FXstreet.com

0

0

EM: Sell Emerging Markets FX−risk “basket”

Wed, Dec 5 2007, 12:22 GMT
by Stanislava Pravdova, Lars Christensen, Lars Rasmussen

Danske Bank A/S


For risk-seeking investors we recommend making a short-term speculative trade on more weakness in cer-tain Emerging Markets’ currencies ahead of the New Year. We recommend entering one or several of the following positions – buy USD/ZAR, buy EUR/RON, and buy EUR/ISK, for the following factors, which will hit all three currencies:

  • • The changes in the financial sentiment have sent risk aversion higher over the last couple of days, as investors have scaled down their risky positions in favour of US treasuries.
  • • Going forward we expect this tendency to continue ahead of the New Year. In general liquidity in fi-nancial markets will be relatively thin, meaning that the EM-currencies will be very sensitive towards changes in the risk sentiment.
  • • The macro outlook seems less bright in the coming months, with the US economy bottoming out in Q4 and Q1 next year. This could also weigh negatively on the global risk sentiment.
  • • Our FX research-team expects that JPY will rise significantly in the coming months, which should add to carry-trade underperformance.
  • • For country-specific arguments, see the links below.

Links to specific FX trade recommendations:
EM Strategy - South Africa: Buy USD/ZAR
EM Strategy - Romania: Buy EUR/RON
EM Strategy - Iceland: Buy EUR/ISK

In conclusion, we recommend entering one or more of the above mentioned speculative trades.

Published on  Wed, Dec 5 2007, 12:33 GMT


Archive

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

Legal disclaimer and risk disclosure

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.


Interested in forex trading? forex brokerage firms!


MG Financial Group
Contact the broker/FDM
Open a demo account
MF Global UK Limited
Contact the broker/FDM
Open a demo account		GFS Forex & Futures
Contact the broker/FDM
Open a demo account		GFT
Contact the broker/FDM
Open a demo account		Deutsche Bank
Contact the broker/FDM
Open a demo account

FXstreet.com will give you a 3 months membership as soon as minimum rebates have been generated (€150 for private trader/ €300 for corporate trader)

[Read Premium full description]

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

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.

©2008 "FXstreet.com. The Forex Market" All Rights Reserved.