Forex News | Currency News by Forexlive

Must be Gerry’s bonus payment being transacted by our bank…Cable has popped up to 1.5585 from the 1.5545 area on very thin volume…

Passive investors like overseas index funds often rebalance portfolios at the end of each month. For instance, this month, the S&P 500, the most indexed-to index in the world is up approximately 6.5%. That makes the fund holding the shares longer 6.5% more dollars than at the beginning of the month. Those excess dollars are often  sold off for rebalancing purposes at the month-end fix.

Long story short: The better month stocks have, the worse monthly fix the dollar has.

This month, there is a catch though: the massive slide in US bonds this month may offset some of the equity-generated flow…

With the dollar weaker over the last few sessions, looks like much of this may already be baked into the proverbial market cake…

…but it must happen enough to keep the dream alive.

To what dream to I refer? The dream of your favorite asset bubble suddenly imploding, justifying your stubborn bucking of a well-defined trend.

As I’ve said time and time again, identifying bubbles is easy, timing their demise extremely difficult (and usually unprofitable).Just ask Alan Greenspan, who told us the stock market was toppy at the end of 1996, only to watch one of the most explosive rallies in history unfold over the next three years, greatly influenced by his own easy-money policies…

I guess human nature programs us to conclude that we are smarter than the market, despite ample evidence to the contrary.

My advice? Hate Aussie? Scorn Swissie? Wait for the market to turn…better to leave some money on the table and get the direction right than to needlessly spit into the wind…

First Chicago, now the Big Apple PMI rises…

The NY ISM index rose to 495.7 from 485.7 in November, a 2% rise.

US DATA: Dec ISM-NY Current Business Conditions index rose to 70.0 vs
65.6 in Nov. Future optimism also reached a seven-month high.

Maybe the push up in EUR/USD in recent days is so central bank buyers of the single currency can mark their books for the year in a somewhat may favorable light…

EUR/USD is consolidating gains in the 1.3375 area.

Thanks for your readership in 2010. 

Bank holiday here in UK on Monday, so will catch up with you again on Tuesday the 4th.

Bloomberg article

• China C.Banker Zhou:  To maintain basic stability in prices in 2011
• UK Nationwide  December house prices +0.4% m/m, +0.4% y/y, stronger than median forecasts of -0.2%, -0.3% respectively
• China’s President Hu:  Will ensure stable, fast growth next year.  Global recovery will remain difficult
• China slows as tightening start to bite – AEP at The Telegraph
• Faber says long-term US treasuries are “suicidal” investment

Dollar is generally weaker this morning.  EUR/USD  up at 1.3375 from early 1.3310, having been as high as 1.3385.  Stops were tripped in 1.3320/30 area accelerating the rally.  Asian sovereign and German bank notable buyers.

Cable up at 1.5500 from early 1.5440.   Stronger than expected Nationwide house price data (see above) will have lent some support. 

USD/JPY has slipped to 81.30 from early 81.45.  US treasury yields little lower, which will have weighed on pairing and dollar in general.

AUD/USD at 1.0170 hardly changed on the day.  Protection of 1.0200 barrier option interest is serving to slow recent rally in the pairing.

We’re back down at 1.5483.  UK clearer (the one that used to give me nightmares when I traded) notable seller in recent trade.

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