Archived IMT (2011.04.18)

Risk Aversion or Credit Woes? Whats a trader to do after the S&P News? Just when the euro began a 180-pip decline on those Greece restructuring talks and Finnish vote against the Eurozone, Standard & Poor's becomes the first major credit rating agency to issue a negative outlook on the US debt rating, while affirming its AAA rating. The USD Impact was less straight forward but here is my take:

The news bore particular significance when S&P said there is a 1/3 chance of a credit downgrade in the US long term trading within 2 years. The news immediately triggered sell orders in the USDX, protecting those key support levels in EURUSD at 1.4250s & GBPUSD at 1.62 (55 dma). So the MAIN QUESTION BECOMES, will the USD extend last weeks selloff on the S&P news?, or, will it continue to stabilize following the accumulated selloff in US equities and US treasury bonds on the risk aversion play? The answer to that question depends on your outlook. Those with a 2-4 day horizon are likely to find further upside in USDX against NZD, GBP and CAD DESPITE THE SURGE IN GOLD. 09680s in USDCAD remains the targeted ceiling, while NZDUSD eyes 0.7750s after those weaker than exp CPI figures. Keeping an eye on US equity indices is key, as S&P500 nears the 100 dma at 1287. But even if we do see 1287, it would not be particularly severe for global risk appetite, unless we break below the 1250 low, which denotes a peak-to-trough pullback greater than the usual 6-7% declines seen over the last 7 months.

WE ARE IN THE FINAL STAGES OF TESTING the integration process of MNI FX Bullets into AshrafLaidi.com service as part of the Premium offering.We hope it should be up later this week before those free trials start going out. We appreciate your patience

AL