Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world’s financial cente New York, London, Tokyo, Frankfurt and Zurich. Historically, the only…
Silver – like gold – has enjoyed a high-octane surge. But what now? How do you keep chasing the profits that inflation is sure to bring without risking the loss of those profits should silver prices reverse? Well, options expert Larry D. Spears last week showed investors how to hedge against a possible decline in the price of gold – and this week he’s back to do the same ….
The tragedy in Japan is only just now beginning to be understood as various reports come in of thousands of deaths, massive flooding, and nuclear facilities that are in danger. Because of this, traders will have to be pragmatic as far as how they approach the FX markets, especially when it comes to the Yen.
The euro halted three days of gains versus the dollar as Moody’s Investors Service downgraded Portugal’s credit rating, reviving concern about Europe’s ability to solve its debt crisis.
The 17-nation common currency depreciated versus all but two its major counterparts after Portugal was cut two steps by Moody’s yesterday to A3, four steps from so-called junk status. The rating company said its outlook remained negative given Portugal’s “subdued growth prospects” and risks that the government won’t be able to implement deficit-reduction plans.
Global shares rallied for the first time in three days as the Nikkei 225 (NKY) Stock Average rebounded from a slump that sent valuations to a 28-month low and commodities gained. The dollar climbed versus the yen as fires at a Japanese nuclear plant hampered efforts to avert a meltdown.
The British Pound has risen almost 15% against the Dollar over the last twelve months. It seems that the markets are ignoring the fiscal concerns that sent the Pound tumbling in 2010, and focusing more on inflation and the prospect of interest rate hikes. At this point, the Bank of England (BOE) is now racing with the European Central Bank (ECB) to be the first “G4″ Central Bank to hike rates.
NEW YORK -Fears over the escalating nuclear crisis in Japan overtook financial markets around the globe Tuesday, pushing stocks and other investments lower. The Japanese stock market lost 10 percent of its value, and Wall Street dropped steeply before bouncing back.
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Global stocks slid, following the biggest drop in Tokyo since 2008, and Treasuries gained amid concern Japan’s biggest earthquake on record will hurt economic growth. The euro rallied as European leaders agreed to expand the region’s rescue fund.
The Standard & Poor’s 500 Index fell 0.6 percent to 1,296.39 at 4 p.m. in New York, paring a drop of as much as 1.4 percent as energy shares rebounded. The Nikkei 225 Stock Average plunged 6.2 percent, with about $285 billion in equity value erased from the Japanese market. Ten-year Treasury yields lost 4 basis points to 3.37 percent. Oil reversed losses after dipping below $99 a barrel. The euro rose against 15 of 16 major peers.
Companies that operate nuclear power plants or supply the fuel helped lead stocks lower, with Entergy Corp. down 4.9 percent in New York and Cameco Corp. tumbling 13 percent in Toronto, while natural gas rallied amid speculation that the atomic-energy industry will suffer as Japan works to contain radiation at damaged reactors. Tiffany & Co. and Coach Inc. lost more than 5.2 percent for the biggest declines in the S&P 500 on concern sales of luxury goods in Japan will slow.
If you’re looking to short Western currencies, one possibility is to short them against emerging-market currencies, such as the Chinese yuan, the Indian rupee, the Brazilian real and the Russian ruble.
India and Brazil are running large government budget deficits, in spite of their amazing booms, and both currencies are highly vulnerable to a sudden monetary tightening or a downturn in the global economy.
China, tightly manages its currency. There is certainly potential for the yuan to rise, provided that China maintains its present policy of allowing fairly free inflows of foreign capital while barring outflows of its own savers’ money.
Canada and Australia are reasonably well-run countries with large commodity exposures. So they should do well as long as the current commodity boom continues.
In the Asia-Pacific region, South Korea, Taiwan, and Singapore all have superbly-run economies that are structurally sound.
A currency portfolio that contains those five currencies – the South Korean won, the new Taiwan dollar, the Singapore dollar, the Canadian dollar, and the Australian dollar – could thus be relied upon to maintain its value better than most.