Search
Flash Comment
0
0
EM: Winners and losers in the EUR/USD game
Fri, Aug 8 2008, 07:15 GMT
by Lars Christensen
We have seen a big move downwards in EUR/USD overnight. This has significant implications for the rela-tive performance among the Emerging Markets currencies.
If the dollar continues to strengthen, it will be positive for the EM currencies with the highest positive corre-lation with the dollar. Among the freely floating currencies, this is especially the Brazilian real (BRL) and the Mexican peso (MXN) and - to a lesser extent - also the Turkish lira (TRY) and the South African rand (ZAR). Among the pegged or semi-pegged currencies, the Emerging Asian currencies that are more or less pegged will nearly by definition benefit from a strong USD (at least, against the EUR). The same goes for the Russian rouble (RUB). In the "dollar bloc", we see most potential for MXN if the USD rally continues. Normally the correlation between EUR/USD and EUR/MXN is very high (nearly 75% on daily moves over the last year). Furthermore, the Mexican central bank has been tightening monetary policy recently to curb inflation, and the peso offers good carry, with the key policy rate now at 8.0%.
Published on Fri, Aug 8 2008, 07:17 GMT
Archive
- USA: Bernanke ready to take further steps
Published On Tue, Dec 2 2008, 11:27 GMT - FOMC: The sound of whirring rotors
Published On Tue, Nov 25 2008, 16:49 GMT - Russia: Gradual rouble devaluation is wrong strategy
Published On Tue, Nov 25 2008, 10:01 GMT - Hungary: Risky move by MNB
Published On Mon, Nov 24 2008, 16:12 GMT - Denmark: Budget slipping into the red
Published On Mon, Nov 24 2008, 15:33 GMT
Danske Bank
| Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com
Legal disclaimer and risk disclosure
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.Interested in forex trading? forex brokerage firms!
FXstreet.com will give you a 3 months membership as soon as minimum rebates have been generated (€150 for private trader/ €300 for corporate trader)
[Read Premium full description]
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
©2008 "FXstreet.com. The Forex Market" All Rights Reserved.