11th March 2015

Market Commentary

USD spec assault now in full swing as the vultures hover overhead sensing the EUR can slip even further than parity. After all is EUR/USD bond differentials on the 2yr and 5yr are set to widen as much as 50 more basis points on the over the next 2 years then we are only at the beginning of more currency woes for the Euro land. The Grexit shambles since last summer 2014 is what tumbled the EUR as investors showed a dramatic sign of no confidence and sank the EUR from 1.40 to 1.10. Now that the Euro version of Q.E. has started it is only beginning to dawn on traders that this whole process can take years to heal the credit excesses in the Euro markets. See on Bloomberg report on the Dollar parity - http://www.bloomberg.com/news/videos/2015-03-11/when-will-the-euro-hit-parity-with-the-dollar-

Meantime Japan continues with its anemia and with the Yuan coming online mainstream convertibility; it's value will wholly depend upon exports to the US markets which piles more pressure on the USD to rise. Traders in January were aiming at a parity horizon by the year end 2015 but it a dramatic push to 0.90 on the cards? 2-5yr US Treasury yields have slowly started to climb since January 2014 as EUR benchmark German Bund yields have been falling on the 2-5yr from 1% to 0.1% on the Bund vs a climb of 1.55 to 1.7%   on the 5yr. Spec positioning on the last 2 sessions seem to point that the EUR has more ground to lose within context of bond market differentials. Any bounce on the cash market come this friday and next week will only be seen as profit taking short covering and opportunities for fresh shorts in the market. Bond yield differential is at the heart of this story of USD rising strength and shall continue to do so until the first signs of inflation begin to fade and so we are basically talking about a 5-7 year economic cycle of boom to peak whereas Euro land is still languishing in the trough of the bust in terms of economic cycles. Within this context of normal vs inverted bond yield curves USD strength will keep crude oil at bay sideways for the next 3 years as confirmed by BP analysts and Gold has no further reason to rise dramatically in the long term should commodity inflation diminish over the next 3 years as the CRB Index benchmark seems to confirm. Crude oil report on Bloomberg - http://www.bloomberg.com/news/videos/2015-03-12/why-the-worst-is-over-for-oil-global-commodities-smith       
 

US DX
99.715     +0.040 +0.05%
Support  97.902   Resistance 100.912


EUR
1.054615     -0.016135 -1.51%
Support   1.03927     Resistance  1.08067


Crude Oil
50.28     +0.26 +0.51%
Support    46.46      Resistance  51.90


Gold
1155.760     -9.125 -0.78%
Support   1,136.0    Resistance    1,171.6
       

Pieter Bergli - DeLoren Trust Holdings

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