Here is my Trades of 13th July 2009
The New Zealand dollar is heading to the lowest rate in eight weeks against the yen and losing against the greenback, as global risk aversion is damping demand for the kiwi’s high-yield profile.
The New Zealand dollar started another week with a negative performance as pessimism is still spreading in equities markets locally and world wide, damping demand for the kiwi, which often experiences falls as risk aversion grows among traders. A report in New Zealand added for the pessimism towards the kiwi, as farmers confidence fell for the third time since November, since dairy prices are constantly slumping in the country, slashing profits in the agriculture sector. The Australian dollar followed its regional counterpart and also declined substantially, being the worst performer against the greenback, on speculations that U.S. corporate profits will fall, adding to the growing attractiveness of safer positions with the U.S. dollar and the yen.
The economic situation in New Zealand, as in its neighbor Australia does not offer attractiveness enough for traders to purchase kiwi priced assets, as risk aversion is driving them away to other overseas options. Even if the economic contraction in the region is far less considerable as it is in other continents, the volatility of the New Zealand dollar is being an option for traders to profit, currently selling it to purchase yen priced assets.
NZD/JPY declined to 57.43 as of 11:51 GMT from an opening price of 57.98. NZD/USD followed, from 0.6277 to 0.6222.
The British pound started this week losing against currencies like the euro and the dollar as speculations that British banks may announce further losses rose, suggesting that the worst moments of the recession are still to come.
The Sunday Times, one of the most prestigious U.K. newspapers affirmed yesterday that Lloyds Banking Group Plc, one of the giants of the British financial sector, would be in a difficult situation and that it may post further losses, reflecting this Monday on British stocks and the national currency, which is being traded at the lowest level in two months against the euro. Concerns regarding a longer than expected crisis in the U.K. made the FTSE 350 Banks Index to drop 1.5 percent, as U.K. Gilts rose, attracting British investors to the safety of fixed income earnings.
The banking sector in the U.K. has not been posting any alarming news for the past weeks, but this Sunday Times article rose risk aversion among traders that are already concerned with the international economic scenario. The pound may post further declines against the euro, if risk appetite, which was supporting the British currency, fail to reappear. Currencies like the yen and the greenback still have a bullish perspective versus the pound, as the growing risk aversion attracts traders to safer assets.
EUR/GBP traded at 0.8686 as of 10:36 GMT rising from an opening price of 0.8599. GBP/USD fell to 1.6044 from 1.6195.
If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.
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