Download Full FX Technical Strategy
Fri, Jun 20 2008, 09:57 GMT
by Lloyds TSB Financial Markets Economic Research Team
Market overview
Since the last release the markets have been broadly range bound, although from an intra-day perspective volatility has been high. Unfortunately this type of price action has the effect of keeping market participants sidelined until clearer signals appear on the daily and weekly charts.
The intermediate strategy has been to buy sterling and the dollar against the previously strong currencies, i.e the Swiss franc, yen and euro, looking for a counter-trend retracement. Whilst this is still the favoured view, for the moment, we could be approaching the end of this strategy (though in weeks rather than days) where the main themes of a strong yen and swiss franc return.
Relative stability in the equitiy markets is gradually eroding and whilst bond yields have risen aggressively, the reasons for this are not necessarily positive for the dollar from a long term perspective.
Opportunities (or risk) may be confined to short term trading for now, but a return to the trending markets is coming into focus.
