9th March 2015

Market Commentary

USD hitting an 8 year against the Yen today looks like preparation for a major assault on the 100 mark on the USDX. Decline in yields on key Euro debt like German bond products weighted heavily on sentiment as the ECB began today officially its bond buy back program for its own version of Q.E. Bond traders taking advantage of the yield differential have been taking advantage of the Euro Zone coming of the Q.E. as prices as Euro bonds go up favorably for US credit investors. The only snag is the flip side. A yield arbitrage between 2 different currency sets can only work if the currency pair remains stable in a low volatile trading range. But that hasn't been the case with the EUR which has declined by as much as 30 cents to the Dollar since August last year. The return on investment in the buy-sell of a Euro denominated government or high quality corporate bond can only make sense if the EUR/USD trades within a narrow range during the set period of the bond trade. But with the EUR having declinedin value so much against the USD, in reality the bond arbitrage totally evaporates as US bond traders cash in their Euro bonds and then convert their EUR back into USD. Crude oil stabilizing nicely as economic fundamentals of production matching actual demand vs speculative demands comes into a sot  landing towards market equilibrium. And as long as fuel driven inflation can be tamed then the necessity for bullion holdings evaporates as the gold loses attractiveness and is price slips further.
 


US DX
97.662     -0.101 -0.13%
Support  97.043   Resistance 98.113


EUR
1.085250     +0.001190 +0.11%
Support   1.07300      Resistance  1.11180


Crude Oil
50.05     +0.05 +0.10%
Support    48.47      Resistance  51.55


Gold
1166.685     -3.860 -0.33%
Support   1,159.0    Resistance    1,178.2
       

Pieter Bergli - DeLoren Trust Holdings

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