One of the popular predictions of the past few years has been to declare China as the next world superpower. The most populated country in the world has experienced tremendous growth for some time, and given their size, growth, and stability, many view China as the United States’ next competitor for worldwide dominance. While I [...]
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A Truly Global Market
Many in recent years have pointed to a “global market” that has emerged in the past few decades. While this term is typically a reference to increased global trade and international economic cooperation, the expression is also becoming applicable to the status of the world’s economy. After several years of widespread economic boon, it is [...]
Random Country Report: India Revisited
My assignment for the day: write 200 times “Next time I will not get too excited when I write about India’s short term economic situation.” For those who have been following India in the past few days, the developments seem anything but the rosy picture I painted last time around. Sure, in the long run, [...]
Random Country Report: Part 1 – India
Some days, I know exactly what I’m going to write about. On days that I don’t, I usually peruse through the news, trying to find something that piques my interest. Today’s top headlines in the currency sector centering on the US Dollar not doing anything as there’s little to trade on… thanks for the help [...]
The “Undervalued” Yuan Saga Continues
The People’s Bank of China may be in a position to use its $1.33 trillion currency reserves as a bargaining tool against U.S. lawmaker demands. Xia Bin, director of financial research at the State Council Development Center, believes China can use its holdings of U.S. government debt to its advantage. As the world’s second-largest holder [...]
Unraveling of the Carry Trade
We’ve been talking about the carry trade unwind for the past couple of days. The moves in the forex market yesterday and during Asian trading last night ran counter to that assumption. There was a reversal upwards in the yen crosses, especially CADJPY, AUDJPY and NZDJPY. The late rebound in the Dow also buoyed USDJPY, [...]
International Credit Crunch Brings Risk Aversion to Forex Market
A worldwide credit crunch and economic problems (mainly in the United States) have torched the equities markets for the past two weeks. There are fears that the subprime mortgage crisis and the housing problems will escape their respective sectors and infect the market as a whole. The losses are magnified by the uncertainty of many [...]
Risk Aversion and Asian Growth Compete for the Direction of the Forex Market
Global equities markets took a beating last week. The phenomenon began in the United States (on the back of subprime mortgage concerns) and it spread to the financial markets in other countries. For the forex market, the primary impact of the losses was a return of risk-aversion. The risk appetite of currency traders has waned, [...]
Yen Crosses Start Their Fall
Yen carry trades have dominated the forex market for the past couple of months. With international equities markets booming and high yields to be found in other countries, traders have been borrowing the yen on the cheap to finance their investments. That has brought the yen to multi-decade lows against all the highly traded currencies. [...]
Globalization Causing Worldwide Inflation
Inflation has always been an important concern for currency analysts, if only because it has a direct relationship with interest rates. Central banks have a mandate to keep inflation under control, and so signs of rising inflation indicate a strong currency. But the new paradigm of an increasingly international economy could leave monetary policy makers [...]
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