Buy Euro…
Today the ECB held rates steady but in the comments it is clear that they are leaning toward higher rates. Trichet said that “Indicators show significant improvement in Economy” and that strong vigilance is essential. With U.S. numbers clearly slowing (we will see a weaker employment number tomorrow) and Inflation ebbing (PCE deflators and core both lower) the interest rate differential is moving more and more in the Euro’s fvor. Sell dollars whereever you can !
Inflation story over….
After digesting the markets for the past two days it seems clear to me that dealers are much more confident in Mr Bernanke and are “over” the inflation story. Oil prices have topped (at least for now) and it seems that society is getting used to 3.00 dollars a gallon for gas. This all leads me to beleive that U.S. rates will move lower and the dollar will suffer. I do however believe that certain currency pairs will move more then others. I am looking for:
Eur/Usd to mover higher
Usd/Jpy to move higher
Emerging Markets (particuarly high yielders) should benifit as U.S. rates decline. So I am looking to be short dollars against:
Brazil
Argentina
Colombia (not yet I will update when I sell)
and Long dollars against Chile.
These are the FX Trading Ideas for today.
Back from Vacation, with few ideas to begin with
Back yesterday from a very relaxing two weeks off. After reviewing the markets I see that although we mat have had some volitility it seems the levels themselves are little changed. It seems that the overall market perspective is that the U.S. economy is slowing and inflation is in check. Bernanke seems to be gaining support from the financial markets and this is always a good sign. For now I think I will be looking for the dollar to (continue)trade under pressure and interest rates to trend lower. No firm trade suggestions yet. I will update later as I get a better feel.
FXTRADINGIDEAS@AOL.COM
Vacation time has arrived
I will be leaving on Vacation today and not returning till August 28. It feels like a good time to go away. The markets are quiet and I expect little to happen (famous last words). The Bank of Japan did not change rates last night.Usd/Jpy is much higher (as is China which definitly suits me) and I must admit I am a little surprised bythis reaction. Did anyone really think they would raise rates ? I strongly feel that any rate rises will be slow (very slow). After 10+ years of zero to negative growth, Japanese officials will not risk a recover by hiking rates to quickly.
So my trading ideas for today are…….Square up and go on Vacation for two weeks, that is what I am going to do !
FXTRADINGIDEAS@AOL.COM
Terror threat disrupted
A terrorist threat originating in London was disrupted today by British police. As London police have reported “A major terrorist plot to allegedly blow up aircraft in midflight has been disrupted”. Markets have had a very muted reaction I think for couple of reasons.
1. It was caught before any damage was done.
2. It originated overseas
3. This is another example of the Western world being one step ahead of the Terrorist.
I think this is an important point. Being one step ahead of terrorism has to be looked at positively throughout the world. As I sit here writing this I wonder what Joe Lieberman, Senator from Connecticut, is thinking. Two days earlier and he has a much better chance of winning his primary.
For trading ideas I have not changed my opionion at all. Lower dollar overall. As for rates, the U.S. could be pushed (or at least market perception) further toward a wait and see approach with any marginal numbers being viewed from the dovish perspective.
These are the FX Trading Ideas for today.
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