Hot-Charts
USDNOK Position Trade
by
Feb 11, 2009 13:54
| 3 Comments
NOK remains boosted across the board faring best performing currency since NY Tues close and second best performer over past 5 days after NZD. With my pro-NOK calls vs GBP already materializing, I offer a a longer term negative outlook for USDNOK (bullish NOK vs USD) calling for 6.4 before end of quarter. More extended outlook favours 6.00, as emerging signs of global stability will boost the already higher yielding and better equipped NOK.
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Mar 17, 2023 21:28 | by Ashraf Laidi.
South Africa has had problems in keeping up with its historical role of #1 gold producer. The ZAR is no longer what it used to be pertaining to correlations with gold due to unrest, slumping econ growth and so on (more on that in Chapters 1 and 8 of my book). Again, the long NOK trade is a long term buy and hold trade.
AMIT,
thanks for your insightful question. Yes, it is true that 10-yield differentials are directly proportional to the currency with the higher spread. But as you correctly put it, the main difference emerges when rising yileds result largely from increased borrowing. This week, the US Treasury will raise a record $67 billion in borrowing (some for new borrowing and some for refunding its existing debt obligations). The way I see it is the following: rising US-EU spread may support USD vs EUR (or prevnt it EUR from regaining $1.31 right away) but the LONG TERM fundamentals of the US economy are negative.
Ashraf
There is something i wanted you to clarify if possible. Your comment in the last HOT-chart post "USD downside risks underlined by record Treasury borrowing, which is boosting yields at expense of USD. "
Know how short term forex traders consider the US-Euro 10yr yield spread, (which correlates inversely with EUR/USD pair), well, if the US yields rise faster than the Euro yields, US-Euro spread would be becoming more positive, therefore, a short EUR/USD action would present itself. Is the main difference in argument invalid due to a supply shock of Treasuries, where the private demand for Treasuries is insufficient or not attractive enough.
It just seems contradictory, so i presume there is something vital i am missing.