FX Charts and Quotes. Our prices adapt to your trading. The signal hub is updated twice daily. This is shown at the red candle near the sideways arrow. In this case, forex traders look for chart signals which suggest that currency prices are on the verge of a big move in either the upward or downward direction.
As it turns out, the forex markets are currently treating the Loonie and the Aussie as inseparable. Why is positios the case? As it turns out, there are a handful of reasons. You can see from the chart above that the year-long commodities boom and sudden drop corresponded with similar movement in commodity currencies. Beyond this, both currencies are seen as attractive proxies for risk. Even though the chaos in the eurozone has very little actual connection to the Loonie and Aussie poditions are fiscally sound, geographically distinct, and economically insulated from the crisisthe two currencies have recently taken their cues from political developments in Greece, of all things.
Finally, the Bank of Canada is in a very similar position to the Reserve Bank of Australia RBA. While GDP growth forex bank positions indeed moderated in both countries, price inflation has not. Further complicating the picture is the fact that the Loonie is near a record high, and the BOC remains wary of further stoking the fires of appreciation by making it more psoitions to carry hank.
In the near-term, then, the prospects for further appreciation are not good. Positons pullback towards positionx — and beyond — seems like the only realistic possibility. Since peaking at the end of April, commodity prices have fallen mightily. As commodities prices have fallen over the last two months, so has the Australian Dollar. In addition, while demand will probably remain strong over the long-term, forex bank positions may very well slacken over the short-term, due to declining economic growth across the industrialized world.
The apparent stabilizing of the dollarthen, might let some air out of the currency down under. For now at least, they are responding by dumping emerging market currencies. As you can see from the chart above forex bank positions shows a cross-section of emerging market forexmost currencies peaked in the beginning of May and have since sold-off significantly. If not for the rally that started off the year, all emerging market currencies would probably be down for the year-to-date, and in fact many of poaitions are anyway.
There are a couple of factors that are driving this ebbing of sentiment. First of all, risk appetite is waning. Over the last couple months, every flareup in the eurozone debt crisis coincided with a sell-off in dorex markets. Some analysts believe that because emerging economies are generally more fiscally sound than their fundamental counterparts, forex bank positions they are inherently less risky.
Unfortunately, while this proposition makes theoretical sense, you can be assured that a default by a member of forez eurozone will trigger a mass exodus into safe havens — NOT into emerging markets. While emerging market Asia fodex South America is somewhat insulated from eurozone fiscal problems. On the other hand, they remain vulnerable to an economic slowdown in China and to rising inflation.
Emerging positioons central banks have avoided making significant interest rate hikes hence, rising bond prices — for fear of inviting further capital inflow and stoking currency appreciation — and the result has been rising price inflation. You can see from the chart above that the darkest areas symbolizing higher posiyions are all located in emerging economic regions.
While high inflation is not inherently problematic, it is not difficult to conceive of a downward spiral into hyperinflation. Again, a sudden bout of monetary instability would send investors rushing to the exits. While most analysts myself included remain bullish on emerging markets over the long-termmany are laying off in the short-term. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice.
Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Loonie and Aussie Share Downward Bond. Tide is Turning for the Aussie. First of all, the putative economic boom that is taking place in Australia posjtions being driven entirely by high commodity prices and surging production and exports. Emerging Market Currencies Brace for Correction. Enter your email address: Forrex by FeedBurner.
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