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Currency conduct code wants raucous traders to clean up their language

Posted on 27 May 2016 by VRS  |  Email |Print

Code from the Bank for International Settlements backs information sharing in scandal-hit FX market. Raucous currency traders will have to follow much stricter rules when describing market conditions under a new code of conduct designed to restore public confidence in a foreign exchange market hit by scandal.
The code laid out by the Bank for International Settlements on Thursday represents an industry-wide attempt to lay down common standards, conduct and behaviour across all levels of the world’s largest and most liquid market, where $5.3tn is transacted daily………………………………………..Full Article: Source

The Real Threat to Currency Traders

Posted on 27 May 2016 by VRS  |  Email |Print

Today’s the day when regulators give the financial world a glimpse of how they reckon traders in the $5.3 trillion-a-day foreign-exchange market should behave. The code of conduct, or rather voluntary guide, is welcome after the $9 billion in fines and settlements linked to market rigging. Yet banks aren’t likely to wait until 2017 — when the full handbook is released — to decide their future in this business.
The biggest change hitting currency markets is technological: computers are replacing human traders. Not just in the spot market, but also in options and swaps, where electronic trading accounted for an estimated 43 to 57 percent in April, according to Aite Group………………………………………..Full Article: Source

Warning sign: China sets currency at 5-year low

Posted on 27 May 2016 by VRS  |  Email |Print

China’s leaders continue to worry about the country’s economy. The rest of the world should too. On Wednesday, China’s central bank weakened its currency. It set the reference rate for the yuan at the lowest level in five years.
The actual cut was small: only about 0.3%. It didn’t send world markets into a downward spiral like in August, when China devalued its currency by nearly 2%, or in early January, when it cut by about 0.5%. Nevertheless, it’s a warning sign. The reference rate is the level that the People’s Bank of China sets each day, although the yuan is allowed to trade in a range around that price………………………………………..Full Article: Source

Sterling could lose position as elite reserve currency if UK votes for Brexit, warns S&P

Posted on 26 May 2016 by VRS  |  Email |Print

A vote to leave the European Union would threaten sterling’s elite status as an international reserve currency, Standard & Poor’s has warned. The credit ratings agency has claimed that withdrawing from the EU could “jeopardise the British pound sterling’s position”, as well as the associated benefits to the UK’s triple A credit rating. As such, a Brexit might lead the UK to lose its place alongside the US, eurozone, Japan and China in the reserve currency club.
Frank Gill, an S&P analyst, said that a vote to leave the EU on June 23 could deter “foreign investment and other capital inflows into the UK”. Given the size of the country’s current account deficit, described as “alarming” by one Bank of England policymaker, quitting the EU could put downward pressure on the pound, he warned………………………………………..Full Article: Source

Stability in Chinese currency may be at an end, analysts say

Posted on 26 May 2016 by VRS  |  Email |Print

Market commentators said the Chinese currency’s recent stability may have ended and the yuan may weaken. China’s currency — traded onshore — was stable in March and April at about 6.5 to the US dollar.
That stability was likely due to intervention from Chinese officials, Singapore-based Heng Koon How, a senior investment strategist at the private bank Asia Pacific, Credit Suisse, said. All hidden risks have the potential to derail the recent stability in the yuan and drive it lower, he said………………………………………..Full Article: Source

Copper hangs near three-month lows as dollar holds strong

Posted on 25 May 2016 by VRS  |  Email |Print

London copper held near its lowest in three months on Tuesday, pressured by a firmer U.S. dollar following comments by Federal Reserve officials that have bolstered expectations of a June rate hike. The Fed is on track to raise rates in June or July, and will continue with even more hikes next year given U.S. economic strength, a top Fed official said on Monday.
“In addition to a less accommodative rate environment that should continue to pressure base metals over the short-term, we also suspect that technicals are turning against the group,” Ed Meir of INTL FC Stone said in a research note………………………………………..Full Article: Source

Deutsche Bank Woes Infect Currency Trading as Former No. 1 Sinks

Posted on 25 May 2016 by VRS  |  Email |Print

A tough week for Deutsche Bank AG just got worse. The German lender’s share of the $5.3 trillion-a-day currency market tumbled to 7.9 percent, down from 14.5 percent a year earlier, according to a Euromoney Institutional Investor Plc survey.
The bank is the world’s fourth-largest currency trader by market share, sliding from second place in Euromoney’s 2015 ranking after holding the top position from 2005 to 2013. That’s the second blow for Deutsche Bank in as many days, after Moody’s Investors Service on Monday cut the lender’s credit rating to two grades above junk………………………………………..Full Article: Source

Why British environmentalists should vote for Brexit

Posted on 25 May 2016 by VRS  |  Email |Print

The leading lights of the UK environmental movement would have us believe that a win by the Brexit camp on 23 June would be akin to a natural disaster. According to them, it is only our membership of the EU that renders our beaches swimmable, our water drinkable and our air almost breathable.
Freed from the noble, ceaseless efforts of the ever-vigilant EU, troglodyte Britain would tear up decades of environmental legislation and return to our 1970s roots as the “dirty man” of Europe. This is complete and utter tosh………………………………………..Full Article: Source

A Rare Look Inside China’s Central Bank Shows Slackening Resolve to Revamp Yuan

Posted on 24 May 2016 by VRS  |  Email |Print

Behind closed doors in March, some of China’s most prominent economists and bankers bluntly asked the People’s Bank of China to stop fighting the financial markets and let the value of the nation’s currency fall.
They got nowhere. “The primary task is to maintain stability,” said one central-bank official, according to previously undisclosed minutes of the meeting reviewed by The Wall Street Journal. The meeting left little doubt China’s top leaders have lost interest in a major policy shift announced in a surprise move just nine months ago………………………………………..Full Article: Source

HKEX Gets Approval to Launch Four New Renminbi Currency Futures

Posted on 24 May 2016 by VRS  |  Email |Print

Euro, Japanese yen, United States dollar, and Australian dollar futures will be launched against the Chinese renminbi (CNH or offshore RMB) by Hong Kong Exchanges and Clearing (HKEX) which today announced that it received regulatory approval to offer the four new RMB currency futures set to go live on May 30th, 2016.
The cash-settled EUR/RMB, JPY/RMB and AUD/RMB will trade in renminbi, and the RMB/USD futures will be priced in US dollars, and all of them are aimed at appealing to hedgers and the risk-management needs of traders seeking exposure in China’s emerging currency as well as serving the capital efficiency of exchange-traded futures, as per the HKEX update………………………………………..Full Article: Source

Greenback To Pressure Commodities

Posted on 23 May 2016 by VRS  |  Email |Print

The US dollar will now be the major driver for commodity prices after last week’s rather blatant move by the US Federal Reserve to return a rate rise to centre stage. While an increase is possible at next month’s Fed meeting, the July and September meetings look more likely candidates.
For that reason the US dollar will reverse its recent weakness and start rising - and will put downward pressure on commodity prices. The only exception will be the vote on June 23 about UK membership of the EU. A vote to leave would see a sell-off in sterling, a surge in the greenback and also gold. A vote to remain in the EU will see markets quickly focus on the July meeting of the Fed for a rate rise (if there is no increase at the June meeting a week before the EU vote in Britain)………………………………………..Full Article: Source

How The U.S. Dollar Influences Oil Prices

Posted on 23 May 2016 by VRS  |  Email |Print

Crude oil has reached a critical technical level, which is likely to test the resolve of the bulls to push prices higher. The bulls have a favorable tailwind with production outages reducing the supply glut. Till about two weeks ago, the drop in the U.S. dollar was also supportive of the crude oil prices, but since then, the dollar has recovered, putting pressure on the crude oil prices.
The U.S. dollar and the various commodities have an inverse correlation. The chart below shows the correlation between crude and the U.S. dollar index for the past 12 years………………………………………..Full Article: Source

G-7 Shows Gaps on Currency Tactics as Leaders’ Summit Looms

Posted on 23 May 2016 by VRS  |  Email |Print

Two days of talks between finance chiefs from the world’s biggest advanced economies at a hot springs resort in northern Japan were marked by some of the sharpest dissonance in years between the U.S. and Japan over exchange-rate policies.
The tensions at the gathering of Group of Seven central bank governors and finance ministers highlighted a lingering division between the G-7’s two biggest members over the trading conditions that can justify government intervention in the currency markets. Underscoring the wider challenge of tackling the global slowdown, the policy makers agreed on common risks to the international economy but showed no appetite for laying down a shared strategy to combat the problem………………………………………..Full Article: Source

Norway’s krone leads commodity currencies fallers

Posted on 20 May 2016 by VRS  |  Email |Print

A combination of a weaker oil price and more aggressive Federal Reserve hits commodity currencies. Commodity currencies began what looked like a sure and steady retreat from 2016 highs, bowing to the strength of the dollar and a market warming to the idea of a midyear US rate rise.
Norway’s krone led the withdrawal, falling 1.7 per cent since Wednesday to NKr8.36, while the dollar bloc also came under pressure. A month ago, the dollar was worth less than C$1.25 Canadian dollars but will now fetch more than C$1.31………………………………………..Full Article: Source

Japan and the U.S. are headed for a showdown over currency manipulation

Posted on 20 May 2016 by VRS  |  Email |Print

Investors will be watching for signs of tension between Japanese and U.S. powers this weekend, when central bankers and finance chiefs face off in Sendai, a city northeast of Tokyo, for the latest Group of 7 summit.
The two countries have sparred over the dollar-yen exchange rate in the months since the Japanese currency began a prolonged rise against the dollar. The yen has lost nearly 9% of its value relative to the dollar since the beginning of the year………………………………………..Full Article: Source

Time to Put China’s Currency Back on Worry List

Posted on 20 May 2016 by VRS  |  Email |Print

The factors supporting a stable yuan—a weakening dollar and a stabilizing Chinese economy—are reversing. Earthquakes are hard to predict. Tremors in China’s currency, however, have been easier to spot.
Following the release of Federal Reserve minutes Wednesday that signaled coming rate increases, the yuan embarked on a mini flash crash, momentarily trading at 6.614 to the dollar, its weakest level since February. The offshore variant of the Chinese currency quickly recovered some of that ground. But the dislocation, however ephemeral, should be seen as a fair warning………………………………………..Full Article: Source

There’s no reason to fear a currency war: Narayana Kocherlakota

Posted on 19 May 2016 by VRS  |  Email |Print

The U.S. government seems concerned about what will happen if other big nations push down the value of their currencies against the dollar. Actually, it could be good for the global economy.
Ahead of this week’s meeting of finance ministers from the Group of Seven developed nations, Treasury Secretary Jacob Lew has warned that the U.S.’s counterparts — the three largest euro-area nations plus Canada, Japan and the U.K. — might undermine global growth if they engage in policies that cause their currencies to depreciate against the dollar. In my view, his concerns are misplaced………………………………………..Full Article: Source

The ‘truce’ in global currency wars is on borrowed time

Posted on 19 May 2016 by VRS  |  Email |Print

The Chinese metropolis of Shanghai and the city of Sendai in Japan’s north are linked by a twice-weekly three-hour flight. The cost? About £400 or, in the currencies that matter, Rmb3,800 and ¥63,000.
In the broader currency stratosphere, the link between Shanghai and Sendai has greater resonance, offering as good a guide as any to prospects for the global economy and market stability. Twelve weeks ago, at a G20 summit in Shanghai, the world’s big central banks worried about a highly volatile market and how to make monetary policy work………………………………………..Full Article: Source

China Fears Rumble Through Currency Markets

Posted on 18 May 2016 by VRS  |  Email |Print

After a two-month stretch of calm, worries over China are seeping back into the foreign-exchange market. Global markets were roiled by volatility early this year and in August 2015 as investors feared that China’s economy was slowing and its tightly-controlled currency faced devaluation.
Those concerns have died down over the last few months as the Chinese government used credit to fuel economic growth and capital controls helped stem the flow of money out of China. The Federal Reserve’s cautious approach to raising interest rates this year also eased pressure on the yuan by weakening the dollar and allowing the Chinese currency to edge higher in March and April………………………………………..Full Article: Source

Pound Morphing Into Emerging-Market Currency Before Brexit Vote

Posted on 18 May 2016 by VRS  |  Email |Print

With just over a month until the U.K. vote on European Union membership, investors are increasing treating the pound like an emerging-market currency. While sterling was used as a haven during the European debt crisis, the specter of a Brexit has pushed it to the other end of the spectrum.
The correlation between sterling and an index of emerging-market currencies has climbed to the highest since the global financial crisis as the June 23 vote approaches. This suggests that, like developing-nation assets, the pound rallies when the market seeks riskier investments, and vice versa………………………………………..Full Article: Source

Brazil’s Real Rises With Emerging Markets as Commodities Advance

Posted on 17 May 2016 by VRS  |  Email |Print

Brazil’s real joined gains in emerging markets on Monday as commodities advanced, boosting the outlook for the country’s raw-materials exports. The Ibovespa was little changed. The currency strengthened 0.9 percent to 3.5014 per dollar on Monday as metals and crude rallied.
The Bloomberg Commodity Index added 0.8 percent, improving inflows prospects for a country where half of exports are of raw materials. The Ibovespa erased gains and ended little changed at 51,802.92 after earlier gaining as much as 1 percent. Producers account for 22 percent of the index’s weighting………………………………………..Full Article: Source

Russia, Vietnam to Expand National Currency Transactions

Posted on 17 May 2016 by VRS  |  Email |Print

Russia and Vietnam intend to expand the use of national currencies in mutual trade and develop cooperation in the banking sector, Russian Prime Minister Dmitry Medvedev said Monday.
“We have agreed to develop cooperation in the field of banking, and to extend where possible the scope of the use of national currencies in bilateral turnover,” Medvedev said after meeting his counterpart Nguyen Xuan Phuc………………………………………..Full Article: Source

Will the yuan eventually become a truly global currency?

Posted on 16 May 2016 by VRS  |  Email |Print

China’s ascent to the ranks of global economic superpowers is one of the most compelling rags-to-riches stories of our time, but its rise has hardly been smooth sailing. In particular, as China’s economic clout grows, gyrations in the country’s tightly-managed currency have acquired the power to roil world markets and wipe billions off global stock prices.
Take last August when the world’s second-largest economy rattled global investors with a surprise devaluation that guided the normally stable yuan down nearly 5 per cent over a week, causing its biggest one-day loss in two decades………………………………………..Full Article: Source

Top Currency Traders Warn White House Race May Echo Brexit Chaos

Posted on 16 May 2016 by VRS  |  Email |Print

Traders wanting to know what November’s U.S. presidential election will mean for the dollar need look no further than the U.K. The pound plunged to a seven-year low and volatility soared, exceeding all other Group-of-10 nations, on risks created by a referendum on European Union membership.
Given the tough talk on dollar strength from candidates vying for the White House, the greenback is just as vulnerable to politics, according to Deutsche Bank AG, JPMorgan Chase & Co., and Standard Bank Group Ltd………………………………………..Full Article: Source

Hedge Funds Almost Double Currency Algo Trading, Greenwich Says

Posted on 13 May 2016 by VRS  |  Email |Print

Hedge funds almost doubled their use of algorithmic trading in the foreign-exchange market last year, according to Greenwich Associates. Sophisticated investors executed 61 percent of their currency trades via automated computer programs in 2015, up from 33 percent in 2014, the Stamford, Connecticut-based financial-services consulting firm said in a report.
That compares with buy-side institutions more broadly, including pension funds and other asset managers, which used algos to handle 33 percent of volumes versus 27 percent a year earlier, according to a Greenwich survey of more than 1,600 foreign-exchange market participants in North America, Latin America, Europe, Asia, Australia and Japan………………………………………..Full Article: Source

World’s Biggest Currency Trade Stuck in Central-Bank-Induced Rut

Posted on 13 May 2016 by VRS  |  Email |Print

The world’s most widely traded currency pair happens to be one of the most boring as well. The dollar has been hovering around its long-term average against the euro — about $1.11 — since November.
Even amid the U.S. currency’s 3.1 percent decline against major counterparts in the past three months, its 1.1 percent depreciation against the euro was among the smallest. The lack of conviction is seen in the realized volatility, which dropped to the lowest since September 2014………………………………………..Full Article: Source

Syrian currency’s losing streak provokes anger with Assad regime

Posted on 12 May 2016 by VRS  |  Email |Print

Syria’s currency is losing value at one of its fastest rates since the country’s 2011 war began, stoking anger in government-controlled territories against President Bashar al-Assad’s regime as economic woes deepen.
The central bank raised its official exchange rate on Tuesday to a historic high of 620 Syrian pounds to the dollar, close to the exchange rate on the black market, which most Syrians have relied on since the war began. Many saw the move, plus a planned injection of “millions of dollars”, as an attempt to catch up with a market that is running out of state control………………………………………..Full Article: Source

Why being the king of currencies has its pitfalls

Posted on 12 May 2016 by VRS  |  Email |Print

The world is getting an object lesson on the problems of having one dominant global currency and even the supposed prime beneficiary, the United States, can see the downside. Alarming bouts of volatility in world financial markets over the past 12 months have been rooted in a fear of what happens when a world with its highest-ever peacetime debt pile faces even a hint of higher interest rates.
Despite a constant narrative about U.S. households and banks paying down debts ever since the global credit crash eight years ago, any ‘deleveraging’ that did happen was more than offset by higher government, corporate and personal debt around the globe in Europe, China and across emerging markets………………………………………..Full Article: Source

Is Japan about to intensify the global currency wars?

Posted on 11 May 2016 by VRS  |  Email |Print

Are we about to enter a new and more vicious stage in the global currency wars as Japan embarks on a dangerous experiment with “helicopter money”? Certainly, Japan is increasingly venting its dissatisfaction with the strength of the yen. The Japanese currency has climbed more than 10 per cent against the US dollar this year, despite the Bank of Japan’s decision to adopt negative interest rates at the end of January.
On Tuesday, Japanese Finance Minister Taro Aso threatened to intervene in foreign exchange markets, warning that that the Japanese government would not tolerate a persistent “one-sided” rise in the yen. The Japanese government, he warned was “determined to stop it”………………………………………..Full Article: Source

Yen weakens on Japanese minister’s currency intervention rhetoric

Posted on 11 May 2016 by VRS  |  Email |Print

Japan stepped up its currency intervention rhetoric on Tuesday, driving the yen lower despite doubts that the strategy would prove effective in the face of a sceptical market, global growth fears and US antipathy towards forex manipulation.
The yen dropped 0.8 per cent to ¥109.27 in response to comments in parliament by Taro Aso, finance minister, who said a persistent “one-sided” yen would trigger intervention. “[W]e are determined to stop it,” he said, adding the qualifier that there were no plans for a long-term intervention strategy………………………………………..Full Article: Source

How the Dollar Bedevils China’s Currency Holdings

Posted on 10 May 2016 by VRS  |  Email |Print

China’s currency reserves are falling. China’s currency reserves are stabilizing. And depending which way you look at them, both are true. What’s going on?
Data published this weekend by the State Administration of Foreign Exchange (SAFE) showed the country’s reserve pile rose for a second consecutive month by $7.1 billion to $3.22 trillion during April—allaying fears expressed earlier this year that China was burning through its currency holdings in defense of the yuan at an unsustainable rate………………………………………..Full Article: Source

Currency talk: Can the Bank of Japan regain control of the yen?

Posted on 10 May 2016 by VRS  |  Email |Print

It is one of the most thought-provoking issues facing currency markets at the moment – why does the Japanese yen continue to strengthen as its interest rates go negative? In March, the Bank of Japan (BoJ) maintained its negative interest rates highlighting the economy was still fighting deflation and a sinking economy.
The minutes of the BoJ’s March meeting (released last week) are more about what the board members didn’t say, rather than what they did, ANZ FX strategist Sam Tuck says………………………………………..Full Article: Source

Dollar Jump Catches Traders Short in One More Currency Calamity

Posted on 09 May 2016 by VRS  |  Email |Print

Just when investors thought they’d finally made a good call in the currency market, the dollar’s advance messed it up. The U.S. currency on Friday capped its best week all year versus major peers, shortly after hedge funds finally switched to betting on dollar declines, known as going short.
That’s not the only wrong move foreign-exchange managers have made this year — an index tracking their returns shows they’ve failed to turn a profit in 2016. Many of the assumptions traders made at the start of the year turned out to be misguided. Anticipated Federal Reserve interest-rate increases have failed to materialize, creating less policy divergence between the U.S. and its counterparts………………………………………..Full Article: Source

Syrian currency hits lowest value of war, economist says

Posted on 09 May 2016 by VRS  |  Email |Print

Syria’s currency hit its lowest value since the start of the country’s five-year conflict on Sunday, having depreciated more than 92 percent, an economist said. “It’s the first time the exchange rate against the US dollar has reached this level since the beginning of the conflict,” Firas Haddad said.
The black market exchange rate was 625 pounds to the dollar on Sunday compared with 48 pounds a dollar in March 2011, he said. Sunday’s official exchange rate was 512 Syrian pounds to the dollar, according to the central bank in Damascus………………………………………..Full Article: Source

New U.S. Currency Oversight May Still Leave Manipulators At Large

Posted on 06 May 2016 by VRS  |  Email |Print

The U.S. Treasury Department’s latest currency report is supposed to ratchet up pressure on trade partners whose exchange-rate policies are giving exporters a leg up on American firms.
But the administration’s new metrics for calling out currency offenders still leave countries enough latitude to avoid triggering censure by Washington. Under the Treasury’s new guidelines, a country has to meet three criteria to start an official sanctions process. Its trade surplus with the U.S. has to be larger than $20 billion………………………………………..Full Article: Source

Yuan eases further after China devalues its currency to weakest in a month

Posted on 06 May 2016 by VRS  |  Email |Print

The yuan eased for a third session against the US dollar in Shanghai on Thursday morning, after the People’s Bank of China (PBOC) set the currency’s guidance rate at its weakest level since late March.
The PBOC lowered the yuan’s reference rate for a second straight day to 6.5128 per US dollar, softer by 185 pips from the previous fixing. On Wednesday, the central bank cut the fixing by most in more than eight months. The onshore rate softened by 0.13 per cent to 6.5029 per US dollar as of 11am, the weakest level since the end of March………………………………………..Full Article: Source

Dollar Declines Mean Go-Go Days for Commodities ETFs

Posted on 05 May 2016 by VRS  |  Email |Print

The inverse relationship between the U.S. dollar and commodities is on full display this year for exchange traded fund (ETF) investors. For example, the PowerShares DB U.S. Dollar Index Bullish Fund, which tracks the price movement of the U.S. dollar against a basket of currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, is off nearly 6%.
On the other hand, the PowerShares DB Commodity Index Tracking Fund is higher by almost the exact same amount by which UUP is down. Supporting the commodities outlook, the China, the world’s top consumer of metals, grains and energy, is seeing its economy stabilize………………………………………..Full Article: Source

World’s Top Currency Trader Sees Dollar Judgment Day With Jobs

Posted on 05 May 2016 by VRS  |  Email |Print

A day of reckoning looms for the dollar, according to Citigroup Inc., the biggest trader in the $5.3 trillion-a-day currency market. The greenback gained a second day Wednesday, paring a recent selloff that saw the currency touch a one-year low.
Traders are girding for a payrolls report that may dictate whether the Federal Reserve raises interest rates in June, according to Steven Englander, Citigroup’s global head of Group-of-10 currency strategy. A private report showed U.S. employers added fewer workers last month than forecast, muddying the outlook for benchmark borrowing costs………………………………………..Full Article: Source

Jim Rickards says for gold prices will go higher as dollar weaken

Posted on 04 May 2016 by VRS  |  Email |Print

Gold prices, fresh from Monday’s 15-month high, look set for further gains as the dollar weakens, according to author and gold markets expert Jim Rickards. Spot gold hit $1,303.6 an ounce on Monday, its highest price since January 2015, and has since come off to trade around $1,295 an ounce on Tuesday morning in Asia.
But Rickards, who is the author of “The New Case for Gold,” published last month, as well as 2011 best-seller “Currency Wars: The Making of the Next Global Crisis,” said gold was “going to go a lot higher.”……………………………………….Full Article: Source

Is the rand a commodity currency?

Posted on 04 May 2016 by VRS  |  Email |Print

It is probably fair to say that the exchange rate of the rand, specifically against the US dollar, is the economic indicator that attracts the most interest among South Africans almost every day. Changes in the exchange rate tend to be simplistically ascribed to purely domestic factors, including political events.
The real world of foreign exchange, of course, looks rather different, with currencies continuously buffeted by a panoply of forces from across the globe, some of which some are of a short-term, passing nature, while others are more fundamental in nature and exert their influence over a long period of time………………………………………..Full Article: Source

Colombia’s Peso Leads Latin America Currency Tumble as Oil Falls

Posted on 04 May 2016 by VRS  |  Email |Print

Colombia’s peso posted the biggest drop in emerging markets as Latin American currencies tumbled amid a selloff in oil and riskier assets. The peso weakened 2.7 percent to 2,913.73 per dollar in Bogota trading, its first drop in six days after gaining to the highest since November.
A Bloomberg index of Latin American currencies, which reached a five-month high last week, sank the most since February as Mexico’s peso slid 2.1 percent and Brazil’s real lost 1.8 percent. Latin American currencies have rallied this year as oil surged 18 percent and sentiment toward emerging markets improved amid optimism that global growth will accelerate………………………………………..Full Article: Source

Gold Crosses $1,300 Threshold as Rates Outlook Undermines Dollar

Posted on 03 May 2016 by VRS  |  Email |Print

After three years of being scorned, gold’s making a powerful comeback. Prices have pushed above $1,300 an ounce on speculation that the U.S. central bank will be slow to tighten policy further, bolstering the metal’s appeal as the dollar sagged.
Bullion for immediate delivery traded at $1,291.90 an ounce at 8:51 a.m. in Singapore from $1,291.55 on Monday, when it rose to $1,303.82, according to Bloomberg generic pricing. The metal has gained 22 percent this year, rising to the highest since January 2015, as a gauge of the dollar lost 6.3 percent………………………………………..Full Article: Source

The US just dropped the hammer on currency manipulation

Posted on 03 May 2016 by VRS  |  Email |Print

The U.S. government is sending a message to countries it believes are manipulating their currencies: We’re watching you. A Treasury report targets five countries in particular: China, Japan, Korea, Taiwan and Germany.
Each meets at least two of the three criteria that “determine whether an economy may be pursuing foreign exchange policies that could give it an unfair competitive advantage against the United States.” At a time when currency devaluation has become a major tool used by multiple countries to stimulate growth, the U.S. is looking to protect its own interests………………………………………..Full Article: Source

Japan’s currency melt-up a warning for the RBA

Posted on 03 May 2016 by VRS  |  Email |Print

The yen’s mammoth move over recent days is a clear warning to the RBA: this is what happens when a central bank disappoints financial markets by withholding monetary stimulus.
Last Thursday the yen surged by more than 3 per cent – it’s biggest daily move since 2010 – and continued to climb on Friday to reach its strongest level in more than 18 months. It reversed course partially on Monday, with one US dollar buying 106.6 yen………………………………………..Full Article: Source

Aso Says Japan Will Take Action With Currency If Needed

Posted on 02 May 2016 by VRS  |  Email |Print

The recent jump in the yen is clearly a one-sided speculative move that is extremely concerning and Japan is ready to take action if needed, Japanese Finance Minister Taro Aso said on Saturday.
“A 5-yen move in two days is clearly a one-sided speculative move and is extremely concerning,” Aso told reporters at Haneda Airport late Saturday, according to a transcript obtained by Bloomberg. “So that these speculative moves don’t continue, we will watch foreign exchange market moves with a sense of vigilance, and will act if necessary.”……………………………………….Full Article: Source

Taiwan: Central bank denies currency intervention

Posted on 02 May 2016 by VRS  |  Email |Print

The central bank said that the figures stated in a US Treasury report regarding Taiwanese exports did not match those released by the Ministry of Finance. The central bank yesterday said that Taiwan did not carry out one-sided currency intervention as the US has claimed.
The nation’s monetary policymaker released a statement after the US Department of the Treasury submitted a report on foreign exchange policies of major trading partners to the US Congress on Friday, which put Taiwan, China, South Korea, Japan and Germany on a watch list for an “enhanced analysis” of the nations’ practices………………………………………..Full Article: Source

Maybe Currency Flash Crashes Don’t Matter

Posted on 29 April 2016 by VRS  |  Email |Print

The world’s biggest financial market may be destined for a flash-crash future.This sounds scary because the foreign-exchange market is crucial, determining the real-time worth of every nation’s currency. But violent moves there may not matter as much as they do in other markets, such as those for equities.
Rachel Evans of Bloomberg News wrote an article on Thursday highlighting how the $5 trillion-a-day currency market is undergoing a significant transformation. Trading has been slowing, perhaps because of a lack of investor conviction in the face of central bank intervention………………………………………..Full Article: Source

The currency correlations that matter

Posted on 29 April 2016 by VRS  |  Email |Print

Yen’s surge contributes to tremors across asset classes from commodities to S&P futures. This week provided further evidence of how sharp currency moves can have an impact on the broader market.
The Japanese yen’s surge early on Thursday whacked the exporter-sensitive Nikkei 225. Because the USD/JPY is seen by many a proxy of global risk appetite, the exchange rate’s plunge contributed to tremors across asset classes from commodities to S&P futures………………………………………..Full Article: Source

The Real Currency War

Posted on 29 April 2016 by VRS  |  Email |Print

Disagreement came to the global financial system when the control over reserve currency became a matter of privilege rather than responsibility. That struggle has since become a morass of monetary expansion and conflict as states have pursued their own, often incompatible currency goals.
The battle of the currencies has left widespread financial instability in its wake, weakening the state-centric currency model that ruled the monetary order for the past century. Now, a different type of money — digital currency — is making a play to become the new standard. If successful, the politics of money could radically change, and with it, the power of states themselves………………………………………..Full Article: Source

Why China Wants Yuan-Denominated Gold

Posted on 28 April 2016 by VRS  |  Email |Print

It’s crucial to understand the potential benefits for China of having yuan-denominated gold. Besides internationalization, the fix may also increase the liquidity and efficiency of the gold markets. Yuan-denominated gold may also reduce the dependency of gold on the US dollar, though this may not hold true in the short run. In the longer run, gold may untangle from the US dollar.
According to the World Gold Council, in 2015, China’s gold demand hit 984.5 tons. The initiation of the yuan benchmark for gold is aimed at increasing the usage of the yuan as a global currency………………………………………..Full Article: Source

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