Equity market recovery points the way and in World Cup will the Dutch effort go to pot.

Posted on July 11, 2010 by larry | No Comments

The forex markets continued to follow the improvement in risk sentiment in the recent time honored fashion.
The US dollar and Japanese Yen were weaker and the commodity currencies especially the Ausie Dollar enjoyed a good week.
The US dollar Euro touched levels just over 1.27 as equity markets surged with the US markets enjoying their best week for the whole year. Notable absentee at the party was Sterling which failed to make headway against a weaker dollar and lost over 5% against the rampant Ausie.
So where to next and can stock markets continue to lead the process.Well the pessimists will point to a low volume rally in oversold stocks and still talk of the double dip. In truth for equities the answer may lie in 2nd quarter Corporate numbers which will begin to be announced.. This will undoubtedly hold the key to forex moves for the dollar and Yen.
Technically the Euro/USD has good resistance over 1.27 and one feels that risk sentiment would need another good leg up to provoke such a rally and perhaps a test of 1.30 and higher. On balance I favor a scenario of another leg down for both.
Statistics next week do not offer too much scope for any major surprises but we will see.As we move into the holiday season European problems are not in focus but undoubtedly will return at some stage.
Finally we have the World Cup final tonight where at least Europe has once gain dominated.Odds favor a Spanish victory prompted from Barcelona but without a flag in sight or a firecracker heard in Cataluña.

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