Miami Diva
06-14-2010, 12:14 PM
YO RECIBO UN UPDATE DE CUSTOM HOUSE AL EMAIL Y HOY LLEGO ESTO CON INFO DE CHINA!!!! QUE AVANZEN O LO VAN A SANCIONAR EN EU Y QUIEN SABE DONDE MAS............. A VER ANTES Q TERMINE EL MES!
World Market Updatehttp://img.en25.com/eloquaimages/clients/customhouse/%7B54ef95f9-3df5-4595-8a06-54be36618cc4%7D_wmu-interim-logo.jpg (http://www.customhouse.com/?elq=55cec75721d94452a34961c0173facf7)A North American Market Perspective by Custom House, A Western Union Company
June 14, 2010 »http://img.en25.com/eloquaimages/clients/customhouse/%7B1260f1d6-e6ae-4c2f-9619-001499ae9b17%7D_collage1.gifhttp://img.en25.com/eloquaimages/tinydot.gif
Optimism Rises, Markets Reverse Direction
Market Highlights:
Cup Half Full for Traders
Commodities, CAD Ride the Risk Elevator Up
China and the United States Spar Over Currency
http://img.en25.com/eloquaimages/clients/customhouse/%7B325bd31f-3eb8-403e-a7a5-edb0782ea9e3%7D_wmu-hr-nz-banner-top.jpghttp://img.en25.com/eloquaimages/clients/customhouse/%7Be8fbead8-9f10-44da-b982-8d2f18874efc%7D_wmu-hr-nz-banner-left.jpg (http://www.customhouse.com/landing/ols-signup/money-transfer/?ls=a0K30000001MngC+USOM05-000&elq=55cec75721d94452a34961c0173facf7)http://img.en25.com/eloquaimages/clients/customhouse/%7B2ac6f502-7269-49ab-a4c0-49f2d5f8697f%7D_wmu-hr-nz-banner-right.jpg (http://payments.westernunion.com/contact/?subject=BusinessServices&ls=a0K30000001MngC+USOM05-000&elq=55cec75721d94452a34961c0173facf7)
Cup Half Full for Traders
After a long, hard weekend watching World Cup football in pubs across the planet, traders returned to their desks this morning in a cheerful mood. Markets worldwide were lifted by the broadly held belief that the selloff which began in mid-April may have gone too far, leaving attractive yield opportunities available for traders discerning enough to find them.
This shift in sentiment comes after Friday’s US data releases sent contradictory signals to the markets. On one hand, the University of Michigan consumer sentiment survey pointed to an improvement in expectations for the future, while on the other, a decline in retail sales numbers showed that buyers are keeping purse strings tightly closed. Traders have chosen to see the glass as half full, and are expecting positive sentiment to eventually feed into purchasing patterns, supporting the US economy and flowing through to the rest of the world.
Implied volatility as measured in currency options prices has fallen since hitting a two year peak in late May, meaning that traders expect markets to be more stable in the months ahead. Indeed, the broad retreat from risk that characterized the markets over the last few months appears to be abating. Investors are taking a more nuanced approach to yield opportunities, and several asset classes have gained ground in recent weeks.
The euro has entered a period of consolidative trading well above the 1.2000 mark against the US dollar, with the market exhibiting classic correction behavior as traders reassess the extreme bearishness that drove the currency down over the last few months. While the financial environment remains dangerous and deeply uncertain within the European Union, the currency’s fall should improve competitiveness and begin adding to growth in the months ahead. For euro sellers, this should create a number of opportunities in the months ahead, although the fundamentals are pointing towards further weakness in the long term.
Commodities, CAD Ride the Risk Elevator Up
With traders chasing yields, funds flowed into the commodities sector, pushing up prices across the base metals and energies. Copper gained two percent, to $6,587 a tonne, while crude oil moved above the $75 mark. Gold hit $1,230 an ounce. The Canadian dollar has risen close to the top of its recent trading range, and is holding ground near the 1.0300 handle.
Over the last month, strong historical correlations between crude oil prices, equities and the Canadian dollar have loosened to a degree, with the currency outperforming the commodities complex and equity markets. Among the major currencies, the CAD posted the second best performance over the last thirty days, only trailing the Japanese yen in its move upward.
This development points to the Canadian dollar’s emerging role as a financial safe haven, with investors drawn by Canada’s strength as a commodity exporter, and assured by the stability of the financial system through the financial crisis. Growth expectations remain high as Canada’s largest export market recovers, and domestic fundamentals improve.
Of course, commodity price movements remain the largest single factor in Canadian dollar exchange rate fluctuations, and represent a wild card for currency traders. Commodity markets themselves seem likely to see significant shifts in the months ahead, as the world economy exits the artificial conditions that have prevailed over the last two years and growth patterns are more clearly defined. In short, volatility in the USDCAD pair will likely remain high for some time, providing both the rationale and the opportunity for businesses to implement effective risk management regimes.
China and the United States Spar Over Currency
Tensions between China and the United States over monetary policy heightened once again last week after the Chinese government reported that exports had surged in May, up 48.3% over the year before. China’s trade surplus hit 19.5 billion USD for the month, while the US deficit widened to 40 billion. Although this rapid growth in export volumes is widely expected to be temporary, the announcement added fuel to the fires already burning in US political circles. On the day before the release, Senator Charles Schumer said “years of meetings and discussions with Chinese officials in an effort to persuade China to float its currency have repeatedly failed to produce lasting and meaningful results”. He promised to push ahead with legislation aimed at punishing China for its currency policies.
In testimony to the Senate Finance Committee on Friday, Treasury Secretary Timothy Geithner stated “the distortions caused by China’s exchange rate spread far beyond China’s borders and are an impediment to the global rebalancing we need. Reform of China’s exchange rate is critically important to the United States and to the global economy”
.
As we’ve discussed previously, exchange rate flexibility would help China achieve a number of important domestic policy goals, and the potential costs associated with a trade war with the United States far outweigh the benefits associated with keeping the currency artificially undervalued.
Geithner said “I recognize, and I think it’s very important for China to understand” that the proposed sanctions have strong bipartisan support, making it likely that they will be passed into law. In other words, the threat coming from the United States is real, and it is dangerous.
Somewhat counterintuitively, the strength of May’s export numbers may provide Chinese authorities with room to manoeuvre, allowing them to normalize monetary policy without incurring the wrath of the politically important export sector. Although loosening the exchange rate peg will not eliminate persistent US deficits, it would go a long way towards rectifying one of the most significant imbalances afflicting the world economy. Watch this space!
World Market Updatehttp://img.en25.com/eloquaimages/clients/customhouse/%7B54ef95f9-3df5-4595-8a06-54be36618cc4%7D_wmu-interim-logo.jpg (http://www.customhouse.com/?elq=55cec75721d94452a34961c0173facf7)A North American Market Perspective by Custom House, A Western Union Company
June 14, 2010 »http://img.en25.com/eloquaimages/clients/customhouse/%7B1260f1d6-e6ae-4c2f-9619-001499ae9b17%7D_collage1.gifhttp://img.en25.com/eloquaimages/tinydot.gif
Optimism Rises, Markets Reverse Direction
Market Highlights:
Cup Half Full for Traders
Commodities, CAD Ride the Risk Elevator Up
China and the United States Spar Over Currency
http://img.en25.com/eloquaimages/clients/customhouse/%7B325bd31f-3eb8-403e-a7a5-edb0782ea9e3%7D_wmu-hr-nz-banner-top.jpghttp://img.en25.com/eloquaimages/clients/customhouse/%7Be8fbead8-9f10-44da-b982-8d2f18874efc%7D_wmu-hr-nz-banner-left.jpg (http://www.customhouse.com/landing/ols-signup/money-transfer/?ls=a0K30000001MngC+USOM05-000&elq=55cec75721d94452a34961c0173facf7)http://img.en25.com/eloquaimages/clients/customhouse/%7B2ac6f502-7269-49ab-a4c0-49f2d5f8697f%7D_wmu-hr-nz-banner-right.jpg (http://payments.westernunion.com/contact/?subject=BusinessServices&ls=a0K30000001MngC+USOM05-000&elq=55cec75721d94452a34961c0173facf7)
Cup Half Full for Traders
After a long, hard weekend watching World Cup football in pubs across the planet, traders returned to their desks this morning in a cheerful mood. Markets worldwide were lifted by the broadly held belief that the selloff which began in mid-April may have gone too far, leaving attractive yield opportunities available for traders discerning enough to find them.
This shift in sentiment comes after Friday’s US data releases sent contradictory signals to the markets. On one hand, the University of Michigan consumer sentiment survey pointed to an improvement in expectations for the future, while on the other, a decline in retail sales numbers showed that buyers are keeping purse strings tightly closed. Traders have chosen to see the glass as half full, and are expecting positive sentiment to eventually feed into purchasing patterns, supporting the US economy and flowing through to the rest of the world.
Implied volatility as measured in currency options prices has fallen since hitting a two year peak in late May, meaning that traders expect markets to be more stable in the months ahead. Indeed, the broad retreat from risk that characterized the markets over the last few months appears to be abating. Investors are taking a more nuanced approach to yield opportunities, and several asset classes have gained ground in recent weeks.
The euro has entered a period of consolidative trading well above the 1.2000 mark against the US dollar, with the market exhibiting classic correction behavior as traders reassess the extreme bearishness that drove the currency down over the last few months. While the financial environment remains dangerous and deeply uncertain within the European Union, the currency’s fall should improve competitiveness and begin adding to growth in the months ahead. For euro sellers, this should create a number of opportunities in the months ahead, although the fundamentals are pointing towards further weakness in the long term.
Commodities, CAD Ride the Risk Elevator Up
With traders chasing yields, funds flowed into the commodities sector, pushing up prices across the base metals and energies. Copper gained two percent, to $6,587 a tonne, while crude oil moved above the $75 mark. Gold hit $1,230 an ounce. The Canadian dollar has risen close to the top of its recent trading range, and is holding ground near the 1.0300 handle.
Over the last month, strong historical correlations between crude oil prices, equities and the Canadian dollar have loosened to a degree, with the currency outperforming the commodities complex and equity markets. Among the major currencies, the CAD posted the second best performance over the last thirty days, only trailing the Japanese yen in its move upward.
This development points to the Canadian dollar’s emerging role as a financial safe haven, with investors drawn by Canada’s strength as a commodity exporter, and assured by the stability of the financial system through the financial crisis. Growth expectations remain high as Canada’s largest export market recovers, and domestic fundamentals improve.
Of course, commodity price movements remain the largest single factor in Canadian dollar exchange rate fluctuations, and represent a wild card for currency traders. Commodity markets themselves seem likely to see significant shifts in the months ahead, as the world economy exits the artificial conditions that have prevailed over the last two years and growth patterns are more clearly defined. In short, volatility in the USDCAD pair will likely remain high for some time, providing both the rationale and the opportunity for businesses to implement effective risk management regimes.
China and the United States Spar Over Currency
Tensions between China and the United States over monetary policy heightened once again last week after the Chinese government reported that exports had surged in May, up 48.3% over the year before. China’s trade surplus hit 19.5 billion USD for the month, while the US deficit widened to 40 billion. Although this rapid growth in export volumes is widely expected to be temporary, the announcement added fuel to the fires already burning in US political circles. On the day before the release, Senator Charles Schumer said “years of meetings and discussions with Chinese officials in an effort to persuade China to float its currency have repeatedly failed to produce lasting and meaningful results”. He promised to push ahead with legislation aimed at punishing China for its currency policies.
In testimony to the Senate Finance Committee on Friday, Treasury Secretary Timothy Geithner stated “the distortions caused by China’s exchange rate spread far beyond China’s borders and are an impediment to the global rebalancing we need. Reform of China’s exchange rate is critically important to the United States and to the global economy”
.
As we’ve discussed previously, exchange rate flexibility would help China achieve a number of important domestic policy goals, and the potential costs associated with a trade war with the United States far outweigh the benefits associated with keeping the currency artificially undervalued.
Geithner said “I recognize, and I think it’s very important for China to understand” that the proposed sanctions have strong bipartisan support, making it likely that they will be passed into law. In other words, the threat coming from the United States is real, and it is dangerous.
Somewhat counterintuitively, the strength of May’s export numbers may provide Chinese authorities with room to manoeuvre, allowing them to normalize monetary policy without incurring the wrath of the politically important export sector. Although loosening the exchange rate peg will not eliminate persistent US deficits, it would go a long way towards rectifying one of the most significant imbalances afflicting the world economy. Watch this space!