Pressure on China Mounts
Yesterday the World Bank came out “Urging China to abandon peg”. I believe it is no longer a question of IF the peg goes but rather WHEN. Speculation is high that possible next week during Asian holiday’s will be the time. I am looking at Oct 05 when the G7 meetings will be in Bejing.
Look for all Asian currencies to strengthen WHEN China moves on thier currency. Jpy,Sgd,Krw and Twd will be the biggest mover’s ( Myr peg will also be under tremendous pressure).
No rate change in New Zealand last night, but very hawkish comments (rate decrease not in the near term and rate increases still a possibility in the future) gave new life to the Nzd currency. I continue to be long Nzd,Aud,Gbp against short Chf,Eur,Cad. This trade has been working out nicely.
These are the FX Trading Ideas for today…..
Good Luck to all.
Sell the Euro……
With a weak ISM number in Germany…French buisness morale low (as reported by reuters) and surprisingly strong consumer confidence numbers out of the States yesterday there is only one position to have SHORT EURO against the Dollar ! I am looking for a move (over time) down to the 1.2200 level and would consider myself wrong if we traded above 1.3480.
I continue to be short Usd/Mxn looking for the break lower and this has not worked out at all. Based on the statistics put out by the futures exchange in Chicago, there is a very high number of short Usd/Mxn positions in the market. Therefore a move higher, like we are seeing, can cause a short squeeze quite easily. I have cut my position in half and will attempt to hold on through the squeeze.
These are my FX Trading Ideas for today.
Good Luck to all
China coming under pressure
Speculation is in the FX markets today for a possible revalutation of the Chinese Remebi during next weeks holiday after comments from Chinese officials over the weekend. Chinese central bank governor Zhou Xiaochuan suggest that everything was in place for currency reform and the only outstanding issue was timing (as report by Reuters). He also said that increased international pressure will move up the timetable. I am trying to stay short dollar Asia (against Singapore and Yen currecntly). When they revalue is will be easiest to get in and out of those currencies.
Good inflation numbers in Mexico late Friday has taken the market by surprise. Although the forwards have drifted in to the left….Spot has weakened. I think these moves are temporary. The central bank has maintained that any increase in U.S. rates will be met with increases in Mexican rates. U.S. rate rises are agiven so stay short dollar Mexico !
These ar the FX Trading Ideas for today….
Good Luck to all !
Foreign Exchange (FX) watching Stocks
Markets yesterday were extremely lackluster with no new economic numbers and dealers looking ahead to the weekend.
In Currencies
Yesterday I added to my short dollar Mexico position looking for a break of 11.00. We did but bounced right back and with no change inthe Corto the market grinded slightly higher. Late in the day very good inflation and growth numbers were announced and surprisingly the market jumped again. I will be watching this closly on Monday as I do not like the way Mexico reacted to the strong numbers (seems alot of shorts out there). I also sold Usd/Jpy and took it home over the weekend. This mostly on the back of the strong talk by the Bush administration and Greenspan for China to adjust is currency. Although I do not think it will happen this weekend I think near term something will happen(next 3 months). Saying all this I am afraid that my timing may have been alittle off and we may “squeeze” higher into monday.
Dollar rates are very closely watching Stocks. I am convinced that U.S. rates are going to continue higher. BUT if stocks suffer (and I think they will) look for a flattening of the curve. The FED does not want this but it will happen (unless China revalues then the back end of Treasuries will collapse). On the U.S. economy. I believe inflation is a problem for most American’s. Fill up your gas tank (50 dollars for me to do it yesterday), pay your water bill, your monthly bus or train ticket….all of these things have gone up for me (and I am sure for most American’s). This is money right out of your pockets. Money you cannot spend on dinners out, movies etc etc….So I do believe that the economy will slow down (maybe just a soft patch?) near term. Stagflation….I would not worry about that yet.
These are my FX Trading Ideas for Today…..
Good Luck to all
Wrong on the Zar
Although I still think there is upside to the dollar Zar trade I must be realistic and cut my losses here. I will however be looking for another opportunity to go long dollars in the future. For today I see little happening as no new economic numbers in the U.S. are due out.
Yesterday Greenspan was talking very aggressivly on the China revaluation issue (as have many members of the U.S. government. It looks to me that dollar Asia will trade heavy as long as this remains a “front page issue”. Near term this looks to be the case.
Today I sold dollar Mexico (added to my already short dollar position). I also remain short U.S. dollar futures.
These are my FX Trading Ideas for today.
-
*************************
