-- Posted Monday, 11 May 2009 | Digg This Article | | Source: GoldSeek.com

GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR

This is a new week. Traders and investors will now start to look at inflation numbers seriously from now on. The effect of super excess liquidity created by central banks to counter global recession by way of inflation will be taken by the investors with a pinch of salt. Global interest rates will remain ultra low for a long period of time. Central banks will not raise interest rates even if inflation starts to creep up. They will prefer higher inflation with the low interest rate regime.  The low and stable interest rate regime promotes currency carry trades. Currency carry trades which had died around eighteen months back have started to pick up and should pick up in a big way over the coming months. Carry trades could be in the form of yen based carry trades or US dollar carry trades. We expect a pick up in yen carry trades over the coming months. Carry trades will be very beneficial for commodity currencies such as the loonie, Australian dollar, South African rand, and emerging market currencies among others. As far as the commodities are concerned base metals and energies will benefit more due to increase in currency carry trades than gold and other safe havens.

However, one needs to keep a very close watch on the fundamental side which is the global economic growth. If global economic growth appears to be shaky then commodity prices will fall later than sooner.  Never ignore the fundamentals in the medium term to long term while investing.

TECHNICAL VIEW

NYMEX CRUDE OIL (1^ST CONTRACT)

Crude oil needs to hold $56 to target $60.40 and $67.40. Intra day sellers will emerge below $56.40.

DISCLOSURE: NO POSITIONS

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice.Prepared By Chintan Karnani. Website www.insigniaconsultants.in

-- Posted Monday, 11 May 2009 | Digg This Article | Source: GoldSeek.com

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