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This thread was started in response to the Analytic:
US EU Bond Yield Spreads
Rather than simply comparing currencies' overnight interest rates, FX traders pay close attention to differentials in 10-year yields for the market's assessment of longer term interest/inflation rate horizons. The relationship is straight forward.
I didn't really look it carefully. To be honesty, I just notice that currencies is affected by bond market last week, when people were talking about selling bonds.
By the way, there are many investors and analysts encourage people short USD and long commodity currencies.
But the banks like USB and RBC are now talking about selling EUR and buying USD. It remind me that banks said buy GBP and sell USD when BOE was announcing print more money to buy gilts.
I am little scary of recently market, don't know whom I should listen to. Do you have any clue why the banks are talking about long USD and short EUR? And if it is possible that EUR will get weak for a while, will it affect to long CAD and AUD and short USD? I am looking for a chance to long AUD, CAD and short USD now.
Best regards
Qin
Ashraf
I still don't understand the chart about EUR/USD and 10 yield bond which you showed on the web.
According the chart and your explanation in 2008 October, if the bond yield is rising, it will make EUR/USD weak.
As you reply to me that you still see EUR/USD will go to 1.5, which means that the bond yield will go down or keep flat. Is that correct? On another hand, what will happen to the commodity price?
Best regards
Qin
Thanking,
Rama