Forex Market News
Japanese holiday today as yen continues to weaken across the board. The surprising move last week however came from the Chinese with them throwing stimulus into the ring too. So all is not what it seems in Asia.
2009 to 2013 saw a massive shift of wealth from west to east as China continued to expand and the US QE3 saw a flood of cheap money head into emerging markets such as Indonesia, Thailand and the Philippines. When the US announced that the spigot will close, those markets collapsed and funds have been shifting back into the US. China has tried to continue its expansion and last week dropped rates further to allow its banking sector to loan funds out and remain competitive. The commodity currencies (Loonie, Aussie, Kiwi) all jumped on the announcement.
Japan as we know, have been fighting stagnation for nigh on 30 years and will continue to add stimulus. The finance minister came out last week and said it had moved too fast and this saw some sellers in the $¥. I see calls of a pullback to 115 area before a move higher to 120 and even 124. This is entirely possible.
Is still talking about inflation and what he might do if the euro zone shows signs of weakening inflation. He’s having a laugh isn’t he?! How many more signs do you need? As Elvis said, a little less conversation and a little more action please. Also in the region, the SNB President warned against the Nov 30th vote for the “Save our Swiss Gold” referendum. Don’t think it will happen, but if it does, that would put some real pressure on the 1.20 defensive line the SNB have in place.
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