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Forex Market Outlook 10/25/11

By Mike Conlon, on Oct 25, 2011

Well it looks like the market is unaware that there is major risk potential in the marketplace as stocks and commodities took off yesterday and it was “game on” for risk appetite. As a result, the Euro as well as the commodity bloc currencies moved higher despite the Euro debt decision due out tomorrow.

Does the market know something that we don’t? As often is the case, the answer is simply “no”. What the market does know is that it wants to take on risk and wants to buy stocks (especially large fund managers who have posted less than stellar returns) as corporate earnings have been largely better than expected. Throw in higher Chinese PMI data that showed that they aren’t slowing entirely and you have a recipe for gains.

Forex Market Outlook 10/21/11

By Mike Conlon, on Oct 21, 2011

The market has been range-bound headed into the weekend, but man, those ranges are pretty big! I was surprised as I thought we’d see the ranges tighten up but that hasn’t been the case. Yesterday, the markets made huge moves as various news trickled out regarding the Euro debt crisis.

It is times like these when I tend to be more cautious, as it is difficult to know when news may hit or what its impact may be. Yesterday, the markets were selling off as risk aversion picked up throughout the early US session, only to completely reverse after “news” came out that the size of the rescue plan is going to be in the magnitude of $1.3 Trillion, with a “T”. That is encouraging news for the market, as in this case more is better.

Forex Market Outlook 10/20/11

By Mike Conlon, on Oct 20, 2011

This morning all eyes are on Athens where the Greek rioters are protesting against further austerity measures which are to be voted to ensure that Greece is taking the steps necessary to continue the bailout discussion. The Troika will be reporting the economic state of affairs in Greece but so far the sentiment has been that that was Greece has done is insufficient to date.

Forex Market Outlook 10/19/11

By Mike Conlon, on Oct 19, 2011

Yesterday’s market turn-around exemplifies the type of market action we may continue to see until the Euro debt crisis is finally resolved to the satisfaction of the world. Yes, I said the world. Markets yesterday were selling off on lowered expectations that this weekend’s European summit would produce that resolution, but a rumor hit the tape from a newspaper in Euro that said that France and Germany had agreed to expand the size of the ESFS to 2 trillion euros, much larger than had been previously agreed upon.

Forex Market Outlook 10/18/11

By Mike Conlon, on Oct 18, 2011

With the overhang of the realization that indeed Euro zone leaders will not have a resolution in place by next week like the G-20 leaders asked for, it is now questionable what exactly Merkozy were referring to when they claimed to be able to have something ready by early November. Is their timetable still in play? From where I sit, it doesn’t seem likely.

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Canadian dollar will Continue to Suffer from the U.S. Slowdown!

Have you ever seen someone make a mistake and not only do they suffer for it but someone else does as a result also? Well, this is exactly what’s happening to Canada right now.

You see, most of last year, you could say that the Canadian dollar was falling because of falling commodity prices. Since Canada exports so many widely used commodities like oil and lumber, when prices fall, so do their profit margins. It costs them about the same amount to produce the product but what they can get for it in the market is determined by where those commodities are trading at the time.

USD/CAD Pushes Towards 1.30 Once Again!

120 Billion Reasons to Sell the Yen!

This past year, one of the few financial instruments in the world was headed to the moon. Which one was that? The yen!

Yeah, the carry trade unwound which caused money to flow away from high yielding currencies and back into low yielding currencies like the yen.

Investors became risk adverse with their money. They poured it into things that had been beaten down for years because it seemed to be a safe place to run to. Thus the yen was a huge beneficiary during this ultimate “fear factor”.

However, recently I started talking to you about a possible turn coming in the yen and that the yen party was about to come to an end soon.

Things go from “Bad to Worse” in Japan

Mexico Intervenes on Behalf of Peso

Most of the speculation in recent weeks concerning forex intervention has focused on Japan and Russia. The Central Bank of Mexico, meanwhile, has slipped quietly into forex markets to protect its battered Peso, which has fallen over 30% over the last six months. It's unclear whether Mexico's efforts, combined with support from the US, will be enough to stem further decline, considering that economic fundamentals continue to deteriorate. At the very least, the move serves as a symbolic warning to market bears, that the Central Bank is monitoring the situation, and is prepared to defend its currency accordingly.

Korean Won Continues to Slide

This week, the Korean Won continued its downward slide, as a new round of volatility in global capital markets crimped a slight rally that had begun to build in the previous week. The currency has already fallen nearly 20% in 2008, as skittish investors have fled emerging markets en masse as the credit crisis has flared with renewed vigor. Last week, the government intimated with only a modicum of vagueness that it is prepared to use its $250 Billion in reserve to defend the Won, in order to forestall the kind of currency crisis that crippled its economy in 1997-1998. Bloomber News reports:

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