Archive for the ‘Asian Market’ category

Safe Havens Back Down

August 26, 2010

The yen, the US dollar and the Swiss franc all fell in this morning’s early trade – can you see the pattern?

Yes, all three are traditionally seen as ‘safe havens’ in an otherwise rocky market – yet today investors headed away from them on the back of healthier commodity increases.

Meanwhile the Japanese authorities are still rumoured to be thinking about intervening on the yen’s strength.

Also in the news: central banks are meeting at the US Fed’s mountain retreat to talk about the state of the global economy.  Is it recovering well enough?  Are we on the edge of another cliff, about to tumble back into recession?  Do we need to print more money to give things a boost?  These and other key topics are likely to be discussed.


Yen Rises on US Economic Worries

July 29, 2010

Growing concern that the global economic recovery is slowing down has sent a wave of jitters into the forex market.  After a healthy bout of rallying over the past few sessions, the US dollar sank on Thursday as investors headed for the refuge of the Japanese yen.

Stock markets also weakened in Australia after a weak lead from Wall Street.  However, most analysts put this down to corrective movements rather than a great deal of anything else.  That said, until elections are over in Oz, investors are likely to remain a bit on the jumpy side.

“Silly season” is well underway in the UK and in Europe, as most people go on their annual summer holiday.  With lower numbers in the office, companies are hoping that there is better economic data to come, which will enhance the ‘back to work’ feel come September.

Is a Double Dip Inevitable?

June 7, 2010

Monday morning is rarely greeted with joy by the UK’s workforce (unless, perhaps, it is a Bank Holiday) – and this morning provided enough economic doom and gloom to remind many of this time last year.  Within minutes of markets opening, shares and the euro had plunged on renewed fears of a double-dip recession.

Is it really inevitable that another round of negative growth is around the corner, or is this just jitters and speculation?

There are, as ever, various arguments.  Some say that it is likely that another recession could take place, especially as the European debt crisis seems to show no signs of calming down.  On Friday, Hungary threatened to be the next Greece, with a huge deficit percentage of GDP and government indications of a default (which were rebuffed by former officials – by which time the damage had been done).

Others argue that healthier economies are strong enough to carry this weak spot – and enough to prevent another all-out recesssionary period.

Whichever is more likely to come true, markets are a hive of nerves and jumpiness in these times.  And the euro has once again sunk to a four-year low against the dollar.

Japanese Prime Minister Quits

June 2, 2010

The Japanese prime minister Hatoyama has quit together with his powerful right-hand man ahead of the upper house elections in July.

Hatoyama, who took power 8 months ago in a flurry of fresh starts and change, has now left the country in the midst of a deficit that sits at a massive 200% of gross domestic product.

The yen took a dive on the news, as investors worried about the political uncertainty surrounding Japan.  However, it is expected that this uncertainty will be short lived as Hatoyama’s replacement is announced.  The favourite to take the lead is finance minister Kan, who is known for a tougher stance on fiscal policy.

With Kan at the helm, investors are likely to receive comfort in the hope that he will do more to cut public spending.

The euro zone’s problems just never seem far away these days, with the latest blow being unemployment figures.  The total amount of jobless people in the region now sits at over 15 million; in April it reached an all-time high.

Sarkozy – Public Display of Support for Greece

March 8, 2010

Greece got a boost from French President Nicolas Sarkozy yesterday, after talks between himself and Greek Prime Minster George Papandreou.

So far, EU leaders have been less than enthusiastic about helping Greece in a big bailout package.  Luckily for them, the country does not (so far) need a package, having already announced austerity measures to tackle the massive 12.7% deficit problem.

Mr Sarkozy attacked speculators on the foreign exchange market and on the bonds market, for attacking the euro.  Indeed, in recent months the amount of positions against the euro reached record levels.  However, after the French President’s comments, the currency took a boost and rose against the US dollar.

Are speculators going too far, or are they right to avoid the single currency as Greece – and possibly other EU nations – struggle to tackle their major fiscal problems?

Greece Unveils Austerity Plan

March 4, 2010

Investors were slightly mollified yesterday, leading to a rise in the euro against the US dollar.  The reason?  Principally, it was due to Greece’s unveiling of plans to put its economy back on track.  It plans to do so by introducing VAT rises, public sector cuts and other austerity measures to try and reduce the deficit from 12.7% to 8.7% within 2010.  Will they manage it?

The euro has really taken a strain thanks to the Greek Problem, while other european nations have been edging close to a similar situation.  Investors have therefore been largely cautious around the eurozone single currency.

Meanwhile, the pound is still enjoying a slight respite thanks to positive PMI and other economic data.

W shape Recession Warning from IMF

January 18, 2010

Apparently it will be crucial for governments (including that of the UK) to focus on pubic debts in the coming year.  Tell us something we don’t know about, Mr Strauss-Kahn aka head of the International Monetary Fund (IMF)!

Mr Strauss-Kahn made a general warning to all developed nations that they ought to be careful about exiting current fiscal stimulus plans, as doing so too quickly could cause another downward turn.

Meanwhile, emerging economies (is China really still classed as emerging?) in Asia are leading the way for the recovery, said Mr Strauss-Kahn.  Overall though, he said that the IMF predict that the global economy will grow by 4.1 per cent in 2010.

Over in the currency exchange market, the euro stayed weak in early trade in the London session.  It reached to below 88 pence against the pound meaning its weakest point in four months.  Most experts warn that Greece’s fiscal woes are the main reason for the euro’s performance.