article: Source

Yuan suffers biggest loss since 2008

Posted on 27 January 2015 by VRS  |  Email |Print

Biggest two-day loss for currency since the onset of global financial crisis. The yuan’s value tested the boundaries of what the authorities will tolerate on Monday, trading as much as 1.94 percent weaker than the lower limit of the People’s Bank of China’s reference rate.
Further declines are possible as the dollar has been strengthening in response to the European Central Bank’s quantitative easing program and the outcome of the Greek parliamentary elections, analysts said. But they said that China still has plenty of tools to prevent a sharp decline………………………………………..Full Article: Source

Gold spike in major currencies a remarkable start to 2015

Posted on 26 January 2015 by VRS  |  Email |Print

The new year has ushered in a remarkable and unexpected turn of events for gold. It is up significantly in four of the seven top currencies (the euro, British pound, Australian and Canadian dollars), up respectably in two others (U.S. dollar and Japanese yen) and down slightly in the last (Swiss franc).
The significant gains in gold’s value in a very short period of time demonstrate amply the value of gold as a hedge, not just against inflation, but against sudden currency devaluation and systemic financial and economic risks as well. In short, it is important to see that gold owners in these countries got the protection they sought against adverse circumstances when they first purchased the metal. In short, gold has performed as advertised………………………………………..Full Article: Source

Here Is Why Switzerland Did NOT Start a Currency War

Posted on 26 January 2015 by VRS  |  Email |Print

Not too long ago, the Swiss National Bank (SNB) gave up the peg it had maintained for years between its franc and the euro. Market reaction was sudden. Within minutes of the announcement, the franc, or swissie as it is called in currency-trading circles, rose almost 40 percent against the euro. Several articles in the financial media described these events as the start of a “currency war.” That is a catchy phrase.
It is nonetheless misplaced. Recent and likely currency moves are much less a matter of targeted, warlike policies than they are a reflection of economic and financial fundamentals that have continued, and for the time being at least will continue, to favor the swissie and the dollar over the euro and most other currencies. The only targeted currency policy was Switzerland’s efforts to keep its franc cheap, and the central bank’s action signals defeat, not the start of a war………………………………………..Full Article: Source

Global interest grows in China’s currency, debt: Fitch

Posted on 26 January 2015 by VRS  |  Email |Print

The Chinese currency yuan, or renminbi, continues its ascent among international payment settlements, trade and currency investment, ratings agency Fitch said in their latest report. A rapidly expanding network of offshore yuan clearing centers has facilitated direct access to China’s onshore financial markets, Fitch said.
“We expect the proliferation of these offshore clearing centers to drive greater issuance of dim sum bonds by both Chinese and non-Chinese governments, financial institutions and corporates in 2015,” it said. Dim sum bonds are yuan-denominated bonds issued outside the Chinese mainland. They originated in Hong Kong and the term comes a style of essentially Cantonese cuisine that involves a variety of small delicacies………………………………………..Full Article: Source

Devaluation and discord as the world’s currencies quietly go to war

Posted on 26 January 2015 by VRS  |  Email |Print

As quantitative easing spreads from country to country, investors are left nervous and discouraged: and stagnation follows. There is every sign that the European Central Bank’s €1.1 trillion stimulus package is going to unleash a long period of beggar-thy-neighbour currency wars. Maybe not quite in the way that wrecked the global economy in the 1930s – triggering retaliatory trade tariffs and sending industrial production spiralling downwards.
But enough to dampen the enthusiasm of exporting companies which might be thinking of expanding output. This is a war that pits the central banks of the world’s major trading blocs against each other and, as currencies yo-yo in value, creates a nervousness and caution among investors that can create years of stagnation………………………………………..Full Article: Source

Commodity currencies face race to the bottom?

Posted on 23 January 2015 by VRS  |  Email |Print

Commodity currencies may face a race to the bottom as the Bank of Canada’s surprise rate cut sent the Canadian dollar to five-year lows and could pressure Australia’s central bank to follow suit.
“The reason [the Bank of Canada] cut rates is largely weaker oil prices. Australia is also a commodity exporter. The market could be excused for anticipating the RBA (Reserve Bank of Australia) would adopt a similar viewpoint,” said Greg Gibbs, senior foreign-exchange strategist at RBS……………………………………….Full Article: Source

Why ECB action is likely to stoke global currency wars

Posted on 23 January 2015 by VRS  |  Email |Print

Will quantitative easing by the European Central Bank succeed? Here’s a tip: watch the euro. Although Mario Draghi, president, denied it was a target, the weakening currency could prove the most effective channel through which QE reaches the real economy.
A lower euro will boost exports and, crucially, lift inflation. If it looks as if the ECB has increased the hostility of a global currency war, there is a good reason: it has. Like the Bank of Japan, the ECB is implicitly using an important reserve currency as a policy weapon………………………………………..Full Article: Source

Goldman’s Cohn: “We are in currency wars”

Posted on 23 January 2015 by VRS  |  Email |Print

Countries around the world are already engaged in a currency war in a bid to boost growth, Gary Cohn, the president and chief operating officer of Goldman Sachs, said on Thursday.
“We are in currency wars,” Cohn told a panel discussion at the World Economic Forum in Davos, Switzerland. “The prevailing view is that the easy way to stimulate economic growth is to have a low currency.”……………………………………….Full Article: Source

Is Dollar Next? Investors Reassess After Swiss Shock: Currencies

Posted on 22 January 2015 by VRS  |  Email |Print

After Switzerland shocked markets by scrapping its currency cap, investors are beginning to ask whether a policy surprise may be lurking for the dollar, too. Samson Capital Advisors LLC said the Swiss move, which sent the franc surging as much as 41 percent against the euro last week, was “a good reminder” of the risks of following the herd, just as speculators pushed bets on a dollar rally to a new high.
A shock from the Federal Reserve, such as raising interest rates less quickly than investors expect, may derail the greenback after it advanced to the highest in a decade, State Street Global Advisors Inc. warned………………………………………..Full Article: Source

Egypt’s currency falls to historic low against dollar

Posted on 22 January 2015 by VRS  |  Email |Print

Egypt’s currency has fallen to a historic low against the dollar after a central bank auction. The bank said it offered 40 million dollars on Wednesday, selling a total of $38.4 million at a cutoff rate of 7.34 Egyptian pounds per dollar.
The central bank, which controls the official exchange rate, has allowed the currency to slide several times over the last week. On the black market it has traded even lower, with dollars fetching up to 7.94 Egyptian pounds at private exchanges………………………………………..Full Article: Source

Commodity Currencies: What’s Behind The Big Moves?

Posted on 21 January 2015 by VRS  |  Email |Print

It is a new trading week and currencies are on the move. The Canadian and New Zealand dollars saw the largest swings intraday with the yen pairs not far behind. USD/CAD rose to its strongest level in 5.5 years ahead of the Bank of Canada’s monetary policy announcement.
While the BoC is not expected to lower interest rates, the decline in oil prices, job losses in December, slowdown in manufacturing activity, drop in housing starts and building permits gives them plenty of reasons to be concerned about the outlook for their economy. Since their last monetary policy meeting on December 3, oil prices dropped more than 30% and this morning we learned that manufacturing sales dropped for the second month in a row………………………………………..Full Article: Source

Obama’s Currency Manipulation Dilemma: Pay Me Now Or Pay Me Later

Posted on 21 January 2015 by VRS  |  Email |Print

A vital aspect of free and fair trade is that countries that trade with one another shouldn’t artificially devalue their currencies in order to make their imports and exports more profitable at their trading partners’ expense.
Currency manipulation is no small thing and it’s widespread. The way it works is that a central bank buys a lot of foreign currency, usually dollars, in order to lower the value of its own currency against the foreign one. That makes exports less expensive and more attractive to foreign buyers………………………………………..Full Article: Source

Denmark vows to keep currency peg, likely to cut rates on Thursday

Posted on 21 January 2015 by VRS  |  Email |Print

Denmark’s political and central banking establishment is uniting in a campaign to kill speculation that the country might follow Switzerland in scrapping a currency link to the euro.
With markets expecting upward pressure on the Danish crown to persist, most analysts predict an interest rate cut as soon as Thursday - which would be the second this week - if the European Central Bank moves to stimulate the euro zone economy………………………………………..Full Article: Source

How Can Exchanges Compete with a Bitcoin ETF?

Posted on 20 January 2015 by VRS  |  Email |Print

Much of the bitcoin community is excited at the prospect of a bitcoin ETF due to the assumption that it could bring many new speculators into the market. After all, if everyone with access to assets traded on the NASDAQ can just as easily trade bitcoin in the same account as their other investments, it’s possible that more traditional investors may take a shot at the digital currency.
While there’s been plenty of attention on the possible Winklevoss bitcoin ETF, there hasn’t been much discussion on the effect the ETF could have on current bitcoin exchanges. Once traders have access to a regulated bitcoin ETF on the NASDAQ, why would they spend time trading on one of the frequently-hacked bitcoin exchanges?……………………………………….Full Article: Source

Will Denmark be the next country to cause currency chaos?

Posted on 20 January 2015 by VRS  |  Email |Print

Investors are worried that the Danish central bank could abandon its peg, following the Swiss in eschewing the link between its currency and the euro. In the aftermath of the market panic triggered by the Swiss National Bank’s shock decision to scrap its euro ceiling for the franc, investors are asking whether Denmark could do the same.
Denmark is the last major economy to peg its currency - the krone - to the euro, and has conducted a fixed exchange rate policy since the 1930s………………………………………..Full Article: Source

The Truth About Currency Manipulation

Posted on 20 January 2015 by VRS  |  Email |Print

U.S. President Barack Obama’s signature international economic initiative, and the centerpiece of his pivot to Asia, is the Trans-Pacific Partnership (TPP), a trade agreement of a dozen Asia-Pacific countries. But the partnership faces a major hurdle. Bipartisan majorities of both houses of Congress insist that the TPP forcefully address the manipulation of exchange rates, the practice through which some countries keep their currencies artificially weak and thus unfairly make their exports more competitive.
The U.S. auto industry, likewise, has indicated that it will oppose the TPP unless the issue is effectively addressed, and it has politically important supporters in the labor unions and the steel industry. At the same time, however, many observers believe that a U.S. effort to raise currency concerns would torpedo the agreement. ……………………………………….Full Article: Source

Commodities shaken by the Swiss depeg from euro

Posted on 19 January 2015 by VRS  |  Email |Print

A week of exceptional volatility culminated on Thursday with the shocking move by Switzerland’s central bank. The removal of the Swiss franc’s peg to the euro triggered an unbelievable rush of buy orders into the currency, pushing it as much 40 percent higher against the euro before settling back to a 19 percent gain. By then, however, the damage to market confidence had been done and a major risk-off move had swept across most asset classes, including commodities.
Precious metals saw the biggest gains of the week with both silver and gold dislocating further from the ongoing rise of the dollar. The Swiss move has been interpreted as a precursor for the full scale introduction of quantitative easing by the European Central Bank next Thursday…………………………………………Full Article: Source

Q&A: Why Switzerland has ditched its currency ceiling

Posted on 19 January 2015 by VRS  |  Email |Print

Why was the Swiss National Bank trying to manage the value of its franc against the euro? During the middle of the eurozone crisis, investors piled into assets they considered safe. The price of gold soared; the precious metal was thought likely to maintain its value even amid economic turmoil.
The same logic applied to Swiss assets. Money piled into the country. The Swiss National Bank decided to implement a minimum exchange rate — capping the value of the franc at just over à0.83 — to keep things under control and ensure the country’s exporters were not hurt by the franc getting too strong………………………………………..Full Article: Source

Swiss Currency Has Shot Up 15% So Far Today. Here’s Why That Matters

Posted on 16 January 2015 by VRS  |  Email |Print

Chaos in the currency market is a sign of deep problems for Europe—and the whole global economy. The global economy got a lot more interesting today, and maybe a little more scary, when the Swiss National Bank ended its commitment to a fixed exchange rate between the Swiss Franc and the euro.
Currency markets went into a frenzy. The Swiss franc immediately rose 30% in value against the euro, mirrored by a spike in its U.S. dollar value. Some of those gains have pulled back, with the currency up about 15% at midday. That’s still a huge move………………………………………..Full Article: Source

Currencies: Going cuckoo for the Swiss

Posted on 16 January 2015 by VRS  |  Email |Print

Currencies don’t normally move that far on a daily basis—2 to 3% is a big shift. The exception is when a country on a fixed exchange rate suffers a devaluation; then a 20-30% fall is a possibility. But a 20-30% plus upward move is almost unprecedented. That, however, is what happened to the Swiss franc on January 15th, as Switzerland’s central bank abandoned its policy (instituted back in 2011) of capping the currency at Sfr1.20 to the euro.
Only a month ago, the central bank said it would enforce the policy with the “utmost determination”. The Swiss National Bank (SNB) announced that: The minimum exchange rate was introduced during a period of exceptional overvaluation of the Swiss franc and an extremely high level of uncertainty on the financial markets………………………………………..Full Article: Source

China’s yuan shifts into currency major league

Posted on 15 January 2015 by VRS  |  Email |Print

After a surge in interest last year, China’s yuan is heading for the currency major league, with trading volumes more comparable to the euro, sterling, Australian dollar and Swiss franc than its emerging market peers.
Offshore trading in the yuan, whose convertibility is still tightly controlled by Beijing, soared some 350 percent on Thomson Reuters trading platforms in 2014. Rival platform EBS - the main venue for dollar, yen and euro trading - told Reuters the yuan ended last year as one of its top five traded currencies………………………………………..Full Article: Source

2015: The Currency War

Posted on 15 January 2015 by VRS  |  Email |Print

War sounds scary. In the traditional sense, war evokes casualties and loss. For investors, currency wars simply convey economic redistribution. For instance, if there were only two stores in town selling identical items and one store raised prices while the other store lowered prices, demand would certainly follow the discount … but overall demand would be the same.
Think of global central banks as the pricing departments for their respective countries. With sluggish demand and inflation pestering global economies, pricing departments have to become more aggressive to lure shoppers. So don’t be scared, but be aware. Currency war games will direct markets in 2015. Now let’s meet the combatants ………………………………………….Full Article: Source

Russia’s Ruble Sinks to Lowest Level Since December Currency Ru

Posted on 14 January 2015 by VRS  |  Email |Print

Russia’s ruble Tuesday sank to its lowest levels since a run on the currency mid-December, wounded by a fresh slump in oil prices and rising fears that the central bank’s emergency measures to rescue the currency last month aren’t enough to staunch the crisis.
New selling pressure is possible before the end of the week, traders say, when Russian government officials are expecting rating firm Standard & Poor’s to downgrade Russia’s status to junk………………………………………..Full Article: Source

The dollar will again shake the world in 2015

Posted on 14 January 2015 by VRS  |  Email |Print

The U.S. dollar, which rapidly strengthened in 2014, shook the world’s several local currencies, strong or weak, last year. Many local currencies lost value against the dollar. The euro, especially in the second half of 2014, was seriously shaken, but nevertheless, its annual average value in 2014 was the same as its average annual value in 2013. Thus, its position against the dollar stayed the same on an annual average basis. But it is difficult to say the same for 2015.
The Japanese yen, the British pound, Norwegian, Swedish and Danish krone and the Canadian dollar were all currencies that continuously lost value against the U.S. dollar. The rates are, of course, different; the currencies of emerging countries, including Turkey, lost values in different rates………………………………………..Full Article: Source

On track for a weaker yuan in 2015

Posted on 13 January 2015 by VRS  |  Email |Print

On 29 December, the State Administration of Foreign Exchange (SAFE) in China released its statement of China’s Net International Investment Position (IIP) for the third quarter of 2014. IIP is a statement of how much foreign currency assets the country has and how much of foreign currency liabilities the country has incurred. China’s net IIP declined in the third quarter.
The net IIP was $1.8 billion compared to $1.97 billion at the end of 2013. This has occurred despite the slight rise in China’s foreign exchange reserve assets from $3.88 trillion to $3.95 trillion during the same period. The culprits are the rise in (a) foreign currency loans and (b) currency and deposits. The latter refers presumably to foreign currency loans of the banking system………………………………………..Full Article: Source

Czech Koruna, The World’s Worst Performing Currency

Posted on 13 January 2015 by VRS  |  Email |Print

What’s the worst performing currency so far in 2015? Not the oil-soaked Norwegian krone, or even the crisis-hit Russian ruble. Nor the swooning euro or sterling. All have been pipped to the New Year’s wooden spoon by a perhaps surprising candidate: the usually dull Czech koruna.
The currency weakened by 1% against the euro on Monday following some disappointing retail sales data from the Czech Republic, taking its losses for the year so far to 2.7%. The prospect of further easing from the European Central Bank is dragging down the euro side of the equation here, but against the dollar, no currency has fared worse in 2015 than the koruna’s 5.4% loss………………………………………..Full Article: Source

Currency swings pose challenges for Asian groups

Posted on 12 January 2015 by VRS  |  Email |Print

Viewed from the South Korean port of Ulsan, home to the world’s largest shipbuilder Hyundai Heavy Industries, it is jackpot time on the international currency markets. Hyundai derives nearly all its revenues in dollars, a rising currency, while a big chunk of its spending is in weak euros — a sweet equation for its bottom line.
Machinations at the Federal Reserve and European Central Bank are reverberating across Asia through the currency markets, and for many companies, the impact is not as benevolent as at Hyundai. Makita, a Japanese power tool maker which generates 40 per cent of its sales in Europe, loses Y600m of operating profit for every Y1 rise against the euro………………………………………..Full Article: Source

How to Stop Currency Manipulation

Posted on 12 January 2015 by VRS  |  Email |Print

If the new Congress can agree on anything this year, it may well be the Trans-Pacific Partnership, a trade deal between the United States and 11 other countries throughout the Asia-Pacific region. Passions run high when it comes to trade deals these days, and the Obama administration is working hard to sell it to labor unions, which roundly oppose it.
So far the pitch has been about what the deal, as written, will do to help the American economy — a pitch that hasn’t won over many, on either side of the partisan divide. But there’s one thing the administration can do that will both win over some opponents and address one of the biggest issues in global trade: add a chapter on currency manipulation………………………………………..Full Article: Source

Beware the Currency Wars of 2015

Posted on 09 January 2015 by VRS  |  Email |Print

It will be very difficult to avoid deflation and promote growth in 2015 and beyond without major changes to the global monetary system, some of which are unthinkable right now. Policy makers in Asia and Europe are already devaluing their currencies, apparently driven by the failure of low interest rates to stimulate investment and by the recognition that the U.S. is the only place that is showing real growth.
Making their exports cheaper, they believe, will help their economies grow. The problem is that if every country devalues its currency, no one wins. And if devaluations become more aggressive and disorderly, it could create great systemic risks world-wide. Dollar borrowers would struggle to find liquidity. U.S. corporations would see their export markets evaporate………………………………………..Full Article: Source

2015: The Year Of Currency Hedging

Posted on 09 January 2015 by VRS  |  Email |Print

One of the great things about exchange-traded funds is that they put institutional-quality tools within reach of every investor. Take the Schwab U.S. Equity ETF: The fund charges 0.04 percent per year, and provides exposure to essentially every stock listed on a U.S. exchange. You can’t get much better than that.
One of my favorite developments along these line in recent years is the advent of currency-hedged ETFs. In 2015, I think they can be critical tools for investors. Most investors don’t realize it, but when you invest in international stocks, currency movements have a huge impact on your returns………………………………………..Full Article: Source

Bitcoin: The magic of mining

Posted on 09 January 2015 by VRS  |  Email |Print

A huge aircraft hangar in Boden, in northern Sweden, big enough to hold a dozen helicopters, is now packed with computers—45,000 of them, each with a whirring fan to stop it overheating. The machines work ceaselessly, trying to solve fiendishly difficult mathematical puzzles. The solutions are, in themselves, unimportant. Yet by solving the puzzles, the computers earn their owners a reward in bitcoin, a digital “crypto-currency”.
The machines in Boden are in competition with hundreds of thousands more worldwide. The first to solve a puzzle earns 25 bitcoins, currently worth $6,900. Since bitcoin’s invention in 2008 by a mysterious figure calling himself Satoshi Nakamoto, people have increasingly traded it for real money, albeit at a wildly varying price……………………………………….Full Article: Source

Indexology: A strong US dollar isn’t bad for all commodities

Posted on 08 January 2015 by VRS  |  Email |Print

A strong US dollar is generally bad news for commodities since historically as the US dollar strengthens, goods priced in dollars become more expensive for other currencies. The historical negative relationship between the US dollar and the S&P GSCI is shown below.
While the broad based indices are negatively correlated with the U.S. dollar, some commodities are more negatively correlated with the US dollar than others. In the long term, since the inception of each single commodity index, ten commodities have a lower than -0.3 correlation to the US dollar: lead, copper, aluminum, nickel, gold, Kansas wheat, Brent, WTI, unleaded gasoline and gasoil with lead leading the pack with the biggest negative relationship at -0.52………………………………………..Full Article: Source

Sterling a thing of the past in commodity pricing

Posted on 08 January 2015 by VRS  |  Email |Print

Sterling — once the dominant currency of commodities markets during the golden years of the British empire — now only keeps its status in a handful of raw materials, the largest being cocoa. If some traders get their way, the British pound could become a thing of the past there too.
As recently as 1993, sterling was still playing a major role in commodities markets.The London Metal Exchange copper contract was denominated in the UK currency until then and shifted to dollars after the ERM crisis; aluminium traded in sterling until 1987, as was tea until 1992 and robusta coffee, the lower quality coffee bean used for instant granules………………………………………..Full Article: Source

Russia’s Currency Crisis Continues: The Ruble Is Crashing Again

Posted on 07 January 2015 by VRS  |  Email |Print

As the price of oil continues its relentless and seemingly unstoppable march down towards $50 a barrel, there has been growing chaos in the Russian financial system. The partial calm of late December, after heavy Central Bank intervention succeeded in putting a temporary halt to the currency’s swoon, has decisively ended.
Earlier today the risk of insuring Russian government bonds against default rose to the highest level since the worst days of the 2009 financial crisis, reflecting widespread concern among investors that “a cut in the nation’s credit rating to junk is imminent.” Perhaps market sentiment about Russia could get worse, but it’s hard to see how………………………………………..Full Article: Source

“Funerals” for Lithuania’s National Currency: Lithuania Joins the Euro

Posted on 07 January 2015 by VRS  |  Email |Print

There was something touching in the symbolic funeral in Vilnius held for the Lithuanian currency, the litas, which received its resting notice as the country formally adopted the euro on January 1. The litas had been in use between 1993 and 2014. If you had asked Nigel Farage of Britain’s UK Independence Party about the service, he would probably have suggested they were burying the wrong one. (The colourful populist insisted on a mock burial of the euro in 2011.)
Moving over to the euro was always a thorny issue. A November poll suggested that 39 percent of the population was against it. Their grounds of suspicion were well founded. While supporters of the euro’s adoption believe – and in this, it is very much a belief – that the adoption of the currency will lead to easier foreign loans and investments – the converse may actually be true………………………………………..Full Article: Source

Belarus lowers official currency rate by 7 pct vs dollar

Posted on 06 January 2015 by VRS  |  Email |Print

The Belarus central bank said on Monday it was lowering its official rate for the Belarussian rouble versus the dollar by around 7 percent, its latest step to defend the currency from the market turmoil affecting neighbouring Russia.
The bank said it was reducing the currency’s official rate to 12,740 roubles per dollar starting on Jan. 6 from 11,900 roubles on Monday and had reduced to 10 percent the tax on buying foreign currency that it had put in place because of increased demand………………………………………..Full Article: Source

Europe readies for another Greek currency crisis

Posted on 06 January 2015 by VRS  |  Email |Print

Talk of Greece crashing out of the euro is back. And the question of whether Europe can handle another crisis in Greece is heightening financial uncertainty for the currency union just as it is struggling to grow and create jobs.
Some analysts and politicians say Greece 2.0 wouldn’t be as rough on the eurozone as the original Greek crisis and default in 2010-2012. They claim the currency bloc has new safeguards. Most investors seem to agree for now. Others argue that’s dangerous complacency………………………………………..Full Article: Source

Why The Canadian Dollar Is Under Pressure

Posted on 05 January 2015 by VRS  |  Email |Print

The Canadian dollar has fallen alongside commodity prices. Global policy in 2014 was not supportive of commodity producers. As the U.S. dollar continues to strengthen, further weighing on commodity prices, the Canadian currency could fall further.
The Canadian dollar continues to fall as commodity prices remain under pressure, as well as heightened interest rate expectations for U.S. policy. CurrencyShares Canadian Dollar Trust is down almost 10% since July, as is seen in the chart below………………………………………..Full Article: Source

Dollar beat all currencies in 2014

Posted on 05 January 2015 by VRS  |  Email |Print

The dollar continued its world-beating ways on speculation the Federal Reserve will raise interest rates this year while other central banks extend stimulus measures. The US currency climbed versus all of its 16 major peers in 2014 and extended those gains Friday as two manufacturing gauge signaled expansion.
The euro slumped to a 4 1/2-year low after European Central Bank President Mario Draghi said he can’t exclude the risk of deflation and signaled the likelihood of quantitative easing is increasing. The Swiss franc weakened to parity with the dollar for the first time in four years and the pound fell as UK factory output slowed………………………………………..Full Article: Source

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