Monthly Archives: May 2011

Trades of the week In FX space we are once again looking at RUB following the recent rebound against USD.  Positioning has been recently cleared with long positions coming down to an 11-month low, while the upcoming round of tax payments (RUB50bn-RUB75bn in profits tax due on Mon,  RUB150bn in excise and MPT taxes on […]

Weighing the costs of (not) helping Greece? We expect the tensions and the elevated volatility in peripheral spreads to prevail until a new comprehensive deal for Greece is presented. 

EUR/USD spent last week attempting to correct higher but has failed to make any impression on overhead resistance. Intraday rallies will find resistance at 1.4340/46 and should now remain capped by 1.4425/65, while below here the market will remain directly offered.

Bundesbank President Jens Weidmann and rating agency Fitch have warned of a restructuring of existing GGBs.

At a glance: The short term range bias continues to develop for the USD following last week’s choppy price action. With key levels still well-defined, last week’s test and hold of a number of key USD supports argues for additional near term strength.

Developed macro 1.       Spanish local elections reveal worst defeat for ruling Socialist Party in 30-years. 2.       Risk off tone permeating through markets as eurozone periphery concerns rise. 3.       Greece still a focus as the ‘Troika’ ends its assessment of the economic situation.

Two striking changes on the charts have occurred over the past few weeks. Firstly, inflationary expectations have been pared back as reflected by the breakeven rates.

The collapse in Silver has come at a very significant mathematical level. It is now probable that the Silver / Gold ratio is in a new bear market and this should mean pressure on “risk”.

Today’s highlights: EUR/USD: Solid defence of chart (1.4195) and key basing line to another new recovery peak.  Focus on 1.4341; through here confirms a base to target 1.4424/43 next

EUR USD (1.4305) The ECB strictly opposes any notion of peripheral debt restructuring, be it soft or otherwise, as emissaries Bini Smaghi and Stark adamantly made clear.

We revise lower our rate forecast for the Czech Republic to one 25bps increase by end-2011 (from two such increases).