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Weekly Currency market review after 2nd September, 2011.

Brazil has cut it’s interest rate but I have still doubt that how much it will effect !  As Europe and US are in recession ( or will be) so in these circumstances Brazil’s growth and interest rate are still higher than US and EU countries. So it is quite normal that money will flow in Brazil. Though things may be different if they start series of rate cuts.

2nd-Sep, 2011

S.African RAND
Brazilian REAL
Mexican PESO

Both YEN and Swiss FRANC rose this week, as bad news from around the globe are forcing investors to take shelter under it. For Swiss FRANC there are more issues as market had discounted some intervention from Swiss authority but FRANC rose as central bank refrained from taking any new steps to control it’s gain.

AUD  rose this week as investors  are pricing out an risk of rate cut. This week Fitch warned that they may cut China’s YUAN debt ratings because of concern of rising default. Banks in China gave lot of loans during last few years and this threat is not something new as Fitch revised it’s outlook in few months back.

Coming week

EURO does not look like to go north from here so the pattern which I talked about during last few weeks is over now, but technically unless it breaks around 1.40 level the pattern is still intact. But things in Euro-area do not permit it to go in the upside from here.
Though AUD broke 1.06 level but it couldn’t able to carry it’s move, it was flat during last few weeks. Unless it breaks 1.08 it is hard for AUD to test higher levels. In the lower side 1.05 is good support for it.
USD is still in a pattern, where from it can drop in future but things can be different if it breaks around 75-76 level in the upside.
Swiss FRANC is again dropping as situation in EURO area is again forcing investors to take shelter in FRANC. So in coming week if things not improve then it may test previous lower levels.
Brazilian REAL got good support around 1.59 area but as I said in last week we can expect uptrend from it if it breaks 1.64-1.66 level convincingly. I don’t think rate cut is going to effect it much in coming days.
South African RAND is in crucial position now if it breaks 7.00 level in coming days then it can drop more.

Coming days can be challenging for EURO as Greece is making matters worse for it. On the other hand if selling continues in stock market then currencies especially Emerging market currencies may depreciate more from current levels.

[Rise and drop in currency (under heading coming week)  means rise & drop in chart figure, not currency’s rise & drop.]

NOTE :  Please see the disclaimer of this blog .


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