Thursday, July 28, 2005

Brazil set to lower rates

Minutes from the July 19-20 policy board in Brazil came out today. They stated that the Central Bank was prepared to shift policy quickly and that higher interest rates have eased inflation. I am looking for interest rate cuts in the next few months.

New Zealand kept rates unchanged last night (expected) but the tone of thier comments were very Hawkish. I was surprised by this and as of this morning have seen little change in ther spot but this will be something to keep an eye on.

Sterling.....I have been wrong here. Although the rate play has been correct....The spot play has been totally wrong. I continue to hold my Short GBP... cautiously....

Good Luck


Wednesday, July 27, 2005

Dallar Falls

The dollar came under pressure today dispite an increase in durable goods orders. The dollar initially went up , but after failling to make new lows reversed course and traded heavy for the rest of the day. I look at this as a Retracement (minor one at that) the the bigger picture is one of steady growth with little inflation in the U.S. economy.

Take this as an opportunity to buy dollars.


Tuesday, July 26, 2005

Latam under pressure....While dollar Soars

Brazil and Mexico led Latam currencies lower yesterday. Brazil came under pressure as political scandals took center stage. Previously ignored yesterday was the 4th day of weakening as new developments about pay for votes was exposed in the congressional investigation. On the open this morning these same markets remain under pressure and I foresee more dealers exiting these positions. Remember everyone have been long these currencies collecting yield.

China's Fix today came in at 8.1099. The lack of strengthening of this currency has spilled over to the other Asian currencies which expected a bigger move. Therefore the dollar has moved higher against Asia. Look for the dollar to resume its up move in the days to come.


Monday, July 25, 2005

Sterling to remain under pressure.

Most analysts expect the Bank of England to cut rates at its next meeting in August. I also expect this. After narrowly avoiding a cut in July (5-4 vote), the economy has shown signs of slowing and with the terrorist attacks the smart move would be to act in August. This will leave the pound under continued pressure in the short term. I am short and will stay that way for the near term.

Asian currencies have given back some of their gains after the Chinese revaluation. Hopes that the Yuan would appreciate quickly in the near term have eroded and it looks like a slow (if any)gain in the yuan will be the outcome.

Friday, July 22, 2005

China finally does it....

Yesterday China Revalued its currency for the first time in 10 years. It moved its rate from 8.2765 to 8.1100 and introduced a trade weighted basket of currencies (unpublished) from which the future value of the Remimbi will be established. This is a big will for the Bush administration although I do not think it will have much economic impact in the near term

Terrorist strike again in the U.K. Today the Police chief asked that people stay home in West London. This coupled with slowing economy, will present the need for the U.K. to cut rates and should also weigh heavy on the pound.

Brazil melting down as more political scandels are expected to be announced this weekend. I have cut all my short dollars here, but still have a short forward position. I am uneasy with this position but will reasses it next week.

These are the FX Trading Ideas for the day.

Friday, July 15, 2005

I am back !

The trend continues the dollar has been and should continue to be strong. Numbers today reflect a steadilty growing economy with few signs of inflation. Critics will say that the inflation numbers will pick up next month as Crude prices just recently crept higher. This may be true, but I see modest inflation (which is fine) and a continued growing (slowly) economy.

Trading ideas.

Short Usd/Mxn Spot and Forward.
Short GBP. There economy is turning over and with the terror attack the next move is toward a slower economy. Also S+B GBP Forward. The differential to dollars should narrow.
Short Usd/Brl. I am cautiously short this one as Political instability (Scandel) could cause the dollar to rise short term. But I am short the forwards as I really believe that rates will start coming off in the 4th quarter of this year. Inflation numbers for this week were once again lower.

Alot of speculation that next month China moves on thier currency. This could provide support for Asian currencies. I am currently square Asia until a clearer picture appears.

These are my FX Trading Ideas....