| FOREX News & ViewsBy: Derek Frey | |||||
| January 05 , 2009 | |||||
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| General Market Comments:
2009 is here! |
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| Welcome 2009! 2008 is now behind us all and we are looking forward to 2009. 2008 taught the world some important lessons. One of those lessons was risk management. The type of financial turmoil that we saw is not “supposed” to happen so one has to ask why or how did it. The answer is simpler than you may think. The answer is simply that the idea that this was not supposed to happen is what was wrong not the events themselves. 2008 was the markets dramatic way of saying that the application of the Gaussian curve to the markets is simply wrong. Just like screwing in a screw with a hammer. You can do it but it and it may even hold a picture on the wall for a while but by originally using the wrong tool you have now weakened the structure and sooner or latter the picture you hung will come crashing down. Just like we saw in the markets in 2008. All these quants with their impressive models wrongly assumed that the market was Gaussian. My sincere hope for 2009 and beyond is that the economic community as a whole walks, no runs, away screaming from the Gaussian curve. It has cost the market Trillions of Dollars just last year alone. | |||||
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Europe |
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| EUR/USD: This pair has fallen back to a more reasonable level and is still building a longer term bullish flag. We are light buyers of dips near the 1.35 handle this week. The situation it Gaza could spin out of control very quickly so that wild card if played will change everything. GBP/USD: The cable has pulled its entire rally back and now is even looking at making fresh new lows. We expect this pair to remain range bound most of this week between 1.43-1.47. We are reading this a bear flag but do not expect the downside break out to come until end of week or next, off of the NFP number this Friday. USD/CHF: This pair took a nose dive towards parity and has now bounced before hitting parity. We continue to expect this pair to grind to and through parity later this quarter but for now we expect this pair to trade near the 1.11 level while the situation in Gaza is in play. This pair in particular could move in extreme ways should the situation there spin out of control. Remember Hamas is a thinly veiled front for Iran so if Israel is attacking Hamas they are in effect attacking Iran, should Iran respond directly the US would be forced to get involved to back up Israel, and that is not a situation anyone with any sense really wants. |
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| ASIA
Yen, Australian Dollar |
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| USD/JPY: This pair is also seeing some upside due to the situation in Gaza. Longer term we are bulls of this pair but now that we have already seen this move up we will look for a major pullback to buy into. If Gaza is resolved soon we could see this pair pullback sharply and if it did we would be buyers. AUD/USD: This pair continues to hold up as others falter. We continue to favor this pair over most other majors for 2009 as we expect commodities to stabilize and even rally a bit in 2009. We are buyers of major dips in this pair if they come in particular any dips near .6800 are attractive. |
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| North America
Canadian |
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| USD/CAD: This pair has held up better than some others due to the low price of oil. We do not expect oil to stay below $50 for much longer. If Oil stabilizes near the $50 level it could free the CAD to make another run at parity later this year. We are sellers of rallies this week with a possible downside breakout coming at end of the week. |
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| Questions or Comments? Call us toll free: 866.636.6378 or Email the author directly: [email protected] |
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| Derek Frey Odom & Frey Futures & Forex 645 Mayport Rd. Suite 4E Atlantic Beach, FL 32266 |
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