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AutoForexTradingPro
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| The Daily Forex Brief is written by FxPro's team in the City of London. Visit fxpro.com for more news, FX commentaries, Business Center TV, real-time feeds, calculators and tools. |  | ||
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| Daily Forex Brief | |||
| Now that European leaders finally understand that perpetual dithering on the sovereign debt and banking crisis could spell death for their economies, it appears that hedge fund managers and traders have collectively decided to progressively close-out those incredibly profitable short risk asset positions. This theme is one we have been highlighting over the past week, and it was again abundantly evident yesterday. For no very good reason other than stops going off, we witnessed significant advances in risk assets, high–beta currencies and the euro, and another day of major losses for the previously impregnable greenback. The EUR managed to get above 1.38 at one stage – it started this week below 1.34. Cable threatened 1.58 at one point, up more than two figures – a remarkable achievement given the dreadful employment figures. High-beta currencies fared even better – the Aussie powered through parity reaching 1.0233 overnight, helped by strong buying from sovereign wealth funds and numerous stops. In just over a week, the AUD has jumped 8% from its low. Commodities are also back in the sweet shop, with Brent crude reaching USD 112 a barrel, and gold touching USD 1,690, now USD 1,672. Given the massive short positions in risk assets and non–dollar currencies that had been accumulated over recent months, it is not necessarily the case that the washout witnessed over the past week is complete although it probably does not have much further to go. Thereafter, we may well see financial markets appear to calm down into calendar year-end, as risk managers essentially close their books. | |||
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