Bernanke had his first ever press conference today in which he stuck to the idea that the Fed would remain unusually lax in keeping the dollar cheap, which sparked renewed interest in the forex carry trade for dollar-denominated pairs.
The carry trade is one of the most basic money-making opportunities for investors. A carry trade is essentially borrowing in one currency to lend in another. Popular currency pairs for this trade are the AUDUSD, and NZDUSD.
Carry Trade Profits
Read more…
Forex
audusd, bernanke, carry trade, us dollar
The United States had better act, and had better act fast; that was the message from the Brics economic group which agreed to unilaterally remove the dollar from its international trading pact.
The group will now account for international commerce between one another in their own currencies, rather than the US dollar; doing so means that they are free to set monetary policy that can affect only themselves and better account for their own domestic and international trading volumes.
The Dollar as a reserve currency
Read more…
Business, Economy, Forex
brics, Dollar, reserve currency
There’s plenty of talk around the world about the future for currency. Some say it should be gold, some say silver, and even fewer say that the next money should be privately minted by individual people, persons, and mints. But most who want an alternative to the greenback are in the market for something backed by a commodity.
The Resurgence of Commodity Money
Read more…
Economy, Forex, Futures and Commodities
commodity money, currencies, fiat money, foreign exchange
The dollar is in decline, helped mostly by a zero interest rate policy that keeps dollars flowing out of the Fed. But while this policy has stirred debate about how a declining dollar is bad for the economy, it’s also important to see that a cheaper dollar, in the short-term, is good for the United States.
The first thing to understand is that while the currency markets are very efficient, any centralized policy (like that which extends from the US Federal Reserve) takes some time to be priced into other markets. The price for hamburger, for example, doesn’t perfectly reflect changing prices.
This is why economists use purchasing power parity (which discounts currency fluctuation) in order to get a long-term view.
How a Cheap Dollar Helps the US
Read more…
Forex
cheaper dollar, exports, gas prices, imports, prices, tourism, us economy
With all the talk of the Japanese Yen appreciating at what might best be described as an alarming rate, there’s plenty of interest in playing it against the dollar. But while the retail game may be new to ETFs, currency ETFs are an entirely different ballgame.
The ETFs investors aren’t digging
Read more…
Forex, Investing
currency, etfs, Forex
Retail foreign exchange trading took a big step up in December when Forex Capital Markets, otherwise known as FXCM (also the ticker symbol) went public. As part of filing for an IPO, and fulfilling new regulatory requirements for forex brokers, the company shed an interesting light into how the industry works, the brokers profit per account, and which traders are and aren’t profitable. Read more…
Forex
In terms of the Greater Fool Theory, I have often found myself part of the “Greater Fool.” The Greater Fool Theory contradicts the discounted cash theory in that it says the assumption that investors aren’t always rational, and aren’t always interested in pure cash flow. Read more…
ETF, Forex, Hedge Funds, Investing
When the federal deficit reaches levels the country has never before seen, politicians get excited about any possibility to raise revenues. A recent approach, one designed to reduce speculation while increasing revenue, is spreading around the world. The financial transaction tax. Read more…
Forex, Investing
It is often said that a picture speaks a thousand words. In this post, I’ll let the picture do the talking, but I’ll add just one thing. Read more…
Forex
The Chinese have been labelled as a “currency manipulator” by the United States, and now months later are working to remove the peg and allow for a freer floating currency. Read more…
Forex
US stimulus programs totaling in the billions of dollars may be better for Canada and Mexico than they are for the United States. The three interconnected NAFTA countries’ currencies are booming in tandem to each other, with each rallying to nearly the same degree. Read more…
Forex
Where there’s controversy and problems in the market you’re sure to find Goldman Sachs. This investment bank just can’t stay out of the spotlight—a problem that’s not going away any time soon. This time at least Goldman wasn’t in the wrong. Read more…
Forex
In macroeconomics, no global meetings are as powerful as G8 summits. The eight largest economic countries come together to decide economic policy, both for themselves and the world. Usually the G8 meetings come and go, with very little of anything other than pictures coming out of the world-wide talks. Read more…
Economy, Forex
At first I thought currency ETFs were rather interesting. They were the only way to get into currencies without a forex account or a brokerage account, which very few stock traders actually possess. If anything I would have expected these funds to gain a lot of traction, especially with how volatile the currency markets are right now. A look into why they’re disappearing and what may be next for currency ETFs. Read more…
ETF, Forex
Fifty million people, one-sixth of the population, will be receiving checks from the stimulus package in May. The payments go to those who do not qualify for “Making Work Pay,” a tax credit that offers $400 per person or $800 per couple. The lowdown and possible investment opportunities… Read more…
Forex, Investing
The relationship between the United States and China is best described as a love-hate. American’s love Chinese goods and the Chinese love American treasuries but the political tensions are heating up as the new Treasury Secretary is taking a similar stance of Treasury Secretary’s before him– the Chinese currency is being manipulated and kept far too undervalued. Read more…
Forex, Investing
Yuan
With the deleveraging of the financial markets the dollar has soared in value against other currencies back into the same trend that occurs every few years. This is setting up an excellent forex trade going into the next few years with GBPUSD being one of the best trades. Short, short, short the dollar and long everything else. Read more…
Forex
Dollar
Looking back through the past few years it seems now that we’re exactly where we began seven years ago. The stock markets were tanking, one bubble was ending and another beginning. Then it was the tech industry and after that the real estate boom, today its real estate bubble bursting and the treasury bubble beginning (and soon ending.) Read more…
Bonds, Forex, Investing
This stock was the perfect bubble. Mastercard represents strong growth in foreign markets, an excitingly strong PEG ratio but is currently running the wrong business. Tight credit markets lower the amount of available credit and the amount that Mastercard users can afford to charge. Read more…
Forex, Investing
MA
The Atom processor for Intel is flat out hot. After the MacBook Air set the precedent for smaller computing devices, the industry has been pumping out both small and light computers to meet the demands of consumers. The new laptops are nothing more than for surfing the web or word processing on the go but their low price points and seemingly high powered XP devices are catching on quickly. Read more…
Bonds, Forex, Investing, Real Estate
It’s over for any of the big three. The huge sales declines posted recently, Kerkorian’s sell off of Ford stock, and a $25 Billion loan that has done little to prop up stock prices or seemingly influence the balance sheets of any of the automakers. The high cost of union employees, bankrupting pension programs and higher components and gas prices have virtually sealed the deal on any chance of a recovery. Read more…
Forex, Investing
F
Treasury secretary Paulson has addressed the credit crunch yet again, this time he is calling for the Fed and the Treasury to be allowed to buy illiquid bank assets. Not much more was stated, just that the future plan would involve the Fed and the Treasury to buy bank assets and cut through the credit crisis. This is a buyout in every sense of the word, bailout with inflation and tax dollars to save the largest financial institutions and the rapidly unwinding derivatives market. Read more…
Forex, Investing
A short term gain in the dollar which amounts to just a few percentage points has completely taken the floor under the commodity markets. Its ridiculous to think as the fundamentals that drove commodities higher exist at even greater levels. Gold and silver have fallen sharply which should add to the many reasons why investors should still favor these levels. Read more…
Forex, Futures and Commodities
Watching the Dow tick away nearly 240 points today shows how much weakness still exists in today’s market. Without huge positive news, the market is slowly falling into a sell-off powered by recent profit taking. After the Dow rallied for a week, investors were already pulling the trigger and cashing in, it seems like no one wants to hold onto US equities for longer than they have to. A modest week long rally comes to a close with a slide of 240 points. Read more…
Forex, Investing
DJIA
The markets as a whole have lost plenty of value as of late but it appears as though at least one index is set for a rally. The S&P 500 is off by 13% since the beginning of the year but some technical analysis looks make it seem like we’re ready for a rally. Read more…
Forex, Investing
S&P
