Wednesday 7 March 2012

Humpty Dumpty had a great fall...

So the fundamental triggers for this risk aversion seem to be:

  • Fed's signal to an end to QE 
  • Slowdown in BRIC economies, notably China
  • Not talking about Europe anymore!

Does that mean cheaper commodity prices in the near future, at least for a while? Can't wait for crude price to collapse.... wink!


This week will be interesting as the mix of full moon and increasing correlation amongst asset classes should come out with a potent concoction!


Before I start, let's thank Temasek for that signal yesterday... smart money indeed!


E$ has trigger a bear signal and I have to claw back on my bullish view for now (delayed). With that signal, it opens up scope for E$ to retest previous low 1.2973.


However, in a risk off environment, EURXXX will benefit as carry trades are being unwound. Expect EURXXX to correct lower over the next 48hrs before rebound. Will watch for buy signals. EURAUD & EURNZD will be the fun pair.


For E$, may see early pressure following yesterday's sell-off. 1.3070/80 to hold on first dip and 1.3160/80 region to cap. Be careful of whipsaw price action!




When in doubt, cut out, step back, and re-assess. Never be held hostage by a bad position. There will be lots of other opportunities.


Update1: Waning downside momentum in the currencies suggest consolidation with an increase in probability of short squeeze. 

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