Action Insight Weekly Report

Sunday, June 20, 2010

Swiss Soared as Intervention Ended, Sustainability of Risk Rally in Question

Swiss Franc was the undisputed winner last week after SNB signaled end to intervention. Euro was lifted by solid bond auctions in Spain and strengthened against dollar and yen. Commodity currencies were even stronger as supported by risk appetite on rally in global stocks. Dollar was generally soft with dollar index extended recent pull back to as low as 85.45. However, we're skeptical on the sustainability of risk rally as yen didn't showed corresponding weakness as dollar in last week's trading. Gold has indeed jumped to new record high of 1263.7 while US treasury yield hovered in tight range above near term low. Risk sentiments are vulnerable to reversal.

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