Wednesday, August 30, 2006

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:

Colombia (not yet I will update when I sell)

and Long dollars against Chile.

These are the FX Trading Ideas for today.



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