Wednesday, 5 December 2007

Selling some EUR-USD

Just sold $200 per big figure of Euro against the Dollar.

(Exact trade: sold Mar '08 EURUSD at 1.4671)

The Euro is off about 1 big figure today against the dollar, I suspect the thinking being that interest rates are less likely to go up in the Euro area. Sterling just got crushed for 3 points against the dollar today, as it now looks like interest rates will be cut there, as the UK has just come out with some horrible numbers today. House prices dropped 1.1% last month, and consumer confidence fell markedly, according to Nationwide. Although bizarrely one of the reasons the Nationwide cited was "rising oil and food prices", so not sure why that makes a rate cut more likely...I'll have a closer look at Sterling another day.

So now the dollar has recovered some ground against both the Canadian dollar (over 10% from the recent lows), and now 7 or 8 points against Sterling, which was around 2.10 just a month or so ago (down to below 2.03 today). The Euro meanwhile has held up surprisingly well, and probably just needs a change of opinion in the rate cycle of the Eurozone, where the ECB continues to have a hawkish rhetoric. And there is plenty anecdotal data suggesting manufacturers have been moving facilities from Europe to the US, due to weakness in the USD Dollar versus the Euro. At some point, this will affect relative growth rates, and make being in the US Dollar more attractive. So lets position early.

1y Graph of Euro versus US Dollar

Oh and if anyone knows a good (free) place on the web to graph and copy FX rates, let me know. None of the sites I found allowed long-term graphing along with saving of the graphs.

What say you?


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