Forex Investment and Currency Trading

In December 1971, the Group of Ten met at the Smithsonian Institution in Washington, D.C., and created the Smithsonian Agreement, which devalued the dollar to $38 per ounce with trading allowed up to 2.25 percent above or below that value. Dollars could not be used to convert directly to gold. Instead, the Group of Ten officially adopted the SDR system, and the IMF held the responsibility of keeping the system in balance.
The United States continued its deficit spending, and the value of the U.S. dollar continued to fall. Gold’s value began floating on the international markets, and its value gradually [...]

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Eurozone Higher than expected CPI estimates for the Eurozone and Italy, both at 4.0% yoy in June and up from 3.7% in May, play in the hands of the hawks on the ECB Governing Council. We need to wait for the second estimate to know if core inflation has accelerated noticeably, or if the rise in inflation is still a food and oil story. Market expects headline inflation to stay above 3% yoy until the end of this year, provided that oil prices stabilize. Meanwhile, growing unemployment in Spain, Italy and France should dampen second round effects through wages. Market thus expects [...]

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The USD gained a stunning 5.3% versus the Colombian peso (COP) last Thursday, largely on the heels of remarks by President Uribe that the government is working to stem the gains in the COP and create a more ‘competitive’ peso. The movement of the currency reflects more than Presidential rhetoric and the drop in the S&P alone. The Central Bank moved its originally scheduled monetary policy meeting from this Friday, June 27 to the prior Friday, June 20. At the meeting last Friday, the Central Bank maintained the policy rate at 9.75% relative to mixed expectations regarding the potential for [...]

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The USD index sold off over the course of the week, as the market continued to reduce expectations for monetary tightening in the US. The yield on the December Eurodollar contract has now dropped 24 bps since last Friday, a move accelerated by Wednesday’s FOMC statement, which suggested a near-term rate hike would not be seen. The index is currently poised to close below trend-line support from the March low at 72.45. Market looks for further losses in the week ahead.
EUR/USD ended the week a figure and a half higher. An expected rate hike from the ECB on Thursday and [...]

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