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Brief review of Currency Market after 23rd September, 2011.



Forget about these Euro-area and US problem, “Currency War”, yes that may be the headline in coming future. Central banks of different countries are really afraid about the USD’s movement. Look like everyone is trying to protect their export. Here we shouldn’t forget that a strong dollar is also not good for US, as their export companies will not gain much from it.

CURRENCY
23rd-Sep, 2011
9/16/2011-9/23/2011
9/9/2011-9/16/2011




USD
78.501
2.48%
-0.76%
EURO
1.35
-2.10%
0.95%
AUD
0.978
-5.59%
-1.05%
YEN
76.26
-0.79%
-1.13%
RUPEE
49.67
4.65%
2.32%
SWISS FRANC
0.903
3.20%
-0.90%
S.African RAND
8.105
8.67%
2.47%
Brazilian REAL
1.832
5.46%
3.51%
Mexican PESO
13.547
3.96%
2.76%

Japan’s export rose less than expected though there are many other factors but YEN’s rise is also big matter for it. New government promised subsidies for domestic construction companies but problem is about them who are reconsidering Japan as a manufacturing hub. Considering this I am expecting some move from Japanese authorities in coming future.



Currency forecast for coming week

 

As I said in last week that EURO’s move may be a short-covering rally, looks like that was true. It is getting support exactly around 1.34 area which I said. Now if things become worst in coming week then it can go to test up to 1.30 area and it also made some bearish pattern in chart. Now if economic things settle a bit then we can expect some up move in later periods.

AUD totally surprise me this week, it completely decouples from last week’s movement. And now it looks like that it is making a base. In the downside it has a good support at 0.96 level.
Last week I said that there is a chance that USD may test higher level, but it is getting good resistance at 78.5 level. Now in coming days if it can break this 79 level convincingly then it has a chance to test more higher levels, but before that it may take breath here.
I was expecting some up move from Brazilian REAL, this week the move was quite good. It is getting some resistance at 1.90 now if it breaks that then it’s next big resistance is at 2.00 level. It has a support at 1.70 level.
Like REAL, I was also expecting some up move in Mexican PESO. This week it broke that 13 resistance level, though it is getting some resistance at 14. It has a support at 12.80 level.
I was expecting some drop in South African RAND but it was in full force and it also break the crucial resistance levels. Now it is getting resistance at 8.40 and it has a support at 7.40 area. 


As I said in past that Emerging economies are suffering much due to this inflation and drop in their currencies. As global investors are transferring into safer asset class, so equity market of these countries are facing some sell-off and their currencies are dropping much. We have already seen the intervention of Brazilian Central Bank and this week their currencies  showed some big movements. Now in coming days I am expecting many countries like South Korea, Russia to follow countries like Indonesia.
Central bank of some countries are facing some hard situation because if they hike rates then there is a chance that growth may reduce in coming days, latest example of that is India. So I think in coming days it will be a test for these Emerging countries.


NOTE :  Please see the disclaimer of this blog .




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