Investors Respond to EU Summit Author: BBH FX Strategy
The European Union (EU) came very close to a consensus on how to build a framework for a fiscal union and the news helped to boost currencies against the U.S. dollar, despite holdouts in the United Kingdom and the Czech Republic as well as growing uncertainty about the future of Greece. Even so, the U.S. currency outlook is positive based on hopes of more economic growth, which is also expected to buoy Canadian and Mexican currencies.
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Investors Eye The Mexican Peso (MXN) Author: BBH FX Strategy
Currency investors are keeping an eye on Mexico as the peso continues to stay strong, and are prepared to increase buys at the sign of any weakness. All indicators point to gains for the peso, although analysts differ in opinion on Banxico’s interest rate position and its effects in the short term. Overall economic activity appears to be slowing, which likely means rates will stay at or around 4.5% as core inflation remains favorable. A political climate that may support long-term reforms and the country’s ability to attract continued foreign investment, including a new Japanese auto manufacturing plant, are signs that the peso may have a long bullish run ahead of it.
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Banks in Emerging Markets to Meet: Forex Investment Ramifications Author: BBH FX Strategy
The central banks of Hungary, Thailand, Turkey and India are set to meet soon and currency investors are intent on forecasting how subsequent interest rate adjustments will impact market movement. India and Turkey are expected to maintain current rates, while the outlook for Hungary and Thailand contains more volatility. Thailand is expected to ease rates in the wake of flood rebuilding, while the banking position in Hungary remains more uncertain.
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Forbes Chairman Advocates Gold Standard Author: Alix Steel
Steve Forbes, Forbes magazine’s chairman and editor-in-chief, is concerned about the erosion of the U.S. dollar through artificially low interest rates and enslavement to the fiat currency system, and he has an idea of how to turn things around. He advocates a revised gold standard that pegs the dollar to a set value for gold ($1,500 per ounce), then allowing the Federal Reserve to raise or lower rates based on the dollar’s performance against that price. The U.S. has utilized the gold standard in the past, but now there are trillions of dollars in circulation and the country faces a mountain of debt, which Forbes argues is a sign to take action rather than remain mired in old ways.
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US Dollar Investment in Early 2012 Author: Larry Spears
The U.S. Dollar Index recorded late-year gains in 2011 and experts expect a further short-term rally moving into 2012 as Europe continues to struggle with its debt fix; however, these gains are not expected to last. The dollar will continue to perform as the European Central Bank prints more euros, but the U.S. will soon have to face its own fiscal problems that include questionable Federal Reserve policy decisions and the government’s inability to spend within its means. Money market investors recommend using a Forex contract, futures contract or exchange-traded fund to take quick advantage of the dollar’s short-term gains.
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Positive Eurozone Report Softens Dollar Author: BBH FX Strategy
The U.S. dollar is easing in the beginning of the week due to a more stable outlook in the Eurozone. The euro saw offers of $1.3150 and sterling pushed to $1.5630, while the Australian dollar sought parity. The yen started the week underperforming against the dollar, but the Scandies and antipodeans outperformed the reserve currency. Equity and bond markets both remain mixed, but oil and gold are both up in the commodities market. Global trading strengthened somewhat following a short period of speculating and fear buying in the wake of North Korean leader Kim Jong Il’s death.
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US Dollar Surges Amid Global Turmoil Author: Ilya Spivak, Currency Strategist for Dailyfx.com
A sweeping Eurozone credit rating downgrade by Fitch and the unexpected death of North Korea’s leader, Kim Jong Il, has turned a once shaky U.S. dollar into a comparative safe haven in the currency market. The dollar jumped as much as 0.4% against its largest currency counterparts in response to the news, and edged up more in anticipation of a large French bond selloff and negative reports on stock index futures from the S&P 500. Increasing and unchecked Eurozone debt and a likely power struggle in North Korea are setting the stage for a strong dollar moving forward. For more on this continue reading the following article from The Street.
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Euro, S&P 500 Remain in Sync Author: BBH FX Strategy
Market analysts have noted the correlation between the S&P 500 and euro since the 90s, when a simulated euro was used to predict market movement. That relationship has remained intact since then, but now it appears the correlation is beginning to weaken. Some speculate the breakdown of the 30-day rolling correlation may be because more American investors are keeping their money at home, but whatever the reason it may trigger a response from investors as they try to anticipate market changes in the wake of growing global financial turbulence.
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Dollar Trends Up Amid Euro Fears Author: David Song
The U.S. dollar will continue to edge up against other currencies, particularly the euro, as the Eurozone struggles to find a path out of dissolution. The upcoming Federal Open Market Committee and announcement on Fed interest rates is expected to affirm continued positive performance for the reserve currency into 2012, as Fed Chairman Ben Bernanke is predicted to hold steady on current rates and policies. Bernanke will not abandon the possibility of a third round of quantitative easing, however, as the economy and housing market continues to suffer. Even so, the possibility of region-wide credit downgrades in the Eurozone has the potential to further strengthen the dollar.
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Hot Currencies for 2012 Author: Martin Hutchinson
The global currency market is drawing more investors by the day and experts believe people can turn impressive profits in currencies, but only if lessons from 2011 are not forgotten. Investors are warned to steer clear of the euro as the region attempts to find a solution to its currency woes, and the Japanese yen and Brazilian real are also not to be trusted. Other currencies that could go either way are the British pound, Australian dollar and Swiss franc. Instead, analysts say the must-have currencies are the Canadian dollar, Chilean peso and South Korean won.
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