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Daily Forex Commentary

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Up and Down then Back and Forth

Tue, Nov 20 2007, 07:15 GMT
by Jyske Bank Team

Jyske Bank  |  View company's profile


Today´s comment

Yesterday morning the coming week appeared as a pretty pink picture. As we noted it would not take much to change that picture and sometime before noon the market turned red. Stocks fell overall due to concerns over credit market losses and this made the market abandon carry trades. As a consequence, JPY and CHF rose and NOK, CAD, and AUD were among the biggest losers.

The risk reduction has been hard on NOK in the last few weeks. A former central bank governor of Norges Bank once said that when the market is long NOK and everybody suddenly wants to close long positions in NOK, the Oslo fjord will not be large enough… As an outcome, the otherwise strong NOK has weakened significantly over a relatively short period of time. The currency has weakened more than 5% in about a month.

The Federal Reserve has announced that it will improve the communication and information to the markets. It will do so by announcing their expectations four times per year instead of two; announce expectations to core inflation (ex. food and energy); extend the forecasting period; and explain the reasoning behind the forecast. All in all this should improve information and communication to the financial markets and reduce the element of surprise. The first “new” minutes are released tonight at 8 p.m. CET, which among other things also will give the market a clue of how big the resistance was on the rate cut.

As a result of the latest performance on stock markets has weakened SEK and our stop loss has been reached. Fundamentally, we are still positive on SEK, but with the current rollercoaster markets SEK will undoubtedly take further hits. We therefore recommend closing long positions in EURSEK or adjust positions to neutral exposure.


Today´s Key Events

  • 10:00 GDP Q3, NOK

  • 12:00 CBI Industrial Trends, GBP

  • 14:30 Housing Starts October, USD

  • 20:00 Minutes from FOMC meeting, USD

Short Term

Published on  Tue, Nov 20 2007, 07:23 GMT


Jyske Bank | Vestergade 8-16, DK-8600 Silkeborg
http://www.jyskebank.com | jyskebank@jyskebank.dk

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Legal disclaimer and risk disclosure

The analysis is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor for transactions made on the basis of the information or the estimates of the analysis. The estimates and recommendations of the analysis may be changed without notice. The analysis is for the personal use of Jyske Bank's customers and may not be copied.
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