Wednesday, September 06, 2006

Patience,patience, patience......

I have been witnessing some profit taking in the markets the last two days. This makes some sense as we had a substantial move last week. Also I believe we could have more backup as the week progresses. I think a few weak positions have entered the market. Dealers coming back from vacation and not wanting to miss a trade have piled in. I would think that these dealers will be "aqueezed" out quickly. I still think the bigger picture stuff is in play. I would look for

Usd/Jpy to gind higher (116.70 current level). A big strengthening earlier in the week should be hard to maintain. Using Yen as a funding instrument against other currencies is a very attractive play. That is one of the reasons a strong Yen is hard to come by.

U.S. rates to continue a lower trend (June 07 94.865 Currenct level). In the coming months I am looking for weaker numbers and no sign of higher inflation (look at the price of oil) and this should continue to keep the FED on hold.

Carry trades. As anyone who is a regular reader knows, I am a big fan of carry trades. Any trade that gives you a positive carry gives you an extra opportunity to make money (market stays the same but you still make money on interest rate differential).

Remain patient, these markets can get you tossed around abit. Pick your levels ans ride out the storms.



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