Skip to main content

Week ended 29th April, 2011 – Currencies this week .

Chinese YUAN rose first time since 1993 to a level of 6.5 versus US$ .  As I told in last week that there is a growing expectation that central bank will allow this appreciation to curb the rising inflation. Appreciation of YUAN is making the imports cheaper for China. Yuan’s weekly gain is the longest since 2008 as it gains 7th straight weeks.

Let see some other currencies this week –

4/22/2011- 4/29/2011

S.African RAND
Brazilian REAL
Mexican PESO

US$ was weaker from the beginning of this week  because investors were thinking  that FED will continue to keep interest rates near zero when it meets in Tuesday and Wednesday .  Higher rates make a currency more attractive to investors . Federal reserve said that they may keep interest near zero for an extended period of time , as economic growth is less than forecast in the first quarter .

U.S. Dollar weakening against the major currencies as Fed is increasing the supply of currencies by buying Treasury . Dollar index slipped for the 9th day as there is a concern that global economic growth is slowing .

What is happening as Fed is artificially trying to decrease the value of US$  by purchasing Treasuries . It is increasing the inflation risk on the one side , on the other side it also increases the prices of the commodities . This in turn is making the US goods  cheaper in abroad , so it is trying to help the exports from U.S. As US$ falls it is making cheaper for investors using other currencies to buy  Gold and other precious metal as these metals priced in US$ .

Foreign funds bought nearly $7.9 billion stocks from India , South Korea and Taiwanese ($1.2 bn) markets . Malaysia’s RINGGIT rose 2.2% , Indonesia’s RUPIAH gained 1.6% , Philippine’s PESO rose 1.4% and Thailand BAHT rose by 1.3% this week . Better economic growth in Asia is the major cause of attracting of fund in these region’s stock and debt markets .

Coming week

South African RAND now is in December 2010 level , though it can get support here but chart pattern is still lower highs and lower lows so unless that improves things are not changing much from here . Thursday Brazilian REAL tried to rise but like USD it also couldn’t carry it’s move . But it is getting some support at around  1.56-1.59 range . Euro hit it’s recent highest level of 1.488 , if things are going same way then it must try to beat the 1.50 level . I don’t know where Swiss Franc is going but it can touch more lower levels as it is not giving any positive signal .

AUD is saying –  come and stop me , if you can . AUD advanced for a 6th week now , so this may fuel the speculation of rising interest rate in Australia . Japanese YEN is heading for a support at around 80.50-81 level .
USD closed in it’s recent low of 72.834 level . As I was talking last week that there are no cause of rising USD from here . This week it plunged more .  On Thursday it tried to make some ground but it failed to carry it . From the beginning of this year it is in the decreasing mode . In last 8 day’s rally it decreases during 7 days . Contrary to the AUD which rises 7 days out of 8 days . Everyone is expecting some rise in USD , even if it is for couple of days . I think better is not to look on the chart , because now days it is looking bad  .

Asian and Emerging market’s currencies will appreciate for this moment , unless better news come from inflation side . Sometime I think every country who imports Crude Oil , they need to build huge reservoirs for this . So that they can store Crude Oil for couple of months , then short-term Crude movements will not effect them much .

NOTE :  Please see the disclaimer below this blog .

Popular posts from this blog

DAX forecast for coming week ended 15th March, 2013.

This week was very good for Dax, though it is getting resistance at 8100 range. Now it has a chance to test downside again. I think even if Dax tests lower levels, it has more chance to bounce back from around 7800 range and therefore it will again test upside.

On the other hand if it shows flat movements around 8000 range in initial days of the coming week then there is a chance that it may take a decisive call in later days. Considering the recent trends it has the chance to test higher levels may be around 8200 but that will be a very aggressive call after taking in to account the movement from last December. I will worry about the downside when Dax will be testing levels below 7600 ranges.
NOTE: Please see the disclaimer of this blog.

Fed’s rate hike Vs Sovereign rating up gradation

Financial market is very much worried about the rate hike in US, probably this is going to come in coming December. But I think that is not going to change much of the things. Even Fed hikes rate in December it will be not so much, because we are forgetting one thing that interest rate in US is around zero so even they hike rate by 0.25-50% basis points (at most) in this year that will not be enough cause for Dollars to change their locations around the world especially markets have already discounted this coming rate hike in US.

A new disaster is coming in EU banking sector, whom to blame, big Audit firms!

First I was thinking what should be the title of this posting? Will it be good if I write that big audit firms set the time for EU bank collapse! If someone is thinking that financial crisis is over then think twice because the coming EU banking crisis is no way less than 2008 financial crisis. The time bomb will explode at some point of time in future, the time has not yet set for it. In that tsunami, forget about the smaller if any major banks collapse then I will not be surprise.