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Mild Risk-Taking to Start the Week!
By Mike Conlon | December 28, 2009
Going into the last week of 2009, the commodity currencies (NZD, AUD, CAD) have been gaining ground against the US dollar, showing a mild uptick from weakness and dollar strength. And while there is no major news on tap for this week and the forex market is expected to be calm, I’m watching other markets just in case.
Barring any major negative news (particularly out of the Euro Zone) I expect the US dollar to resume its major trends after the new year, so we could see some short-term USD weakness going into year end against all but the Japanese yen (JPY).
With the “Santa Claus Rally” underway, if stocks can continue higher into the New year then we could see a resumption of the “risk” trade that has recently decoupled over the past month. That is of course going into the FOMC meeting in late Jan., where odds of a change in interest rate policy have been increasing.
So I’ll be taking my clues this week from the stock market, and keeping my eyes and ears open for any potential negative news that could induce the “flight to safety” trade. Otherwise, I expect it to be quiet and range-bound, with a mild bias toward dollar weakness.
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