Wednesday, August 25, 2010

Market Brief: Aug 25, 2010





1 -2 weeks out:

Short EUR/USD short USD/JPY

Longer Term 3-4 weeks + :

Look for entry to long the EUR/USD and long the USD/JPY.

If crude is more related to European markets long crude with long EUR/USD

As risk aversion deteriorates around the world + continued weak US econ data, we will get continued relative flight to quality sentimentally (weather or not fundamentals support such a move). Though lessened risk aversion will be mild at best if we continue to see strong price pressure in stable european and asian bonds.

Overall Id say risk aversion will stay strong but will lessen in the short term. Though, US equities are going to continue to trend down which can quite possibly drive risk aversion back up if world indices follow the SPX.

All in all such a scenario would support a break in gold's recent resistance of 1256+ to higher highs.

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