THE aftermath of the G20 seemed to trigger a bout of dollar short covering this week as the greenback has gained against most majors. Dollar-yen was breaking through the strong ¥83.20 resistance level yesterday, above which there are rumoured to be large stops located. If the dollar breaks through with conviction then it could easily take the ¥84.00 level in a matter of days. Spread Co offers a spread on dollar-yen of ¥83.115–¥83.145.
Despite higher than expected inflation data in Britain yesterday, traders are not getting much more bullish about sterling-dollar. The pound failed to hold onto gains against the dollar and dipped back below the $1.6000 level. Not being able to hold onto such an important psychological level could well lead to further weakness. Capital Spreads quotes a spread of $1.5993-$1.5995 for sterling-dollar.
But sterling-euro may still have space to climb. In fact, higher than expected inflation might even help push it back towards the recent low of around £0.8100. CMC Markets offers a spread on euro-sterling of £0.84956-£0.85974.
Traders should watch out, however. Thanks to Irish fears and crisis talks in the eurozone, the greenback has been performing well, whereas the euro has been slipping since the end of October, but if the market decides that a bailout is likely for Ireland then the trend may reverse. Cantor Index offers a spread of $1.35913–$1.35923.
The South African economy has been overheating for a while, and it could be about to burn up. Yesterday the South African rand fell to a seven week low against the dollar, as European uncertainty weighed on commodity prices. With the dollar on the up, traders would seem wise to consider selling the rand against the dollar. IG Markets offers a spread of R7.05725-R7.07700 on US dollar-South African rand.