A currency event may be fast approaching. The recent breakout of the dollar and rapid retracement sets up a major move in nearly every currency in the world. The Japanese yen has remained stable amid the dollar volatility but the euro, pound, Canadian and Australian dollars are far from inert. Even currencies like the Mexican Peso, Brazilian Real and Chinese Yuan are all likely to experience massive price moves in the coming weeks and months. Currency volatility has the ability to take control of the world financial markets. The underlying fundamental reasons for major currency moves are often game-changers in the global stock and commodity markets.
Think about how strong of a relationship there is between currencies and commodities. Everything from gold to corn is affected by the import/export relationship of the respective buyer’s or seller’s home currency. Buying power – that is what it is all about. The Japanese government has spent decades trying to suppress their currency value against the dollar, yuan and euro to facilitate a critical export component to their economy. A strong yen weakens foreign demand for their goods and stresses their critical industries like cars and electronics. Now think big picture – the world is in economic recession and the European Union is experiencing stress due to government bankruptcy fears and economic bailouts of epic proportions. A major currency shift right now could have catastrophic impact on commodity prices. Click here for details on my forecast at http://www.insidefutures.com/articles/out.php?a=339041&u=http%3A//188.8.131.52/Mega_Email/2011/Q4/LandingPage/.
Brazil, one of the largest producers of some of the world’s most important commodities (coffee, soybeans, cattle, oranges, and sugar to name a handful), is the sleeper of the bunch. A major move in the Brazilian Real could either open up exports and flood the world with cheap commodities or, if the currency shifts the other way, could tighten the supply chain and cause commodities to scorch higher.
The United States is another major commodity producer, especially of cattle and grains, and the dollar is still near multi-decade lows. The U.S. also serves as a major importer of critical commodities such as oil, coffee and cocoa which makes the dollar a focal point of any shift in currency valuations. Imagine the dollar returning to the 2001 highs in the U.S. dollar – nearly 60% above current levels. Think about the impact that would have on the price of grains to the rest of the world. At the same time the buying power of the U.S. would be greatly increased. On the flip side if the dollar should see continued pressure and drop to fresh lows the inverse could be devastating to the world economy. The world economy is the driver of the stock market in the U.S. and abroad.
The fact is multi-national companies are the norm. The internet has made nearly every company international. A global currency shift would change the landscape for nearly every company in the world and could spell major changes in stock valuations.
Real estate is also closely tied to currency action. When the world got rocked in 2008 many Europeans used their strong euro to buy U.S. real estate. When the euro got slammed investors liquidated cash real estate holding in the U.S. because, even though the real estate holdings had likely lost value, the currency conversion was so beneficial that there was net profit on the sale.
I believe the world is about to experience a major global currency shift and I am excited to forecast the move and help you prepare for what I believe is right around the corner. How do you hedge your currency exposure? How does one leverage the moves that lie ahead to potentially profit from the action? My upcoming forecast calls for the biggest currency moves in recent history and reveals exactly how to play these moves and their critical impacts on stocks and commodities. Discover my latest forecast – Currency Cataclysm - by clicking here at http://www.insidefutures.com/articles/out.php?a=339041&u=http%3A//184.108.40.206/Mega_Email/2011/Q4/LandingPage/ or copying and pasting this link into your internet browser: http://www.insidefutures.com/articles/out.php?a=339041&u=http%3A//220.127.116.11/Mega_Email/2011/Q4/LandingPage/
Head analyst for MoundReport.com
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