Wednesday, July 23, 2008

The sea's are a changing....and the Dollar seems Cool again

Today we had another down day for Crude. The dollar benefited, as did Usd/Mxn. As i said in my previous post I am not sure what to make of this. I think Usd/Mxn is making a push for 10.00. First because we are so close to is and second because of the ever increasing interest rate differential. Mexico is in a rate rise environment and the U.S. is in a stable rate environment. Brazil was basically unchanged today. Posibbly because of the oil factor. As I said before when crude comes off, oil producing currencies could weaken. I know that is only one factor to an economy and probably not the most important one but it is certainly the one which has been driving the market most recently. Right, wrong or indifferent it is a big factor driving the market. Will it lead the way I am not sure, but currently i am on the sidelines in the spot but still looking for widening differentials in interest rates. Ultinatly there will be a level to get back into a short Usd/Brl position, but right now I am not comfortable with it.

The Dollar is very bid. I will not short it currently. It looks to me as if the market is looking for ANY opportunity to buy the dollar against other major currencies. This I think is adding to the weakness in crude. All in all a positive for the world economy.

Good Luck and Good Currency Trading.



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