Market News

I guess that little coordinated interest rate cut thing didn’t do the trick. But don’t despair citizens. Right now he’s strapping on his cape to prepare for yet another episode of “The US Treasury Saves the World” news conference to explain why the latest scheme hatched in the last 15-minutes will be just the ticket.

As the stock market goes, so goes the euro against the US dollar. Can it be that simple? Short answer is yes. Risk aversion right now is dollar positive. And falling stocks are the best general definer of a risk adverse environment

The Federal Reserve cut their benchmark interest rate by 50 basis points today.And so did the European Central Bank …And so did the Swedish Riksbank …And so did the Bank of England …And so did the Bank of Canada …

We saw a significant degree of real and psychological capitulation yesterday in favor of the dollar.

The US House approved the massive $700 billion package finally, after having rejected it earlier last week. The earlier rejection of this badly needed package seems to indicate that lawmakers were opposed to using taxpayer’s money to bail out the financial system. But, it appears that after a dose of education and some added sops, the lawmakers changed their stand.

After pumping tens of billions of euros and dollars into its financial system over just the last two weeks, the ECB couldn’t muster up enough energy to cut rates today. The ECB left their benchmark lending rate sitting at 4.25% after they concluded their policy meeting this morning.

We are guessing the “momentous historical development” that launches the US dollar into a new multi-year bull trend was the credit crunch. It is a game changer on risk appetite and correlation of every asset class (but the dollar) going up at the same time, as the dollar credit was the driver

Yesterday the Dow Jones Industrial Average closed the day down 777 points! Needless to say that’s going to get your attention when you flip on your local news and the anchors are attributing it to a House funding bill, vital in avoiding a financial meltdown, that failed.

If Karl Marx were alive today, he would have probably winked at Uncle Sam over a swig of Vodka and said ‘If Capitalism brought down the Rouble, your dollar stands socialized today.’

If Freddie Mercury were alive, he would have cheered thousands in his audience in this time of economic gloom just as the Governmental take over of US mortgage giants Freddie and Fannie seems to be cheering the US dollar.

After having taken a beating for nearly six years, the US dollar seems to be getting back its sheen. Factors like the massive US twin deficits and the emergence of the Euro led to a shaky dollar for a prolonged period of time.

With the turmoil in the global economy and currency markets, a trader needs to find a safe haven for his hard earned profits. Let’s evaluate if it is time to go long on the Yen, which may be considered a safe bet, though with low yields.

The US economic contagion seems to be finding its way far and wide. New Zealand’s economy seems to have been hit worse than others and it may already be in recession.

In one of my previous articles on an economic and monetary union, we had discussed the possibility of the Eurodollar becoming a future world currency. Let’s explore this fanciful idea further and reason out the pros and cons of such a currency and what experts have really proposed.

The emergence of the Euro and the recent decline in the US Dollar vis-à-vis key currencies does not seem to bode too well for the long term prospects of the Dollar. The Dollar has lost nearly 50% of its value against a trade weighted basket of currencies since 1985

An Economic and Monetary Union is a union of two or more economies or markets to form a single market with a common currency. It is considered the fifth stage of economic integration. The largest Economic and Monetary Union at present is the European Union.

Most currency traders must already be familiar with the concept of currency carry trade. However, it is important to understand the risks involved in this form of trading vis-à-vis the high returns that it seems to promise, especially in the context of the fluid forex markets of today.

We are all probably aware that inflation leads to an erosion in the value of a currency. Then how can inflation in the Euro zone prop the Euro! The seeming conflict has a short term vs. long term connotation.

Fiscal policy may broadly be defined as the governmental policy that influences the economy via the tools of taxation and government spending. By utilizing the various tools of fiscal policy, governments can affect economic activity, aggregate demand, resource allocation and income distribution.

Exchange rate systems can be classified under the two broad categories of fixed and floating rates. In real life, exchange rate mechanisms are a mix of these, with some countries having abandoned exchange rates completely due to macro economic crisis.