Sterling
Few Feeling Confident or Lucky on This Friday the Thirteenth
August 13, 2010
A mid-August Friday afternoon and Friday the thirteenth no less would be a precarious place for currency traders to sit in the best of circumstances, and these are certainly not that. Trouble lurks wherever one peers, and the market reaction is risk aversion. Start with the U.S. economy because that is where perceptions have been [...] More
Third Anniversary
August 6, 2010
The world financial crisis began on August 8, 2007. The third anniversary finds a very heterogeneous world business cycle. Growth in global real GDP is again above 4.0%, something almost nobody foresaw a year ago. Many emerging economies in Latin America and Asia, a far wider spectrum than just India and China, are experiencing very [...] More
Currencies More Sensitive to Global Growth Than Growth in Particular Economies
July 9, 2010
A more resilient euro has coincided with better-than-expected European data, but the rise from $1.1878 in early June doesn’t reflect strong confidence the short-term to medium-term economic outlook for the region. Industrial production during May recorded monthly advances of 2.6% in Germany, 1.7% in France, 1.0% in Italy, 2.6% in Sweden and 0.7% in Britain. [...] More
Risk Aversion, Not Growth Prospects, Again Driving Foreign Exchange
June 25, 2010
Economic growth prospects have discernibly darkened in advanced industrial economies, so financial markets are looking beyond what should be a respectable second quarter. An interest rate hike by the ECB, Bank of Japan, or even the Fed is nowhere in sight. The ECB and Bank of Japan have taken liquidity-supporting steps, which at the least [...] More
Many Governments Want a Weak Currency, But Not All Can Make it Happen
June 18, 2010
The euro experienced its best week in many months but was not alone in advancing against the dollar. The euro’s gain was pretty much matched by the New Zealand and Australian dollars and surpassed by the Swiss franc. The U.S. dollar dropped about 2% against the yen and around 1% against the British and Canadian [...] More
Chaotic Currency Conditions Likely to Continue
May 21, 2010
The European debt crisis rolls onward. No enduring solution to the problem exists. Investors for starters want to see Greece, Portugal, and Spain implement very sharp, multiyear programs of deficit reduction and debt containment but would fear the impact on regional growth and would remain dissatisfied if they got their wish. Currencies are only one [...] More
European Currencies Still Looking Pricey
May 7, 2010
The European sovereign debt crisis has revealed several truths. Public officials have thrown varying remedies at the problem, and none has reassured investors more than briefly. The crisis involves decision-making mechanisms and long-term prospects, and it cannot be fixed with a lot of money alone. Like the banking crisis of 2007-09, the response of policy-makers [...] More
Easter Holiday 2010 Finds Key Currencies Marching to Different Beats
April 1, 2010
The euro’s first-quarter range of $1.4882 – $1.3268 lay entirely within calendar 2009′s high-low boundaries of $1.5144 and $1.2458. Until a week ago, euro momentum had been adverse. It subsequently rallied 2.4% to $1.359 but remains 3.5% below the mid-point of this year’s trading range. At times, perceptions that the euro area’s growth prospects are [...] More
Many Uncertainties For Currency Traders to Sift Through
March 19, 2010
February 5th has become an important reference point for world financial markets. For one thing it was a Friday. Because currency trading is a 24-hour per day game, Friday closing levels provide a convenient opportunity to get a still picture of what’s happening. Also in early February, stock markets bottomed after a long-overdue, but comparatively [...] More
Sterling’s Legacy of Crisis
March 2, 2010
Britain’s periodic fiscal problems,chronic large trade deficits, comparatively high inflation and the enormous offshore holdings of sterling have made that currency an object of speculative selling through the ages. Prior to the modern era of floating dollar exchange rates, the pound devalued sharply after Britain quit the gold standard in 1931 for a second time. [...] More
