Over the last 5 days Dollar index has put up a green candle every
day...Oil has done almost the same. Oil is defying its inverse linkage
to the Dollar at the moment. It will be interesting to see how long it
can continue doing this. Bolstered by the almost explosive inventory
figures that have formed a hat-trick of big draw downs in products,
crude prices have moved up 9 Dollars over the last three weeks. No
doubt the QE money has a part to play in this flare up.
Dollar may continue to grind higher on the rapidly dwindling stock of
the European Soverign debt. What will be worth watching is how long
can oil defy its most celebrated linkup. Oil fundamantals are no doubt
looking better but they are still a long way away from being truly
bullish in an environment of "neutral financials". By neutral
financials I mean an absence of the heavy duty Dollars that are
searching for short term relationships.
Many such short term relationships will definitely be built on the
inverse linkups of oil and dollar. These trades will have to unwind,
coz they aren't working and there is a curtailed limit to the pain
that these short term relationship guys can take.
No comments:
Post a Comment