Tuesday, 22 November 2011

Aussie Retreats as Risk Aversion Sets In

Aussie is retreating once showing some signs of gains earlier. Now, though, Aussie is heading lower as risk aversion sets in. issues regarding sovereign debt in Europe, and therefore the budget issues plaguing the US, are weighing on riskier currencies nowadays.

Earlier, as US stocks pared gains and headed higher, the Australian dollar showed signs of gains, supported, in part, by recovering gold prices. Now, although gold prices have reached $1,700 an oz. once more, the Aussie is in retreat as sentiment turns negative. US GDP growth for quarter three wasn’t nearly as good as hoped, being lowered to 2 % from 2.5%.

Additionally, the debt woes facing countries in Europe, and facing the US, are no closer to being solved. European politicians seem to move at a glacial pace, unable to agree, and therefore the US is in much a similar position. A recent supercommittee designed to seek out a solution to the budget problems in the US has failed.

So, for now, sentiment is turning, once again, toward the chance averse. Aussie has given up its gains and is now lower against the US dollar — although it is higher against some currencies. till some solid progress is made in terms of budgets around the world, the Australian dollar is likely to founder.

At 15:08 GMT AUD/USD is lower, down to 0.9857 from the open at 0.9864. EUR/AUD is higher, up to 1.3712 from the open at 1.3675. GBP/AUD is lower at 1.5849, down from the open at 1.5858.
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Euro Higher for Now, But Debt Remains a Problem

Euro is higher straight away, gaining as some Forex traders engage in brief covering. However, the 17-nation currency continues to be at risk of debt issues — in the eurozone and in the US.

For now, euro is obtaining to a small degree of a lift when some choppy trading yesterday, and a flight to safety for markets. Middle East demand has helped support the euro up till now in today’s Forex trading, but that might easily fade. Indeed, several expect that because the US session approaches, the euro can realize it more durable and more durable to hold on to gains.

The biggest issue, jointly may expect, is sovereign debt. Eurozone debt remains out of control, and there is no sensible attempt to solve the debt crisis. On prime of that, budget issues in the US have several worried about what’s next for the world’s largest economy. All of this uncertainty means that the short covering that's helping the euro is unlikely to last as Forex traders explore for shelter soon. With politicians in Europe and the US refusing to induce serious about debt issues, it'll be awhile before Forex traders feel extremely safe.

At 14:07 local time, EUR/USD is up slightly from the open at 1.3490, moving to 1.3503. EUR/GBP is higher, up to 0.8653, up from the open at 0.8624. EUR/JPY is also higher, moving up to 104.0900, from the open at 103.7095.
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SA Rand Rebounds on Outlook for Interest Rates

The South African rand rebounded these days after yesterday’s decline on the speculation the central bank will keep its interest rates unchanged, continuing to draw foreign investors.

South Africa’s interest rates are important for the rand as the differential between the South African rates and also the borrowing prices within the developed markets attract investors interested in carry trades. the most interest rate of South Africa is at 5.5 percent, compared to zero.25 p.c within the USA, 1.25 p.c within the European Union and zero.1 p.c in Japan. The South African Reserve Bank left the benchmark repo rate unchanged on November 10 for the sixth consecutive month. Analysts consider chance on an interest rate cut as low.

Economists expect that the govt report will show tomorrow that the buyer value inflation rose to 5.9 p.c in October from 5.7 p.c in September. The weakening rand contributed to the price growth. As long as the upward pressure on inflation remains, the central bank isn’t likely to reduce its lending rates and South Africa will continue to be engaging to hold traders.

USD/ZAR fell from 8.3150 to 8.2430 today before trading at 8.3030 as of 11:24 GMT. Yesterday, the currency pair rose from 8.1740 to 8.3140.
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Global Economy Unfavorable for Riskier Currencies, Brazilian Real Drops

The Brazilian real ticked down because the developments within the international economy created investors favor safer assets over riskier ones.

The US politician weren’t been ready to agree on budget cuts. Germany’s Finance Ministry admitted that the nation’s economic growth was “noticeably slower”. All in all, it remains terribly arduous to convince investors to shop for riskier currencies, even with guarantees of upper yield.

Unfortunately for Brazil and its currency, the foreign issues have impact on the country’s economy. Analysts slash their forecasts for the Brazilian economic growth. There’s the speculation that Brazil’s government could cut its estimate for growth to three.5 % when it reduced the outlook to three.8 % on November eighteen.

USD/BRL was up today from 1.8077 to 1.8084 as of 8:30 GMT after falling to the intraday low of 1.8035.
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