Looking at recent economic data and leading indicators, such as the Ifo Business Climate Index, I get the impression that the economic recovery of Europe’s largest economy knows no bounds. Indeed, after posting its fastest economic growth rate since re-unification (at 2.2%), my colleagues at Business Monitor International have upgraded their real GDP growth forecast [Read more...]

The euro continued to rally in today’s trading and is beginning to approach key technical resistance around the US$1.2750/EUR area. Though on the daily chart the unit is beginning to look increasingly overbought, the technical pattern points towards further upside for the euro, and I would not rule out a push to US$1.30/EUR.

[caption id="attachment_1380" align="alignnone" [Read more...]

Some investors have been astonished by the run–up in raw material prices so far this year – after all, chocolate was not supposed to be high on the shopping list in a global recession! Well, the resurgence of commodities should not come as a surprise to Risk Watchdog’s faithful readership. My colleagues at BMI have [Read more...]

Calls by China and Russia for a new global reserve currency – possibly based on the IMF’s special drawing rights (SDRs) – reflect Beijing’s and Moscow’s concerns about a potential decline in the US dollar, and by extension, the value of their own substantial dollar holdings. Indeed, yesterday was the second time in as many [Read more...]

This week’s announcement that Ben Bernanke’s Federal Reserve would up the ante in its purchase of debt securities has certainly made things interesting.

The Federal Reserve’s plan is to buy up to an additional US$750bn of agency mortgage-backed securities, bringing the total to US$1.25trn; increase agency debt purchases by up to US$100bn, to US$200bn; and grease [Read more...]

As the charts below show, the JAMAICAN DOLLAR IS IN FREEFALL versus the US dollar. As the charts below also show, it’s just hit a NEW HIGH AGAINST STERLING.

[caption id="" align="alignnone" width="378" caption="Exchange rate, JMD/US$"][/caption]

I’m no maths genius, but to me this suggests that the UK is in serious, serious trouble.

[caption id="" align="alignnone" width="378" caption="Exchange [Read more...]

Last Wednesday, Watchdog pointed out that the move through US$1.3000/EUR would set up euro gains towards US$1.3800/EUR. At US$1.3400/EUR, I wrote on www.businessmonitor.com that US$1.4900/EUR was a realistic possibility, as the dollar would come under renewed pressure due to Fed easing, in both conventional monetary policy and quantitative terms.

In fact the dollar has depreciated against [Read more...]