About Currency Currents

With Currency Currents, you can stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency prices.

We consistently focus on the key asset classes responsible for the flow of global capital -- including equities, fixed income, commodities and, of course, currencies.

Nothing is off limits to us in this free-wheeling look at the markets. Some days you’ll receive ramblings on trading psychology, while other days we may take an academic approach in explaining esoteric economic issues. Ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

Who is Jack the Pipper?

Jack Crooks is Black Swan Capital LLC, President and Chief Trading Officer.

Jack is founder and president of Black Swan Capital LLC. He has also operated a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. In addition, he was general partner in a firm specializing in currency futures and commodities trading. Neither firm is now in operation.

Prior to entering the investment arena, Jack worked in various corporate finance positions. He has written extensively on the subject of global currencies and international economics.

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An Opportunity in Dollar/Rand?

Posted 08:51 25 June 2009

Key News

Standard Life Buys Brazilian Real, Aussie, Sells Euro in Commodities Bet (Bloomberg)
China's Central Bank Pledges to Keep the Money Flowing as Economy Recovers (Bloomberg)

Key Reports (WSJ):
7:45 a.m. ICSC Chain Store Sales Index For June 20: Previous: -0.6%.
8:55 a.m. Redbook Retail Sales Index For June 20: Previous: -4.5%.
10:00 a.m. May Existing Home Sales: Expected: +2.6%. Previous: +2.9%.
10:00 a.m. June Richmond Fed Manufacturing Index: Previous: 4.
4:30 p.m. June 1 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For June 20: Previous: -49.

Quotable

“Success usually comes to those who are too busy to be looking for it.”

Henry David Thoreau

FX Trading - An Opportunity in Dollar/Rand?
Wondering why the South African Rand rallied sharply against the buck yesterday? Me too.

Leading into and following the Federal Reserve announcement yesterday, the dollar was stronger versus the pack of majors. So what prompted such strength from the rand?

Scan the recent headlines and find they point toward ongoing weakness for Africa’s largest economy. To be sure, nothing fundamental was the driver behind the rand’s move yesterday.

Perhaps inter-market correlations can tell the story ...

Above is a chart of the USD vs. the South African rand. Below that is a chart of gold.

Even on a day when the US dollar index was decisively stronger, gold made an equally strong move and so did the South African rand. South Africa has a very extensive mining complex and its gold sector is important to the country’s export revenue.

Perhaps this is the simple reason for the rand’s peculiar strength yesterday.

Commodities are a bit stronger to start the morning. But gold did finish well off its highs yesterday, unlike the rand. And with the South African economic data applying pressure, the rand is lower today despite early gold strength. Most recently, South African PPI plunged the most on record, softening the potential for inflation and increasing the potential for lower rates

If gold fails to conquer yesterday’s intraday high then it could apply even greater pressure on the rand. Keep in mind, too, the buck is stronger again today. Right now it would seem the buck holds the advantage to the rand.

Perhaps a golden buying opportunity in USDZAR???