Thursday, April 10, 2008

Seems we are back to risk reduction

The markets this morning are a follow thru of yesterday's action. Namely Risk Reduction. I think we will see more of the same as the week grinds on. For the previous few weeks we saw bad news being pushed aside. Really I am not sure why. Now the market is clearly not as happy (or at least comfortable) with what the future brings. The IMF is calling for slower global growth. Inflation is a continually growing problem (Crude at 111.38 after touching 112 yesterday), as commodity prices continue to move higher. I have heard talk that Commodities are to high. I too have said this, but everyday seems to bring new, higher, levels. The dollars shows no sign of strengthening. As one of my friends put it yesterday "The Euro is on the Do Not Short list". So True !

Today the MAS (Singapore CB) Re-Centered its band lower. This was basically expected as the currency has been trading at the stronger end of the band for some time.

I think the messgae here is clear. The U.S. Economy is weak. I think this will spill over into the rest of the world (I know I have been saying this for a while) and we will see a major Global slowdown. Stay short dollars for now. Look for interest rates globally (in non EM countries) to come lower. In EM countries I am looking for higher rates. The Global Eonomy is in a very difficult situation. Inflation is a real problem. Lowering rates will make this problem worse, but is there another choice? I am not sure.

I wish I had all the answers, but I do not. Rather I perfer to stay on the sidlines with smaller risk and see where it takes me.

Good Luck and Good Forex Trading.



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