I heart risk

The market loves risk, courtesy of yesterday's Fed shift. If seems one needs an adavanced degree in semiotics to decode the subtleties of the Fed's communication strategy, but yeterday's indubitable softening of tone induced a zowie-worthy reaction from risk assets.

While today has started somewhat slowly, there probably remains more joy in the pipeline. Macro Man has therefore:

* Cut the short Turkish equity position
* Cut long EUR/HUF
* Re-established the FX carry basket, given that the indicator he follows has moved back into risk-loving after several weeks' hiatus.
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March 23, 2007 at 9:50 AM ×

Everchanging risk appetite ...

23 Mar 2007 09:46 GMT

DJ MARKET TALK: EUR/HUF To Return To 250-260 Soon - Commerzbank
0946 GMT [Dow Jones] EUR/HUF is to return "pretty soon to the well-worn 250-260 zone, once speculation abates that Hungary might abandon its HUF trading band," says Commerzbank. Reason for the finance ministry's denial of the rumor "is obvious: an end of the exchange rate band in the current environment would probably lead to a significant HUF appreciation, which would be neither politically desirable nor economically necessary," Commerzbank says. EUR/HUF is at 246.60. (MAF)

Macro Man
March 23, 2007 at 9:58 AM ×

Yes, I think it ultimately does go back up there...but there's nothing to say it won't have a pop at 243 or even lower first. Particularly in the dollar comes under pressure, model driven selling of USD/HUF could be a catalyst for a lower EUR/HUF.

From a risk management perspective, I managed to turn a huge loss into a small loss...and I am happy to exit and wait for a better opportunity to re-establish.