May 23, 2011 by
Is the US Dollar really gaining strength? Or is it’s prime competitor, the Euro, just losing strength? This week should really tell us a lot.
First of all, there is no real reason to be optimistic right now about the US Dollar, which is why it’s rise this month has baffled many. The budget deficit reached it’s ceiling last week, surged past it with treasury accounting tricks, with no congressional compromise on the subject in sight. This quarters economic numbers have been just as dismal thus far as last quarters, including weak housing and GDP numbers.
Spanish Protests From Last Weekend
As for the Euro, things have really been a mess. Everyone is waiting for Greece to implode, there are mass protests in Spain with rumblings their debt crisis may be worse than Greece’s or Ireland’s, and new rumors swirling around that Italy will be next domino to fall.
So is the Dollar’s rise soley at the expense of the Euro? This week will be key. By the end of this week, the capital goods report and one on consumer confidence will help paint a true picture of the economy. If these numbers are soft, and yet the Dollar continues to rise, it will be a good sign that the dollar is just “the best of a bunch of bad choices”, and no real strengthening is taking place. Or it might signal that buying gold and silver is in order.
May 12, 2011 by
The Bank of England today released its quarterly inflation report, and it was as grim as everyone expected:
Along with the standard report, Meyrvn King added his own commentary. The focus of his statements was that inflation will be above 5% this year, and that the high price of commodities is driving this inflation. He also quips about some nonsense about a “medium-level inflation” mandate. If you read the reports in detail, the true inflation rate may be even higher than Febraury, up to 7%.
I hate to break it to Mr. King, but he has got it 100% WRONG. Commodities are not driving inflation, inflation is driving commodities. You can’t keep dumping cheap money into your economy and not expect to see inflation at some point. Commodities are rising across the board, save for their recent correction, regardless of fundamentals or demand. Despite what some pundits would have you believe, this is not all cause by speculators or phantom bubbles, the prices are rising due to inflation.
The second part of this statement is nonsense. I’ve never seen this mandate anywhere in official bank or British government literature. Maybe someone can enlighten me as to what this mumbo-jumbo means. Medium-level inflation? Why? For what purpose? Fight deflation? The British economy is a wreck, inflation is skyrocketing, and wages are dropping or holding even. That is called stagflation. and if you want some more details about it Mr. King, make an international call to one Jimmy Carter in the United States.
Anyway, most sane investors soon realized that 7% inflation isn’t going to work, and that the bank of England will have to raise interst rates sometime soon. The pound was up against the dollar and other currencies today, but I expect this to be a short lived rally, at least until they actually do raises rates.
May 07, 2011 by
With multiple countries in the Eurozone teetering on the brink of collapse, another potential blow surfaced today. Greece may be seek to leave the Euro. You can read more about this at the BBC:
Greece has struggled in recent years with high unemployment and a sagging economy. The goverment seems unable to reel in its spending, even with recent austarity measures. One of the inherent weaknesses of an organization such as the EU is that centralized interest rates and other measures often don’t address each country’s individual needs. Germany is in a much different situation that Greece, yet they share a common interest rate and policies. One size does not always fit all.
While Greece is neither the largest nor the most influencial member of the European Union, this has the potential to start a domino effect that could cause the Euro to collapse, and send shockwaves throughout the world economy. It will be interesting to see how the ECB will spin this, and what damage control will be initiated in the coming weeks. Already today, the Euro has taken a beating against most other currencies, and probably will for the near future.
May 06, 2011 by
As many of you noticed, the dollar skyrocketed today as both the stock market and particularly commodities saw significant drops. Is this a sign of things to come?
Probably not. Today we saw the convergence of multiple factors that are going to disipate within a week, and the dollar will most likely continue to trend downward.
First of all, the ECB (European Central Bank) came out with a less-than-stellar appraisal of the Euro, which is not what investors wanted to hear. As bad as the dollar is, the Euro may be in even worse shape, so some investors transferred to greenbacks.
Second, silver and other commodites plummeted again today. Most of the week-long-drop has been caused by COMEX raising the margin on silver four times in one week in an attempt to draw out speculators. Many commodities investors were forced to sell their holdings to cover margins, thus tightening the money supply.
Finally, after these other two factors were in play, the short factor reared its head. Everyone and their grandmother has been shorting the dollar, thus it didn’t take much of a bump to drive many to grab dollars to cover their short positions.
As demonstrated by today’s job numbers, the US economy is still incredibly weak. Gold and silver will eventually rebound, although at a more subdued pace. The ECB won’t give the dollar a bump every day. QE3 is just around the corner, and the shorts will again dominate the dollar.
So enjoy this short repreive while it lasts, because it probably won’t last long.
May 06, 2011 by
Please bear with me as I pull posts off the old site and into the new format. I hope to have the entire archive moved over by the end of the month. I will also start posting new material as it is written. Thank you for stopping by Forex Currency Trading Strategies
November 06, 2010 by
In these uncertain times, it’s hard to know where to invest your money to not only retain your wealth, but grow it for the future. TV analysts and internet gurus are quick to tell you what stocks to diversify into, or what commodities to buy. But what about trading currencies directly? Is that a good way to invest? How exactly do you trade currencies?
FOReign EXchange Markets, know more commonly as Forex, offer a way to trade currencies throughout the world. Forex is by far the most traded market in the world. On any given day, over three TRILLION dollars in currency is traded by banks, institutions, and individuals. Unlike other markets you may be more familiar with, currency is traded in an over-the-counter manner, in whatever currency market is open at the time. Trading starts at 10AM on Monday mornings in Australia and ends on Friday afternoon at 5PM in New York, allowing 24-hour-per-day trading, 5 days a week.
Currency trading is a form of speculation, basically trying to buy a currency at a lower value and selling it at a later date at a higher value. As with stocks, you can also short sell currency, which is essentially selling currency at a higher prices, then buying it later at a lower price to make a profit. The value of currency is determined by exchange rates, which fluctuates with news and event like stock markets do.
In my new blog, Forex Currency Trading Strategies, I will help you get ahead in the currency markets. Rather than focus on dry charts and statistical analysis software, I will focus on the geopolitical forces shaping our world that drive currency markets. I won’t tell you what to buy or sell, but I will give you news and insight to make your own informed decisions. But the most import part comes from you, the reader. Please feel free to comment on any of my articles to add your own unique perspective on the changing international markets, and help other readers make sound investments.
– Robert Bane