Wednesday, March 14, 2007

U.S. Stocks Rebound

Stocks today put in a very good performance. For a while it looked like they were down for the count but they rebounded to close the day +57 points. I think this will prove to be good news for the Asian markets. I am looking for stocks to be up tonight and lead to gains in Emerging Markets on the opening of the European and U.S. markets. We do however have the issue of PPI in the States tomorrow. This is a crap shot. Yes the economic numbers have been on the slower side which could lead some to believe a lower inflation number is in store. But gas prices have risen steadily which could counteract that. I am looking for a number at or below expectations.

Out of Mexico the the Central Bank President Ortiz stated that ``This is essential to protect salaries, families' savings and for long-term interest rates to be low,'' and that the ``The bank will do whatever is needed to make inflation converge to its target.''. This seemed hawkish at first glance but it was (or should have been) expected. More importantly (from my perspective) was that he also stated that inflation would be lower then the previous trend and is heading lower. The market took these comments along with the slowing U.S. environment to determine that no interest rate increases, believed to be on March 23, would take place. The currency and fixed income responded very positively to this news. I once again added to my interest rate risk in Mexico and went home short dollars against Mexico, Argentina and Brazil.

Good Luck and Good Forex trading.


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