Thursday, February 15, 2007

Green Light to Yield Trades

Fed Chairman effectively gave an endorsement to carry trades yesterday but proclaiming the the U.S. economy was healty and that inflation pressures were moderating. Stocks rallied as did fixed income instruments. With his statements yesterday the market has now placed little chance to a rate movement in the next 5months. The Fed Funds contracts are basically 94.75 the entire way out.

Emerging Markets currencies all did well on the back of this, both from the currency perspective and the fixed income market. I heard some rumbling's in the Try market that locals did not expect Try to go below 1.3800. We will see, but if fundamentals are strong and yield is high, there is little they can do over the medium term to stop it.

I think stay with weak Dollar positions across the board.

These are the FX thoughts for the day.

Good Luck and Good Forex trading




Post a Comment

Subscribe to Post Comments [Atom]

<< Home