Friday, January 26, 2007

Risk Aversion...the name of the game

Yesterday, and now into today risk aversion trades are in flavor. Emerging Market currencies have been under extreme pressure led by Zar,Try, Mxn and Brl. Today the Mexican Central Bank will announce it's latest interest rate policy. No change is expected this month, but a strong signal that next month rates will be raised is expected. Earlier this week Mexico had "OK" inflation numbers and that market tried to take rates lower, but in looking back it seems as dealers took that opportunity to cut short rate positions. Yesterday saw only paying interest in dollars across the board and a definite interest to pay interest rates.

I am in the proocess of cutting my short rates position (like everyone else) in everything except Brazil. One thing is very puzzeling to me. U.S. dollar rates. For the last few days rates have been moving higher and with risk aversion in play I would have thought that dollar futures would benifit. So far that has not happened. I assume you can guess which way I am positoned there !!!

These are the FX Trading ideas for today....

Good Luck and Good Forex Trading.



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