Tuesday July 12, 2005 - 04:31:00 GMT
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Tricom Futures and Foreign Exchange -
Forex: The Lunatics are running the Asylum
I've spent most of the day trying to find an explanation for the overnight strength in the EUR, and particularly the GBP, and the subsequent weakness in the USD. Outside of saying it's based on short-covering, profit-taking, and stops being triggered i have nothing.
Basically, in the case of the EUR and GBP, it can be put down to a case of more buyers than sellers. Given that we have no fundamental reasons, i'm inclined to stay on the sidelines for the next 24 hours atleast. I remain bearish the EUR and GBP, but will wait for this panic to sort itself out.
The market is looking ahead to Wednesday's release of US trade data. Analysts said this data could switch the market's attention -- albeit temporarily -- back to concerns over how the US will fund its record high current account deficit. The GBP led the way against a softer USD, as traders looked to pick-up the sterling around over-sold levels.
US Treasury debt prices eased on Monday as gains in stocks merely reinforced fears that a rally in bonds that lasted the better part of three months might have finally run out of steam.
US Equity markets maintained a positive tone <.DJI><.IXIC> as analysts forecast a solid week of earnings, attracting funds away from Treasuries. The Dow Jones industrial average was up 57 points, or 0.55 percent, at 10,506 and the Nasdaq gained 16.5 points, or 0.78 percent, at 2129 in late trading.
Federal Reserve President Jeffrey Lacker reinforced the Treasury market's bearish tone by saying it was still too early to ponder a pause in interest rate hikes.
Today’s Economic Releases:
CAN: Central Bank Policy Decision
Today’s Top Trades
· Buy EUR/USD around 1.2130, with a 30 point stop
. Sell USD/CHF around 1.2810-20, with a 30 point stop.
. Sell USD/JPY around 111.50-60
. Sell USD/CAD around 1.2140-50
For more ideas send me an email, [email protected]
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