Saturday, December 01, 2007

Is the Dollar turning.

For regular reader's of the column know, I have been trying to find a bottom of the dollar move for quite some time. This actually goes against one of my trading rules (Trade with the trend), but for once I am trying to anticipate what the market will do rather then react when it does. Good strategy ?.....time will tell. Also for anyone who is budgeted in dollars, yet their P/L is in a foreign currency (like me), I think it is a good idea to lock it now. This has been a long run for the dollar and although it can go further, lock in now and in a month reasses.

As for my positions I have on the following.

Short Euro/Usd
Long Usd/Krw
Long Usd/Twd

I cut all of my Latam exposure Friday morning as the overall "pain" of being long dollars overnight caused me to exit them. I will look to trade the Brazil from the long side next week.

One other thing to consider, in the latest edition of the ECONOMIST comes this story on dollar weakness (you have to love the picture). It seems that everone is extremly down on the dollar. I do not get it. Do you really think the rest of the world will be totally uneffected by the continuing Sub-Prime situation? Also, although there are further write downs on the way, it seems to me they are totally expected. As such, at least here in the States it should be buisness as usual.

Rates are coming lower here. 25bp is totally built in for the Dec 11 meeting with 50bp a very plausible reality. Look for this curve to steepen over time. Currently it is way to flat.

Good Luck and Good Forex Trading.

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12:26 PM  

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