FOREXYARD: Forex News Blog

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• Russian Ruble Undergoing Trend Reversal?
• CAD Hit by Massive Decline in Foreign Securities Purchases
• British MPC Unanimous in Holding Rates Steady
• The SNB Won the Battle but What about the War?

Russian Ruble Undergoing Trend Reversal? Posted: 17 Aug 2011 06:37 AM PDT We have seen reports over the last year which painted the Russian ruble (RUS) as one of the better performing currencies. The value of the RUS even gained as much as 15% against the US dollar (USD) earlier in the year. But these days, as investors appear to be fleeing towards traditional safe-haven assets, the ruble is beginning to experience broad declines. Are we seeing a trend reversal in the global economy, or is it something specific to Russia? As one of the largest emerging market economies, Russia was benefiting from the speculative growth shifts over the last 3-5 years. Technologists and innovative organizations have even written on the growing need to focus new endeavors on the high growth economies of BRIC (Brazil, Russia, India, and China). What today's uncertainty is now doing is pulling these speculative growth shifts away from those nations. What appears to be happening is not so much an intrinsic decline in the value of Russia's economy, but rather a move away from the more speculative, and therefore riskier, assets by international investors. This is supported by the very recent downturn in Russia's stock market. To underscore this point, consider that the RTSI Index has lost over 22% of its value over the last two weeks. The RUS is obviously affected by these investment shifts. Without something to address global uncertainty, it doesn't seem likely that the RUS will recover its former uptrend in the near future. Read more forex trading news on our forex blog.

CAD Hit by Massive Decline in Foreign Securities Purchases Posted: 17 Aug 2011 06:30 AM PDT Demand for Canadian securities took a dive in August, with today's report showing a C$3.46B downturn in the foreign purchase of domestic stocks, bonds, and money-market assets. The move has so far taken a large bite out of the value of the Canadian dollar (CAD) in forex trading. The Canadian economy has been teetering on an edge these past two weeks with highly optimistic housing data offsetting downturns in consumer spending and a global manufacturing slowdown. Today's investment news underscores the loss of appeal for North American markets during this time of financial stress. The CAD will likely continue to take losses until other data can support renewed interest. Read more forex trading news on our forex blog.

British MPC Unanimous in Holding Rates Steady Posted: 17 Aug 2011 06:26 AM PDT An interesting twist in an unfolding story apparently took place today after the release of the Bank of England's (BOE) Monetary Policy Committee (MPC) minutes. Over the last year-and-a-half, the MPC has gradually seen a few votes shift in favor of lifting the nation's interest rates. Today all votes turned unanimously in favor of holding rates at their current target. Spencer Dale and Martin Weale, the two MPC members who have voiced opposition to the dovish views of the committee for the past year, capitulated in this month's vote, citing sluggish growth in demand and a shaken international financial system as catalysts for their change of heart. The British pound (GBP), as a result, was seen trading significantly lower as market bears poured into other assets and went short on sterling. Read more forex trading news on our forex blog.

The SNB Won the Battle but What about the War? Posted: 17 Aug 2011 05:37 AM PDT The SNB initiated another round of liquidity measures to weaken the Swiss franc. Instead of opting for more severe policies such as a currency peg to the euro or setting a floor beneath the EUR/CHF the SNB chose to increase the liquidity measures it provides to the financial system. The initial reaction by the market was to buy the CHF but a euro rally and a relative improvement in market sentiment has helped to push back speculators, giving this round to the SNB. The question then is what will happen to the CHF when markets tighten up in a "risk-off" mode? Rather than secede control over its sovereign monetary policy to the European Central Bank the SNB chose a more conservative route and expanded its sight deposits from 120 bn to 200 bn. There have also been actions taken by the SNB in the money markets and rumors of intervention in the FX forward market. The initial reaction by the market was that of disappointment as expectations had been building for more severe monetary policy measures. This past weekend the Swiss press was swarming with headlines of an SNB plan to peg the CHF to the euro. Following the announcement the EUR/CHF came off of the 1.15 level to trade as low as 1.12. But an upswing in market sentiment and a euro bid helped the pair claw its way back to trade at 1.14. The failure of the SNB to rule out a peg to the euro did two things; it kept FX speculators on their toes and did not eliminate any future options the SNB may take. This may bring further pressure on the CHF in the near term as market players feel the central bank may have lost a tad of credibility when it did not make its intentions clear to the market . It also allows for the use of the CHF as a safe haven should markets once again shift into "risk-off" mode as was the case last week. By leaving the option for a peg to the euro or a floor put under the value of the EUR/CHF the SNB still retains additional tools to address CHF strength. Note that the EUR/CHF has risen almost 15% from last week's low through a combination of tough talk and policy tools. The cat and mouse game continues. Read more forex trading news on our forex blog.

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