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Jul 10th 2007
Hello Forex Fans,
Late in the US session today, we saw unusual moves in about every currency pair. This I believe was brought on by the news of the sub-prime mortgages.
I also believe this is one of the driving pins that will drive the dollar lower then its previous low from last year.
We are also starting to see the yen gain strength in the past few days. I also think this strength will continue in the coming days and months.
You ask yourself, what does this all mean? I believe history can answer that question.
Fact 1 When the markets become skeptical, money runs to the swiss frank. (CHF)
Fact 2 The Yen is way undervalued. When the yen carry trades do start to unwind, we will see the other currencies traded against it fall also. Top ones being, NZD, AUD, GBP, EUR, USD.
Fact 3 China now has a pork dilema on there hands. The inflation of there economy, due to the under inflation of there currency is driving there consumer prices too high.
Butchers are now having pork spoil before its sold, because the people can not afford to pay the price for it. When people cannot afford the luxury of food, there government will feel the heat. So now China has a decision. Up the value of it currency to bring consumer spending costs and inflation down or suffer at the hand of a billion screaming chineese. There isnt a choice of if it will happen, its a matter of when. When this does happen, you can expect to see the other asian currencies follow.
Keep a very close eye on the swiss frank and the yen in the coming days and weeks. I expect the frank to become much stronger. The yen is so over borrowed, that we all know the ride wont last forever. The BOJ is also expected to raise rates this month or next.
Can you see the bubble forming here between China, Japan and the US sup-prime lending? I think today, we received a bit of a taste of whats to come in the very near future.
We’re looking at Dollar weakness and Swiss Frank strength. Were looking for carry trades to unwind and bring down with it the top producing interest rate currencies. Does this sound nuts? Trust me its not. I believe we will see all this happen in the next few days to months. Now you have a heads up on not what may happen, but what eventually will happen.
My trade pick will be later tonight. Ive made the mistake of making picks before the UK and London sessions. I do love how they come in and kick my a$$.
Humpty
Popularity: 2% [?]
Yesterday was a great day opening positions against USD to gain a lot of pips in the afternoon (Spain) and then, touching the night, it was also incredible all jpy pairs falling (not so much the chf/jpy pair as you well post).
A lot of profit that I suppose that many people have got