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Currency market review (weekly) after 9th December, 2011.

EURO($) dropped 5th week out of last 6 week, but drop in the last day indicated that markets were not totally satisfied with the new initiatives of EU. But interestingly weekly changes for both EURO and USD were not much. I think market needs more time to act on the outcomes of EU summit. As I said in last week that joint central banks effort may going to affect USD in future, look like in coming days FED is going to get new orders for money printing machines. I have a doubt that this liquidity in the system may not work like the way they want it to be !

12/2/2011-12/9/2011 (%)
11/25/2011-12/2/2011 (%)

S.African RAND
Brazilian REAL
Mexican PESO

Most of the Asian currencies faces decline this week, this is because there were some sell-off in the stock markets, slower export growth for Malaysia, etc. AUD was higher due to their strong economic growth in the 3rd quarter but later it was affected by bad Chinese report.

Currency Market forecast for coming week

As I said that Currency market is due to act on the outcome of the EU summit, I think the major problems are still there in Euro-area, unless those are getting any solution, currencies will be reacting.
Last week I was suspecting a short reversal up to 1.39 for EURO but it did less. Sentiment is still negative and if the pattern reacts it can test up to 1.15 level as I said in last day. So I am still holding those levels which I told in last week.
AUD is still facing flat movement though its intra-day moves were better. It dropped lower levels which I was expecting in last week but it closed above. Though it is forming a pattern which indicates that it will go up in coming days, but from the other angle if we see it then it creates a range and look like it will remain in this zone. This zone indicates that even it drops, it will not go below 0.98 in coming days.
In spite of good news for EURO, USD dropped less in the last day. I am not telling that USD will not drop more in coming days, so if it drops then it will get support at 76.5 level but first it has to break 78 level. I still believe that it will test 80-81 level in coming days, if it completes the pattern which I talked during last few weeks.
Japanese YEN is unable to break 78 level and it is testing lower support of 77 level again. But I still think it has a chance to test higher levels in coming days. Swiss FRANC is getting good resistance at 0.93 and it may break that level in coming days, in lower side it has support at 0.895.
Last week I was talking about the support level of 1.72-1.78 for Brazilian REAL, but it is getting resistance of 1.82. In the upside it can go up to 1.90 level, if it crosses this obstacle then it can run more in coming future.
South African RAND was trying to test 8.30 level but in last day it again dropped. It has support at 7.80 and if it breaks 8.30 range then it can test 8.60 level in coming days.

If miracle does not happen or suddenly some other topic closes this chapter of European debt fever, only ECB can remove this debt problem and that is only by using their printing machines. Because no one is ready to clean the mess created by others. And if someone is thinking about the collapse of EURO, I think that is too immature, considering just the amount of EUROs which are in the reserve of other countries.
I think the fiat currency system is one of the bigger contributors of this financial crisis which we are facing now and for those crises which are coming. Can anyone imagine a scenario when countries with good currency system deny to trade with fiat currency !  Lot of reforms are needed in this area and bigger countries with AAA or AA+  ratings must think about that, before it becomes too late ………

[Rise and drop in currency (under heading currency forecast for 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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