Nexum Capital Markets

Fundamentals will bring volatility during this calm week

Last week continued to look very volatile due to the problems with liquidity and the continuation of the effects of the sub-prime mortgages problem we saw the week before. However this week looks to be extremely calm as we have very few releases and the main concern of the market could be the cut in lending rates we saw late last week by the Fed. This week we will have a short range between 1.3550 and 1.3460. Try to get in and out as fast as possible and get small profits several times during the week so we could add up to a good week. Be patient because we’re expecting a wide move on the following weeks due to the outlook that Fed will cut rates this year and that the ECB will rise them. Keep an eye on releases regarding movements by central banks and be patient to wait for the right time to get in and ride the Euro to 1.4000 by the end of the year.

Fundamentals will be pretty low this week. Focus on any announcement by central banks and on the meeting by the BoJ to forecast any future movements on the interest rates. Also keep an eye on announcements by hedge funds and mutual funds if they speak about where they are going to keep their money, this is important because we expect them to begin to look at other currencies such as the Euro and this will weaken the USD in the future.

Have a nice week and please remember to focus and be patient.