Australian Dollar Vs China GDP

  • China’s monetary yield shrank by 6.8% in the main quarter
  • This was underneath the 6% fall expected and the main compression since 1992
  • The Australian Dollar didn’t fall far, a portion of the information were superior to anticipated

The Australian Dollar backtracked a little Friday on news that China’s economy shrank in the primary quarter of this current year, and by more than the business, sectors had expected, as coronavirus demanded its cost. Official Gross Domestic Product was somewhere around 6.8% on the year, more terrible than the 6.5% expected and the 6% rate seen toward the finish of 2019. Walk modern creation was discharged simultaneously. It sneaked past a moderately humble 1.1%, obviously superior to the 7.3% dreaded and gigantically superior to February’s 13.5$ breakdown. Retail deals plunged, be that as it may, falling by 15.8% a month ago when a slide of just 10% had been normal. Clearly in general withdrawal was normal, and it stays doubtful that maybe China’s economy is showing improvement over numerous in endeavoring to restart itself from infection incited torpor. Introductory 2020 development conjectures will obviously now be destroyed, however, China is not really alone in that. The Australian Dollar regularly goes about as the outside trade market’s preferred fluid intermediary wager on the Chinese economy. This is to a great extent on account of Australia’s huge crude material fare connects to China. It appears to have assumed that job on Friday, shriveling in the wake of the information.

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Which are the weakest currencies in the world?

Currency means a system of money in used for common purpose in a country. It’s a medium for exchange of goods and services. A currency becomes weak when the country’s economy slows down. This occurs due to inflation, falling prices of commodities, monetary tightening and political instability. Here is the list of weakest currency around the world against dollar:

 

 

Iranian Rial(IRR):

Iranian rial is the least valued currency against dollar.

1USD = 42,105 IRR

The currency has lost four times of the real value in almost 15 months due to withdrawal of nuclear agreement and imposing of sanctions again. Its financial structure and corruption pulls down the currency to weaker zone.

 

Vietnamese Dong(VND):

Vietnamese Dong is the second weakest currency against dollar.

1USD = 23,208 VND

The country’s currency is undervalued subsequently till date. The Vietnam government is pushing hard to value their currency in to global market. The government is moving in a right direction to compete their currency along with their neighbours and expecting to hit soon like other Asian currencies.

 

Indonesian Rupiah(IDR):

Indonesian Rupiah is the third undervalued currency against dollar.

1USD = 13,980 IDR  

Due to the low value of old-style banknotes, by presidential decree of September 5, 2016, 7 new banknotes were issued in denominations from 1 thousand to 100 thousand rupiahs.

Indonesia is an economically stable and quite developed country in Southeast Asia. However, its money has a very low exchange rate. The financial regulatory authorities are trying their best to build their currency to a valuable currency but all their efforts end in failure.

 

Guinean Franc(GNF):     

Next Guinean franc adds the list by number four weakest currency versus dollar

1USD = 9,183 GNF

This currency became weak due to the biggest concern of inflation and poverty. The people who are living in the country considers their currency as a precious gift like gold, diamond.

 

Laotian Kip(LAK):    

Further added in the list is Laotian Kip which secures the fifth place.

1USD = 8759 LAK

The Lao is the only currency on this list which did not devalue but was originally issued with very low rate. Besides, since its issue in 1952, the currency did strengthen against US Dollar and continues to improve its value.

 

Sierra Leonean Leon(SLL):

Sierra Leonean Leon ranks sixth worst valued currency against dollar.

1USD = 9,125 SLL

Sierra Leone is a very poor African country, which applied many strategies to value the local money but ended in vain. Recently, a war took place and the periodic deadly Ebola virus.

 

Uzbekistan Sum(UZS):

Here comes Uzbekistan Sum entering seventh place for poor currency against dollar.

1USD = 8,620 UZS

The modern Sum was put into circulation with a ratio of 1 Sum equal to 1000 Sum-coupons from July 1, 1994 by Decree of the President of Uzbekistan.

As a result of the liberalization of their monetary policy from September 5, 2017, the exchange rate of the Sum against the US dollar is set at 1 USD = 8,100 UZS

 

Paraguayan Guarani(PYG):

This currency settles at eighth place in the race of weakest currency versus dollar.

1USD = 6,012 PYG

Paraguay is the second poorest country in South America. The country faces weak economy with high inflation, having low literacy rate and high unemployment and corruption plays a major role to obstruct the currency growth.

 

Cambodian Riel(KHR):

Cambodian Riel ensures ninth place in the least currency countered with dollar.

1USD = 4,083 KHR

This currency was amended in 1995 to replace Indochinese Piaster. But the monetary value was not a hit in their country because the people preferred dollar for their transactions. This made the currency weaker.

 

Ugandan Shilling(UGX):

The Ugandan Shilling captures the title for poor currency at number ten towards dollar.

1USD = 3694 UGX

In 1966, the Uganda Shilling first appeared, replacing the East African Shilling. The latter was the official means of payment in Kenya, Uganda, Tanganyika and Zanzibar.

The Uganda Shilling is a relatively stable currency. Over the past few years, its value hasn’t lost more than 5%.

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What is Black Friday? What are the effects of Black Friday?

What is Black Friday?
Black Friday is the shopping day after Thanksgiving, also considered as the first day of Christmas shopping season.

History of Black Friday:

As History reports, the term “Black Friday” was first recorded back in 1869 and it referred to the dark financial crisis following the crash of the gold market in the United States. The two Wall Street barons Jim Fisk and Jay Gould conspired to buy as much gold as they could and wanted to cause a surge in gold pricing and then sell their gold reserves for stellar profits, but their conspiracy was exposed on Friday, Sept. 24, 1869. The unraveling sent the stock market crumbling down and bankrupted everyone including farmers and millionaires.

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What is the probability of winning a trade?

Effects of Black Friday:

In stock markets, an impact will be there by boosting the share prices for short term. Later, the stock markets will move down. The investment in stocks will also be considerably low because the people save the money for shopping to celebrate Christmas.  Retail Sales always has been a crucial economic indicator to gauge the overall health of a nation’s economy and calculating GDP and seeing the influence of Black Friday on retail sales, clearly indicates that Black Friday is no different from any economic indicator. On Black Friday, the retail sales will have a sale of $7 billion within 24 hours. The impact of Black Friday in forex markets will be zero as there are other factors like interest rate, GDP etc.  As the retail sales moves up the GDP will develop and the economy will also improve. Naturally the currency value of that country will grow up temporarily.

What are the factors to decide the central bank interest rate?

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Will U.S replicate 2008?

Will U.S replicate 2008?

It’s hardly a decade over!!! Will there be another Lehmann Brothers collapse? The answer will be yes. Why?

Economy:

The US economy under Trump is doing just fine. The president has overseen a slow but steady economic expansion.  But this only benefited the wealthy Americans not the average labours. In a poll 48% of Americans believe economy is going towards bad shape. Even the GOP’s signature economic Policy achievement, the Tax Cuts and Jobs Act, did little to boost wages and business investment.

 

However, the economy isn’t contracting, so things could be a lot worse. And it’s possible they might get that way. Wall Street banks are already preparing for the US economy to slow down in 2019. Economists do believe the tax bill helped boost overall economic growth — for a little while, at least. The economy was growing at about 2.2 percent a year since the end of the recession in 2009, and then hit 4.2 percent in the second quarter of 2018, right after the tax cuts went into effect. The third quarter was also strong, with a 3.5 percent increase. By the end of 2018, however, annual economic growth fell to 2.6 percent.

What is Economy? Why is it important?

Stock Markets and Trade War:

After Trump has become President in 2017 the stock market was started moving up and in January 2018 the DOW has breached 25,000 points and many stocks have shown good growth. The investors had also good returns for their money. But before the end of 2018 the stock markets has faded and investors lose their investments. Trump also picked stock market as a favourite tool to measure the economic growth.

Again in January 2019, the DOW reached 25,000 points and did some favour for investors. Now the investors  and analysts are expecting a crash in stock markets as the markets are overvalued and the trade war which has been emerged between U.S and China. Initially, after Trump sworn in as President he promised to upend free trade, which he blamed for the loss of well-paying manufacturing jobs.

He definitely disrupted international trade, but his restrictions have done more harm than good. Over the past year, America has placed about $200 billion in tariffs on Chinese goods, in part to make Chinese products more expensive so Americans don’t buy them. The administration has also placed steep tariffs on all imported steel, angering other major US trade partners.

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The idea was to level out the trade deficit with China and make China buy more US goods, but, as expected, China responded by slapping its own tariffs on American imports.

Trump’s protectionist trade agenda ended up hitting American farmers the hardest. A total of 84 farms in the Upper Midwest filed for bankruptcy between July 2017 and June 2018. Farms that produce corn, soybeans, milk, and beef were suffering due to low global demand and low prices, according to economists, and Trump’s trade war is making the problem even worse.

What is trade war? Will trade war come to an end?

Bond Market and Unemployment rate:

The 10-year US bond yield has fallen below the 3-month bond yield. In simple terms, this means that long-term bonds are offering lower returns than short-term bonds and is seen as an indication of economic uncertainty. The yield inversion has raised fears that the US economy may be headed for a recession.

Will bonds benefit investors? Will yields affect growth of the country?

The US unemployment rate has been on a steady downward trend since the end of the Great Recession, dropping from 9.8 percent in January 2010 to 4.8 percent when Obama left office. Under Trump, unemployment hit a low of 3.7 percent in September, though it has started to tick up in recent months.

In September, the black unemployment rate fell to 6 percent for the first time, setting a new record that suggests progress is being made toward closing a longstanding employment gap between black and white workers. The black unemployment rate has since ticked up to 6.8 percent, but that’s still low by historical standards.

What is GDP? How it affects the economy?

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What is Currency Manipulator Watchlist?

Currency manipulator watch list is a list of expected currency manipulator countries which is of US government importance to ensure free and fair trade practices.

That brings us to the next questions who will be called as a currency manipulator.

In today’s market currency value is determined through market forces of demand and supply but there are countries like China who are indulged in controlling currency value artificially by controlling foreign exchange purchase and sell policies in their country.

If you want to know why would one do the so here China has kept its currency value very low to promote cheaper export to other countries

Three criteria’s for listing by the U.S mentioned below:

  1. Where one country constitutes a major part of their Trade deficit like  China, India
  2. Any country is purchasing US $ in excess of $20 Billion and the net purchase is in excess of 2% of GDP.
  3. Having a current account surplus of 2% of US GDP.

 

Japan, alongside China, Germany, Switzerland, India, and South Korea, was placed in the bi-annual currency watch list in October last year.

While Switzerland and India have not been mentioned in the latest list, the US has added Ireland, Italy, Malaysia, Singapore, and Vietnam to the list, with China continuing to figure in it.

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