Saturday, July 14, 2007

I should listen to myself more often

I have been looking over previous posts and have realized that if I just listened to myself my P/L would have alot more "P" and a little less "L". Yes 2007 has been a pretty good year so far (I knock on would as I type this) but it could be a GREAT year. Things have worked out pretty much as I had anticipated. Yield has been king. EM currencies and have been on a pretty consistent strengthening trend all year (Brazil,Mexico,Iceland and Turkey leading the way). The dollar against major currencies has been in a consistent down trend. So that is the history, but what more importantly is the future. Well if I knew that I would be sitting on a tropical island somewhere downing a drink with a little umbrella in it. But I do THINK that we are in for more of the same. Why not, the U.S. economy is moving along nicely and as go us, usually goes the rest of the world. Sure there will be hic-ups along the way but come December I would expect:

1 The Euro to be near 1.4000
2 Brazilian rates to be lower
3 Argentinian rates to be lower
4 Iceland and Turkish currencies to be stronger
5 U.S. and Mexican rates to be the same

I also feel that oil is heading to 100 dollars per barrel real soon. As such I am looking at a basket trade to take advantage of this as well as yield. Long Mexico,Norway and Canada against short Taiwan and Japan. This has been the basic trend and is a positive carry trade. I do not have it on yet but I think it is an interesting trade. Risk aversion would certainly hurt this trade so I need to do some analyse on this trade next week to find an exit strategy in case it goes bad.

Good Luck and Good Forex trading, I am now off to my Son's Baseball game.




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