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Posts by "ashraf laidi"
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Ashraf
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Ashraf
My base case scenario is for yen to drop across the board and stocks to rally from mid November till mid January. under which 96 may hold up but id say 95.00 just to play it on the safe side. This scenario is more of a seasonal analysis that Im using rather than a change of fundamentals. If not mid November then maybe towards Thanksgiving.
Having said that, stocks are undergoing a severe loss of confidence, whereby each and every advance is followed by more than twice as much in declines. fundamentals are simply horrible and unemployment has yet to exceed 8.5% from the current 6.5%. so be careful.
Ashraf
JPY is the main focus among Asian currencies. Commodity currencies such as CAD and AUD will stage a sharp rally once 1) the rate cuts in these countries have been played out i.e when cenbanks start getting less dovish and 2) when global growth generally shows signs of stabilization ie seen in the Chinese data. The global part may take place in Q3 2009, but currencies tend to precede these economic data. But also keep an eye on global risk appetite and equities. I cannot emphasize enough how this is paramount in determining the path of commodity FX. Now, if Thursday's rally in Wall Street proves to be a prolonged leg up into year-end (I am expecting one more rally of at least 15% into year-end), then this would be beneficial for commodities, CAD, AUD, NZD and EUR.
Ashraf
Much of the action in GBPUSD depends on these 2 main factors ; i) further BoE rate cuts; ii) further declines in global equities. As loong as one of these factors is present (both will be present for some time), GBPUSD may drop to as low as $1.47 sometime in Q1 2009.
Ashraf
EURGBP directional trade remains up as UK rates will remain below Eurozone for a much more and that's the first time in the life of the euro. The notion that ECB will not have to cut rates by as much as BoE is a major factor. The fact that the ECB's inflation mandate is set by the ECB itself whereas the BoE's inflation target is set by the GOVERNMENT suggests that the govt will let the inflation priority pass for now because it is the very target that it had imposed is the main reason behind the deepening UK recession--resulting from BoE's refusal to inject liquidity immediately after Northeren Rock, etccc... EURGBP seen at 0.8160
Gold's prospects will improve at the first sign of stability in the world economy (not nececessarily US economy). Once US interest rates drop to 0.50%, the system will be ultra liquified, and i dont see the situation as bad as in Japan, where banks simply hid bad debts under the desk and let them rot for years. US banks/govt are at least taking some hard measures. dollar to remain low yielding currency, which means it will underperfom during every upcoming bout of carry trade building.