Friday, May 16, 2008

Risk appetite increases and so do opportunites.

It seems to me that risk is being put back on. Emerging Market currencies, led by Latin America have strengthen tremendously over the last few trading sessions. I am getting more confident in entering some yield plays in a small way. If correct I will add going forward.

1. Sell Usd/Ars. This is something I have talked about for a while. I think that the Farmers stick will be settled amicably, as the government knows they have no other way out. A good article is the BLOOMBERG website. It details how the President Kirchner called for unity among political opponents. This fueled speculation that the Farmers strike would be settled.
2. Sell Euro. As I wrote yesterday, I am short at 1.5494 and will stop out above 1.5600 looking for a target of 1.51-1.52 area. This may be a bit to aggressive as I do not think market's will break out in a big way but I think the possibility for this move does exist.
3. Sell Usd/Clp and Usd/Cop. I like the region in general and the big picture for these currencies is strength. The market has gotten used to the intervention from the Chilean CB, therefore it is having alot less of an impact.
4. Sell Usd/Cad. Technically it looks terrible and from my market sources there has been big buying going on and the currency pair is no higher. The sellers for these size transaction are the big Canadian banks. This adds to my desire to be short Usd/Cad.

As you can see I have purposely stayed away from Usd/Brl. Although it is showing tremendous strength yet again, I find it difficult to sell dollars here with any conviction. I will not go long but rather get out of the way for now.

Enter at your own risk, but I think there could be some real opportunites in the near future.

Good Luck and Good Currency Trading.

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Blogger FXoldsalt said...

Canadian banks still heavy sellers, a barrier option expires at 10.00 AM, 0.9950 and may cause further downside...however good corporate bids all the way down, may be more of a grind than a sprint

10:00 AM  

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