Investment Themes

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Investment Theme – Australian dollar underpinned by rising commodity prices and surge in exports

Posted on February 21, 2017 at 3:50 pm GMT

The Australian dollar has been moving steadily higher since the start of this year, mainly due to the resurgence in commodity prices. As result of surging prices for iron ore and coal, which are what Australia mainly produces and exports, there has been an improvement in the country’s terms of trade. This has driven the aussie higher, resulting in more than 6 percent gain so far this year. Meanwhile, a steadying Chinese economy is also beneficial for the Australian economy [..]

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Investment Theme – Euro faces tough tests in 2017 as key elections loom

Posted on February 13, 2017 at 4:11 pm GMT

Twenty seventeen looks set to be a difficult year for the euro as concerns grow about the future of the European project with key elections coming up in the Netherlands, France and Germany. Snap elections in Italy and Greece are also a possibility, while the Greek debt crisis continues to rumble on. After last year’s shock leave vote in the UK’s EU referendum and Donald Trump’s surprise win of the US presidential election, traders are bracing themselves for a rocky [..]

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Investment themes – Political developments trump fundamentals for dollar, pound

Posted on January 12, 2017 at 3:17 pm GMT

One interesting theme for the second half of 2016 as well as for the first few days of 2017 has been how political developments are moving two of the world’s most important currencies: the dollar and the pound.  The two currencies are paying less attention to economic fundamentals and more on the pronouncements of the two countries’ new leaders, Prime Minister Theresa May and President-elect Donald Trump on Brexit and possible fiscal stimulus respectively. In the UK, statements by May [..]

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Investment themes – Euro / dollar at crossroads as “Trump trade”, European uncertainty may have peaked for now

Posted on December 7, 2016 at 1:46 pm GMT

The announcement that the Italian referendum on Sunday, December 5 was lost by the government with the decisive margin of 60-40, led to a 21-month low in the euro / dollar exchange rate.  Euro / dollar briefly dipped to 1.0505 but the pair quickly rebounded to above 1.07.  Below 1.05 lies the 13-year low of 1.0460, which was struck in March 2015.  The euro’s rebound surprised market participants as the single currency found itself trading higher than the level at [..]

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Investment themes – The dollar, the Fed and the recent election-induced volatility

Posted on November 2, 2016 at 3:03 pm GMT

The revelation that the FBI was reopening a probe into Secretary Clinton’s use of a private email server on Friday, October 28, was enough it seems for the markets to reassess the likely outcome of the November 8 US elections.  This has caused some volatility across a range of assets although it must also be said that the shake-up seems to remain contained for now. Interestingly one of the biggest victims has been the US dollar.  Dollar / yen for [..]

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US dollar index hits fresh 8-month peak; brings it within reach of a 13-year high

Posted on October 26, 2016 at 2:09 pm GMT

The US dollar index reached its highest since early February on Tuesday at 99.11.  From its August low of 94, the dollar index has therefore rallied more than 5%.  The US dollar is now tantalizingly close to the 100.51 high of December 2015.  If it manages to overcome this level, it would be a fresh 13-year high for the greenback.  Such a development would certainly be a major event for foreign exchange markets in 2016.  It would also mark a [..]

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A brief take on the US dollar and the UK pound following Brexit

Posted on September 20, 2016 at 1:25 pm GMT

Brexit was one of the year’s key events, which caused quite a lot of volatility initially.  Looking at the currency market, it is worth revisiting some of the key recent fundamental influences for two currencies in particular; the pound and the US dollar. Starting with the pound, it is interesting to note that the initial shock devaluation that Brexit inspired was followed by some sideways action.  Bank of England stimulus hurt the pound initially, but stronger-than-expected economic data created some [..]

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Bad US economic news may not hurt the dollar longer-term

Posted on September 7, 2016 at 1:51 pm GMT

The US dollar has experienced quite a flip-flop in the past few weeks, as a summer that was dominated by a relatively uneventful Brexit was drawing to a close. Relatively hawkish statements from Federal Reserve officials (particularly Chair Yellen) that seemed to open the door to a possible rate hike in September, have clashed with some particularly weak readings from the two most important business surveys of the world’s largest economy. In particular, the ISM’s manufacturing and non-manufacturing surveys posted [..]

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July employment report gives hope to dollar bulls following GDP, Fed disappointments

Posted on August 8, 2016 at 2:22 pm GMT

The US dollar was under intense pressure during the period July 27 – August 2.  During this period the dollar index suddenly lost about 2.5% of its value – a brutal move for the world’s reserve currency.  Following some encouraging news out of the US economy such as personal income and spending and the ISM non-manufacturing index the dollar started a recovery which received a big boost from a very strong US employment report. The employment report was better-than-expected in [..]

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Australian dollar sticks to 75 cents – what’s next?

Posted on July 27, 2016 at 1:43 pm GMT

The Australian dollar has been on a downtrend versus the US dollar since 2011, although to be fair, most currencies have been losing ground against the greenback in the last 2 years as well.  It has been tempting for some to call a bottom around the 68-71 cents level, as a sharp reversal rally to 78 cents was triggered when those levels were tested.  The May rate cut however, together with speculation that an additional cut could take place soon, [..]

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