One dollar on verge of 100 yen

September 2, 2010 by Prakash Dhawan · Leave a Comment
Filed under: "Yen" 

One dollar on verge of 100 yen

The strong bounce in the last couple weeks seems to strongly support the continuance of the medium-term upward trend in the dollar-yen ratio. In mid-December, the dollar touched its low point against the yen below 88. It has spent the last 3 ½ weeks making a healthy and consistent climb with gains near 12 pips.

Broadening out a bit on the charts, the dollar still has some work to do for any significantly higher moves up against the yen. On a 2-year chart, the dollar would need to break several points over 100 yen before it could attempt a breakout and potential reversal of the longer-term downward trend that began about a year and a half ago.

The dollar peaked above 125 yen during the middle of the summer time in 2007. This was also the height of the stock market Bull Run when it surpassed 14,000 points. As the share prices were rising, the dollar-yen ratio was still part of the ongoing carry trade that pitted higher interest yield currencies against the then-zero per cent interest yielding yen. Just as stocks unwound quickly, the dollar fell hard during the months of carry trade unwinding.

The carry trade is a way for investors to take advantage of the ability to earn daily rollover interest from carrying higher yield currencies by borrowing with lower rate currencies. This practice is popular during stable economic climates and the global crisis started a massive carry trade unwind, which led to sharp reversals in many pairings with the yen.

Now that the dollar has a zero per cent interest basis, it is on a relatively equal speculative playing field with the yen. Speculation has been more centered on the economic troubles faced in the US and Japan. As hard as times have been for Americans, the Japanese economy is also suffering through one of its worst stretches ever. Japan’s gross domestic product has been experiencing contraction at rates as historic, or more so, than US declines. Based on currency speculation, it appears many traders believe the US economy has the potential for a turnaround in shorter order.

For now, the dollar looks to clear a hurdle that it hasn’t been over in around four months. The 100 yen point would be a significant psychological clearance for the dollar. If it is able to make a move past the century mark and hold, the upward trend in the dollar-yen could continue.

Neil Kokemuller
10:08 PM EST
Tuesday, March 31, 2009

Neil

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Travel and Your Canadian Dollar

August 29, 2010 by Prakash Dhawan · Leave a Comment
Filed under: "canadian Dollar" 

Travel and Your Canadian Dollar

Canadians have been so long with a dollar worth only pennies in exchange for US currency or the Euro, it almost goes against the grain to think about how to use the high dollar to our advantage. In early 2002, the Canadian dollar sank to less than $.62 against the American dollar. But our economic recovery has surprised pretty much everyone (even us!) and even our finance minister has said that the high value of the Canadian dollar is likely here for a while. So what are the advantages and disadvantages to the all-time high our currency is enjoying?

First, traveling in the US may or may not be cheaper. But with a Canadian dollar more or less at par, it becomes possible for many more Canadians. Instead of adding 30% or more to the cost due to exchange losses, visiting the US can at least be considered as a vacation destination. There are a few things to remember, though, if you plan a trip south.

Retailers more than a few hours across the border generally won’t accept Canadian dollars. Even if they do, they’ll not likely give you the current exchange rate. If you revert to your credit cards, you’ll still lose on the exchange (although not as badly as when the Canadian dollar was worth much less) and get dinged big time service fees as well. The best way to save with a high Canadian dollar is to make sure you exchange your money in to US funds at your bank before you head south. Then pay as much as you can with cash. For example, reserve your rooms with your credit card, but pay in cash.

Once in the US, of course, many products can cost much less. So take advantage of the buys and look for great deals, especially on clothes, books, some electronics, and if you’re buying really big, even vehicles. Even if the prices are no cheaper, sometimes the biggest bonus of shopping south of the border is selection and quality-both are nearly impossible to match in the much smaller Canadian market.

Traveling to Western Europe and the EU nations, however, is a different story. Europeans are well accustomed to dealing with all kinds of currencies, and give much better exchanges. The dwindling Euro means Canadian dollars can go a long way this year if you’re traveling abroad-right now one Euro will cost you about .29 Canadian, about 40 cents less than this time last year.

Not all EU countries will take your Euros-England and Switzerland, for example, don’t take Euros at all, even though they’re member nations. So before you

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