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Currency Markets Return to “Normal”!
By Mike Conlon | November 30, 2009
In the wake of the Dubai debt crisis from last week, the currency markets are attempting to return to normal, whatever that is. While the risk to overall markets have been heightened, there doesn’t seem to be a dominant theme either way. It appears as though we are taking a “breather”– that is a pause before the market decides what it wants to do.
Aside from the usual risk taking/ risk aversion trades, there are 2 important pieces of news to be aware of:
1. Canadian dollar (CAD) strength- Canada reported 3rd quarter GDP growth, indicating that they are exiting their recession.
2. British pound (GBP) weakness- British consumer confidence weakened and the BOE has left the door open for further quantitative easing if their economy doesn’t pick up.
So I’m keeping my “eye on Dubai’ (yes I’m a poet and know it!) and looking to see if there is any fall-out or contagion from it. If the situation looks contained, then I would expect the risk taking trades to be back on the table as the long-term trends dictate.
However, I wouldn’t be surprised to see if any more “bad” news comes out this week. No one wants to be seen as piling on, but we could see some dollar strength if there are some hidden time-bombs out there. Better to get them out now then let them fester and explode later.
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Tags: BOE, British, cad, canada, course, crisis, currenc, currency, currency market, dollar, Dubai, economy, fx, fxedu, gbp, Il, Mike Conlon, news, pound, recession, RSI, ssi, time, trade, trades, trend
Topics: What To Look At In The Market |
December 1st, 2009 at 8:24 pm
You are right, the USD/CAD chart went down sharply in the past two days.