Monday May 23, 2005 - 01:28:04 GMT
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Tricom Futures and Foreign Exchange -
Just When You Thought It was Safe to Sell The USD
The USD closed firmer on Friday, with most of the strength coming from a late New York push, as traders went searching for stops in the EUR, and USD/CHF. The EUR/USD and USD/CHF are now only 200 points apart, after being 500 points apart at the start of last week. When these 2 crosses crossover, we can normally expect them to continue in this direction for another 400-600 points, as such, we could see the EUR down around 1.2000.
The US Treasury market was really quiet in the early action Friday as the US economic report slate was empty. With the Treasury market showing a little profit taking action off the recent highs we suspect that technicals were driving prices more than the fundamentals in the action Friday. With the Dollar rising sharply and the US/China trade battle heating up we have to think that many Treasury traders are hesitant to make an aggressive play. Equity prices initially backed off and oil prices tried to rise and that seemed to truncate the liquidative posture present in the Treasuries after the Thursday run up.
The stock market started off in a profit taking posture, weakened considerably into mid session, before levelling out in the mid afternoon trade. An economic cycle forecast prompted concern for growth and a number of brokerage firms seemed to downgrade retail stocks. Ford Motor stock was initially firm, but that was countervailed by weakness in American Eagle. Greenspan dialogue around mid-session on the energy complex seemed to be partially supportive. We also suspect the stock market found support off the surging US Dollar.
Today’s Top Trades
· Buy AUD/NZD around 1.0640-50, with stops under 1.0600.
. Sell EUR/JPY around 136.00, with a 40 point stop.
. Sell NZD/USD on a break below .7035, with a 30 point stop-loss.
For more ideas send me an email, [email protected]
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