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Wednesday, November 10, 2010

US FED STIMULUS PACKAGE WHO WINS???

Well now the US makes another strange move, instead of creating jobs, they created more money.  In a report by Forex Traders;  - "The U.S. Dollar’s weak performance last week came after the U.S. Federal Reserve announced on November 3rd that they would leave the Federal Funds Rate at ‹0.25% and the new QE II stimulus package would consist of a $600B buyback of U.S. Treasury securities by the end of 2011."

So whats that mean to us mere mortals:

After last week’s dismal performance, the U.S. Dollar may be ready to continue its downtrend against most of the other major currencies, and even some of the minors, with the possible exception of the Japanese Yen.


Nevertheless, some caution in shorting the US Dollar this week is advised, mainly because of the increasingly oversold condition of the U.S. currency against the other majors that may prompt a corrective pullback.


In addition to the technicals indicating a possible bounce for the Greenback, the U.S. economy seems to be showing some fundamental improvement in key sectors such as manufacturing and employment.


The gains in these fundamental indicators may signal a favorable turn in the U.S. economic picture which will likely be reflected in gains for the U.S. currency against other major currencies over time.


Going forward, the market will now be watching Wednesday’s U.S. Trade Balance and the upcoming G-20 meetings in Seoul, South Korea just before next weekend to get a better sense of the direction of the U.S. Dollar.

On Thursday, after the US Federal Reserve announced buyback of treasury bills worth 800 billion dollars as an incentive for the country's slow economic growth, market prices of gold futures started growing. A weaker dollar inevitably triggers an appreciation of gold, traditionally viewed as an alternative and more reliable asset, and, at the same time, reduces dollar-denominated commodity prices as compared to other currencies.



For example, in response to the weakened dollar December gold futures on New York Mercantile Exchange sky-rocketed by 3.4% (to $1,383.10 per Troy ounce).






According to analysts, the gold market currently demonstrates an uptrend
 
On Thursday, after the US Federal Reserve announced buyback of treasury bills worth 800 bn. dollars as an incentive for the country's slow economic growth, market prices of gold futures started growing. A weaker dollar inevitably triggers an appreciation of gold, traditionally viewed as an alternative and more reliable asset, and, at the same time, reduces dollar-denominated commodity prices as compared to other currencies.



For example, in response to the weakened dollar December gold futures on New York Mercantile Exchange sky-rocketed by 3.4% (to $1,383.10 per Troy ounce).




On Thursday, after the US Federal Reserve announced buyback of treasury bills worth 800 bn. dollars as an incentive for the country's slow economic growth, market prices of gold futures started growing. A weaker dollar inevitably triggers an appreciation of gold, traditionally viewed as an alternative and more reliable asset, and, at the same time, reduces dollar-denominated commodity prices as compared to other currencies.



For example, in response to the weakened dollar December gold futures on New York Mercantile Exchange sky-rocketed by 3.4% (to $1,383.10 per Troy ounce).


and look what gold did:

 
 
Interesting!
 

Wednesday, November 03, 2010

SA EXCHANGE CONTROL RELAXES - EIIISH about time.

At the end of October, Foreign Investors were given a super boost from Pravin Gordhan the Minister of Finance in South Africa.


His statement and announcement that exchange controls on individuals, companies and pension funds would be eased dramatically with immediate effect, has been welcomed in the International and local markets.  Also, with the fact that the rand has gained nearly 30 percent against the dollar since the start of 2009 as low rates in developed countries push investors towards emerging market assets offering higher returns. Well, ...
 When he presented his medium-term budget policy statement in parliament, Pravin Gordhan said exchange controls on individuals, companies and pension funds would be eased dramatically.  and that by using their foreign investment allowance South Africans will now be able to move R4, 000,000.00 out of the country every year whereas before that was only once before.  A great leap. If you wanted to move more you could apply for this as well....so we certainly see big changes.
"That's the money that's coming to Brazil and South Africa. That's the money that's coming in on a short-term basis and can pull out any time," Gordhan said this mornining..




What else was offered, well there has been an increase of both the individuals annual travel allowance and the annual discretionary allowance, from R750, 000 to R1, 000,000.00.

The scrapping of the 10% exit levy on all blocked assets for those who have already emigrated, is a very welcome sign for the future.


"Well with the strong rand, we will certainly see a call for more fund movement out of SA especially from people who have assets such as properties that are either mortgaged or have equity in them and they want to raise home loans or further loans on those mortgages.  A great time to maximise the benefits of the strong rand", says Chris Green a Financial specialist in SA>.With interest rates at 9.5% and the lowest in the last 30 years, it is time that South Africans abroad and foreigners who own  property in SA, jump on the band wagon.  Call your mortgage broker today.