Market Action in 2006

1.  U.S dollar starts falling come January, and euro will see new highs. The sterling will remain subdued and range bound.

2.  The Yen will be the star in 2006. Look for opportunities to sell USD/JPY. The money will be made here.

3.  USD/INR will remain under pressure, hit 45.50 – 46.00 before strengthening. Time to look for opportunities to liquidate your long dollar positions and reinstate your shorts early next year.

4.  Oil prices will inch up before the end of the year, with the coldest winters ever, predicted in most countries. However, come next year, the prices should start falling again as demand itself goes down as predicted by OPEC.

5.  Inflation remains a googly in this entire exercise and my crystal ball looks a little hazy as of now.

6.  USD interest rates will continue to rise, another 75 bps and then stabilise. Don’t look for cuts next year. The cuts if any , will take place only in 2007.

7.  The bond traders in India may see better times in 2006,as India interest rates stabilise latter half of next year. The shorting of gilts may introduce some money making opportunities.

All in all , another year of action, and volatility is here to stay… Enjoy!


Any comments? Mail jai@corporateacademy.com

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