Thursday, July 10, 2008

More of the Same

Korea collapsed as the Central Bank was once again in, TWICE, with a rumored amount of between 3.5-6 billion dollars worth of selling. This forced the currency pair to fall below 1000. They mean business and if crude can continue to move lower look for further gains in this currency pair. I am looking for similar moves in Usd/Sgd and Usd Inr. These two currencies (specifically India) react quickly to changes in crude prices as they are big consumers of the commodity.

China could be an interesting play here also. It has been on a slow and steady appreciation path, recently almost 6 big figures a month (but the curve only building in 3.50-4.00). In the past week there has been little to no appreciation at all. So something has to give. Which one I am not sure, my head says sell dollars, my heart buy them (remember I am the ultimate yield monkey). For now I am on the sidelines looking for an opportunity.

Latin America. Argentina and Brazil were on holiday’s today. I continue to look for the dollar to weaken against all of the Latin American currencies, with Argentina and Chile benefiting the most Mexico the least. Inflation numbers out of Mexico were in line with expectation (bad numbers) and there is a call for an increase in 25bp in Mexican rates at the next meeting on July 18.

Good Luck and Good Currency Trading



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