Reports in Canada showed unexpected zero economic growth for the month of April, the Canadian dollar came crashing down from a 30-year high. The Canadian currency dropped to 94.16 U.S. cents from yesterday’s 94.39. The zero growth report comes as a big surprise, for there had been a 0.3 percent increase in March. Investors have [...]
Archive | June, 2007
Carry Trade: Not Dead
Yen-funded carry trades are not finished, despite reports to the contrary. To paraphrase Mark Twain, reports of its death have been greatly exaggerated. All three commodity currencies, the Australian dollar, the New Zealand dollar and the Canadian dollar, gained against the yen last night. High oil prices and bad Japanese economic data spurred the poor [...]
Possible Carry Trade Resurgence
As the yen fell from a two week high against the dollar and weakened versus the euro this morning, it is possible that the carry trade is back in action among traders. The yen dropped to 123.04 per dollar at 9:35 a.m. from yesterday’s price at 122.83. Against the euro, the Japanese currency fell from [...]
FOMC to Leave Interest Rates Unchanged
The United States Federal Reserve’s interest rate announcement and accompanying statement is scheduled to be released today at 2:15 PM Eastern Standard Time. Barring a complete surprise, the Fed is likely to leave interest rates at 5.25% and issue a statement hawkish on inflation. With contradictory data regarding economic growth and interest rates, the bank [...]
Fall in US and European Equities Markets Boost Swiss Franc
Both U.S. and European equities markets have taken a fall with the news of disappointing durable goods and weak new homes sales still fresh in trader’s minds. The European Dow Jones Stoxx 600 Index fell 0.8 percent to 386.38, the Euro Stoxx, decreased 0.8 percent, and both the U.S. Dow Jones Industrial and S&P 500 [...]
Carry Trade Unwind
We might be seeing the beginning of a yen rally. There are a number of factors that point to the unwinding of the carry trade and the subsequent rise of the Japanese yen. Recent economic data suggests that consumer demand in the Japanese market is finally starting to pick up. There are growing problems in [...]
Future Gains by the Canadian Dollar Uncertain
The Canadian dollar reached a 30 year high at 94.79 U.S. cents. Even though it has fallen since, an increase is still possible after today’s U.S. government report showed a decrease in new home sales 930,000 in April to 915,000 in May. New homes were sold at a median price of $236,100, down .9 percent [...]
Emerging Market Currencies
The market for emerging market currencies is entering an interesting phase. As I mentioned yesterday, global risk aversion is on the upswing. That would suggest a capital flight from emerging markets to more blue chip investments like the US dollar. But conversely, record commodity prices all over the world have boosted demand for these emerging [...]
Financial Market Risk Re-evaluation
Recent developments in world financial markets suggest an increase in international volatility. As the carry trade thrives on financial stability and an increasing appetite for risk, an upward re-evaluation of that risk could slow down carry trades in the forex market. The most prominent situation is the one regarding US dollar-denominated assets. Recent economic data [...]
Interest Rates Move Forex Market
Recent developments in the foreign exchange market prove that it is not just interest rates that drive action in the currency market. Expectations of future interest rates also matter. The currencies with the greatest chance of higher short-term interest rates are the currencies receiving the most support from traders. The few currencies with bad prospects [...]
UAE Emirati Dirham
UK Pound
South Korean Won
Turkish Lira 
Canadian Dollar
European Union Euro
Argentine Peso
Russian Ruble
Malaysian Ringgit
Brazilian Real
Mexican Peso
Japanese Yen