The long wait is over! The Bank of International Settlements (BIS) has just released the results from its Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity , conducted in April 2010. The report contains a veritable treasure trove of data, perhaps enough to keep analysts busy until the next report is released in 2013. [Chart below courtesy of WSJ ]. First, the data confirmed earlier …  Read More →

The frequency of my reports on the Chinese Yuan is admittedly much higher than it used to be. Why? Call it disbelief. More than two months have passed since China revalued its currency, and after a rapid 1% appreciation, the RMB has actually fallen back. Today, it stands only .5% higher against the Dollar compared to June 18. On a trade-weighted basis, it is actually 2.3% lower. What is going on?! It can foremost be attributed to …  Read More →

The recovery that emerging markets (their economies and financial markets) have staged since the lows of 2008 is impressive. In most corners of the financial markets, all of the losses have been erased, and securities/currencies are trading only slightly below there pre-credit crisis levels. Even compared to twelve months ago, in 2009, the performance of emerging market currencies holds up well. In the year-to-date, however, most of these currencies... 

It sounds like a play on words, based on the Karate Kid refrain, Wax-On Wax Off , and for all I know it was. Still, I rather like this characterization – coined by a research team at HSBC – of the markets ‘ current performance. Moreover, you’ll notice from the placement of that apostrophe that I’m not just talking about forex markets, but about the financial markets in…  Read More →

The rally in the Pound, which lifted it 10% from trough to peak, appears to be fizzling. The Pound is already down 3% in the last two weeks, and is trending downward. It now stands at a four-week low against the Dollar. Looking back at the Pound’s two-month rise, it’s not hard to understand why it was unsustainable. You can see from the charts below that there was a strong correlation with the Euro and the S&P 500 over the same... 

The Canadian Dollar was supposed to be one of the “hot” currencies of 2010. Given that it’s now exactly where it started the year, I think it’s safe to say that this isn’t the case. On the one hand, it would seem that the markets are still confused about how much the CAD should be worth, as Adam recently pointed out . An alternative interpretation is that investors believe the Loonie should trade near parity with... 

It was only a few weeks ago that I last wrote about the possibility of intervention on behalf of the Japanese Yen, and frankly, not a whole lot has changed since then. On the other hand, the Japanese Yen has continued to appreciate, the Japanese economy has continued to deteriorate, and the Bank of Japan has continued to ratchet up its rhetoric. In short, whereas intervention once…  Read More →

Pessimists love to point to the surging US National Debt as an indication that the Dollar will one day collapse. And yet, not only has the US Dollar avoided collapse , but is actually holding steady in spite of record-setting budget deficits. That being the case, one has to wonder: As far as the forex markets are concerned, does this debt even matter? In attempting to answer this question, it makes sense to start by asking whether investors... 

I shouldn’t have been so complacent in declaring the paradigm shift in forex markets, whereby risk aversion had given way to comparative growth and interest rate differentials. While such a shift might have been present – or even dominant – in forex markets over the last couple months, it appears to have once again been superseded by the so-called safe haven trade . In hindsight, it wasn’t that the interplay between risk... 

Since the beginning of this week, the Euro has retreated 3% against the US Dollar, including a 2% dip in Wednesday’s trading session, alone. Is it possible that the Euro rally was too good to be true, or is this correction only temporary? Earlier this week, Adam reported that China (via the institution that manages its foreign exchange reserves) was at least partially …  Read More →

I concluded my last post ( Euro Recovery: Paradigm Shift Confirmed ) by musing about how interesting it is that nobody has taken credit for predicting/profiting from the sudden reversal in forex markets, whereby the Euro has surged and the Dollar has tanked. Two days later, I think I can offer an explanation: China. That’s right. The force behind the sudden sea change might not be private investors, which up…  Read More →

In early July, when the Euro rally was (in hindsight) just getting under way, I reported on the apparent paradigm shift in forex markets , whereby risk-driven trades that benefited the Dollar were giving way to trades driven by fundamentals, which could conceivably favor the Euro. Since then, the Euro has continued to rally (bringing the total to 12% since the beginning of June), confirming the paradigm shift. Or so it would seem. …  Read More →

Next week, the Open Market Committee (OMC) of the Federal Reserve Bank will hold its monthly meeting. Even without checking futures prices, it’s obvious that the probability of an interest rate hike is nil. [In fact, the odds of a rate hike in November have already converged to 0%]. Why, then, are investors keenly awaiting the outcome of the meeting? In a nutshell, they will be watching for two things. The first is any changes in the statement... 

Today, we bring you an interview with Roland Manarin, founder of Manarin Investment Counsel and Manarin-On-Money . Below, he shares his thoughts on risk management and the EU Sovereign Debt Crisis, among other topics. Forex Blog : How would you summarize your general approach to investing? In the management of retirement assets, I subscribe to global diversification using low-cost, asset-class funds that adhere to Modern Portfolio Theory.  From... 

I last mused about the possibility of Japanese Yen intervention in June ( Japanese Yen: 90 or 95? ): “It seems that anything between 90 and 95 is acceptable, while a drop below 90 is cause for intervention.” Since then, the Japanese Yen has fallen below 86 Yen per Dollar (the USD/JPY pair is now down 7% on the year), and analysts are beginning to wonder aloud about when the Bank of Japan (BOJ) will step in. The BOJ last intervened...