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Japanese yen on the up |
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Japanese yen is snapping an eight-year slide against the euro and Australian dollar as the abrupt global economic slowdown forces investors to unwind long-entrenched positions, pushing these currencies into a downtrend.
The sudden shift in the outlook toward interest rate cuts in economies such as the euro zone took investors by surprise, spurring them to cut back on risky carry trades using the low-yielding yen to buy high-yielding currencies.
The move has also coincided with the dollar’s broad recovery, with the spreading weakness beyond the United States forcing some investors to abandon bets on a decoupled global economy.
Most major currencies, oil and commodities have tumbled. The Japanese currency rallied about 3 percent against the Australian and New Zealand dollars this week and 2 percent against the euro.
The sharp drop in higher-yielding currencies against the yen is likely to persist until investors fully factor in the global economy’s deterioration. Even Japan’s steady investment abroad that has kept the yen weak may not be enough to offset such selling pressure.
The abrupt shift in expectations sent the Aussie dollar sliding 9 percent against the yen in August, the biggest monthly drop in a decade.
The yen hit a two-year high against the New Zealand dollar and a five-month high against the Australian dollar on Wednesday, even as Australia and New Zealand still offer the highest interest rates among developed nations at 7 percent and 8 percent, respectively.
Australia’s rate cut was the first in seven years, while New Zealand trimmed rates in July for the first time in five years. Both countries’ central banks are expected to cut rates further.
Sterling and the euro touched five-month lows against the yen as more investors see the European Central Bank and the Bank of England lowering rates in coming months, with inflation concerns easing after oil’s 30 percent fall from its record peak in July.
Analysts say the euro, sterling, Aussie and kiwi all appear to have entered downward trends from long-term peaks and technical charts were also seen pointing to more weakness.
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| Technical Calls |
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Russia may buy remaining 203 tonnes of IMF gold |
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Which country will not buy the remaining gold reserve from International Monetary Fund (IMF), following India's purchase of 200 tonnes of gold last week? Bullion analysts say China is set buy the remaining 203 tonnes of IMF gold. But China is not alo |
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Gold price peaks to Rs16,900 in India bullion market |
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Gold prices in India continue to peak. On Satruday, gold prices spiked to a new high of Rs 16,900 per 10 gram in the bullion market. Gold dealers said strong marriage season demand amid firmimg global trends are driving gold prices in India. |
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Sri Lanka shoring up gold reserves |
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The Gold Price in Euros peaked on Feb. 20th above €782 an ounce. "We have been fairly strong accumulators of Gold reserves over the past few months," said Sri Lankan central bank chief Ajith Nivard Cabraal to Reuters today in an interview from Chenna |
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Cardamom futures rose at the MCX counter Friday as the demand for the commodity in the spot market is seen firm against the lower than expected stockpiles. |
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MCX Comdex was up by 0.67% to 2687.20. MCX Energy was down by 0.98% to 2765.22, MCX Metal was up by 1.45% to 3130.30 and MCX Agri was up by 2.78% to 2182.39. |
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Domestic crude oil futures are trading with mild losses Friday as the impacts of the late sell of continued to linger on the market. |
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