Tuesday, January 01, 2008

2008 here we come.....

It seems this time of year that most people are filled with hope and a new sense of life. New year, a new chance to start over. In the trading business you "Start Fresh" and begin the process of accumulating profits all over again. It often surprises me the amount of times that people think that things will change just because the calender has changed. Will the dollar reverse it's weakening path? Is the Sub-Prime situation in our rear view mirror? Will the housing market bottom and begin a move higher? I do not know any of the answers to the questions that I have posed, but I do not think that just because the calender says 2008 that things will be different. The dollar have been in a weakening trend for 3 years and unless foreign countries economies begin to struggle do I see it turning around. Similarly in the housing market's, I see no turn around in the near future and stocks grinding sideways (at best)for the forseeable future. Remember this is how I feel now and as economic numbers come out I will adjust my views, starting with this friday when the U.S. employment number comes out.

I do like a few trades for now and here they are.

1. Short Gbp/Euro. I think that the U.K. economy is rolling over and they will begin cutting rates pretty soon. I previously wrote that I thought that Europe would cut rates in the first quarter of 2008, although I think that is still a possibility I think that there is a better chance that the U.K. cuts rates quicker.
2. U.S. rates continue lower. This is really a no brainer, I think the tricker aspect will be trying to make money on the extreme volitility. As I am more of a medium term trader I will be looking to put on a yield curve steppening trade.
3. Short Usd/Cny. The Chinese have consistently kept the pace of apprciation ahead of what I thought they would do. I have been pretty much out of this market but based on the last 12 months plus the fact that the olympics are this year, and the Chinese want (I would think) to put their best face on the country, I think thet will speed up the pace of apprciation to stop and comments in the press.

These are my first thoughts on the New Year. Please read my "Quote of the Day", below. It is an interesting way of looking at things.

When I hear somebody sigh that life is hard, I am always tempted to ask, "Compared to what?" Good Luck in 2008 and Good Forex Trading.

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