Where will EURUSD close Q1,2010?
Posted by trywalker / 9:55 a.m. @ Hong KongDec 21
EURUSD close the week below the strong resistance at 1.4610 and heading down to 1.4175 ( 1.4262 low on 18/12) after a rejection of 1.5148 on the topside. While risk on/off drives XXX-JPY and S&P, EURUSD seems to be trading with different fundamentals lately on the back of structural& economic problems within EU/US and IR differentials.
Question is : Where will EURUSD close Q1, 2010 ? at 1.2750 or 1.5750 ?
( spot ref. 1.4325 on 21/12 )
Please feel free to send over your precise levels according to your view.
4 comments
Comment by Deniz on 22/12/2009 at 12:35 AM
Looking at risk reversals and sell-side consensus, it seems to me Dollar strength against EUR is pretty much priced in. It is also interesting that speculative investors have the largest EUR shorts on since Nov-08 based on CFTC data. While PIGS are in deep trouble, excessive pessimism reminds me of the period when Ukraine/Latvia woes were dragging down the Euro. If you take the rule of thumb that for every 1% depreciation in Euro, GDP goes up 0.1%, the weakness I think sets up a stronger export recovery which will be beneficial in 2H2010 when fiscal stimulus starts becoming a drag. Add the weak BoP flows, so I say we will test 55dma at the least. Come 2010 end, $ will be stronger.
On the S+P, I think there is a general expectation that equity market will trade sideways in 1H10 -much like 1H04- on the back of rate hike expectations. I pretty much agree -don’t know how range-boundiness can be priced in-. So I say flat for the quarter, slightly up for the year.
Tesekkurler for the nice blog.
Comment by trywalker on 22/12/2009 at 8:12 AM
Welcome to the tilting at windmills, Deniz..
and I thank you for the comment.
TW.
Comment by Somnambulist on 23/12/2009 at 11:02 AM
Gotta agree with Deniz there, the market wants dollars.
The US is best positioned economically to take advantage of unprecedentedly loose monetary policy. The principle beneficiaries are the banks (witness their stocks recovery and Mr David Tepper’s trade of the decade
, and while no-one likes bankers at the moment, their balance sheet restructuring is instrumental to the wholesale exit from the global down turn. They lead us in, and they’ll lead us out…
I also agree on range-bound price action for S&P, with stocks likely to be tugged by improving economic conditions on the one hand, and the inevitable tightening of monetary policy on the other. Switch to slow-stochastic indicators, and remember to stay nimble in ranging markets and their swift reversals.
Bon chance mes amis!
Comment by trywalker on 24/12/2009 at 1:54 AM
reading your comments about the financial markets after a long time, Somnambulist. Please do not hesitate to keep us enlightened so we can learn from your experiences.
Merry Xmas, mate !