Indications
that the market is turning more negatively towards the Greenback would
represent very positive news for emerging market currencies, in particular
those having received a pounding over the past couple of months in response to
prolonged Dollar strength. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html This can be seen during
trading today with the Thai Baht, Chinese Yuan, Philippine Peso, Indonesian
Rupiah, Malaysian Ringgit and Indian Rupee all strengthening.
The
exact catalyst behind why the Dollar is weakening is not easy to point out, but
the main contender is that fading fears over trade tensions are providing
traders with a reason to take profit on Dollar positions that have been
building for months. Another round of reassuring comments from authorities in
China indicating that the Yuan will not be used as a weapon during-trade
tensions has also been looked upon positively by the market. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
It
does go without saying overall that the prospects for more potential weakness
in the Dollar moving forward would of course be widely welcome news for a long
list of currencies across the globe.
As we
head into the conclusion of the trading week the South African Rand has
benefited the most from weakness in the Greenback. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html The Rand has strengthened
above 4% over the past five days, with traders looking very positively on the
news that the South African Reserve Bank (SARB) was able to leave monetary
policy unchanged yesterday. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html The news earlier this week
that inflationary pressures in South Africa unexpectedly eased in August
allowed the SARB to maintain resilience and not follow the recent path of both
the Russian and Turkish central banks to raise interest rates, which was a move
needed in both the cases of Russia and Turkey to ease inflationary pressures
and defend both the Ruble and Lira from further weakness.
It is
not surprising that the Turkish Lira remained volatile and has shifted between
both gains and weakness in the aftermath of Turkey’s finance minister
announcing his plan to combat the Lira currency crisis. The market, as you
would expect, has looked negatively upon the announcement that there has been a
sharp downgrade in GDP growth forecasts for both 2018 and 2019. Growth is now
expected to slow below 4% this year and narrowly above 2% in 2019, which is
sharp contrast to the overall growth of 7.4% that the economy enjoyed last
year.
We will
keep a very close eye on the British Pound over the upcoming sessions despite
the news that the Cable has rallied to its highest levels in nearly three
months. Traders appear to have repositioned in recent sessions that there will
eventually be a breakthrough in the UK and EU negotiations over Brexit. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html However, the latest summit
in Salzburg failed to result in a positive outcome and the rally in the Pound
could fall like a house of cards if markets begin to reprice into the market a
potential hard-Brexit eventuality.
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