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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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Dollar investors bring down gold, silver prices |
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Gold slipped again for Dollar investors early in London on Friday, nearing the weekend 1.7% above last week's finish as commodities fell, government bonds rose, and world stock markets dropped. Gold priced in the British Pound Sterling hit a new all- |
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High gold price threatens Indian marriage culture |
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Gold’s auspicious significance within Indian culture will continue to ensure it plays an important role in weddings there, even as India modernizes. But the threat is that the gold price has become much more driven by speculative investment in the pa |
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Gold, silver traders book profit as prices fall |
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Against this changing set of background conditions, New York spot gold bullion opened with an $8 loss, quoted at $1136.70 per ounce. Trade talk indicates a possible dip to the $1100 area prior to a possible renewed assault on the other side of the $1 |
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Crude oil futures continued to trade down in mid London trade Friday as the US dollar strengthened against the major currencies apart from a dip in the global equities. |
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Gold futures fell in negative zone as dollar gathered some strength in mid London trades. Dollar typically strengthens when there are less data releases from US. |
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MCX Comdex was up by 2.35% to 2694.17. MCX Energy was down by 0.22% to 2651.55, MCX Metal was up by 3.70% to 3226.02 and MCX Agri was up by 4.84% to 2255.10. |
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