Summer ……and the shorts are taken out.

Posted on July 18, 2010 by larry | No Comments

On the one hand there was the usual forex market reaction to Risk aversion sales, on the other there was the stellar performance of the Euro. Yes one would assume that many Euro Shorts self included felt the pain last week. Despite weaker equity markets the Euro /USD powered over 1.30 at one point and closed around 1.2930. As commodities and gold took a hit not surprisingly the Canadian dollar faired worst losing almost 5 % against the Yen and a little less against the Euro.
Equity markets and the dollar focused on slightly weak data rather than Corporate earnings and the Euro further benefitted from better than expected bond auctions in Greece and Spain.Data from Germany remains solid  and this has helped keep a more positive Euro mood.
However, I do believe that it will only be a matter of time before lagging growth and other strains on the weaker Euro members reemerges to the detriment of the Euro. Next weeks banking stress tests could also prove a stumbling block.
All in all the picture for growth remains cloudy with signs also of a slowing in China. Thus we continue to see equity markets having good and bad weeks with the US dollar and Yen reacting accordingly in the main.
Technically the US dollar still has further to fall before perhaps events turn things positive again which might be a few weeks off yet.
 

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