Financial spread betting strategy can encompass a variety of financial markets, including currencies, commodities and stocks, as well as other financial markets. The Asia Times Online offers an interesting forecast for the coming year, which information could affect your financial spread betting strategy in 2007:
A surprising dynamic may be unfolding in the
new year - some liquidity might be draining off
the global economy. So bets on full-steam-ahead on
stocks, commodities and the dollar, just as last
year, are in the process of a minor rethink - and
it could turn into a major one.
I use the
term "draining off" lightly, however, for there
are still some very large buckets of money out
there. My comment is based on some anecdotal
evidence we are seeing in the market - notably the
move in the yen, and supported by the fall in
commodities, energy, and pull-back in the key
commodity dollars (Australia and New Zealand to be
specific).
The main catalyst is US
economic growth. The view the Fed will cut sooner,
rather than later, is becoming increasingly
clouded because of some surprising strength in the
US economy.
Playing in supporting roles in
this "liquidity drain" episode are: the European
Central Bank, it's on the hiking train; the Bank
of England, will likely hop on board; China,
announcing it may try, yet again, to slow its
runaway locomotive with higher reserve
requirements; and the Bank of Japan, suggesting it
will fire up the interest rate engine.
The
market result: gold is tanking, oil is getting
whacked, stocks looking ozone-ish (made that one
up) and getting hit hard, bonds are lower, the
dollar is rocking higher, and the yen is in rally
mode. Yes, let me write that again in case you
thought it was a typo - the Japanese yen is in
rally mode - while the high-yielders, Aussie and
New Zealand, are getting spanked.
The
infamous yen carry-trade, borrowing yen and buying
high-yielding stuff, has been about two things -
low interest rates in Japan and plenty of
liquidity elsewhere - both play a role. And let us
not forget, extremely low currency market
volatility has played a big role. At least two of
the three, liquidity and volatility, may be
changing and it seems the hedge funds are
recognizing that fact.
|
