SubscribeDaily Futures Commentary July 16, 2009
Thursday, July 16, 2009
Traders are buying the September Japanese Yen this morning as protection against a bankruptcy filing by U.S. commercial lender CIT. Investors have been lightening up their demand for higher yielding assets after CIT Group announced it probably won’t receive a federal bailout.
Some business leaders fear a possible economic collapse in some areas of the economy if the CIT situation is allowed to escalate. If this occurs then the Japanese Yen would most likely gain versus the Dollar because of its safe-haven status.
Another reason why traders are leaning toward the long side of the Japanese Yen this morning is because of the U.S. report showing a 15% increase in the number of foreclosures. This report served as a reminder that the recession is still real and raised doubts that the rapid rise in equity markets this week is sustainable.
Although these two events may be triggering a short-covering rally overnight, gains may be limited if the equity markets continue this week’s strong rally. If the rally continues then the overnight gains in the Japanese Yen will most likely disappear. A stock market rally today would send …
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