Weekly Analysis

IB FX View: Andrew Wilkinson, Senior Market Analyst

Wednesday 17th December 2008

A Message to the Dollar Bears

A sea-change seemingly swept the fortunes of the dollar right back onto the rocks Tuesday following the Fed’s de facto adoption of a zero-interest rate policy. The additional confirmation that it will also monetise the nation’s debt and ease monetary policy in a more quantitative fashion through the purchase of various government, mortgage and agency bond instruments is apparently the thing that rumbled dollar bears from their torpor . . . more

Daily Market Analysis & View Points

Market Comments: Lena Manousarides, Market Analyst, Spikecharts.com  
      
New Year Starts with Dollar Strength!

The first full working week of the New Year has started, with the euro weak all across the board and especially against the dollar! The move came early this morning following comments by ECB members that the bank is ready to fight inflation and won’t let it stay above 2% for a long period of time. These comments were taken in their stride by traders who now are pricing in further cuts for the next meeting . . . more

 Market Comments: John Hardy, Saxo Bank

Market Comment:

President-elect Barack Obama spoke last night about the stimulus package he wants to sign and implement post-inauguration. It now seems likely that the package will comprise USD775 bln worth of programs, including USD310 bln in tax cuts and other job creation schemes and infrastructure spending.

The USD rose in late NY on the back of this and has held onto gains . . . more

Market Comments: Mark O'Sullivan, Currencies Direct

Pressure Grows on Central Banks for Further Cuts …..

…. following the continued proliferation of very weak economic data. Cuts are already expected to emerge from the UK, Canada and Australia over the coming month and a growing conviction that the ECB will be compelled to reduce Euro rates significantly (they are already behind the curve and further inaction could prove extremely costly) following their meeting next week. The short term outlook for differentials therefore remain firmly in favour of the US Dollar its interest rates having already been cut by the Fed with a target level of zero . . . more

Market Comments: Jonathan Griffiths, Raphaels Bank

Euro Pressured by Inflation Data as Optimism Bounds for U.S

The Euro took a royal drubbing yesterday thanks to two key factors at work within the financial markets.  The first spur, which rallied the Dollar considerably against the single currency, was jubilant sentiment over Obama’s Economic Stimulus Plan which outlined a massive series of tax breaks for Americans over the coming year. Investors took this news as extremely positive in the fight against deflation in the US and happily bought the Dollar as speculative and real income flows boosted . . . more 

Articles & Features

Risk & the volatility vortex!

`A man is nothing but his mind; if that be out of order, all is amiss, and if it be well, the rest is at ease'. Girolamo Cardano Of course, we all know that the Italian Renaissance mathematician, physician, astrologer and gambler, Gerolamo Cardano, invented a type of universal joint and investigated the mathematics of probability… right? 

It's a hard knock life!

Not many people outside of the likes of Warren Buffet get to make too much money out of a Wall Street crash. But eerily reminiscent of recent events...

The good ship 'Economy' heading for the port?

Having sailed though a month of storms since our last round-up, its official: weve now run aground in the most turbulent financial seas since the first use of the expression Credit Crunch was coined. Having weathered the extreme volatile markets in July and August, with unwinding JPY carry trades, the weak EUR, collapses of the oil prices, and the GBP, AUD, NZD up down like the proverbial brides night gown, not to mention cable collapsing over 1,500 pips to its lowest close in last 2 years. 

Is the end nigh?

The Japanese Yen carry trade has been the centre of much debate over the past two years, but for good or for ill there are signs that it may well be coming to an end. The first indication that the carry trade could be in jeopardy appeared this time last year when the US subprime disaster hit the markets very hard. This immediately sent a warning shot across the bows of those who had sought cheap financing in Yen and invested it in higher yielding assets denominated in other currencies, mainly U.S dollars.

Long or Short the MXN

The global markets have been in somewhat of a tailspin the last several months due to a windfall of events. Problems stemming from the credit crisis and rising inflation have put severe strain on some of the largest economies in the G10. DP has contracted on an annual basis in the US, and the trend of slowing growth has spread to neighboring countries. Foreign Exchange captures the full scope of a country's economic health through the concept of relative value

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