Wednesday, March 22, 2006

Emerging Markets Nervous

It seems to me that the markets are trying to take risk off the table. Iceland today had none of thier debt bought in the market (this is the second time in a row that this has happened). Try and Mexico have also been under tremendous pressure lately. The stimulis for this seems to be the view in the market that U.S. rates are going to continue higher. I agree with this view. The new FED chairman Bernanke was more bearish then I was expecting and any hopes of a near term slowdown in the current rate direction was dashed. I have cut down my risk in spot, although I do like the dollar overall and really think that the markets are looking for to much apprciation out of China. I continue to like the convergence of U.S. and Brazilian rates although I will watch this closely as if the currency gets hit hard the debt market could follow for the near term.

These are the FX Trading Ideas for today



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