FX Fundamental Analysis
Forex Mid Year Review 2011
T
he currency landscape continues to be spattered by nervous, trend-absent trading as various
and fluctuating levels of uncertainty continue in all major regions.
In no particular order or relevance, FX markets have so far contended with ecological disasters like Japanese nuclear meltdowns, two bouts of earthquakes in NZ, tornadoes and wildfires in the US and flooding in Australia.
Additionally, deteriorating economic situations such as mounting burdens of US & EU debt, widespread risks of corporate and municipal defaults, mulling of QE3 by the Fed, a growing perception of flip-flopping to its previously hawkish stance by the ECB, leadership chaos at the IMF, Bank of England grappling with inflation above target despite soggy GDP, risk of default by PIIGS based on associated ratings downgrades, implications of Swiss National bank losses caused by Franc strength, mixed signals from RBA indicating a disconnect in transparency and most recently some potentially significant topping patterns
8 FX TRADER MAGAZINE July - September 2011
in global equity and commodity prices, caused by a combination of the above, amid the prospect of China pausing for breath in its lengthy expansion.
Conspicuously absent from dramatic or potentially negative headlines and ticking over nicely have been Brazil, Norway, Sweden and Singapore. Maybe short EUR/NOK or EUR/SGD are the ‘no- brainer’ trades, but it’s never that simple, is it?
Tat all sounds more like a review of the year than six short months and despite everything so far FX markets have been surprisingly sanguine in dealing with these events and issues both singularly and collectively, evidenced by relatively narrow ranges in most currency pairs, despite the sensationalism of some headlines.
IMF
as being in shock by mainstream media aſter recent events, yet Lagarde beat out several heavyweight lobbying attempts by senior politicians from around the world to the MD post, including Stanley Fischer of Israel and Agustin Carstens of Mexico, who one must imagine all see the prospect of better times ahead at the IMF. It’s a fairly sure bet that no viable candidate was simply attracted to the job by the accompanying 320,000 GBP/350,000 EUR/500,000 USD tax- free annual salary.
Interestingly and perhaps in a reflection of our fast-changing times, Lagarde’s appointment has broken one of the main traditions by becoming the first female chief since the IMF’s creation in 1945. However the other breach of tradition previously on the cards remains intact, a non-European appointee remaining something for the future.
As we go to print, a new Managing Director of the IMF has finally been appointed, congratulations to Christine Lagarde of France. The institution itself was portrayed
Given the far-reaching implications of the recent global crises and an accompanying rise in prominence of non-European monetary powers, it was certainly rational that the choice of IMF head may not have
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