Forex speculation slowly on downside

crisis where government leaders are failing to address the real issues and slowing global growth in emerging markets such as the BRICS.
The most liquid currency pairs are swinging between gains and losses with the euro gaining by 0,3 percent against the dollar meaning that the euro tail risk rates differentials is benefiting euro traders.
The euro strengthened to trade at US$1,3060 per dollar after being pushed by those interest differentials which has helped traders to cover their short positions.
The tail risk has been reduced as it continued to gain against most of its peers. The euro was 1,1 percent stronger than the yen trading at 104,41 and 0,2 percent stronger than the pound sterling to trade at 81,29 pence per euro.
The Japanese economy has been hogging the limelight as we continue to see those weaker trade numbers coming through from its economy.
A slide in Japanese exports means a real problem for that country. Given that the market has been maintaining a short bias in the yen it means this status quo will remain until the Bank of Japan meeting where it is expected to announce its policy decision on October 30.
The yen slid by 0,3 percent against the dollar to trade at 79,94 and was 1,1 percent weaker against the euro at 104,41 yen.
The Japanese once boasted of a trade surplus and that surplus was the broadest measure of trade, meaning that Japan never did rely on foreign capital to finance budget deficits.
That deterioration in the trade surplus has caught market attention and that puts pressure on the yen and we are likely to see yen breakout to 81 yen against the dollar maintaining that downward trend and further weakness against the euro ahead of that Bank of Japan.
Any selling of the yen by the Bank of Japan next week will send the yen tumbling and those benefits of a global risk aversion will be eroded.
In London, the pound sterling strengthened against the dollar by 0,1 percent to trade at US$1,6014 and was 0,2 percent weaker against the euro trading at 81,29 pence per euro.
Despite that move up against the dollar headwinds facing the UK economy are quite significant and will exert a lot of pressure on the pound.
UK data is not fairly impressive as compared to the past months. In Australia, the Aussie dollar fell by 0,3 percent as pressure hits on their central bank to cut rates again.
The Aussie touched US$1,0320 ahead of that Reserve of Australia meeting. We have seen the spread for 10 Australia treasuries widen by 1,42 percent as compared to US treasuries as more investors prefer to hold US treasuries.
This has heightened the probability to cut rates and this will definitely affect the Aussie dollar to the downside.
South African Markets
Rand strength was driven by a no rate cut insight as foreign players continue to chase yield on investments.
The rand snapped a three-day loss to trade at R8,5961 per dollar but pressure still remains on their central to help stimulate growth in their forthcoming meeting.
Despite a rand rally investors are still worried about the ongoing mining strikes that have since created that uncertainty in Africa’s biggest growth and questions being raised: Is South Africa’s growth story over?
Given the current investment environment in South Africa a rand weakness towards R10 per dollar is a possibility if you consider the implied volatility on the unit.
Commodity markets
Market watchers have cut their net long positions on commodities in the short term.
Gold declined by 2,7 percent thus far since last week to trade at US$1 730,40 an ounce as support from central action dwindles.
With the Bank of Japan likely to announce a stimulus, gold could be well be supported and likely to see a move up US$1 750 but it has weaken first probably a move down to US$1 720 an ounce.
Crude oil weakness remains mixed on issues of supply in the US and fears on Middle East tensions.
Crude touched US$88,73 per barrel. My chart of the day volatility is at its lowest, and lower volatility makes investments in currencies with a higher benchmark lending rates more attractive because risk in such trades is that market moves will erase profits. Let trend be your friend.