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FX Talking Points – The Week Ahead in FX |
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By Dave Floyd
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June 07, 2010
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Folks, it was a wild week and I expect this week to be no different as FX, equities and bonds all closed at levels that suggest the current trends will continue.
The latest concern arises from Hungary. The comment Friday (default “isn’t an exaggeration.” ) from Peter Szijjarto, spokesman for Prime Minister Viktor Orban, sparked concern that Europe’s debt crisis is spreading after credit downgrades of Greece, Portugal and Spain. Full Article
CHF/HUF 60-min chart
Despite Friday’s 2 big figure sell off, EUR/USD is still lagging behind the move higher in Eurozone periphery (Spain, Portugal, Ireland & Greece) vs. core spreads, i.e. German. Thus with spreads STILL pushing higher, a strong argument can be made for further losses in EUR/USD and EUR in general. A very good article in The Timesalso asks some pretty tough questions of the major banks in London and how they can cope with further contagion of the credit crisis.
Given that equities broke and closed below 1069 in the S&P 500, further weakness seems likely.
S&P 500 - 60 min chart
Thus, it is safe to assume that USD/JPY will also fall to lower levels given the high degree of correlation between the two.
S&P 500 vs USD/JPY
Additionally, the chart of USD/JPY offers the potential for lower levels based solely on the wave count.
USD/JPY 60-min chart
There is a lot more going on as you can imagine, but I only scratched the surface here. Clients to our FX Insight Service will continue to receive updates throughout the week in what will likely be a period of volatility and opportunity.
For more from Dave, visit Aspen Trading for more updates. |
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