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Cut in Aussie Cash Rate Likely

February 7, 2012 by · Leave a Comment
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(As written for My Paper on 7 February 2012. Click here to enlarge)

Last week, US government data beat all estimates when it reported that Non-Farm Payrolls rose by 243,000 in January. The official figures easily surpassed the 140,000 estimate by economists.

Additionally, the unemployment rate came in at 8.3%, the lowest level in nearly 3 years. This also recorded the fifth consecutive month of falling unemployment in the US.

Immediately after the announcement, yields on 10-year US Treasuries spiked up 10 basis points to 1.92%, and the EUR/USD dropped over 100 pips. Read more…

Greek Creditors Open to Bigger Haircut

January 31, 2012 by · 3 Comments
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(As written for My Paper on 31 January 2012 issue. Click here to enlarge)

After intense negotiations at the recent World Economic Forum in Davos, Switzerland, a deal with Greek bondholders seems imminent.

In October 2011, the bondholders agreed to take a 50% cut in the face value of their bonds, worth more than 200 billion Euros. In simple terms, this means that bondholders will only be paid 100 billion Euros once the debt matures, effectively shaving off 100 billion Euros off Greece’s debt load. Read more…

Euro Trades Squarely On News

January 17, 2012 by · 4 Comments
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(As written for My Paper on 17 January 2012 issue. Click here to enlarge)

What a week it has been for the Euro.

Mid-week, ECB chief Mario Draghi gave a press conference, stating that the bank’s policy of extending low interest loans to financial institutions had been successful in stabilizing the region’s credit markets.

Proof of his statement was seen in the recent Spanish and Italian bond auctions, which saw solid demand for their respective paper. In fact, Spain had doubled the size of their offering.

This caused the EUR/USD to rally to 1.2879 on Friday.

However, the party came to an abrupt halt late last week when news about the S&P downgrade of top European nations hit the wire. Read more…

US Likely to Outperform Europe in H1

January 10, 2012 by · 4 Comments
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(As written for My Paper for 10 January 2012 issue. Click here to enlarge)

It’s good to be back in the currency market after a three week break.

For my first article of 2012, let’s take a snap-shot of the world’s biggest economies to see how they fared for 2011. This can give us excellent insight into how they might perform at the start of 2012.

According to the list by the International Monetary Fund for 2011, the top 3 economies (by country) are as follows:

1. USA: USD 15.06 trillion

2. China: USD 6.99 trillion

3. Japan: USD 5.86 trillion

Read more…

EU Summit Has Not Resolved Euro’s Fate

December 13, 2011 by · 2 Comments
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(As written for My Paper on 12 December 2011. Click here to enlarge)

The recently concluded EU Summit in Brussels last week answered some tough questions.

Here’s some of the highlights:

1. War-chest topped up with 200 billion Euros

The Eurozone’s central banks will contribute 150 billion Euros, while non-Euro EU states will chip in the remaining 50 billion Euros. Part of the plan is to calm global fears and attract rich nations like China to join in the rescue.

China’s response though, was muted and non-committal with Foreign Ministry spokesman Hong Lei saying that “we note Europe’s important proposals to deal with the debt crisis.” Read more…

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