Mamma mia! What a week it’s been in the currency markets. Let’s get right to it.
Italy dominated much of the ink last week as its prime minister announced his resignation because of the country’s debt crisis. Prime Minister Silvio Berlusconi stepped down Nov. 12 after Italy’s government passed crucial economic reforms demanded by the European Union. He was replaced by economist Mario Monti, who’s serving as premier-designate. Aside from Berlusconi facing scrutiny for scandals and failures during his service, Italy is in fiscal turmoil because the country’s debt is larger than the combined economies of Portugal, Ireland and Greece. Not to mention its bonds are shattering the 7-percent level, worrying financial officials as the world’s eighth largest economy could potentially spawn an unmanageable economic situation. There was some good news for Italy Nov. 14 when it sold some short-dated bonds via a sale that had been viewed as “a key test of demand for Italian debt.”
In Greece, the country named former European Central Bank Vice President Lucas Papademos as its next prime minister, hoping his experiences can help right Greece’s economic ship. Despite the turnover of Italy and Greece, nearly 80 percent of Germans believe both the euro will survive and Chancellor Angela Merkel is handling the economic crisis well.
In the U.S., hedge fund experts are already betting that 2012 will see more investors and shopping around for investments. According to the 2012 Preqin Hedge Fund Investor Review, 10 percent of investors plan to invest only with new managers in the new year while nearly 50 percent intend to seek new relationships. Unfortunately for U.S. retail foreign exchange traders, some new rules and strict enforcements are causing some trading restrictions. According to a LeapRate report, currency traders have shrunken to their lowest levels in years because new regulations and legislation such as the Dodd-Frank act that have limited trading and the amount of leverage brokerages can offer individuals. On the jobs front, September saw the most job openings in three years as employers advertised more positions during the month. Many experts are hoping that’s a sign companies may increase hiring. The U.S. Labor Department said businesses and governments posted 3.35 million job openings—a 7-percent increase from August and the most since August 2008. Some more optimism for U.S. jobs last week included the number of jobless claims dropping to 390,000—well below the 400,000 mark that analysts expected. Additionally, the U.S. trade balance deficit reported below expectations, hitting 43.1 billion—also well below the expected 46.1 billion. To finish positively, and celebrating the recent New York City marathon, successful long-term investors are being compared marathoners because “they must be well prepared, resilient, disciplined and focused” to go the distance.
- After ‘Frenetic’ Weekend, Italy Rushes To Limit Financial Damage, NPR, Nov. 14, 2011
- Europe’s Drama Is Far From Over , Wall Street Journal, Nov. 11, 2011
- Italy Senate Vote to Make Way for Coalition Government Led by Mario Monti, Bloomberg, Nov. 11, 2011
- Study: Hedge Fund Investors To Invest More, Shop Around In 2012, FINalternatives, Nov. 11, 2011
- New Rules, Strict Enforcement Curtailing US Retail Forex Trading -Study , Wall Street Journal, Nov. 10, 2011
- More Good News from the US, Forex Crunch, Nov. 10, 2011
- Job openings in Sept. most in 3 years, USA Today, Nov. 8, 2011
- Why Investing is a Marathon, Not a Sprint, Forbes, Nov. 7, 2011
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