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Shayne Heffernan is an Economist, Trader, Fund Manager and Venture Capitalist based in Asia. He also serves as Editor and contributor at, Founder of The Heffernan Group and currently building the company's financial services business in China. Major shareholder and CEO... More
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  • Yen and US$ shift into retreat 3 comments
    Jul 19, 2009 4:17 PM

    The Japanese Yen and the US $  suffered last week as better-than-expected US corporate earnings and improving economic data boosted investor confidence. Forecast-beating Q-2 earnings from the likes of Goldman Sachs, and Intel, prompted a sharp rally in global equities. Growing risk appetite fed through to the currency markets, weighing on haven demand for the yen and the dollar, and boosting higher-yielding currencies, especially those with commodity links.  Signs of a pick-up in the global economy, most notably in China, added to investor optimism. Analysts said a string of Chinese economic data releases last Thursday re­affirmed the country’s economic resilience and validated its fiscal stimulus packages. Chinese growth figures accelerated from an annual rate of 6.1% in the Q-1 to 7.9% in Q-2, outstripping forecasts. Meanwhile, Chinese industrial production gained 10.7% in June, the largest increase for nine months.
    Improving sentiment hit the yen hardest. Over the week, it fell 1.7% to Y94.04 against the USD, dropped 2.9 % to Y132.76 against the euro and lost 2.7 per cent to Y153.66 against the pound. The yen’s losses were more acute against commodity-linked currencies as raw material prices rallied. Over the week last week, it fell 4.7% to Y75.43 against the Australian dollar, lost 6.1%to Y84.31 against the Canadian dollar and dropped 4.6% to Y60.69 against the New Zealand dollar. Falling haven demand also hit the USD, but the US currency faced additional pressure from news that China’s foreign exchange reserves, the world’s largest, had grown by a record US$178.3B to US$2.130T in Q-2 Y 2009. Analysts said the largest increase in reserves was in May, when the USD weakened sharply as Treasury yields in the US rose. Fear of a weaker USD contributed to inflows to China, sparking offsetting intervention by the Chinese authorities to stem strength in the Renminbi.

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Comments (3)
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  • H. T. Love
    , contributor
    Comments (17883) | Send Message
    I've read comments that China's reported stats are suspect. Others have pointed out that it can be verified with examination of electricity generation. Any thoughts about this? Sources for generation figures?


    19 Jul 2009, 10:25 PM Reply Like
  • The Aft Deck
    , contributor
    Comments (180) | Send Message
    Author’s reply » I have spent 20 years in China and reliable information is rare, electricity generation is a good indicator, so are the health of the big ports, Hong Kong is the best guage IMO.
    20 Jul 2009, 08:58 AM Reply Like
  • H. T. Love
    , contributor
    Comments (17883) | Send Message
    Thanks. I'll start googling for something that I can use.




    On Jul 20 08:58 AM The Aft Deck wrote:


    > I have spent 20 years in China and reliable information is rare,
    > electricity generation is a good indicator, so are the health of
    > the big ports, Hong Kong is the best guage IMO.
    20 Jul 2009, 01:26 PM Reply Like
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