Early today, the dollar slid lower as investors avoided long-positions as the US heads for the Thanksgiving holiday. The tension caused by Turkey downing a Russian aircraft contributed to the sluggish investments.
From an 8 month peak of 100.000 dollar index, the value now is down at 99.615. The Japanese yen is ahead of the USD from a week and half low of 122.31 to 122.57.
Those who invest in the US dollar did not mind the data that showed the growth of the US economy in the 3rd quarter reports which will trigger an interest rate hike by December.
A senior currency expert from the Commonwealth bank, Elias Haddad, commented that a “Robust U.S. domestic demand growth remains the main driver of U.S. economic activity and justifies a December Fed funds rate increase. Still, we expect the Fed’s tightening cycle to be gradual which will limit significant USD upside”.
The euro showed reverses from $1.0673 down to $1.0646. The US currency against the Turkish lira rose at 2.8700.
The Russian rouble had gains from the recovery of oil prices. Commodity currencies are doing well. USD/CAD pair is siding with CAD at C$1.3436 to one USD. The AUD is hit a high in a month’s period at $0.7266.
Monday’s early trading showed the euro getting stronger after hitting the all-time low for the past seven months on Asian time. The euro was at $1.0600 on its first round of trading from the options market.
A strong rally from the euro zone supported the single currency. However, analysts and traders are apprehensive about euro’s future especially that the European Central Bank is set to have a meeting on monetary policy in December. The results can totally reverse the euro position.
It is expected that the $1.06 position will push on for the week. The major banks, on the other hand, are expecting the euro will be at par with the dollar in the coming months due to the US Fed plan to raise interest rates and the ECB taking the opposite way.
Mario Draghi, ECB President, have issued comments that reinforced the expectations that the bank will implement more monetary stimulus when the board meets on Dec 3. The said stimulus is likely to create more pressure for the euro currency.
The biggest illegal foreign exchange network in China has been exposed and apprehended by the Chinese authorities. The network is said to be dealing with billions of USD transactions.
Authorities said that the bust was made in the city of Jinhua of the Zhejiang province. The network is composed of hundreds of people with eight separate units or “gangs”. These gangs operated from almost a dozen separate “dens”.
The network transferred money from accounts in Chinese and Hong Kong financial institutions in order to avoid compliance to the restrictions imposed on currency movements outside the country.
The illegal operation was actually cracked down last December 15, 2014 but the details of the activities have only been disclosed this weekend. Authorities did not give any reason why disclosure was made public after almost a year.
A Chinese daily newspaper, People’s Daily, reported that at there has been 69 persons that have been slapped criminally charges while 203 individuals were penalized with administrative sanctions.
410Billion yan was said to the amount involved in the transactions of this network.
Anti-money laundering authorities from the Central Bank of China as well as local Jinhua police detected suspicious activities in September last year. This “red flag” called for joint FOREX regulators and the local police to start a deep investigation into the matter. The project was code named “9-16”.
The alleged mastermind whom police identifies as Zhao set up shell companies in Hong Kong. Then the network people opened more than 800 accounts also in Hong Kong and other Chinese provinces to avoid the FOREX limits set by the Chinese government. Money was transferred to other countries in amounts that would not go through the usual regulatory check. The money would be for settlement by a number of banks outside China.
Bitcoin trading regained most of its losses in the early part of the sessions yesterday. BTC-E began with $324 then went down by $15 at $309. As the day continued, the BTC/USD pair slowly moved upward and closed at $319.74. BTC-E exchange quotes are currently at $319.18.
At OKCoin, a similar movement happened with a low of $307.38 but moved upwards as the day progressed. OKCoin USD is quoted at $321.31. Bitcoin futures also traded a bit higher due to profits by the Chinese exchanges.
USD sites have been showing BTC quotes in the vicinity of $321. Chinese yuan exchange sites are at $325 or 2,070 yuan.
News that the EU is considering stopping of bitcoin and other payment forms may have caused the losses. EU ministers’ meeting did not conclude anything concrete about the fate of crypto-currencies. There is no update on the issue either thus the market started rebounding once it was felt that no negative news is going to happen.
How the bitcoin will do in the next few days will depend on the EU announcement and whether there will be new rules covering crypto-currencies.
Prices of precious metals increased 1% on Thursday. This is a good rebound from almost 6 years of low prices. The increase in prices is happening even as the US Fed Reserve has announced possible rate hikes and this has resulted in investors to go for short positions. Gold prices have also increased by $4.70 and ending on $1082.60 on Friday.
Next month has been targeted by the US Federal Reserve to increase interest rates which has been steady for the past years. However, the Central Bank has signified intentions of doing the transition slowly. High interest rates will weigh heavily on gold prices as this is an opportunity of holding non-yielding gold bullions as the cost of the dollar increases since this is the currency used in its transaction. It is speculated that gold prices will decrease by 9% this year. Silver, on one hand, went down by 17 cents and ending at 14.205 while platinum had a better run and was up by $5.40 ending at 862.25.
The prices of base metal were at a low last Thursday even if demand was felt to be high with China as the top buyer. This is happening as USD is down at this point. Such a condition makes metals with USD prices cheaper for those investing outside the USA.
China showed that prices actually gained 0.1% as compared last year. This growth is the first felt in 14 months. The People’s Bank of China has cut down its interest rates for loans given to local bank as an additional measure to boost the economy.
The interest rate cut will lessen by 2.75% for overnight rates and 3.25% for 7-day rates. The PBOC announced this through its official blog and takes effect on Friday after the close of the trading day. The purpose of this move is to let more money flow into the Chinese economy.