As Jamie and Gerry have noted over the last few days, India has been a significant buyer of cable and there have been plenty of other Asian central banks joining in as well. I presume that this buying will have something to do with their reserve diversification but we do not as yet know whether there has been a concious decision to reduce their USD percentages.
The GDP number on Tuesday certainly has me reconsidering my bullish cable approach but as we know it’s flows, not logic, which drive the FX market. The next few days will be critical for cable’s medium-term outlook; a break back below 1.5750 and the bears will have wrested control; a break back above 1.6025 should see the bull-run back on.
