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Daily Trading Forecast
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Renewed Interest in "Carry Trades"
Thu, May 15 2008, 10:10 GMT
by Swiss e Trade Strategy Team
We have seen renewed interest from our clients in establishing "Carry Trade" positions, which explains why we have also seen weakness in the Japanese yen and the Swiss franc. One problem with this viewpoint is the fact that Sterling has remained very weak overall and normally this scenario has been supportive for Sterling in the past.
Another mystery to many analysts is the strength in the Euro against the other major currencies, especially the U.S. dollar. The standard explaination for the Euro's performance is the growing conviction that the ECB will not reduce interest rates anytime soon. But there is also the opinion that the Fed is finished lowering rates and their next move will be to raise rates which would support the dollar. Go figure.
Intraday Market Outlook for Day Traders
EUR / USD
The EUR / USD today looks like it will be range-bound between support at 1.5395 and resistance which we see at 1.5570 and is currently trading at 1.5515. Recently, the Euro has been supported by its interest rate advantage over the dollar and the perception that the ECB now will not reduce rates any time soon. We have no forecast for today.
GBP / USD
The GBP / USD is currently trading at 1.9476, not far from its long-term support line at 1.9360. The discouraging economic outlook for Great Britain has weakened the pound recently and we see no reason for this view to change. We do not expect the pound to break below its aforementioned support in today's trading due to the renewed interest we’ve seen with clients establishing carry trade positions. No forecast for today.
USD / CHF
The renewed interest in carry trades is hurting currencies with low interest rates like the Swiss franc, which is currently trading at 1.0540. In today’s trading, we see support at 1.0480 and resistance at 1.0600. If interest in the carry trades continues, the USD / CHF could test this resistance level. No forecast for today.
USD / JPY
Like the Swiss franc and also due to the interest in the carry trades, the USD / JPY is trading higher, at 105.03. Also like the Swiss franc, the USD / JPY may test its strong resistance level at 105.60 – 105.70, but we think resistance will hold. No forecast for today.
Published on Thu, May 15 2008, 10:12 GMT
Archive
- Dollar Poised for an Upmove Today
Published On Fri, Nov 6 2009, 10:32 GMT - Forex: Not Much Direction, But Still Fairly Tradeable
Published On Thu, Nov 5 2009, 11:01 GMT - British Pound the Weakest Among the Majors
Published On Wed, Nov 4 2009, 11:11 GMT - USD: Sideways Movement With a Slight Bid Tone
Published On Tue, Nov 3 2009, 11:11 GMT - Watch the Pendulum
Published On Mon, Nov 2 2009, 11:18 GMT
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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
©2009 "FXstreet.com. The Forex Market" All Rights Reserved.