The big news on all of the cable channels this morning is US Treasury Secretary Tim Geithner’s surprise trip to China. Secretary Geithner was in India meeting with Indian Finance Minister Pranab Mukherjee and apparently received an invitation to head on to China. Geithner will undoubtedly be talking about the renminbi (CNY), and China’s plans for their currency. As I wrote yesterday, Geithner postponed the April 15 deadline for the annual review of China’s trade policies, which was probably going to result in China being labeled a currency manipulator.
[Read more...]US Consumer Spending Helps the Peso
March 30, 2010 by Leave a Comment
The dollar bears returned to the markets yesterday, as most every currency moved higher versus the dollar.
Confident investors kept the dollar on the run yesterday as they went shopping for yield. The commodity currencies ruled the day again, with Australia, Norway, and Brazil’s currencies all posting gains nearing 1.5% versus the US dollar. Greece successfully sold 5 billion euros worth of bonds in the first sale since the EU reached agreement on a stability plan. The sale emboldened investors who moved funds out of their ‘safe haven’ parking spots in the Japanese yen (JPY) and US dollar. It seems we are back to the risk on/risk off trading pattern that dominated the currency markets over the past year. Good news for the US or global economy means bad news for the safe havens of the US dollar and yen, while the opposite occurs whenever the global recovery is called into question.
[Read more...]Currency Market Mix Up
March 23, 2010 by Leave a Comment
The currency markets were a bit mixed yesterday, with half the currencies higher versus the US dollar, and half lower. The markets seemed confused, and didn’t hold to ‘normal’ trading patterns. The three best performing currencies versus the US dollar were the Brazilian real (BRL), British pound (GBP), and Japanese yen (JPY). That is an odd group! At the top spot, we have the Brazilian real which is a commodity-based currency with some of the highest yields available; which would lead you to believe that the risk trades were back on. But the Japanese yen was the third best performer, and the yen is a currency that typically moves higher when the markets are nervous and reversing out of carry trade positions. And who in the world would be buying the pound sterling right now? Something just wasn’t right in the currency markets yesterday. The overnight markets started to set things right, pounding the pound sterling lower; but the currency markets still don’t seem to be able to agree on a direction to take the dollar.
[Read more...]Could Merkel Be Trying to Bring the Euro Down a Bit?
March 18, 2010 by Leave a Comment
The Germans broke rank with the rest of the EU and suggested Greece should turn to the IMF for support. The euro (EUR) had rallied over the past couple of days after it seemed the EU finance ministers had agreed on a loan facility to back the Greek government. But Germany’s Angela Merkel threw a cat among the pigeons today when she said Greece should not look to the EU but should turn to the IMF if it needs aid. So traders immediately started selling the euro again as the black cloud of a possible Greek default fell back over the market.
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Investor Concern Causes a Move Back to Dollars
The dollar moved higher throughout the trading day, and the rally continued in overnight trading. Just about all of the major currencies were down, with the Singapore dollar (SGD) and Japanese yen (JPY) the only two that saw a positive return versus the greenback. This would indicate that Wednesday was a ‘risk off’ day, as investors moved money out of higher yielding currencies and back to the carry trade funding favorites of the yen and US dollar.
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