Thu, Mar 12 2009, 06:19 GMT
by Lloyds TSB Financial Markets Economic Research Team
The short term market orientation does not seem ready to change. This is hardly surprising given the journey the markets have travelled over the past 18 months. However, it is becoming increasingly clear that the price of risk is simply too high and by virtue of this situation, it is discouraging risk appetite. If the market has a heightened expectation of a risky environment, then there is no value in paying for this. The value comes from looking at what the market does not expect. As FX vols continue to ease, this will actually provide a positive back drop for the next main trend in FX. The downside is that we may still be some weeks away from this.
The default position for now is to look for dollar strength and monitor the signs of a counter trend move. Base metals such as lead have put on a decent rally with copper continuing to build a base. The outlook for gold looks soft short term and a break of $900 would imply a deeper correction to $850. It is easy to dismiss these signals as the market wants to focus on the bearish angle. However with oil continuing to hold firm and the baltic dry index extending gains, consideration has to be given to a dollar sell off, driven by an oversold bounce in stocks.
Published on Thu, Mar 12 2009, 06:38 GMT
Lloyds TSB
| Faryners House, 25 Monument, London EC3R8BQ
http://www.lloydstsbfinancialmarkets.com/doc/fms/financial_markets.htm | Sarah.Pedder@LLOYDSTSB.co.uk
FX View - Headline unemployment rate creates dollar shocker by Interactive Brokers LLC
Fri, Nov 6 2009, 18:41 GMT
Forex Daily Overview - USD mixed, unemployment rises to 10.2% by Easy Forex
Fri, Nov 6 2009, 18:31 GMT
Forex Daily Analysis - USDJPY is moving towards support level at 89.55 by Investija.com
Fri, Nov 6 2009, 14:35 GMT
London Gold Market Report by BullionVault.com
Fri, Nov 6 2009, 14:27 GMT
Forex Technical Report - U.S. Markets Brace for Jobs Data by ForexHound.com
Fri, Nov 6 2009, 13:29 GMT
eurusd, eurjpy, chfjpy, gold, gbpusd, usdchf, gbpjpy, usdjpy
View AllForex: EUR/USD: Euro post weekly gains
FXstreet.com | Fri, Nov 6 2009, 22:49 GMT
CURRENCIES: Dollar Dips Vs. Yen As Jobs Data Have Fed On Hold
Dow Jones | Fri, Nov 6 2009, 22:14 GMT
U.S. markets ended with small gains, up for the week; Dollar mixed
FXstreet.com | Fri, Nov 6 2009, 21:32 GMT
Forex: GBP/USD: Cable hovering around 1.6600
FXstreet.com | Fri, Nov 6 2009, 20:34 GMT
CURRENCIES: Dollar Dips Vs Yen As Jobs Data Has Fed On Hold
Dow Jones | Fri, Nov 6 2009, 20:25 GMT
eurusd, eurjpy, chfjpy, gold, gbpusd, usdchf, gbpjpy, usdjpy
View AllGET CASH BACK FOR YOUR TRADES! Learn more about the Pip Rebate Program