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Saxo Bank FX Monthly – June 2009
The USD devaluation – still just a question of risk appetite?
In markets, the saying goes, timing is everything, and our timing, if that is all it is, has been extraordinarily off for
this part of the cycle as global recovery fever continues to grip the market and sustain risk appetite, whether in
emerging market equities or EM and commodity currencies. In the G-10 currencies, the poles of risk appetite
remain relatively consistent with past behaviour as the main beneficiaries of the risk rally are the commodity
currencies - with USDCAD plunging as far as 1.08 and AUDUSD stretching all the way above 0.8200 recently - and
the worst victims the market’s traditional punching bags: the greenback and the JPY.
The risk appetite seems to be built on the idea that the slowing of the slowdown is well under way and that we
are thus on the cusp of a brave new world of economic growth led by the emerging markets, whose economies
will storm to new heights without the aid of a hopelessly bogged down USA or other developed countries. It
almost looks like a redux of the decoupling theme that was so influential in early 2008 before the world realized
how interconnected capital markets were (and remain, we might add). So the question here is this: is this a valid
theme? And what should we look for next? This question is particularly relevant for the US dollar, which suffered
so much weakness over the past month that Asian central banks, particularly in China, were actually out verbally
defending the currency at times.
Dollar Index and EM Equities
40000 120
38000 MSCI EM Equities
US Dollar (inverted) 115
36000
34000
110
32000
30000 105
28000
100
26000
24000
95
22000
20000 90
Apr-09
Oct-08
Mar-09
Sep-08
Nov-08
Dec-08
May-09
Jan-09
Feb-09
Chart: Some are calling it a spurious correlation, but the market is clearly putting on the USD devaluation as risk
appetite is soaring and also as a play on the idea that the greenback must eventually be devalued if the US public
debt is to ever be paid off.
Our over-riding conviction is that the world will still need to suffer through further bouts of risk aversion as the
recovery story is very premature. As for decoupling, this is certainly a theme that could gain further valid traction
in years ahead, but for now, it is also premature. There are no major economies, including most importantly
China, that can simply pick up where they left off before this recession kicked off. The last cycle created global
imbalances that are still rapidly being unwound and must be forever buried if the global economy is to launch a
new and sustainable growth trajectory. The stimulus-led Chinese growth story is not likely sustainable in the
short term.
What does this mean for the USD? Our suspicion is that the USD is still somewhat correlated with moves in risk
appetite, despite brief bouts of non-correlation of late. The market is already very pessimistic on the USD and the
greenback must therefore already be priced accordingly. If the decoupling/commodity/new Chinese growth story
loses cachet in the coming weeks and months, as we suspect it will eventually, then the other currencies that
have gained against the dollar could be in for an adjustment lower, more on their demerits rather than the USD’s
merits. We also have to consider the ominous possibility of European destabilization and the implications for
reserve diversification if risk aversion kicks into high gear and if the market ever bothers to really ponder the
Euro’s woes (more on this in the next article).
EURUSD and 2-yr. Spreads
1.50 250
EURUSD
1.45
Ger/US yield spread - 2 200
yr.
1.40
150
1.35
100
1.30
50
1.25
1.20 0
Apr-09
Oct-08
Mar-09
Sep-08
Nov-08
Dec-08
May-09
Jan-09
Feb-09
Chart: a somewhat curious development on the day we are readying this publication for release, we see an enormous
move higher in short term US rates as the market seems to be making the bet that the Fed will actually raise rates in the
coming quarters. Not much has moved the short end of the curve in the US of late – but this move just after the release of
the May US payrolls data is enough to pull out the old interest rate differential charts – here the 2-yr. spread of German
vs. US notes and EURUSD.
EUR: when does will the market shift its focus to the single currency?
EURUSD advanced as much as 1000 pips since our last report as the USD has declined, but has been relatively
weak vs. the pound and commodity currencies over the last couple of months, as stronger risk appetite tends to
favor the riskier currencies, and the Euro maintains a modicum of cachet as a safe haven, meaning it will
underperform when risk appetite increases and perhaps slightly outperform when the risk barometer swings the
other way, though it is nowhere near the opposite poles of the USD and JPY on the safe haven side and the
commodity dollars on the opposite side. In other words, the EUR seems to be a no-man’s land.
But is the market correctly pricing specific EuroZone risks? Has this recovery in risk appetite suddenly made the
festering EuroZone problems null and void? (These include the desperate straits of the weaker EuroZone
members and the insufficiently addressed holes on European banks’ balance sheets on domestic and CEE asset
play exposures). We hardly think that the Euro can maintain an even keel for the long haul and we will watch the
single currency with extreme interest, especially if a renewed bout of risk aversion sweeps over global markets.
The Euro’s liquidity has normally been its saving grace, but the market could being to lose faith in the single
currency if it stops to take stock of where the currency should be trading in light of the EuroZone’s own special
challenges. Downside potential could be realized very quickly. The destabilization question is still very much out
there. EUR buyers beware.
Euro vs. US Unemployment
15 EuroZone Unemployment Rate 10
German Unemployment Rate
14 US Unemployment Rate 9
13
8
12
11 7
10 6
9 5
8
4
7
6 3
5 2
6
7
8
9
0
1
2
3
4
5
6
7
8
9
-9
-9
-9
-9
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
pr
pr
pr
pr
pr
pr
pr
pr
pr
pr
pr
pr
pr
pr
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Remember the ancient argument that the US leads the cycle? What are the prospects for the Euro if the worsening of the
US employment begins to slow dramatically in coming months while the EuroZone data accelerates in the opposite
direction? If past cycles are indicative, then this is a real possibility.
JPY and the US yield curve – what now?
Whenever a major market indicator reaches an important multi-decadal high or low, it is always time to consider
what it means and whether to look for mean reversion or for a further extension of the trend. In this case, as
easily inferred from the title of this article, we are talking about the slope of the US yield curve, as the slope of
the 2-10 yield spread reached a stratospheric 275 basis points, a level only neared twice in the last generation.
The slope of the curve is, in part, a simple reflection of the market’s USD devaluation theme, i.e., that the Fed is
going to keep short rates at very low levels for a long time at all costs to ensure that the US economy is
recovering and maybe even as a purposeful attempt at creating a modicum or worse of inflation in order to
inflate the US out of its long term fiscal nightmare. At the long end of the curve, the idea goes that the market
will be unwilling and unable to absorb the tsunami of debt that the Treasury will need to issue in order to finance
the extraordinary expansion of the public balance sheet. The result is a weak USD dollar. Optimists would say
that higher long rates are also a symptom of a recovery under way.
Interestingly, the bottom completely dropped out of the Japanese Yen after the US payrolls data this month as
the entire curve was lifted after the data, actually flattening the US yield curve slightly and weakening the JPY, at
least versus the USD, if not elsewhere. But we’re not so sure that the JPY will weaken across the board here even
if the US yields continue higher. It feels like the cycle is beginning to change somewhat, or at least that it should
be changing relative the more simplistic days of the carry trade. That’s because, rather than reflecting healthier
risk appetite, higher bond yields could become a destabilizing influence in their own right.
JPY and US Yield Curve
175 300
170
250
165
160 200
155
150
150
145 100
140 JPY Index (left)
50
135 US 2-10 yield spread (bps)
130 0
A 9
A 9
M 9
M 9
A 9
D 8
Ja 8
M 9
9
Ja 9
Fe 9
Fe 9
M 9
D 8
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
0
0
0
0
n-
n-
b-
b-
pr
pr
pr
ar
ar
ay
ay
ec
ec
ov
N
The JPY has weakened on a broad basis as long yields have headed higher – but eventually long yields becoming
damaging for risk appetite and trigger a rise in volatility – in which case the JPY might perform better than the traditional
yield differential metric says it should.
So, on the one hand, if bond yields rise gently and risk appetite somehow continues expanding in the short term,
this could be a JPY negative and we could see further lows in the JPY basket, but we have a hard time imagining
there is much to squeeze from this trade at the levels at the beginning of June, with EURJPY trading as high as 139
and AUDJPY at a lofty 79.00. An ugly further rise in yields in an environment of sovereign debt worries and the
idea of currency devaluation is a far less JPY bearish scenario. The most JPY positive scenario, of course, would be
a strong flattening of the curve based on risk aversion and the market finding safety in long bonds. Considering
our view that a return to risk aversion eventually materializes, it is difficult to find a reason for the market to
further punish the JPY on a basket basis from these very stretched levels.
Saxo Bank G-10 FX Forecasts
Here are our expectations for the G-10 currencies over the One-, Three-, and Twelve-month horizons. Our
expectations given the current environment are outlined in the base case for each pair, but we also present an
alternative case for the short term in and the factors that could contribute to that alternative scenario.
Base Case: Our base case outlook remains largely the same in terms of the surrounding intermarket inputs into
FX, namely that this bear market rally in risk has become overstretched in the short term and that the markets
will revert to risk aversion at some point. Timing is clearly the largest uncertainty as the rally in risk has extended
far beyond our expectations. And certainly this rally can continue in the short term: “the market can remain
irrational longer than you can stay liquid”, as the saying goes.
There are a number of possible triggers for a return to risk aversion, but current market conditions are
unsustainable: equities cannot continue to completely ignore the implications of rising long bond yields, which
would further pressure housing markets and consumption. Something has to give. Our preferred scenario is that
the market’s audacious bet that the global recovery is just around the corner is proven wrong. But there are two
divergent potential ways this scenario could play out: first, that risk aversion could be accompanied by relief in
the rising long government bonds yields. In the other, far more dangerous scenario, risk aversion materializes as
the long end spirals out of control on a general theme of loss of faith in sovereign debt generally and therefore all
currencies. The first scenario is far move supportive of the USD and the JPY, while it may be too premature for
the latter scenario, though it could certainly materialize much further down the road, with the USD at the crux of
such a scenario. Either way, if the anticipated shift to risk aversion arrives – and it becomes more and more likely
with every uptick in bond yields - commodity currencies remain at highest risk for a volatile correction lower once
the market decides that it has shifted too far into risk willing territory.
Alternative Case: the alternative case remains largely the same: that the much ballyhooed green shoots continue
to blossom and that a small cyclical recovery materializes over the summer before we are reacquainted with the
secular recession/depression environment later in the fall or winter. This could sustain risk appetite at higher
than expected levels and keep bond yields heading a bit higher and would likely entail a further extension of the
rally in commodity currencies and weakness in the USD and the JPY.
Saxo Bank G-10 FX Forecasts
Forecast: Alternative
1M case...
Currency Base Case
3M
12M
(1-2 month)
The greenback has lost ground on a “re-decoupling” scenario, (EURUSD 1.4500)
if we may call it that, due to the resonance with the theme (USDJPY 105.00)
that was all the rage just before the US financial contagion If this liquidity induced
swept around the world in 2008. The idea here is that the rest “bounce” in the
of the world, particularly China and other major EM players, indicators continues
EURUSD are quickly getting back on track while the US remains mired to see hope blossom
in its financially prostrate state and must print money and that a sustainable
1.3300
devalue in order to come out from under the unbearably recovery is underway
1.2500 weight of its foreign-financed debt. In this scenario, traders and all manner of IMF
USD 1.2500 are loathe to hold dollars. But something doesn’t sit right interventionism allays
with this theme: if the markets are so concerned about the fears of a , then the
USDJPY viability of the most important financial instrument in the EUR could continue on
world – US treasuries – then we should be seeing major risk- a path higher vs. the
98.00
quakes in every direction. Where is the worry? In other USD and the bearish
95.00 words, there still seems to be a correlation between the USD scenario could be
100.00 and risk appetite, and we wonder if the USD might perform delayed for some
relatively better than less liquid currencies once again if risk time.
aversion returns. The Chinese recovery story in particular
looks overbought. And what if the recovery does not arrive
just yet and we are headed to round 2 and round 3 of global
deleveraging, just at a less frantic pace than round 1?
As we discussed this month, the EUR seems to be neither
here nor there with the shifts in risk sentiment: it obviously (EURUSD 1.4500)
does better than the USD and JPY when risk appetite is high (EURJPY 152.00)
due to the ECB’s less expansive policy and perhaps also on If the EUR somehow
some measure of relief over the EuroZone’s exposure to the manages to thread the
CEE countries. But when risk aversion returns, the higher beta needles as a no-man’s
commodity currencies experience the worst beating. It all land and the market
EURUSD adds up to overall trendlessness if we look at the EUR vs. a sustains hopes for a
1.3300 basket of currencies. At 1.4000 in EURUSD, we have a hard recovery for another
1.2500 time finding any scenario that is highly supportive of further month or two, this
strength in the EUR vs. the USD or JPY, and continue to look could see the EUR
EUR 1.2500
for a sell-off in the single currency: if the sell-off occurs in an limping along for
environment of renewed risk aversion, the EUR could fall the another round of
EURJPY most sharply vs. those two currencies, but a EUR fall on a strength vs. the
134.00 broad basis could materialize regardless of the direction in greenback and the
119.00 risk appetite due to the EuroZone’s own special set of Yen.
125.00 problems that we have outlined ad nauseum. The EuroZone
economy is underperforming and a stronger currency is the
last thing that its economy needs. Watch out for an ECB that
ends up dragged deeper into QE-like territory despite the
brave words of its foremost hawks, led by Weber. And
especially watch out for signs of political discord within the
EuroZone political framework.
Forecast: Alternative
1M
Currency Base Case case...
3M
12M (1-2 month)
In May, the JPY scraped to new lows on a broad basis as bond (USDJPY 100.00)
yields, commodities and equity markets surged higher – all (EURJPY 145.00)
factors that normally weaken the Yen. The fact that USDJPY If long yields are able
USDJPY actually fell for the month despite sharply rising T-bond yields to stretch higher
98.00 in the US (one of the more stable correlations of recent without waylaying
95.00 market history has been the positive correlation of USDJPY equities and increasing
100.00 and long US bond yields) underlined the greenback’s volatility and risk
weakness and the idea that higher yields in the US may have aversion generally,
JPY some element of sovereign risk thrown into the mix – which then the JPY could
EURJPY requires a different stance on the JPY than the traditional stretch even further to
134.00 carry trade. If long yields rise in an environment of risk the weak side in the
119.00 aversion rather than as a side effect of strong risk appetite, short time due to a
125.00 then the JPY may show more stability, and if yields fall again traditional carry-trade
while risk appetite contracts, then the JPY could really don its like stance.
rally cap. Either way, it is tough to see the JPY much weaker
from here.
GBP has outperformed of late on the grinding contraction in (1.6500)
risk spreads and apparent improvements in the financial The pound continues
sector. A few better than expected data points have also to thrive as risk
GBPUSD peppered the scene as some argue that the worst is over for spreads continue to
the British housing market and consumers and that the come in and equities
1.5200
country may be on the road to recovery. Our overall stage an extension of
1.4500 conviction is that the recovery story is premature – but it is their historic rally.
1.5800 more than tough to place the UK’s relative merits in Alternatively,
comparison with the EuroZone, where the potential for EuroZone woes sweep
GBP EURGBP negative developments seems to remain larger. On a basket to the fore and the
basis, we would expect the pounds torrid rally of the last pound leaves the Euro
1.4800
couple of months to ease, and there is certainly the risk of a in the dust.
1.4500 sharp pound sell-off if the idea of sovereign risk comes into
1.5800 play with a vengeance, considering the UK’s enormous
financing needs in coming years. But if ugly EuroZone
developments come into play in coming weeks and months,
then the GBP could find support through the important
EURGBP cross, where we watch the 0.8580 low with interest.
The SNB has apparently succeeded in scotching the market’s (EURCHF 1.4700)
USDCHF enthusiasm for trading the Swiss Franc – as it has failed not The franc powers
only to strengthen, but also failed to weaken when risk higher as the EUR
1.1300
appetite improved during the last cycle. Is this simply a sign of swoons broadly and
1.1800 the market’s neglect or a red flag of the currency’s weakness? the market is
1.2500 It is a bit surprising that the Franc did not sell off more surprised as the SNB
considering the rally in risk and in CEE currencies. We have a fails to show up until
CHF EURCHF neutral outlook on this currency for now until something new much lower levels in
comes to light and it will be interesting to see what happens EURCHF, well below
1.5000
with the EURCHF pair and its apparent 1.5000 barrier if the 1.5000.
1.4800 most EUR-negative scenario plays out. In general we would
1.5600 prefer to sell the franc vs. the JPY and buy it vs. commodity
currencies in the shorter term.
Forecast: Alternative
1M case...
Currency Base Case
3M
12M
(1-2 month)
Until the turn of the calendar month, AUD was on top of the (0.8200)
world as it sat in the sweet spot of intermarket As long as the Chinese
developments: the currency is a carry trading poster child as recovery story
AUDUSD rates are rising and it enjoys a huge exposure to a supposedly continues to burn
recovering China with its endless commodity appetite. As brightly and
0.7400
well, AUD has always tended to perform well when equities commodity and equity
0.6800 do well. But the failure of the Chinalco/Rio Tinto deal was a prices continue their
0.7600 warning sign, and if the market decides to take a second look torrid rally of late,
AUD at the timing of the global recovery theme, AUD could be in then it will be tough
AUDJPY for a nasty correction in the short term. We’ve described our for AUD bears to get
disbelief at the sustainability of the Chinese story in the the upper hand.
73.00
medium term and we look for a pivot in risk appetite soon, so
65.00 at some point, we are clearly looking for a correction in the
76.00 rally in AUD, virtually across the board. Longer term, AUD
could bounce back once the global economy, led by Asia,
finds traction and a sustainable recovery. We simply think the
market has way overplayed this idea for the near term.
As with the Aussie, the loonie has found strength on a (1.0800)
powerful combination of factors, including stronger risk Oil prices rise to 75
appetite and a doubling of energy prices since February. As dollars a barrel and
we head into June, CAD has been on a moonshot that took it the S&P500 shoots
all the way to structural support at 1.0800 in USDCAD. The above 1000 – this is
CAD strength may take a break here in the short term with a the basic stuff that
transition to risk aversion, especially if energy prices correct would keep the
USDCAD sharply lower. One factor that many have touted as CAD rallying impulse alive
1.1600 positive is the country’s banking sector, which has been for CAD for the short
CAD proven the world’s best on the other side of the credit bubble term.
1.2000
1.1000 that laid waste to so many other countries’ banks. But while
this may be a CAD positive at first flush as it reduces the need
for massive money-printing efforts by the BoC, it is potentially
a CAD negative if one considers the capital flow implications
of strong Canadian banks going on a worldwide shopping
spree. Due to the strength of the CAD rally, however, the
range of our expectations for USDCAD have been shifted
sharply lower even if CAD weakens in the near term.
The kiwi finally spread its wings over the last month, even (0.6400)
rallying sharply vs. the strong AUD as risk appetite blossomed. Risk appetite picks up
NZDUSD But as June begins, it appears the currency may have seen a the rally impulse once
blow-off top for now with the sharp sell-off reversal. If we get again and NZD fights
0.5800
another backdraft in global asset markets and renewed risk back to its recent
0.5400 aversion, the kiwi will likely take up its old underperforming highs on stronger food
0.6400 ways for some time. Its enormous current account deficit prices and resilient
which depends on the trust of foreign bond holders and the asset markets.
NZD illiquidity of the currency are ever-present background risks.
AUDNZD
The weak kiwi will hopefully help right some of the country’s
1.2800
wrongs and we still think that its main exports – foodstuffs –
1.2700 are likely to see a stronger recovery relative to other
1.1800 commodities eventually. As well, New Zealand has generally
run large budget surpluses and only had its first budget deficit
in 15 years in early 2008. The strategically minded investor
might have a look at a long term EURNZD short.
Forecast: Alternative
1M case...
Currency Base Case
3M
12M
(1-2 month)
NOK seems to have a split personality of late after starting the (9.25)
year as a favourite of the safe haven crowd, due to its Further rhetoric from
unmatched fiscal credibility in an otherwise profligate world. Norges Bank and
EURNOK At the same time, the currency was trying to rally in May on another aggressive
8.75 more robust energy prices, which is associated with the move on rates could
8.50 global recovery rather than safe haven worries. The outlook Is see EURNOK launching
8.00 cloudy for the short term, and the market has taken fright at another brief try
the Norges Bank coming out with further strong verbal higher – with the
NOK intervention (a bit strange as NOK is at very low levels vs. the move possibly
USDNOK Euro on historic comparisons, the recent spike to 10.00 aggravated by the
6.55 notwithstanding….) In general, we are very positive on the currency’s illiquidity.
6.80 NOK almost regardless of what happens in the broader
6.40 market, as the currency is simply undervalued – especially vs.
the EUR when the EURNOK pair is trading around 9.00 or
higher. But considering Norges Banks strange vigilance and
the currency’s relative illiquidity, it may be difficult to trade
the currency other than on an opportunistic basis.
The SEK has weakened sharply despite the overall (11.25)
background of increased risk appetite as the Latvian troubles Instability in the Baltic
have come to the fore in the first week of June. The country States and risk
EURSEK appears to be on the possible brink of a devaluation and aversion sees the
10.60 Sweden has by the largest exposure to this country. But market throwing the
10.50 would a Latvian devaluation really be so catastrophic for baby out with the
9.75 Sweden, with only a few percent of GDP exposure to the bathwater and the
country (compare to Austria’s 70% exposure to Eastern krona revisits its old
SEK Europe)? And if Latvia is simply the first domino to fall for the extreme lows vs. the
USDSEK whole CEE region, won’t the EuroZone banks experience even single currency.
8.00 more pain? It seems the Swedish krona is too weak in the
8.40 bigger picture. There is a risk of further spikes to the
7.80 downside if the Latvia story is allowed to spiral out of control
(a bit hard to imagine considering the interventionism at
every turn we have seen over the last six months from the
IMF et al, but some kind of more or less controlled unwinding
is a higher odds scenario than total chaos.
Fundamental Indices
Our indices of monthly economic data show that most economies downside trajectories are now rising slightly, a
bit less impressively than “green shoots” theories would suggest, for sure. The US numbers seem to be showing a
bit more bounce than some of the other major economies.
G10 Economic Data Trends I
3
2
1
0 JPY
EUR
Aug-05
Aug-06
Aug-07
Aug-08
Feb-06
Feb-07
Feb-08
Feb-09
Nov-05
Nov-06
Nov-07
Nov-08
May-05
May-06
May-07
May-08
May-09
-1 GBP
USD
-2 CHF
-3
-4
-5
The Swedish economy looks like a laggard, though there are few signs of pronounced strength in general in the
remainder of the G-10 currency economies. New Zealand has perhaps shown the most bounce, but this bounce
was preceded by a precipitous drop.
G10 Economic Data Trends II
3
2
1
NZD
0 AUD
Aug-05
Aug-06
Aug-07
Aug-08
Feb-06
Feb-07
Feb-08
Feb-09
Nov-05
Nov-06
Nov-07
Nov-08
May-05
May-06
May-07
May-08
May-09
CAD
-1 SEK
NOK
-2
-3
-4
G10 Currency Charts
The charts below show each currency vs. an evenly weighted basket of the other 9 of its G10 peers. All currencies
are indexed to 100 on a rolling basis, 3500 calendar days before the date of the snapshot (almost 10 years,
though only the more recent moves are displayed in the charts ).
EUR
130.00
EUR
25 EMA
125.00 55 SMA
200 SMA
120.00
115.00
110.00
105.00
Jul-07
Nov-07
Jul-08
Nov-08
May-07
May-08
May-09
Jan-08
Jan-09
Mar-08
Mar-09
Sep-07
Sep-08
The EUR has been in a holding pattern and even ticked higher as the first round of risk aversion in early June hit
the market. The single currency is overvalued, but has only sold off modestly from the panic highs in strength
from late 2008. Lately, the currency has shown little independence of movement. When will the spotlight shift to
the Euro and when will we see more volatility?
JPY
130
125
120
JPY
115 25 EMA
110 55 SMA
105 200 SMA
100
95
90
85
80
75
70
Jul-07
Nov-07
Jul-08
Nov-08
May-07
May-08
May-09
Jan-08
Jan-09
Mar-08
Mar-09
Sep-07
Sep-08
The JPY sold off to new lows on a basket basis, but is showing some signs of resilience as June gets underway. Is it
time for a new JPY rally for the next few months?
100
110
70
80
90
90
100
110
120
130
140
90
100
110
120
130
140
80
90
100
110
120
Aug-06 Aug-06 Aug-06
Aug-06
Oct-06 Oct-06 Oct-06
Oct-06
SEK
CAD
CHF
Dec-06
USD
Dec-06 Dec-06 Dec-06
55 SMA
55 SMA
55 SMA
55 SMA
200 SMA
200 SMA
200 SMA
Feb-07
200 SMA
Feb-07 Feb-07 Feb-07
Apr-07 Apr-07 Apr-07 Apr-07
Jun-07 Jun-07 Jun-07 Jun-07
Aug-07 Aug-07 Aug-07 Aug-07
Oct-07 Oct-07 Oct-07 Oct-07
Dec-07 Dec-07 Dec-07 Dec-07
CAD
SEK
CHF
USD
Feb-08 Feb-08 Feb-08 Feb-08
Apr-08 Apr-08 Apr-08 Apr-08
Jun-08 Jun-08 Jun-08 Jun-08
Aug-08 Aug-08 Aug-08 Aug-08
Oct-08 Oct-08 Oct-08 Oct-08
Dec-08 Dec-08 Dec-08 Dec-08
SEK – represents reasonable value vs. the EUR
Feb-09 Feb-09 Feb-09 Feb-09
CHF a tough call – market refuses to take a stand...
CAD getting too expensive if risk aversion to return
Apr-09 Apr-09 Apr-09 Apr-09
USD could finally stabilize if risk aversion returns. Will
Jun-09 Jun-09 Jun-09 Jun-09
take a strong move to reverse the downtrend, though.
100
110
120
80
90
80
90
100
110
120
130
70
80
90
100
110
90
100
110
120
130
Aug-06 Aug-06 Aug-06
Aug-06
Oct-06 Oct-06 Oct-06
Oct-06
GBP
NZD
AUD
NOK
Dec-06 Dec-06 Dec-06
Dec-06
55 SMA
55 SMA
55 SMA
55 SMA
200 SMA
200 SMA
200 SMA
200 SMA
Feb-07 Feb-07 Feb-07
Feb-07
Apr-07 Apr-07 Apr-07 Apr-07
Jun-07 Jun-07 Jun-07 Jun-07
Aug-07 Aug-07 Aug-07 Aug-07
Oct-07 Oct-07 Oct-07 Oct-07
Dec-07 Dec-07 Dec-07 Dec-07
NZD
AUD
NOK
GBP
Feb-08 Feb-08 Feb-08 Feb-08
Apr-08 Apr-08 Apr-08 Apr-08
Jun-08 Jun-08 Jun-08 Jun-08
Aug-08 Aug-08 Aug-08 Aug-08
for the short term if risk aversion returns?
Oct-08 Oct-08 Oct-08 Oct-08
Dec-08 Dec-08 Dec-08 Dec-08
Feb-09 Feb-09 Feb-09 Feb-09
Apr-09 Apr-09 Apr-09
Apr-09
AUD index is way overdone – a sell on a basket basis.
Jun-09
NOK is getting cheaper – could surge on risk aversion.
Jun-09 Jun-09 Jun-09
GBP at 200-day moving average area. Will it fade again
NZD saw new highs on risk appetite. Rally to tire in June?
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