Binary Bet 22 Sep 2009

Binary Bet 22 Sep 2009

It appears the bulls aren’t quite done yet with Tuesday bringing the buyers back in force. In early trading, the FTSE, CAC and DAX have all opened up around 0.6% higher. Although this isn’t enough to regain last week’s highs, but it is better than yesterday’s 0.75% fall.  The sentiment pendulum has swung once again to the optimistic side as confidence about the world economy causes the buyers to take interest in commodities again. Gold is at $1008 and oil is stubbornly holding above the $70 marker.  It’s another quiet day on the economic news front with Canadian retail sales at 12.30 the standout economic announcement. Japanese traders still away for an extended bank holiday.

Pair in play

The dollar is on the back foot in early trading today with falls of 0.4% against both sterling and the euro. The commodity pairs are making a comeback following yesterday’s drop in the price of oil.  The Aussie is up over 1% against the US and the Canadian is up 0.64%. The yen is having a mixed day with big gains against the dollar, but relatively moves against the pound and euro.

It is one of the smaller currencies that is setting the pace today though with the New Zealand dollar up 2% today. As appetite for risk taking returns, the number of traders playing the carry trade has also increased. The carry trade involves borrowing in one currency offering low interest rates and investing in another offering high interest rates. With the US having an interest rate of near 0% and New Zealand having an interest rate of 2.50%, the kiwi’ is in play today.   The Kiwi has hit a new 12 month high of 0.7217 against the dollar, but there is previous resistance around this level dating back to August 2008. Today’s move so far has been well above the average range of the NZD/USD in recent
weeks so any upside could be limited from here.  A Double (down) trade could be the best way to play this today.