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Commodities Briefing - Category | Currencies more

Did the Fed just enter the currency wars?

Posted on 20 February 2015 by VRS  |  Email |Print

The minutes from the Federal Reserve’s meeting last month have foreign-exchange traders wondering whether Janet Yellen has joined the currency wars. Policymakers pointed to the dollar’s rising value as “a persistent source of restraint” on exports in a surprisingly dovish set of minutes published Wednesday. The greenback fell against a broad group of its peers.
Central bankers from Europe to Australia have engaged this year in bouts of rate-cutting oneupmanship, leaving the U.S., and possibly Britain, as the only developed nations seen as likely to raise borrowing costs in 2015. The dollar climbed to its strongest in more than a decade as a result, prompting billionaire Warren Buffett and Goldman Sachs Group Inc. President Gary Cohn to question whether the Fed can now increase rates without damaging the U.S. economy………………………………………..Full Article: Source

Ultimately everyone loses in a currency war

Posted on 20 February 2015 by VRS  |  Email |Print

Pity the prudent Canadian saver. As she seeks a safe place to park spare cash and build a nest egg for retirement, the pickings are increasingly slim. At the peak of RRSP season, most banks are offering barely 1.5 per cent on once reliable five-year guaranteed investment certificates.
Canadian savers are better off than the Danes or Swedes, however. What was once thought a technical impossibility – negative interest rates – have become the norm in Scandinavia. If you buy a short-term deposit certificate in Sweden these days, you’ll get back less than you invested………………………………………..Full Article: Source

China calls the shots in Asia’s currency war

Posted on 19 February 2015 by VRS  |  Email |Print

As fears of a global currency war grow, all eyes in Asia are on whether China will devalue its currency to avert a sharper economic slowdown. The urgency with which Asian central banks are cutting interest rates is an indication of not just the deflationary forces they are seeing but also recognition that if China weakens the yuan, their policy options will be severely limited.
Indonesia was the latest to surprise investors on Tuesday with a rate cut, joining Singapore, India and China, all of whom have unexpectedly eased policy this year to spur growth. Bank Indonesia’s rate cut was in some ways a reminder of how critical China’s yuan is to the region’s policy making………………………………………..Full Article: Source

Currency Speculators Can’t Force Denmark’s Hand, Callesen Says

Posted on 19 February 2015 by VRS  |  Email |Print

The deputy governor of Denmark’s central bank, Per Callesen, said speculators won’t force the country to abandon its peg to the euro. “We do not consider any exit from this path, irrespective of what currency speculators believe,” Callesen said at an event at the London School of Economics on Wednesday. “Speculative attacks have happened, they will go on” in the future, he said.
The comments follow signs that demand for the krone is building, forcing the central bank to accelerate record foreign-currency purchases in an effort to defend the peg. Net flow data published on Wednesday revealed the central bank sold $2.7 billion in kroner in a single day, according to estimates provided by Svenska Handelsbanken AB. That follows Tuesday data, which showed $2.1 billion in kroner were dumped on the market by the bank………………………………………..Full Article: Source

Investors Piling in to Currency-Hedged ETFs

Posted on 18 February 2015 by VRS  |  Email |Print

Investors are hedging their bets against more wild currency moves. Nearly half of all inflows into U.S.-listed exchange-traded funds this year have been invested in currency-hedged products, according to ETF.com. A total of $10 billion has entered 35 currency-hedged funds in 2015, amounting to 49% of the $20.4 billion that all ETFs had gathered as of Friday, the firm said.
Such funds have been available for several years, but have become increasingly popular as of late as the U.S. dollar appreciates. In the first six weeks of 2015, the funds have collected nearly 30% of their total asset base………………………………………..Full Article: Source

Bring on the currency wars

Posted on 18 February 2015 by VRS  |  Email |Print

The European Central Bank has finally begun to engage in quantitative easing. The euro depreciated on the news, which is good for the Europeans but bad for the rest of the world, right? It’s another currency war — a zero sum game leading to, at best, nothing but debased currencies.
At least that’s what we’ve been told. I think that’s wrong. A currency war right now will be win-win. Let’s start with the concerns about currency wars. The first worry is the beggar-thy-neighbour effect. If a country’s exchange rate falls, demand is sucked from other countries for no net gain. So, concern number one is that a depreciated currency is contractionary for others. ……………………………………….Full Article: Source

A currency war would be no bad thing

Posted on 18 February 2015 by VRS  |  Email |Print

The European Central Bank has finally begun to engage in quantitative easing. The euro depreciated on the news, which is good for the Europeans but bad for the rest of the world, right? It’s another currency war – a zero sum game leading to, at best, nothing but debased currencies . At least that’s what we’ve been told.
I think that’s wrong. A currency war right now will be win-win. Let’s start with the concerns about currency wars. The first worry is the beggar-thy-neighbour effect. If a country’s exchange rate falls, demand is sucked from other countries for no net gain. So, concern number one is that a depreciated currency is contractionary for others………………………………………..Full Article: Source

Time to start treating commodities as currencies?

Posted on 17 February 2015 by VRS  |  Email |Print

A few weeks ago, Michael Masters, of the eponymous US investment firm, made the point to FT Alphaville that bad things can happen whenever investors mistake the fruits of production for the means of production, and apply long-standing “long only” strategies (more suited to equity index markets) to assets like commodities.
Earlier this month, Nomura put out a note that observed much the same point. Specifically, they argued that commodities should be treated like currencies and valued with macro-trading tools that incorporate the concepts of carry, value and momentum………………………………………..Full Article: Source

Currency Battle Is Tethered to Obama Trade Agenda

Posted on 17 February 2015 by VRS  |  Email |Print

A number of countries — China most prominent among them — have long acted to hold down the value of their currencies against the dollar, helping their industries by keeping exports to American consumers cheaper and making goods from the United States more expensive.
And while every president from Bill Clinton on has repeatedly criticized the practice, none have ever taken formal action against China or any other nation to try to stop it. Now, a growing bipartisan majority in Congress is coalescing around a demand that could derail President Obama’s ambitious trade agenda before it really gets moving: include a robust attack on international currency manipulation or no deal………………………………………..Full Article: Source

Japan, South Korea to Let Currency Swap Program Expire

Posted on 17 February 2015 by VRS  |  Email |Print

Japan and South Korea on Monday said that they will let their 14-year-old currency swap arrangement expire this month. The currency-swap program was established in 2001 to enable each nation secure dollars from the other in exchange for their own currency during financial emergencies.
Viewed as a symbol of economic cooperation in East Asia, it had grown to as much as $70 billion at its peak, but has shrunk to $10 billion in recent years as the relationship between the two neighbors grew chilly. Officials from the two countries said that the decision to end the program when it expires on Feb. 23 was based on financial and economic considerations, rather than political tensions………………………………………..Full Article: Source

Azerbaijan prepares to drop currency peg to dollar

Posted on 16 February 2015 by VRS  |  Email |Print

Azerbaijan is planning to abandon its currency peg to the dollar as the oil price tumble strains its energy-dependent economy, the central bank governor has told the Financial Times.
“It is critical to make some kind of corrections to fiscal and monetary policy,” Elman Rustamov, who has led Azerbaijan’s central bank for two decades, said in an interview in Baku. “We consider that we should transit to a more flexible exchange rate regime and gradually we will transit to an inflation-targeting regime.”……………………………………….Full Article: Source

An accidental currency war?

Posted on 16 February 2015 by VRS  |  Email |Print

Six and a half years after the global financial crisis, central banks in emerging and developed economies alike are continuing to pursue unprecedentedly activist—and unpredictable—monetary policy. How much road remains in this extraordinary journey?
In Januar alone, Australia, India, Mexico, and others have cut interest rates. China has reduced reserve requirements on banks. Denmark has taken its official deposit rate into the negative. Even the most stability-obsessed countries have made unexpected moves. Beyond cutting interest rates, Switzerland suddenly abandoned its policy of partly pegging the franc’s value to that of the euro. A few days later, Singapore unexpectedly altered its exchange-rate regime, too………………………………………..Full Article: Source

Currency hedge funds are making huge comeback

Posted on 13 February 2015 by VRS  |  Email |Print

Hedge funds that bet on currencies are reaping the rewards for the beginning of 2015. According to the Wall Street Journal, currency hedge funds gained 3.4% in January, compared to a 0.5% gain in stock-trading hedge funds and a 0.9% decline in emerging market funds. Their performance this January is the best start to the year since 2008, and for some even longer.
This is a big renewal in currency trading at hedge funds, which diminished greatly after the 2008 financial crisis. But with activity in currencies picking up in the last year, currency trades and profits are finally starting to pick up………………………………………..Full Article: Source

Stop howling about currency manipulation

Posted on 13 February 2015 by VRS  |  Email |Print

Anti-trade critics are arming themselves with a grab-bag of attacks on proposed U.S. trade agreements and the legislation to bring those deals to Congress for a vote. Some critics focus on the negotiating process (”secret!”) or accuse the U.S. of using the negotiations as a backdoor way to subvert or expand domestic regulations or standards. Both assertions are overblown, but they pale in comparison to charges by the currency protectionists.
This week a strange-bedfellows group of Senators rolled out an anti-currency manipulation bill that will serve no other purpose but to upend trade expansion talks currently underway, in particular the Trans-Pacific Partnership. ……………………………………….Full Article: Source

Emerging-Market Currencies Tumble as Worries Over Greece, Ukraine Escalate

Posted on 13 February 2015 by VRS  |  Email |Print

Fears of a default in Greece and an escalating conflict in Ukraine spilled over into emerging markets as investors fled for safer assets, sending currencies in Asia and other developing countries tumbling. Indonesia’s rupiah sank as much as 1% while South Africa’s rand hovered close to its weakest in over a decade and the Malaysian ringgit’s slide gathered steam.
From a political gridlock in Europe over the restructuring of Greece’s mountain of debt, to unsuccessful cease-fire talks aimed at ending the conflict in Ukraine and a renewed slide in oil prices overnight, pockets of risk for investors are growing with emerging market assets bearing the brunt………………………………………..Full Article: Source

Has an accidental currency war erupted?

Posted on 12 February 2015 by VRS  |  Email |Print

Even the most stability obsessed countries have made unexpected economic moves, but barriers to growth remain largely unaddressed – and central banks cannot tackle them alone. Six and a half years after the global financial crisis, central banks in emerging and developed economies are continuing to pursue unprecedentedly activist – and unpredictable – monetary policy. How much road remains in this extraordinary journey?
In the past month alone, Australia, India, Mexico and others have cut interest rates. China has reduced reserve requirements on banks. Denmark has taken its official deposit rate into negative territory………………………………………..Full Article: Source

Brazil’s Currency Falls to a Decade Low as Retail Sales Tumble

Posted on 12 February 2015 by VRS  |  Email |Print

Brazil’s real sank to a 10-year low as a record drop in retail sales added to concern that Latin America’s largest economy is slumping. The local currency slid 1.2 percent to 2.8679 per dollar at the close of trade in Sao Paulo, the lowest closing level since October 2004. It is 0.6 percent weaker than the year-end median forecast of 2.85 per dollar among analysts surveyed by Bloomberg.
The real fell after the national statistics agency reported that retail sales tumbled 2.6 percent in December from a month earlier, the biggest drop since the series of data began in 2000. Analysts predict zero growth for Brazil this year, according to the median of about 100 estimates in a central bank survey published Monday………………………………………..Full Article: Source

Forex focus: Should you buy euros in the currency war?

Posted on 11 February 2015 by VRS  |  Email |Print

Exchange rates are likely to remain volatile as long as central banks are engaged in a cold war to devalue their currency. You may not have noticed, but there’s a currency war going on worldwide at the moment.
With most countries in a desperate scrabble to make their currency cheap compared with others (and therefore their exports), whether you’re a winner or loser depends on which side of the see-saw you are sitting………………………………………..Full Article: Source

Brazil Real Drops to Lowest Level in Decade as Commodities Sink

Posted on 11 February 2015 by VRS  |  Email |Print

Brazil’s real declined to a 10-year low as falling commodities prices damped the outlook for growth in Latin America’s biggest economy. The real dropped 2.2 percent to 2.8324 per dollar at the close of trade, the weakest level on a closing basis since November 2004. The drop was the biggest among 31 currencies tracked by Bloomberg.
Swap rates, a gauge of expectations for changes in Brazil’s borrowing costs, increased 0.12 percentage point to 13 percent on the contract maturing in January 2016. Most developing-nation currencies fell as the Standard & Poor’s GSCI Index of raw materials lost more than 1 percent………………………………………..Full Article: Source

US bill would tax ‘currency manipulators’

Posted on 11 February 2015 by VRS  |  Email |Print

Foreign products from places such as China and Japan will be subject to punitive US import taxes if their governments are found guilty of currency manipulation by Washington under legislation proposed on Tuesday.
The measures contained in bipartisan bills presented in both houses of Congress come amid an escalation in rhetoric in Washington surrounding recent foreign exchange swings fed by concerns over the impact on American competitiveness and the US recovery of a rising dollar………………………………………..Full Article: Source

Commodity currencies recoup ground as U.S. dollar rally fades

Posted on 10 February 2015 by VRS  |  Email |Print

Commodity currencies held onto modest gains early on Tuesday, having risen broadly on a further rebound in oil prices and as the U.S. dollar faded somewhat after a payrolls-inspired rally ran out of steam. The Canadian and New Zealand dollars were among the best performers in a session that saw all the major currencies remain well within recent ranges.
The greenback eased to C$1.2428 CAD=D4 from a session high of C$1.2545. The kiwi popped above 74 U.S. cents NZD=D4 from $0.7325, staying in a $0.7288-0.7453 range seen in the last few days………………………………………..Full Article: Source

Greece will leave euro, and the currency will collapse, predicts Alan Greenspan

Posted on 10 February 2015 by VRS  |  Email |Print

The former chairman of the U.S. Federal Reserve, Alan Greenspan, has predicted that Greece will be forced to exit the euro, as its new prime minister outlined plans last night to keep the debt-stricken country financially afloat. In a bleak assessment of Europe’s future, Greenspan, one of the most influential policymakers of modern times, said it was “just a matter of time” before Greece dropped out, triggering the eventual collapse of the single currency.
His stark comments came just hours before Greek prime minister Alexis Tsipras told parliament he would on Wednesday ask fellow eurozone members in Brussels for an emergency short-term bridging loan, to allow Athens more time to negotiate a new debt deal………………………………………..Full Article: Source

Currency-hedged ETFs in vogue as investors clamor for more

Posted on 09 February 2015 by VRS  |  Email |Print

U.S. investors spooked by wild swings in the foreign exchange market are piling into exchange-traded funds that strip out the local currency on their international equity portfolios, making them one of the most sought-after financial products in 2015.
With the dollar having rallied more than 19 percent since the beginning of 2014, investors are seeing gains in overseas stock markets eaten up by losses against the greenback. “People are voting with their feet,” said Luciano Siracusano, chief investment strategist for WisdomTree Investments in New York. “They’re putting billions of dollars into these funds, and what they’re saying is, ‘We don’t want to be 100 percent unhedged.”……………………………………….Full Article: Source

Global currency issues impact the U.S.

Posted on 09 February 2015 by VRS  |  Email |Print

Consumer prices in Spain’s depressed economy have been slipping since June — and dropped more than 1 percent last month due to plummeting oil prices. That doesn’t mean Spaniards like Ivan Piqué, a 28-year-old unemployed IT specialist in Barcelona, are spotting a huge change, yet. “I haven’t noticed any prices coming down besides gasoline, so I’m still trying to spend as little as possible,” he says.
But, soon, he plans to move to Canada to seek work. Maybe there he’ll see some reprieve at the checkout lines, as the Bank of Canada recently — and quite unexpectedly — cut its main interest rate for the first time since 2009 following fears that the falling price of oil would drag down the Great White North’s inflation rate. ……………………………………….Full Article: Source

A currency war ‘can hit growth in the long term’

Posted on 09 February 2015 by VRS  |  Email |Print

The unprecedented moves by nations across the world to drive down their currencies could hit long-term economic growth unless coordination is imposed, according to a finance expert this week.
Professor Didier Cossin, from Switzerland’s IMD Business School, added that Singapore’s central bank could play a key role in leading such a coordination. He told The Straits Times that the world may be headed towards a “currency war” - essentially when countries drive down their currencies to steal a march on their trade rivals……………………………………….Full Article: Source

China poised to widen currency band, says Nomura

Posted on 09 February 2015 by VRS  |  Email |Print

China is unlikely to engage directly in the so-called currency wars, but may relax its controls on the yuan’s movements against the US dollar to adjust for imported disinflation, says Nomura. The investment bank suggests in a note that recent reports in China point to a widening of the band within which the yuan is allowed to float.
Such a move could be promoted as another step in the country’s move towards full financial market integration, Nomura suggests, while maintaining the yuan’s competitiveness in the face of monetary easing around the world………………………………………..Full Article: Source

Oil heading for $30, currency war coming: Analysts

Posted on 06 February 2015 by VRS  |  Email |Print

So much for the rally. Oil will likely still head as low as $30, analyst John Kilduff told CNBC on Thursday. “I still believe we’re going to go to that $30 to $33 area, which is the low point from the financial crisis in 2008, 2009. What you saw over the past several days was technical in nature, a short squeeze. This volatility is a little crazy and I think that $30 target is a downside target is for technicians that are in this market,” the founding partner of Again Capital said.
U.S. crude tumbled 9 percent on Wednesday to settle at $48.45, erasing nearly all of its gains in the previous two sessions. The benchmark commodity—West Texas Intermediate—had soared 22 percent from a nearly six-year low of $43.58 last Thursday, ending the day at $53.05 on Tuesday………………………………………..Full Article: Source

Currencies: Money-changers at bay

Posted on 06 February 2015 by VRS  |  Email |Print

Early trade was conducted in whatever currency was available. Coins circulated across borders in a bewildering variety of forms, creating the need for middlemen to value one token against another. These were the “money-changers” whom Jesus threw out of the temple. Two thousand years later the foreign-exchange markets are still in turmoil.
In January the Swiss National Bank abandoned its policy of capping the Swiss franc against the euro, catching many traders and investors by surprise. As the franc rose by 30% in a few minutes, many foreign-exchange brokers lost money (one went bust) and a hedge-fund manager, Everest Capital, lost so much that it had to close its main fund. Eastern Europeans who had taken out mortgages in Swiss francs also suffered—so much so that Croatia voted to peg its currency, the kuna, against the franc………………………………………..Full Article: Source

Ukraine’s hryvnia plunges after foreign currency auctions scrapped

Posted on 06 February 2015 by VRS  |  Email |Print

Ukraine’s hryvnia currency plunged about 30 percent against the dollar on Thursday, traders said, after the central bank abandoned the foreign currency auctions that had effectively pegged the exchange rate.
The central bank scrapped the daily auctions, which had set an unofficial peg for banks to follow, and also raised its main interest rate to 19.5 percent on Thursday as it sought to avert a Ukrainian financial collapse, brought ever closer by fighting in the country’s east and a lack of foreign funding………………………………………..Full Article: Source

Currency wars: Lose-lose or win-win?

Posted on 05 February 2015 by VRS  |  Email |Print

The term “currency wars” has been bandied about ever since Guido Mantega, the Brazilian finance minister, used it in 2010. He was complaining that quantitative easing (QE) by the US was weakening the dollar, and prompting a response from other countries that did not want to lose export competitiveness. This time round, the dollar is strengthening, but the term is being used again.
Currency volatility is on the rise, albeit from a low base. And David Woo of BofAML thinks this is a bad thing. In a research note, he argues that “For many countries facing zero interest rates and binding fiscal constraints, the only policy tool left at their disposal to stimulate growth is a weaker exchange rate.”……………………………………….Full Article: Source

The Currency Wars Look Real, and the Prospects Could Be Grim

Posted on 05 February 2015 by VRS  |  Email |Print

How do you know you’re in a currency war? Central banks will be cutting rates like it’s going out of fashion, for a start. Stephen Cohen, chief investment strategist for BlackRock international fixed income, noted that 15 central banks have already cut rates this year. And there could be more to come with the People’s Bank of China and the Bank of Japan expected to ease policy further.
The kind of currency volatility that creates “is something we expect to continue,” said Mr. Cohen. Which brings us to exhibit B: foreign exchange volatility………………………………………..Full Article: Source

Goldman Cuts Aussie Forecast to 72 Cents as Commodities Plunge

Posted on 05 February 2015 by VRS  |  Email |Print

Australia’s dollar will fall 7 percent this year to 72 U.S. cents as a faster-than-anticipated plunge in commodity prices leaves the nation A$500 billion ($388 billion) poorer in the coming decade, Goldman Sachs Group Inc. said.
The U.S. investment bank, which had previously forecast an exchange rate of 75 cents, also brought forward to May its prediction for another interest-rate cut after the Reserve Bank of Australia on Tuesday reduced the cash target by a quarter point to a record 2.25 percent………………………………………..Full Article: Source

Why currency volatility has got worse

Posted on 04 February 2015 by VRS  |  Email |Print

Foreign exchange markets are suddenly in turmoil. The Swiss franc jumped 30% in a matter of minutes last month. Over the past year, the Russian rouble has fallen 40% against the dollar, while the Canadian and Australian dollar have recently dropped to six-year lows against the greenback. These shifts have proved costly for many in the markets, with Alpari, a foreign exchange broker going bust, while Everest Capital, a fund manager, had to close its main hedge fund after suffering heavy losses. Why has currency volatility got worse?
These shifts follow a long period in which currency markets have been relatively calm. There are two reasons for the recent volatility. The first is a divide between the Federal Reserve and the developed world’s other two big central banks—the Bank of Japan and the European Central Bank………………………………………..Full Article: Source

Switzerland Rejoins Currency Wars

Posted on 04 February 2015 by VRS  |  Email |Print

Two weeks after Switzerland stunned currency traders by abandoning the franc’s peg to the euro, it seems that the central bank is quietly getting back in the market. With central banks from Denmark to Singapore to Canada easing monetary policy in recent weeks, the Swiss authorities face an even bigger battle trying to restrain their strengthening currency.
The Schweiz am Sonntag newspaper said during the weekend that the Swiss National Bank is now targeting a corridor rate for the franc of 1.05 to 1.10 per euro, compared with the 1.20 level it abandoned Jan. 15………………………………………..Full Article: Source

An Australian Front in the Currency War

Posted on 04 February 2015 by VRS  |  Email |Print

The Reserve Bank of Australia deserves marks for candor. Other central banks have been loath to say their policies are designed to affect foreign-exchange rates. That is for fear of appearing to be in a race to the bottom or acknowledging a global currency war is underway. But the RBA, in cutting its cash rate Tuesday by 0.25 percentage points to 2.25%, was up front about its currency designs.
The central bank’s statement noted that while the Australian dollar has declined “noticeably” against the U.S. dollar, the fall has been less marked against a basket of currencies. The result: “A lower exchange rate is likely to be needed to achieve balanced growth in the economy.” Markets took that to heart, sending the Australian dollar lower still………………………………………..Full Article: Source

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

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