ForexInfoCenter

11/18/2007 - Commodity reversal is underway

Posted by FOREX.com's Weekly Strategy in November 16th 2007  
* Commodity reversal is underway
* Risk aversion to keep carry trades under pressure
* Holiday-thinned trading conditions likely to heighten volatility
* Heavy data schedule all around next week

Carry trades (JPY-crosses) were once again the big movers, with most registering sharp losses as increased risk aversion sends speculative traders running for cover. The heightened risk aversion stems from continuing concerns over the health of the financial sector, owing to still large levels of toxic MBS assets corroding bank balance sheets and fears of further large write-downs in coming quarters. To give you an indication of the level of risk aversion, we are now back at levels last seen at the height of the June/July credit market meltdown. Adding to risk aversion is the approaching end-of-year, which typically sees speculative portfolio flows reduced as asset managers lock in gains and cut losing positions.  Full text »

digg this! | del.icio.us | Technorati | Stumble It! Read More...

Filed under: Weekly Strategy