Trade of the Month….
I have been watching Euribor futures. Recently I shorted them with no success. My thinking was that interest rates globally were going up and although I felt Europe would lag I felt they would raise rates at their first opportunity. I still feel that way but think that the “first opportunity” is month’s away. I went long June 05,Sept05 and Dec05 contracts yesterday. The upside for June is limited (6 pips) and I will be looking to sell at 97.85. I will stay long these futures until a fundamental change in the markets occurs. I do not see that happening in the near term.
Good Luck to all !
New Zealand Raises…U.K. Does Nothing…
New Zealend raised its benchmark rate 25 basis points to 6.75%. This was not a total surprise, but rather the comments afterward were clearly more bearish then the market anticipated. This morning the U.K. kept rates steady at 4.75%. The market has had a muted reaction so far. Short Sterling has ticked slightly higher and the pound has dropped marginally.
The big news of the morning came out of Japan where it was stated that Japan was going to start moving reserves out of dollars. I think this is big news. Japan is the largest buyer of dollars and dollar debt in the world. This will continue to put steady pressure on the dollar. Best bet be short dollars perferrable against higher yielding currencies.
Questions…Comments…Opinions…Let us know
Dollar struggles after Employment number
The dollar after a stronger(slightly) non farm payroll number on friday sold off aggressivly against all currencies. The market seemed to take the news as clarification that interest rate rises will conytinue at a “measured” pace and that there will be increase in the speed of rises. I feel the dollar will be in a range near term and will look to sell Euro 1.34(ish) level and buy it at 1.30(ish) level. higher yielding currencies (Aud,Nzd,Gbp)should out pace the market in the coming days.
Employment Number
This is all that matter…..Strong number futures sell off, dollar rallys. Weak number the opposite. Market looking for a strong number. Emerging currencies starting to get squeezed. If a strong number I will be buying Usd/Mxn,Usd/Brl,Usd/Sgd,Usd/Twd,Usd/Krw…..They will move the most….
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