Week in review - Markets

Exremely volatile week
1) Made a loss on nifty
2) Very high volatility is also expected in coming week due to US credit concerns
3) Problem is of credit concerns spreading worldwide like BNP paribas news last week
4) If US credi issue was just local, there was nothing much to worry, but things might not be so local
5) Also many hedge funds can be in deep trouble like recent news on Goldman's Alpha fund
6) For India, outlook is anyway bearish for next week, so would prefer to sell selective stocks on possible upside on a particular day
7) For F&O, staying out is good strategy .. at least don't make any losses !
8) Shorting nifty might be a good idea in any other crash, but here there can be a good bounceback on one particular day
9) For currencies, USD seem to shed all its gains, so long on EURUSD, GBPUSD, short on USDCHF,USDJPY,EURJPY for the week
10) Crude seems to range trade in 71-74$ levels

Dollar Decline ? McKinsey MGI report

In the current scenario, I am always dollar bearish. I strongly belive in fundamental strength of EURO. Even I would be slightly bullish on GBP and CHF against USD. Only one big currency in which I don't have much faith is JPY, even though they come with strong GDP growth rates and raise interest rates, still for some time I would bet on USD against JPY. However, for a long term > 3 years horizon, I would always bet on a short USD strategy. So my personal views are

Till December 2007 end
Pair : Strategy : Target
EURUSD : Long : target 1.3900
GBPUSD : Long : target 2.0150
USDCHF : Short: target 1.2200
USDJPY : Long : target 125.00

3 year targets i.e. December 2009 end
Pair : Strategy : Target

EURUSD : Long : target 1.6000
GBPUSD : Long : target 2.2000
USDCHF : Short: target 1.1500
USDJPY : Short : target 105.00


Coming back to my original point, McKinsey - MGI has released a report which says US dollar would need to depreciate 33% from its level in January 2007 to eliminate the US current account deficit by 2012.
Read the report here and article here