Over the past few months, I have seen an influx of capital and high net worth investors who are getting interested in the junior mining resource area. Now may be the worst time to panic out of the precious metals and junior mining sector into the overbought US dollar. Smart capital may be carefully looking at ways to diversify away from the euro and yen which has collapsed hitting multi-year lows. Inflation may pick up rapidly in Europe and Japan. The European Central Bank is printing euros (NYSEARCA:FXE) like crazy causing a collapse in the currency and its worst quarter in many years. This is a manipulative attempt to stimulate a weak economy and boost exports from the region.
(click to enlarge)
The flight of capital from Europe and Japan (NYSEARCA:FXY) has looked for temporary liquidity in the US dollar (NYSEARCA:UUP) which is hitting three year highs as investors expect
By Dean Popplewell
The 18-member single unit has managed to fall to a fresh two-year low outright this morning, briefly penetrating the psychological €1.26 handle (€1.2595), just as the capital market-bid farewell to another volatile September and third quarter. While at the same time, Euro equities have been edging higher, trying to reverse in part some of yesterday’s decline while waiting for this morning’s inflation data that some investors expect could very much shape the ECB’s next move.
From a global perspective, the key to any defining rally or equity retreat currently lies with Hong Kong. Growing protest in the region is once again encouraging many investors to stay on the sidelines. Regional indices have wavered to the downside on signs that the standoff between Occupy Central and the authorities will not be subsiding any time soon. Ahead of the start of China’s National Day holidays, the Shanghai Composite and
"Volatility" is the forex investor's greatest ally. In the month of September, there has been no let up from this key variable that had been missing during the G8 Central Bank "lower for longer" interest rate stretch over the past two-years. Volatility provides investors opportunity; something that has been in abundance for a number of weeks now, ever since investors started to price in the potential of interest rate differentials actually beginning to appear "sooner" rather than "later".
Diverging monetary policies has been the driving force propelling both GBP and the USD higher as the Fed and BoE shift expectations towards a "normalization" of monetary policy, and the EUR and JPY lower, as the ECB and BoJ are seen maintaining "negative" and "zero" interest rate policy while further expanding their balance sheets.
Investors have NFP and QE to contend with