The G20 is now behind us and it was a qualified success. The assembled nations managed to present a united front but whether this leads to a sustained global recovery is highly debateable. The excesses of three decades are to be erased through excessively excessive spending- I have my doubts!
Nevertheless we are now in a short term feel-good trend and I am certainly not going to fight it. The USD is likely to be the main sufferer during this phase and I think buying EUR/USD is the safe way to play this, and buying cable is the aggressive way to go. It may sound a bit crazy at the moment, but I think we can see cable trade back towards 1.70 if this ‘recovery’ can last a few months.
I do not now expect to see any major retracements in cable. The volatile will-we-won’t-we phase is now over in my opinion and an interim low has been formed. Many of the same people who were really bullish at 2.00+ were also super bearish at 1.40, a sure indication that the market is oversold. They seem to forget that price is important.
