General Market Comments
Last week we got a split decision from our friends on the other side of the pond. The BOE cut rates as expected but the ECB decided not to. No major surprise in either case. At this point we feel that the ECB has now backed itself into a corner where the only way out is to cut at it’s next meeting. So while many people expect the Euro to resume its rally we do not.
Friday’s NFP report turned out to be mostly a non-event. This week of course is the FOMC meeting where our Fed. is largely expected to cut by at least .25 points. I agree with the consensus that they will cut .25 but we do not expect them to cut by .50. Since a .25 cut is already “baked in the cake” we do not expect the cut to adversely affect the Dollar.
The only reason the Dollar would turn down again is if the FOMC does in fact cut by .50. We are not wildly bullish the Dollar but do expect the current counter trend move to continue for at least the next week or two if not the rest of the year.¼br> ¼br> EuropeEuro, Pound, Swiss Franc
EUR/USD:
The Euro did have some nice reactions to the downside last week and we did in fact exit our shorts. We are looking to renter from the short side this week but event risk remains highs so our position sizing will be reduced. We are still targeting a move in the Euro towards the mid to lower 140’s by years end.
GBP/USD:
The Cable did breakdown out of the bear flag that we mentioned in the last issue. We covered our shorts last week and are now looking to reenter from the short side on a push over 2.0450. We continue to target a move to test the 2.00 level before this pullback is over.
USD/CHF:
We exited our long trades in this pair on the push through 1.1325 last week and here too we are looking to reenter the long side on a pullback below 1.1250. We are still targeting a move to 1.15.
Asia Yen, Australian Dollar
USD/JPY:
This pair also pushed higher as we forecasted last week. We are now testing the 112 level and we are now looking for more upside with a target of 114 by Christmas.
AUD/USD:
This market has traded within the range we expected so far. We expect this range to hold and we continue to be buyer below .87 and sellers above .8850. Again we expect this market to trade within the 86-90 range for the rest of the year.
North America Canadian
¼br> USD/CAD:
The Canadians surprised many by cutting rates last week. Despite that, the Lonnie has been able to hold above parity. Near term we see this market trading on both sides of parity with little overall directional movement. Much like the Ausi, we are expecting the CAD to trade within a 98-102 range for the rest of this year. ¼br> ¼br> Derek Frey
Odom & Frey Futures & Forex¼br> ¼br> ¼/p>
