Currency converter wise money waits
The dollar firmed slightly against the yen as some sort of calm returned to US stock markets following Wednesday’s sharp declines which prompted another up tick in risk aversion to the Japanese currency's benefit.
By 4 pm London time yesterday, the Dow Jones index of leading shares had more or less recouped Wednesday’s 100 plus point decline, while the Nasdaq was up 1 %. Further volatility in asset markets is likely to be the key driver and will likely keep high-yield currencies trading in a choppy fashion.
Despite yesterday’s slight reversal in risk aversion, the markets remain in jittery mood. This is sparking more speculation that more needs to be done by the major central banks, putting a positive gloss at the front end, steepening curves and boosting the demand for mainstream government debt.
The new loss of appetite for risk is hurting stocks, denting credit market sentiment and leading to further unwinding of carry trades.
This unwinding of carry trades, where investors borrow in low-yielding currencies to buy higher-yielding assets has seen the dollar fall from a high of 124 yen in mid-June to a low of below 114 in mid-August, while the euro has dropped from just below 169 yen in mid-July to around 150 in mid-August.
In addition, investors reckon some solid Japanese data coupled with continuing difficulties in the US sub-prime market will help the dollar recover further ground in the days and weeks ahead.
With a raft of high profile Japanese economic readings due before the month end, including retail sales and CPI, plus the prospect of further bad sub-prime news emerging from the US, additional gains for the yen would seem to be of little surprise.
If the Japanese data comes in as expected, then the Bank of Japan is widely expected to raise interest rates from their current super-low level of 0.50 % next month.
The next key event for financial markets is Friday's speech from US Federal Reserve chairman Ben Bernanke in Jackson Hole, Wyoming. Most observers reckon that he may signal that the Fed is ready to cut its key Fed funds rate from the current 5.25 % at the next meeting on Sept 18.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
By 4 pm London time yesterday, the Dow Jones index of leading shares had more or less recouped Wednesday’s 100 plus point decline, while the Nasdaq was up 1 %. Further volatility in asset markets is likely to be the key driver and will likely keep high-yield currencies trading in a choppy fashion.
Despite yesterday’s slight reversal in risk aversion, the markets remain in jittery mood. This is sparking more speculation that more needs to be done by the major central banks, putting a positive gloss at the front end, steepening curves and boosting the demand for mainstream government debt.
The new loss of appetite for risk is hurting stocks, denting credit market sentiment and leading to further unwinding of carry trades.
This unwinding of carry trades, where investors borrow in low-yielding currencies to buy higher-yielding assets has seen the dollar fall from a high of 124 yen in mid-June to a low of below 114 in mid-August, while the euro has dropped from just below 169 yen in mid-July to around 150 in mid-August.
In addition, investors reckon some solid Japanese data coupled with continuing difficulties in the US sub-prime market will help the dollar recover further ground in the days and weeks ahead.
With a raft of high profile Japanese economic readings due before the month end, including retail sales and CPI, plus the prospect of further bad sub-prime news emerging from the US, additional gains for the yen would seem to be of little surprise.
If the Japanese data comes in as expected, then the Bank of Japan is widely expected to raise interest rates from their current super-low level of 0.50 % next month.
The next key event for financial markets is Friday's speech from US Federal Reserve chairman Ben Bernanke in Jackson Hole, Wyoming. Most observers reckon that he may signal that the Fed is ready to cut its key Fed funds rate from the current 5.25 % at the next meeting on Sept 18.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: currency-converter, US Dollar, wise-money, Yen
posted by Drs Search @ 2:56 PM
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