A little bit of reversal overnight - EUR sold off again early, but then
found buyers under 1.3400, and the Yen crosses popped up on stops, but
then fell late as traders took quick profits. I think we might see this
move continue for today atleast, but then the reversal will reverse yet
again later in the week.
With the release of the latest UK monetary statistics this week, the spotlight should shine on what has been happening to money supply since the credit crisis broke in the summer of 2007.
Gain a wider view of the factors behind current economic news with comprehensive analysis and commentary from Wachovia Economic Commentary and Currency Risk Management Groups
Bias: I still feel we should see higher to 1.5152 but must allow for an
earlier dip to 1.4788-04
The dip to 1.4502 was frustrating but from there the rally was impressive to
reach 1.4990. I still feel the risk is for further gains. The short term
problem is identifying where the pullback will stall. I suspect this should
be quite limited ...
This week we have the RBA, ECB, and BOE all meeting to determine interest rates in their respective countries or regions. We see the RBA raising rates, the ECB holding rates steady, and the BOE cutting rates. So as mixed a bag as you can get. This should cause even more volatility than we have already seen. The fact that each region is going in different directions should lead to many of the correlations traders have relied on in the past to begin to break down. This week we expect to see the dollar move sideways to slightly lower.
Gold has fallen again today and is down some 1% but continues to consolidate between $830/oz and $890/oz. Gold should remain well bid given the degree of international macroeconomic and geopolitical risk challenging us as we enter the New Year.
And so many are looking at 2009 as an improvement (variations on degrees of improvement) over 2008. We are an optimistic lot to begin with and why not dip into the well of optimism as the New Year gets underway?
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