Phew, what a year.

It was a great year for all those who called the right moves!

2007 was marked as the year where investment banks and banks started facing huge losses caused by the sub-prime mortgage problems.

So what has this got to do with the currency markets?


Firstly, the yen pairs.
The infamous carry trades collapsed as risk appetite over the world dropped drastically. With the markets in such a turmoil ( stock and bond markets ), who would dare to take on the risk of carry trades especially where the movements in the yen crosses became so volatile? The risk/reward ratio of that just don't match.

I believe that there will be further unwinding in the coming year as the credit crunch caused by the sub-prime problems spread globally.

Then, the rest.
First hit would be the pound, then aussie, and lastly the euro. So basically, I'm calling for a lower GBPUSD, EURUSD, and AUSUSD. The yen pairs would be ranging and further lower movements would not be shocking. The USD would rise not because its undervalued, but because the other currencies are just overvalued.

But, what's the point of saying so much in this when the future is so unpredictable? As traders, we should just focus on the charts and go with what happens.