Monday, July 31, 2006

Stronger Yen on the horizen

Alot of talk in the market today about stronger numbers in Japan in the coming weeks. This is anticipated to bring about more aggressive rate rises from the Bank of Japan. I am not sure this plays out but looking at the markets this morning clearly the Yen is stronger and looking to continue that way for the near term. The bank of China did nothing over the weekend and Usd/Hkd bounced slightly from its Friday lows. I am still long Usd/Jpy but I am watching very carefully.


Friday, July 28, 2006

Rumour China widens the band this weekend

I am hearing a rumour that the Bank of China widens the band on its currency this weekend. The rumour seemed to come from the fact that Usd/Hkd moved from 7.7740 to 7.7690 and that Bank of China was the main seller. I am hearing there was good buy orders all the way down and all filled in.


Rumour China widens the band this weekend

I am hearing a rumour that the Bank of China widens the band on its currency this weekend. The rumour seemed to come from the fact that Usd/Hkd moved from 7.7740 to 7.7690 and that Bank of China was the main seller. I am hearing there was good buy orders all the way down and all filled in.


Thursday, July 27, 2006

Dollar continues under pressure.....

Looking at the markets this moring I see a continuation from yesterdays close. The dollar is under alot of pressure and I believe it is because the market perseves the FED will be on hold. This I agree with. I wrote yesterday that I liked Eur/Jpy to take out the 147.91 high and so far this trade has proven costly. I am watching 146.75 level for a stop (soft stop). This shift in the FED outlook should benifit Emerging Market currencies. Usd/Brl,Ars,Mxn have all been trading lower of late and I continue to see this as the bigger picture trade.

These are the FX Trading Ideas for Today.


Wednesday, July 26, 2006

Beige book points toward a slowing economy....

The Beige book today came out on the weaker side, stating that "The pace of Economic growth has slowed". It also stated that "rises in wages,prices of final goods stayed modest". The market took this as another sign that the FED will not be raising rates in August as Eurodollar futures rallied over 6 pips and the dollar took another tumble. I foresee more U.S. dollar weakness in the weeks/months ahead.


Stronger numbers out of Europe

IFO surveys out of Germany last night came in slightly behind expectations but clearly viewed by the market as showing continued growth in Germany...and therefore EuroZone. This has sent Euribor futures lower in anticipation of increased interest rates in the near term. I think this could be an excuse to buy the Euro (if one is needed) and I think it would be best to buy against the Yen. It has made a move overnight and I am looking for it to take out the 147.91 high.

I continue to think that U.S. Dollar weakness is in our future.


Tuesday, July 25, 2006

Weaker Dollar on the horizen ?

Everything I have been reading today seems to be suggesting that a weaker dollar is iminent. This follows my broader view as I think the U.S. economy is set to slow into the 4th quarter and as such the Dollar should lag countries still in a rate rise environment. I believe the biggest benifactor of this should be the Euro. Europe is clearly not done raising rates. This should help to allow it to strengthen againt the U.S. dollar in the coming months. I have not bought any yet and may express this trade in a cross Eur/Jpy as I believe that although Japan has eliminated its zero interest rate policy, it's rate rises will be slower then the market anticipates.


Quiet start....

Word out of the Middle East is that Prime Minister Ehud Olmert said he was determined to pursue Isreal's offensive against Hizbollah guerrillas as he met with U.S. Secretary of State Condoleezza Rice. This Seems like a very positive step toward resoloving the crisis as it seems all sides are focusing on getting Hizbollah away from the Israel border and establishing an international force to patrol the frontier region. Currencies are little changed from where we left them yesterday and I see this continuing throughout the week. I will be looking at my Yield plays today and probable establishing a position. I will keep you posted.


Monday, July 24, 2006

So you think the FED is done raising rates

If you are one of those people who believe that the FED is done raising interest rates (and I am one also) why not look to dollar neutral yield baskets. This is something that I had on and worked pretty well (even after the FED began raising rates). Basically I take a roup of currencies say Euro,Gbp,Cad,Chf,Aud,Nzd. I buy the three highest yielders and sell the 3 lowest yielders leaving me dollar neutral. This type of position fullfills my TRIAD THEORY, market's move three ways up, down or sideways, put on a trade that two out of three you make money and you increase your chances of being profitable. Just a thought, but certainly one I like. Currently I do not have this trade on put I am looking at putting it on in the near future.

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Cautiously long Dollars

I am currenctly sitting small long Usd/Jpy. It looks to me like weshould go up and test the 119.00 levels. From a technical perspectivethese was a gap on the daily charts (116.52-115.96) which was filledand then tested and we seem ready to move higher. From a fendamentalperspective it looks like Japan has eliminated thier Zero interest ratepolicy. On the surface this should be good for Yen, but I think tyhemarket is to optomistic on rate rises and I think they will bedisappointed. I am going to use a move below 115.80 as my stop.


Friday, July 21, 2006

Quiet day ends... and a quiet week ahead looms.

Today seemed to be a day where the markets tried to realize profits as dollar Mexico and Brazil backed up off thier lows on very limited trading. Colombia was very strange today ending the day almost 100 points lower from Wednesday's close (yesterday was a Colombian Holiday). Actually it opened lower and never recovered. I saw no real reason for the move.

On the big dollar I look for continued weakness over the near term. The FED seems to be strongly signaling a pause in the rate rise environment. My call for August therefore is for no change in the Fed Funds rate. The U.K. to me along with Europe (even more so) will remain in a rate rise environment. This should lead to am underlying bid to these currencies.

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