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Will the global politics of currency competition mean greater market volatility?

*Bloomberg, by Richard Frost & Inyoung Hwang, June 25, 2013

‘Currency Volatility

Volatility in currencies surged since the Fed signaled last week it may start reducing stimulus this year.  JPMorgan Chase & Co.’s Group of Seven Volatility Index, based on currency option premiums, was at 11.52 percent today after rising to 11.96 percent yesterday, the highest since January 2012.

The cost of insuring against losses on corporate bonds fell for the first time in four days.  The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies dropped five basis points to 127.7.

Copper advanced after falling 2.2 percent yesterday.  Nickel climbed 2.5 percent and silver rose 0.3 percent.  West Texas Intermediate oil fluctuated near $95 a barrel, with trading 63 percent above the average for the past 100 days.

Gold futures for August delivery slipped 0.1 percent to $1,276.30 an ounce.  Morgan Stanley lowered its forecasts for gold, joining Goldman Sachs Group Inc. and UBS AG in paring estimates on prospects that the Fed will scale back monetary stimulus as the economy recovers.

The bank cut its 2013 target to $1,409 an ounce from $1,487, reduced its prediction for 2014 to $1,313 from $1,563, and trimmed its 2015 estimate to $1,300 from $1,450.  Morgan Stanley also lowered its gold and silver forecasts through 2018, analysts Peter Richardson and Joel Crane wrote in a report.

Analysts from BNP Paribas SA to Standard Bank Plc are cutting their outlook for gold as the precious metal heads for its biggest annual drop in more than three decades.  Bullion has fallen 24 percent in 2013 after rallying for 12 years, slumping to the lowest level since September 2010 last week after Fed Chairman Ben S. Bernanke said the central bank may slow its bond-buying program if the U.S. economy continues to improve.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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