I normally do not announce intraday spot trades. This was thus an exception. Also, I prefer to use options whenever valuations look good. These marketcircumstances fit the options instrument very well. Whenever spreads and valuations allow for it.
Anyway, re long Eur/Huf; intraday charts indicates spot wants to go higher. If we can close above 278.50, I think we should be able to go higher again over the next 1-2 days. If we close below 276, perhaps not so.
I see this as an opportunity to go long Eur/Huf post IMF;s comments regarding Hungary, where it omitted any critical ditto re Hungarys fiscal policy.
Unless general market sentiment shifts in a positive way nearterm, it would seem to me the long Eur/Huf overhang should become absorbed by the market before long and move to test the highs again.
Spot now; 278.35.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
13 January 2009
I am buying Eur/Huf on the dip here.
Rate 277.12. Reasons later.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
Bailouts and tradewars - closer than you think
Bailouts=Subsidies=Protectionism=Competitive devaluations=Trade wars=,,,,,
I stop there. just dont want to take it further, but its not getting better down the line - thats for sure.
So, where are we now?
I would suggest that the world is somewhere between subsidies and entering the stage of competitive devaluations.
Lets go for the easiest ones;
FX; Any economy with twin deficits still not freefloating? I will bet they will before long. Which other countries will get dragged down along with it? And if they are freefloating what does their net hardcurrency debt exposure look like? Who will sort it out? The IMF?
Equities; Any Bank lending in large to corporates and households in such a country? Sell that bank stock (again), it will soon be bailed out or become worthless. In either case, shareholders get nothing. Any construction company with huge balancesheet exposure in a country like this?,,,,,, etc etc
I suspect I will get a few reasons to revert on this theme again over the next few weeks.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
I stop there. just dont want to take it further, but its not getting better down the line - thats for sure.
So, where are we now?
I would suggest that the world is somewhere between subsidies and entering the stage of competitive devaluations.
Lets go for the easiest ones;
FX; Any economy with twin deficits still not freefloating? I will bet they will before long. Which other countries will get dragged down along with it? And if they are freefloating what does their net hardcurrency debt exposure look like? Who will sort it out? The IMF?
Equities; Any Bank lending in large to corporates and households in such a country? Sell that bank stock (again), it will soon be bailed out or become worthless. In either case, shareholders get nothing. Any construction company with huge balancesheet exposure in a country like this?,,,,,, etc etc
I suspect I will get a few reasons to revert on this theme again over the next few weeks.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
12 January 2009
Reasons to be long Nok/Sek
We are talking about two currencies, (NOK and SEK), which on any fundamental measure are very much undervalued. The most undervalued currencies in the G20 spectra, even.
However, I believe they will have two quite different scenarios to tackle near term. This will lead to one performing quite well (NOK), and the other one underperforming.
Norway
Admittedly, Norges Bank is (as usual), behind the curve, but have since cut rates fast, sinking the currency in the process. However, with expansive domestically funded measures around the corner, the NOK will have some good support going for it near term.
The Norwegian government has taken aggressive measures to support their economy. Now, fiscal expansions are normally currency positive as long as long as bond markets are willing to fund their deficits. In this case, it is taken one step further since the funding source for the fiscal measures will be the Norwegian Petroleum Fund, (renamed the Norwegian Pension Fund, but I will stick to the Petrol Fund in this text, since it is still the most renowned name).
This will have a substantially positive effect on the NOK.
The Norwegian Petroleum Fund have the majority of its assets denominated in Eur and Sek, since its holding are weighted in accordance with the importance of the trade relationship.
With the government intending to use up to 4% of the petroleum funds current asset value for fiscal measures, expect strong support for the NOK. Keylevel support in Eur/Nok will be the 9.31 level.
As a reference, until November of 2008, Norges Bank purchased foreign currency equivalent to 1500 MLN per day for the Norwegian Petroleum fund. These purchase have now stopped.
Actually, with the new expansionary fiscal approach, Norges Bank could potentially even become a buyer of NOK, as it repatriates petroleum fund assets. This would be the case if incoming oil revenues did not cope with the pace of fiscal expenditure increases and thus forced fundasset repatriation to cover up the difference.
Hence, the conclusion is that on a relative basis, there will be near term support for the NOK, at least from a government related FX flow perspective.
Sweden
Dominating and Sweden specific theme.
Well, ehhh, lets see,,,, at least two Swedish banks are "all in" into the Baltic states. The Swedish version of the subprime story. Not good.
The Swedish government forced the deal with the IMF and other Nordic states, Latvia, to NOT devalue the LVL. Yes, you read it correctly, it was MR Borg, the Swedish finance minister, who was the driving force in this according to IMF;s Christoph Rosenberg, Senior regional representative for Central Europe and the Baltics. Why would they do that? Any guesses? Well, the Swedish Banks wanted it.
So, what is the Swedish scope from here? With the Baltic states in kryptonite deflation mode, I would be very surprised if it took 6 months before they let go of the peg.
The decision not to unpeg, is one of the weirdest moves Ive seen. And this from a government that has extensive experience from the early nineties, when the WORLD as a whole was doing ok. It is simply irresponsible and everybody will pay extra for it in the end; the Swedish taxpayers and their economy. The Baltic populations and their economy, (yes, if Latvia unpegs, so will the others).
With Russia and Eastern Europe about to cave in, pegged currency economies will come under the most stress. They will depeg. Thus, consequences for the Swedish economy will be felt in a very harsh way when this takes place in the Baltics.
Bank bailouts, corporate bankruptcies, higher unemployment and imploding domestic demand are some of the consequences from the upcoming creditlosses. This will outweigh any domestic fiscalexpansion plans.
Hence, until the Baltic issue is solved, the SEK should have severe difficulties competing with the NOK on a relative basis.
I Buy NOK/SEK.
As usual, good luck.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
However, I believe they will have two quite different scenarios to tackle near term. This will lead to one performing quite well (NOK), and the other one underperforming.
Norway
Admittedly, Norges Bank is (as usual), behind the curve, but have since cut rates fast, sinking the currency in the process. However, with expansive domestically funded measures around the corner, the NOK will have some good support going for it near term.
The Norwegian government has taken aggressive measures to support their economy. Now, fiscal expansions are normally currency positive as long as long as bond markets are willing to fund their deficits. In this case, it is taken one step further since the funding source for the fiscal measures will be the Norwegian Petroleum Fund, (renamed the Norwegian Pension Fund, but I will stick to the Petrol Fund in this text, since it is still the most renowned name).
This will have a substantially positive effect on the NOK.
The Norwegian Petroleum Fund have the majority of its assets denominated in Eur and Sek, since its holding are weighted in accordance with the importance of the trade relationship.
With the government intending to use up to 4% of the petroleum funds current asset value for fiscal measures, expect strong support for the NOK. Keylevel support in Eur/Nok will be the 9.31 level.
As a reference, until November of 2008, Norges Bank purchased foreign currency equivalent to 1500 MLN per day for the Norwegian Petroleum fund. These purchase have now stopped.
Actually, with the new expansionary fiscal approach, Norges Bank could potentially even become a buyer of NOK, as it repatriates petroleum fund assets. This would be the case if incoming oil revenues did not cope with the pace of fiscal expenditure increases and thus forced fundasset repatriation to cover up the difference.
Hence, the conclusion is that on a relative basis, there will be near term support for the NOK, at least from a government related FX flow perspective.
Sweden
Dominating and Sweden specific theme.
Well, ehhh, lets see,,,, at least two Swedish banks are "all in" into the Baltic states. The Swedish version of the subprime story. Not good.
The Swedish government forced the deal with the IMF and other Nordic states, Latvia, to NOT devalue the LVL. Yes, you read it correctly, it was MR Borg, the Swedish finance minister, who was the driving force in this according to IMF;s Christoph Rosenberg, Senior regional representative for Central Europe and the Baltics. Why would they do that? Any guesses? Well, the Swedish Banks wanted it.
So, what is the Swedish scope from here? With the Baltic states in kryptonite deflation mode, I would be very surprised if it took 6 months before they let go of the peg.
The decision not to unpeg, is one of the weirdest moves Ive seen. And this from a government that has extensive experience from the early nineties, when the WORLD as a whole was doing ok. It is simply irresponsible and everybody will pay extra for it in the end; the Swedish taxpayers and their economy. The Baltic populations and their economy, (yes, if Latvia unpegs, so will the others).
With Russia and Eastern Europe about to cave in, pegged currency economies will come under the most stress. They will depeg. Thus, consequences for the Swedish economy will be felt in a very harsh way when this takes place in the Baltics.
Bank bailouts, corporate bankruptcies, higher unemployment and imploding domestic demand are some of the consequences from the upcoming creditlosses. This will outweigh any domestic fiscalexpansion plans.
Hence, until the Baltic issue is solved, the SEK should have severe difficulties competing with the NOK on a relative basis.
I Buy NOK/SEK.
As usual, good luck.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
I am long NOK/SEK
I am long Nok/Sek. Will revert with the reasons why later.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
I am short Eur/Jpy, Eur/Usd - here is why
With the Eur curve set to steepen even further due to the domestic demand imploding, ECB will have to play catch up in order not to remain way behind the curve. We have, amongst other central bank meeting this week, the ECB one, which will be the focus. As mentioned on the 9 Jan, I expect the ECB to cut rates to 1% before long. Any sign of turnaround in the ECB stance this week will hit the Eur hard.
Increasing loss of investor confidence will also weaken the Eur as the tensions within the Euro area increases. The PIGS countries bonds spreads vs the German one is becoming unsustainable. If the PIGs countries were Emerging Market countries the IMF would have told them off. (At least the old IMF). The new one seems completely lost, see Latvia as the most recent extreme example of negligence.
The Eur yield curve steepening mentioned above is a very interesting variable.
The 2/10 Year Eur yield curve steepening over the last couple of weeks has not matched the historical correlation with Eur/Jpy. In fact, there was a complete correlation break up in December. I do NOT expect this to last.
The Eur surge in December was mainly stemming from European (German) banks repatriating assets from abroad for year end purposes and after the German government rejected a suggestion to start a "Bad asset bank" in order to clean out the banking sector.
Yes, the German government took a 25% stake in Commerzbank. This means they will become a more Euro and German oriented bank, from a strategic point of view, leading to repatriation of assets from abroad. On the other hand, the German government recently did a 180 degree turnaround as they indicated they would be more open to a "Bad asset bank" idea, and as they are looking to support further corporates under siege, decreasing the need for German corporate asset repatriation in the process
The Japanese lifers
Japan´s portfolio of net foreign assets is about 3 Trn Usd, of which 2Trn Usd is privately held, the rest is BOJ and MOF. The private holdings have partly diversified away from the Usd, with 35% of assets held in Eur. Lion part of the privately held assets are with Japanese Lifers.
These have and are still acting quite mechanically when it comes to hedging patterns; No currencyhedging as yieldcurves are inverted and vice versa as curves are positive. This in order not to hedge away the increased yield in their foreign investments.
With the Euro 2/10 year yield spread at about 160-170BP, it has increased the Lifers attention to currency hedging again.
Since Japanese lifers have committed themselves to deliver 2% yield annual returns and with the Euro yieldcurve to steepen further nearterm. A spread of 2% on the 2/10 Yr Euro curve would attract significant amount of currency hedging flows, strengthening the Jpy in the process. With the 10 Year JGB at 1.35% ish yield, expect a strong interest for currencyhedging from Japane lifers, with interest to increase as the Euro curve steepens further.
The US and the credit spread focus
As I mentioned in December in my Usd piece, the US authorities commitment and focus on the credit spreads will become a strong positive driver for the USD as well. Please read that piece for reference since it is still valid.
As always, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
Increasing loss of investor confidence will also weaken the Eur as the tensions within the Euro area increases. The PIGS countries bonds spreads vs the German one is becoming unsustainable. If the PIGs countries were Emerging Market countries the IMF would have told them off. (At least the old IMF). The new one seems completely lost, see Latvia as the most recent extreme example of negligence.
The Eur yield curve steepening mentioned above is a very interesting variable.
The 2/10 Year Eur yield curve steepening over the last couple of weeks has not matched the historical correlation with Eur/Jpy. In fact, there was a complete correlation break up in December. I do NOT expect this to last.
The Eur surge in December was mainly stemming from European (German) banks repatriating assets from abroad for year end purposes and after the German government rejected a suggestion to start a "Bad asset bank" in order to clean out the banking sector.
Yes, the German government took a 25% stake in Commerzbank. This means they will become a more Euro and German oriented bank, from a strategic point of view, leading to repatriation of assets from abroad. On the other hand, the German government recently did a 180 degree turnaround as they indicated they would be more open to a "Bad asset bank" idea, and as they are looking to support further corporates under siege, decreasing the need for German corporate asset repatriation in the process
The Japanese lifers
Japan´s portfolio of net foreign assets is about 3 Trn Usd, of which 2Trn Usd is privately held, the rest is BOJ and MOF. The private holdings have partly diversified away from the Usd, with 35% of assets held in Eur. Lion part of the privately held assets are with Japanese Lifers.
These have and are still acting quite mechanically when it comes to hedging patterns; No currencyhedging as yieldcurves are inverted and vice versa as curves are positive. This in order not to hedge away the increased yield in their foreign investments.
With the Euro 2/10 year yield spread at about 160-170BP, it has increased the Lifers attention to currency hedging again.
Since Japanese lifers have committed themselves to deliver 2% yield annual returns and with the Euro yieldcurve to steepen further nearterm. A spread of 2% on the 2/10 Yr Euro curve would attract significant amount of currency hedging flows, strengthening the Jpy in the process. With the 10 Year JGB at 1.35% ish yield, expect a strong interest for currencyhedging from Japane lifers, with interest to increase as the Euro curve steepens further.
The US and the credit spread focus
As I mentioned in December in my Usd piece, the US authorities commitment and focus on the credit spreads will become a strong positive driver for the USD as well. Please read that piece for reference since it is still valid.
As always, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
09 January 2009
NFP, Stocks and EUR/USD; New correlation
Corporate bonds still bid, which should help stock market bulls today, going into NFP.
In fact, unless there is a massive disappointment with todays NFP number, the stock market should remain well bid or rally post it. NFP consensus is at 650K due to mainly a weak ADP report, so NFP will have to come in at 700 plus to change any positive sentiment post it.
New correlation
However, dont expect Eur/Usd to rally due to a higher stock market. For this year, I expect the much talked about and expected capital market rebound to be US centered, ie US stocks and Usd outperforming their European peers. FX markets are still mechanically staying with their yield differential focus. This could support the Eur in the short term, but will sink it as ECB is forced to cut very aggressively during the 1Q. Eventually, we will see 1% or lower. The ECB is hopelessly behind the curve and it is only a short matter of time before it will dawn uponthem. As sure as the Baltic countries will devalue within the next 6 months.
As always, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
In fact, unless there is a massive disappointment with todays NFP number, the stock market should remain well bid or rally post it. NFP consensus is at 650K due to mainly a weak ADP report, so NFP will have to come in at 700 plus to change any positive sentiment post it.
New correlation
However, dont expect Eur/Usd to rally due to a higher stock market. For this year, I expect the much talked about and expected capital market rebound to be US centered, ie US stocks and Usd outperforming their European peers. FX markets are still mechanically staying with their yield differential focus. This could support the Eur in the short term, but will sink it as ECB is forced to cut very aggressively during the 1Q. Eventually, we will see 1% or lower. The ECB is hopelessly behind the curve and it is only a short matter of time before it will dawn uponthem. As sure as the Baltic countries will devalue within the next 6 months.
As always, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
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