Global stock markets plunged for the last two consecutive days. While the scale was relatively smaller than yesterday in Asian & Pacific and European markets, US major stock indices have gone down as much as yesterday. DJIA lost about 1,900 points in just two days.
Japanese and Russian markets opened today for the first time in this week because of their bank holiday, and the impact was well priced in for the last Monday when the other markets plummeted. For example,
Nikkei 225 >> -3.3%.
RTS index >> -5.1%.
Kospi index >> +1.2%.
S&P/ASX 200 >> -1.6%
There is another market being back from the national holidays, Brazilian stock market opening ahead. Tomorrow (Wednesday) is a key for the market opening. While Asian & Pacific markets were relatively mild on Tuesday, US market was devastated again and it could trigger further crash in Asian & Pacific market on Wednesday.(Nikkei 225 future digged 2.4% by last closing.) Then, European markets could follow the negative sentiment as the Covid-19 recently brought anxious mood into Italy and Europe. Unless breakthrough for the corona virus is indicated, the global markets are unlikely to turn optimistic in coming days.
On Thursday when Brazilian stock market finally opens, it is inevitable to face massive loss and it could overshoot like downward spiral as it is the first opening since last week. The scale depends on how the other markets move next 1 or 2 days, but it can go down by 10%.
Showing posts with label BRL. Show all posts
Showing posts with label BRL. Show all posts
Tuesday, 25 February 2020
Saturday, 26 September 2015
Credit Default Swap market signals another trend? 26-Sep-2015
Since the beginning of this year, global financial market have been volatile and chaotic in uncertainty of geopolitics and economics. You easily remember Chinese stock market crashed recently, but we have experienced several events from beginning of 2015, which have driven the market.
(Remarkable events in 2015)
Jan 2015: Swiss Franc Jumped 30% - 40% against Euro, and massively gone up against other currencies.
Jan 2015: Greek election. SYRIZA lead by Alexis Tsipras became a leading party in Greek government.
May 2015: UK general election. Although the leading party is Conservative party lead by David Cameron, opposition parties are restructured in larger scale. Labour and Lib-Dem lost certain number of seats, but Scottish National Party (SNP) got more seats.
Jun - Sep 2015: Chinese stock market have continued going down, and other market including in UK, US and Japan have declined.
Aug 2015: Chinese yuan (CNY) has been devalued.
Sep 2015: Refugee crisis got attention. Number of refugees in this year became record high in Germany.
Sep 2015: Volkswagen's emissions scandal. German car industry could face slowdown.
Long term trend 2015: Natural resources including crude oil and iron ore, the price continues going down.
Long term trend 2015: Currency has been weak in emerging market, including BRL, ZAR, MXN, MYR or PHP.
Long term trend 2015: Currencies of natural resources provider, such as AUD, NZD and CAD has been weak as the interest rate has been lowered.
By the way, today's subject is about Credit Default Swap (=CDS) market. While such events have been occurred since the beginning of 2015, CDS market indicates some sense of another trend.
CDS market might be unfamiliar with some of you, but it is basically measured in credit spread for each entity. When the spread is widen, the market expect the referenced entity is losing its credit. When the spread is tighten, the market expect the entity is getting credit.
Around 2010 - 2012, it was sovereign bond crisis, particularly Greek bond yield has shot up record high. 10 year Greek bond yield has gone up 25% - 30% at the peak. Since then, the market has been calm down. Compared with that time, the credit market is still stable.
However, CDS spread have been widening in some economic zones since early 2015. For example, Spanish banking industry have been getting wider spread sharply. Spain is facing political uncertainty about discussion of Catalonian independence. A political party, Podemos, could add another shot into the market.
On the other side of the planet, Australian banking industry have been getting wider CDS spread, too. Australian economy highly depends on Chinese demand, and the demand has been slowing down since beginning of this year. Chinese stock market crisis may drive the Australian CDS market further.
American, British, German and Japanese banking industries are relatively tighten.
It may be too soon to say crisis about Chinese stock market crush. It could be just the beginning of chaos.
If you have confidence to change this uncertainty to profit, Forex Signal by QROSS X will help your forex trading.
(Remarkable events in 2015)
Jan 2015: Swiss Franc Jumped 30% - 40% against Euro, and massively gone up against other currencies.
Jan 2015: Greek election. SYRIZA lead by Alexis Tsipras became a leading party in Greek government.
May 2015: UK general election. Although the leading party is Conservative party lead by David Cameron, opposition parties are restructured in larger scale. Labour and Lib-Dem lost certain number of seats, but Scottish National Party (SNP) got more seats.
Jun - Sep 2015: Chinese stock market have continued going down, and other market including in UK, US and Japan have declined.
Aug 2015: Chinese yuan (CNY) has been devalued.
Sep 2015: Refugee crisis got attention. Number of refugees in this year became record high in Germany.
Sep 2015: Volkswagen's emissions scandal. German car industry could face slowdown.
Long term trend 2015: Natural resources including crude oil and iron ore, the price continues going down.
Long term trend 2015: Currency has been weak in emerging market, including BRL, ZAR, MXN, MYR or PHP.
Long term trend 2015: Currencies of natural resources provider, such as AUD, NZD and CAD has been weak as the interest rate has been lowered.
By the way, today's subject is about Credit Default Swap (=CDS) market. While such events have been occurred since the beginning of 2015, CDS market indicates some sense of another trend.
CDS market might be unfamiliar with some of you, but it is basically measured in credit spread for each entity. When the spread is widen, the market expect the referenced entity is losing its credit. When the spread is tighten, the market expect the entity is getting credit.
Around 2010 - 2012, it was sovereign bond crisis, particularly Greek bond yield has shot up record high. 10 year Greek bond yield has gone up 25% - 30% at the peak. Since then, the market has been calm down. Compared with that time, the credit market is still stable.
However, CDS spread have been widening in some economic zones since early 2015. For example, Spanish banking industry have been getting wider spread sharply. Spain is facing political uncertainty about discussion of Catalonian independence. A political party, Podemos, could add another shot into the market.
On the other side of the planet, Australian banking industry have been getting wider CDS spread, too. Australian economy highly depends on Chinese demand, and the demand has been slowing down since beginning of this year. Chinese stock market crisis may drive the Australian CDS market further.
American, British, German and Japanese banking industries are relatively tighten.
It may be too soon to say crisis about Chinese stock market crush. It could be just the beginning of chaos.
If you have confidence to change this uncertainty to profit, Forex Signal by QROSS X will help your forex trading.
Sunday, 21 December 2014
FX rate for last 10 years against USD 21-Dec-2014
As you know, Russian Ruble (RUB) has massively dropped in its value against other major currencies, particularly against USD, since the Crimea issue and crude oil price plunged.
This RUB dropping is one of topics in the latest FX market, however other major currencies have been under the trend reversal for last ten years over the Lehman crisis.
1. Currencies down around 50% for last 10 years
The chart on the right describes the change rate of USD value per each currency value per since Dec 2004. RUB value has gone down to less than half of the value at 2004, and South African Rand (ZAR) value has also dropped around half of the value at 2004.
2. Brazilian real
BRLUSD have changed only 1.1% from 2004, but the current value has gone down 42% from maximum value in last 10 years. BRLUSD at Dec 2011 was around 0.5358 and BRLUSD at Dec 2014 is around 0.3743.
If you bought 3yr BRL bond for BRL 2M at Dec 2011, the equivalent value in USD is
(Issue at Dec 2011) 1,071,600 [USD]
(Redemption at Dec 2014) 748,600 [USD].
It means you would lose 323,000 [USD] from this investment. BRL is a non-deliverable currency, and it could be settled in USD. Even if the interest rate in BRL is as high as 5.0%, the capital loss could not be covered.
3. Trend reversal within last 3 years
Another remarkable trend reversal after the Lehman crisis could be observed in JPY and AUD whose values have been downward trend since 2012 - 2013. Those currencies are considered relatively stronger after the Lehman crisis but the trend has reversed around that time.
JPY has dropped against major currencies since the Japanese election on Dec 2012 and quantitative easing with the new administration. Australian interest rate has cut from 4.25% (Jan 2012) to 2.50% (Aug 2013) record low level, and AUD has turned into downward trend for that time and after. JPYUSD and AUDUSD have changed -34% and -17% respectively for last 3 years only though -14% and +4.7% for last 10 years.
4. General comments
AUD, CAD, SEK, NOK and RUB, which are considered sensitive to the oil price, have gone down later 2014 due to the crude oil price down.
GBP, NZD and CHF have been on flattened trend relatively since 2011 while other currencies have started dropping against USD.
For earlier 2015, the crude oil price is one of the biggest factors leading financial trend. RUB is the most sensitive currency at the moment. If those were going to out of control, emerging market could collapse and even the developed markets could be in crisis like domino.
Related posts)
Stock Market Risk: Correlation and Triple top 26-Nov-2014
Crude Oil vs Stock market in correlation 1-Dec-2014
This RUB dropping is one of topics in the latest FX market, however other major currencies have been under the trend reversal for last ten years over the Lehman crisis.
1. Currencies down around 50% for last 10 years
 |
| < Figure I > |
The chart on the right describes the change rate of USD value per each currency value per since Dec 2004. RUB value has gone down to less than half of the value at 2004, and South African Rand (ZAR) value has also dropped around half of the value at 2004.
2. Brazilian real
 |
| < Figure II > |
If you bought 3yr BRL bond for BRL 2M at Dec 2011, the equivalent value in USD is
(Issue at Dec 2011) 1,071,600 [USD]
(Redemption at Dec 2014) 748,600 [USD].
It means you would lose 323,000 [USD] from this investment. BRL is a non-deliverable currency, and it could be settled in USD. Even if the interest rate in BRL is as high as 5.0%, the capital loss could not be covered.
3. Trend reversal within last 3 years
Another remarkable trend reversal after the Lehman crisis could be observed in JPY and AUD whose values have been downward trend since 2012 - 2013. Those currencies are considered relatively stronger after the Lehman crisis but the trend has reversed around that time.
 |
| < Figure III > |
4. General comments
AUD, CAD, SEK, NOK and RUB, which are considered sensitive to the oil price, have gone down later 2014 due to the crude oil price down.
 |
| < Figure IV > |
 |
| < Figure V > |
For earlier 2015, the crude oil price is one of the biggest factors leading financial trend. RUB is the most sensitive currency at the moment. If those were going to out of control, emerging market could collapse and even the developed markets could be in crisis like domino.
Related posts)
Stock Market Risk: Correlation and Triple top 26-Nov-2014
Crude Oil vs Stock market in correlation 1-Dec-2014
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