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Euro: New Year, New Challenges
Euro enters its 12 year and adds a 17th member but the challenges keep on coming. While parity in EURUSD is not viable, no real recovery is due any time soon.
How serious should we take Mr Trichet in reference to the possibility of raising interest rates should inflation get out of hand? Do you believe it's really possible considering the state of the peripheral countries at the moment? Could I ask when you think we could see a rate hike?
thank you,
On the other hand, the Russian economy is set to see massive growth and modernization through LED lighting, and modern infastructure,etc,,,,. With the exchange rate now rebounding to the downside rapidly, it is inevatible that this exchange rate could see levels below 20.000 in the long run. The Ruble is paying fair interest and will remain to do so. USD/TRY, USD/CNY, USD/PLN all good short opportunities for the long run. USD/RUB weekly chart one of my favourites. USD/HKD can be used as a hedge position by going long.
Whats your opinion on this ashraf? and the ever so deteriorating exchange rates of the GPD against other emerging economies?
- tight fiscal policy, which results in less Euros being spent into the economies, promoting deflationary domestic conditions.
- Fed USD swap lines buy institutions time to borrow USD to cover USD losses at an inexpensive cost rather than having to sell EUR to obtain USD
- higher price of crude makes USD more obtainable by non-US sectors (can obtain USD from oil exporters rather than having to obtain them via trade with the US)
The reasons why I would expect a Euro decline:
- political uncertainty
- Dollar losses don't recover
I suspect the reasons for decline will continue to be kicked down the road although I'm not certain what the time frame is for some nations that seem to be overlooked like Belgium. Any Euro member withdrawal would reduce the operational demand base for the currency.
Firstly, great article and thank you!
Do you think with the NFP not exactly blow out numbers means this only slightly delays this?
Also, it seems odd though that eurozone debt crisis seems downplayed in the media (bloomberg, cnbc). I am guessing they will step in when EURUSD is closer to 1.22 :-)
Thank you,
Adam