My picks: Short EUR/USD @ 1.36
Expertise: Global Macro
Average Time Frame of Trades: 1 week
The U.S. dollar has been under strong selling pressure, particularly against higher yielding commodity currencies. To some extent, a sudden change in investor’s sentiment towards more risk taking has been helping stocks and commodities to stage substantial rallies and the safe-haven US dollar seems to be giving back some of its previous risk-aversion gains. However, in the week ahead I expect a pullback on riskier assets, probably triggered by profit-taking. In addition, investor’s expectations that the world economy will emerge from this recession sooner than expected seem grossly overstated. According to the Bureau of Labor Statistics of the U.S. Department of Labor, the U.S. economy lost 539K jobs in April, the unemployment rate rose from 8.5 to 8.9 percent and 5.7 million jobs have been lost since the recession began in 2007.
