FXstreet.com

FX Technical Strategy

1

0

Drop in vols the first stage to risk appreciation

Thu, Mar 12 2009, 06:19 GMT
by Lloyds TSB Financial Markets Economic Research Team

Lloyds TSB Financial Markets


Market overview

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.



Related reports

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 All

Related content

Forex: 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 All

Interested in forex trading? forex brokerage firms!


FOREX.com
Contact the broker/FDM
Open a demo account
FX Solutions LLC
Contact the broker/FDM
Open a demo account
Alpari (US), LLC
Contact the broker/FDM
Open a demo account
MIG INVESTMENTS SA
Contact the broker/FDM
Open a demo account
MF Global FXA Securities Ltd.
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

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.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.