Dow Jones Forex Focus

02/03/2012

UK And Pound Are Back In Business. By Nicholas Hastings

Despite all the U.K.'s problems, sterling will remain ahead of the game.

The widely expected quantitative easing from the Bank of England next Thursday, the continued lack of U.K. bank lending and fear of overspill from the euro-zone debt crisis may all have given investors pause for thought in recent weeks.

Even the U.K. government bond market lost some of its attraction with 10-year yields that had reached a record low of 1.92%, rising back to 2.06% now.

But, there is little reason for this investor strike to continue.

02/02/2012

True Test Of SNB Mettle Has Yet To Come. By Nicholas Hastings

The Swiss National Bank must be wondering what it has started.

Its decision to cap the Swiss franc's rise at CHF1.20 against the euro last September has been successful in some ways.

For most of the time since then, the euro has traded above CHF1.20 and even risen nearly as far as CHF1.25.

But things have gone awry for the Swiss central bank in the last few weeks.

02/01/2012

Gillard Is Only Too Right About The Aussie. By Nicholas Hastings

Julia Gillard is only too right.

Australia may have emerged from the global financial crisis relatively unscathed in many ways.

But, the world is a different place now and Australia's position in the global pecking order has improved.

And for that, it will have to pay a price by building, as Gillard says, "a new Australian economy."

Sure, one can talk about the country's over reliance on the mining industry and its need to widen its manufacturing base in response to the growing needs of its Asian neighbors.

01/31/2012

Fiscal Pact Will Only Undermine The Euro. By Nicholas Hastings

The European Union's fiscal pact is not good news for the euro.

In fact, the pact will probably inflict more damage on the single currency over time than the 25 leaders who signed up to it could possibly imagine.

First there is the political fallout of passing such a heavy junk of fiscal sovereignty to Brussels.

Then, there are the terms of the pact itself, with a cap on budget deficits at 0.5% of GDP, strangling growth at just the time many of these euro-zone economies will need to expand.

01/30/2012

Japanese Intervention Alert Louder Than Ever. By Nicholas Hastings

Bank of Japan intervention alerts should be switched on again.

If anything, they should be turned on even louder than before.

For a few weeks there, the need for intervention subsided. The yen had fallen back, much to the relief of Japanese authorities as the global risk environment improved and the currency lost some of its safe haven attraction.

However, everything has swung back again in the yen's favor in the last few days.

01/27/2012

Commodity Currencies Will Head Even Higher. By Nicholas Hastings

2012 has been a good year for commodity currencies so far.

And there is little reason to believe that it won't continue to be so.

The Australian dollar has already risen 4% and the Canadian dollar 2% against the U.S. dollar in the last four weeks alone.

Both the leading commodity currencies were already well placed because Canadian and Australian banks weren't exposed to the global financial crisis the way many others were and because both the Canadian and Australian economies have been doing much better.

01/26/2012

Fed Makes Dollar Even More Of A Buy. By Nicholas Hastings

That was a buy, not a sell, signal from the Fed.

On the face of it, the dollar's sell off on the Fed's decision to adopt a 2% inflation target and preserve its ultra-easy monetary policy "until at least late 2014" was pretty predictable.

But, since when were currencies just driven by interest rate predictions?

And, since when did a central bank predict its policy quite so far in advance?

And, since when was the Fed likely to hint at higher rates, send the dollar higher and put the country's nascent economic recovery at risk?

01/25/2012

Japan's Trade Deficit Is Good, Not Bad, News. By Nicholas Hastings.

Japan's first trade deficit since 1980 is not such a bad thing.

In fact, it might well be a very good thing.

By helping to knock the yen lower it should give Japanese exporters at least some temporary respite.

A rise in exports to the U.S., as opposed to declines to China, Asia and Europe, suggest that a long-awaited rebalancing in the world economy is taking place.

And, with Japan's current account surplus rising, the country can be confident that its growing fiscal deficit will still be financed for now.

01/24/2012

Don't Take Euro Strength For Granted. By Nicholas Hastings

The euro is still waiting for a firewall around Greece.

Without it, the risk of contagion remains and the single currency's current level looks unsustainable.

For a moment, it looked like the firewall was finally being built.

A front page report in the Financial Times should have set the pulses of euro bulls racing. German Chancellor Angela Merkel was said to be going along with plans for the European Financial Stability Facility and the European Stability Mechanism to run in tandem.

01/23/2012

So, what is the euro now? By David Cottle.

Risk asset, carry trade funding currency or just a good old fashioned turkey?