Archive for the ‘Political’ Category

On 21 January, Donald Trump was inaugurated as the president of the US. Though Trump has been lauded as the most ‘business focused’ president, this has not hitherto materialised in definite fiscal policies. As such, there has been a climate of uncertainty amongst Forex traders and this has materialised in a sense, since January 21st, that the dollar may be at risk.

Why might the dollar be at risk?

The uncertainty about the Trump administration’s fiscal policy has led some traders to worry that this could destabilise the dollar. Often all that it takes is a lack of confidence in the dollar for it to start to fall as traders turn to other markets and currencies as securer forms of investment.
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South Africa’s biggest private fixed-income money manager will stop lending money to six of the country’s largest state companies because it is concerned about how they are being run, government infighting and threats to the independence of the finance ministry.

Futuregrowth Asset Management, which has about 170 billion rand ($11.7 billion) in assets, shelved plans to lend more than 1.8 billion rand to three state companies on Tuesday (August 30), Chief Investment Officer Andrew Canter said from Cape Town on Wednesday (August 31), without giving more detail.

The fund manager will only resume offering loans and rolling over existing debt once it has determined that what it sees as proper oversight and governance at the companies have been restored.

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Sterling traded close to a three-week high against the dollar on Thursday (August 25) and was on track for its best week in six, with worries over the economic impact of Britain’s vote to leave the European Union easing a little after recent better-than-expected data.

The pound was also on track for its best week in six weeks against the euro, having hit a two-week high against the single currency on Wednesday (August 24).

Short positions on sterling had reached a record high of 94,238 contracts in the week to August 16, and traders said many speculators had this week been unwinding bets and booking profits, which had helped lift the currency.

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Speculators that are the most bearish on sterling in nearly 25 years may be vindicated by a report published on Monday (August 1) showing Brexit is probably hitting Britain harder than markets previously envisaged.

Sterling declined versus most of its 16 major peers as the data showed UK manufacturing shrank more than initially forecast in July.

Hedge funds and other large speculators ran the biggest net short positions, or bets on the currency’s decline, since records began amid speculation that the Bank of England will cut interest rates for the first time in more than seven years on Thursday, August 4 to head off the risk of recession.

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The pound fell even as a report showed the UK’s annual inflation rate rose more in June than economists forecast.

Sterling weakened versus most of its 16 major peers. UK consumer prices climbed 0.5 per cent last month from a year earlier, the Office for National Statistics said in London. Analysts had expected the rate to rise to 0.4 per cent, from 0.3 per cent in May, according to the median estimate in a survey by news agency Bloomberg. The Bank of England’s 2 per cent inflation target was last reached in December 2013.

The Bank of England signalled last week it is readying stimulus for August as the economy reels from Britain’s decision to quit the European Union. Minutes of the BOE’s July meeting showed most members of the Monetary Policy Committee expect policy to be loosened next month.

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Sterling was firmer on Wednesday (July 13), trading near a two-week high against the euro as Theresa May was set to take over as Britain’s prime minister, easing some of the political uncertainty that has dogged the currency in the past few weeks.

Traders will keep an eye on who will be appointed as finance minister with many awaiting for clarity on the new prime minister’s detailed thinking on triggering Article 50, the procedure for exiting the European Union.

May has said “Brexit means Brexit”, but added Britain will not rush to trigger the formal divorce proceedings. The uncertainty over whether Britain will be able to retain access to the single market after exiting the EU, along with expectations that the Bank of England could cut rates on Thursday (July 14), are likely to make traders wary of sterling.

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The pound tumbled to a new 31-year low on Wednesday (July 6), at one point dipping below $1.28, on fears over the effect of last month’s Brexit vote on Britain’s property market and the prospect of cuts in Bank of England interest rates.

The pound, one of the main vehicles through which financial markets can express concern about Britain’s decision to leave the European Union, fell as low as $1.2798 in Asian trading, its lowest since June 1985. It recovered to about $1.2891 in afternoon trading in London.

That still left it more than 13 per cent weaker than it was before the June 23 referendum, and about 1 per cent lower on the day.

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Scandinavia’s biggest bank estimates Denmark sold almost $750 million in kroner to weaken the currency after it became clear early on Friday (June 24) that Britons had voted to leave the European Union.

The flight into safe-haven markets triggered by Brexit drove the krone to its strongest level against the euro in more than a decade, forcing the central bank to intervene to defend its currency peg.

The bank probably sold about 5 billion kroner ($744 million) on Friday (June 24), according to Jan Stoerup Nielsen, a senior analyst at Nordea in Copenhagen. That follows a resumption of interventions to weaken the krone in May for the first time since February last year, when Denmark’s euro peg was under a speculative attack. Interventions in May reached 23.6 billion kroner.

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Prime Minister David Cameron has said Thursday’s (June 23) referendum on Britain’s membership of the European Union was likely to be very close but he also predicted a “remain dividend” in investments if Britons voted to stay in the 28-nation bloc.

With just two days to go until the referendum that will shape the future of Europe, opinion polls have indicated that British public opinion is so divided that the outcome is too close to call.

Meanwhile, Swiss investment bank UBS warned its clients on Tuesday (June 21) it may fail to execute some orders on its electronic trading platform should this week’s Brexit referendum affect liquidity or cause extreme volatility.

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With the Brexit vote taking place in less than 48 hours, many Forex online traders (Foreign Exchange Market) are sweating at their palms. Numerous, who are trading, had said that the markets were looking incredibly risky. Investors have been closely been following the vote. The vote will take place on Thursday. According to recent polls, the vote is set to be substantially close.
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With sterling trades seen too expensive, the yen and Swiss franc are in demand according to in-depth research by news agency Bloomberg.

The UK’s referendum on European Union membership is spurring volatility in the pound, making trading sterling increasingly expensive. Banks are pointing clients toward alternative currency bets or hedges that could fare well regardless of the outcome.

Here is a list of analysts’ favourite trades as written in research notes or recommended in interviews conducted by Bloomberg News in recent days.

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The Colombian peso weakened on Tuesday (31/5) after the country’s central bank announced it would suspend an intervention policy aimed at slowing the currency’s decline.

The central bank said on Friday (27/5) it would not hold any additional dollar option sales, but did not fully rule out further intervention.

The bank also increased its benchmark interest rate for a ninth consecutive month on Friday, to 7.25 per cent, confirming the expectations of most analysts in a Reuters poll.

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The pound rallied the most in three weeks after a poll of UK voters released on Monday showed people who support a campaign to remain in the European Union exceeded those saying they will vote to leave by a wider margin than last month.

Sterling rose against most of its 16 major peers after the ORB/Telegraph poll showed 55 percent of respondents were in favour of remaining in the European Union, while 40 percent wanted to leave.

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The Philippine peso rose the most in six weeks against the dollar as Rodrigo Duterte sought to ease investor concerns after claiming victory in the nation’s presidential election.

The currency also strengthened versus all of its 10 Asian peers as preliminary results showed Duterte, the tough-talking mayor of Davao city, won about 39 percent of the vote.

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All eyes within the online Forex trading market have been focused upon the performance of the dollar in relation to the recent interest rate hike enacted by the Federal Reserve. What is interesting to note is that many investors expected the value of this currency to strengthen significantly when compared to major counterparts such as the pound and the euro.

After a short and somewhat disappointing rally, the dollar has failed to exhibit any real strength. Many Forex analysts believe that this lack of upward momentum signals the continued sensitivity of this currency; particularly in terms of the final two weeks of 2015. However, there may be another reason why the dollar is failing to perform even while the price of commodities continues to fall.
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The latest round of online forex trading news highlights the continued fact that traders are adopting a “watch and wait” approach in terms of any significant movements. Part of the reason for this strategy is that there is relatively little data expected to be released over the next few days.

If anything, the details which have emerged are far from promising. Once again, economic figures released from China have echoed weakness while the recent sell-off in oil (regardless of short-term technical gains) highlights that markets are still in a sluggish position.
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A considerable amount of attention by online Forex traders has centred around the relationship between the United States dollar and the euro. There continues to be a significant amount of speculation in regards to the monetary strategies employed by the Federal Reserve in relation to the actions of the ECB.

In particular, surprisingly robust employment figures out of the United States have hinted that the Fed may hike interest rates in December.
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First Greece, then China, and now it is Japan that worries.

The International Monetary Fund, IMF is sensing out a warning regarding Japan’s debt in a completely new report. The IMF believes that Japan’s debt is unsustainable and that the risk of increasing as much as up to three times the country’s GDP (Gross Domestic Product) in 2030, is worrying. (more…)

All eyes have been understandably focused on Greece during the past week. What appeared to be a rather tenuous bailout offer has been accepted by the Greek parliament and pushed through at the eleventh hour by the European Union. While the massive €80 billion euros required to ease the financial tensions and imbue liquidity into the Greek economy may be a welcome development, many investors are still wary in regards of the long-term damage that could have already been done to the euro as a whole. (more…)

The Greece crisis reached new corners of the globe recently with its latest haphazardly turn away from progress. Today Monday June 29th, markets suffered across Asia to Europe in the wake of Greece shutting down its banks for a week, ahead of a debt default that now seems more probable than ever.

Oil prices saw a sharp drop and the Euro declined against the dollar, while Japan’s Nikkei 225 index fell 2% to 20,283.98 points.
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