Yen strength continues to dominate
Wed, Sep 17 2008, 05:50 GMT
by Lloyds TSB Financial Markets Economic Research Team
Market overview
Is the dollar bullish trend over? This certainly has become a more pertinent question of late and as the Swiss franc tentatively joins the yen in pressuring the dollar, the potential for a broader dollar correction starts to look likely. There are still some flies in the ointment however. Whilst gold has found some support, platinum and paladium continue to decline with soft commodities yet to find any significant support so far. In support of the bearish dollar scenario, US bond yields have slumped and equities teeter on the edge of some significant support levels with further downside likely. This mix makes for a short term jittery market and certainly a flexible approach will remain. Once the dust settles, I remain a long term dollar bear and as the weeks unfold, further confirmation of this strategy should develop.
Progress has been made with dollar yen continuing to work its way down towards the 100 target and the yen crosses dominating market activity. Appetite to pick up the Swiss franc on the crosses has also increased and should continue to extend from here with euro swiss targets at 1.5333. Dollar swiss targets 1.08 and then parity from here, but a break of the 1.10 this week is required to increase momentum.
