Kruger Insights Thursday – January 2, 2014 by FirstMacro

BinaryOptionsNow | Published on January 2, 2014 at 4:12 pm

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By: Joel Kruger

The Other Side – OK..So here we are on the other side and into the new year. I am very much looking forward to 2014. Although I have nothing to really complain about with my overall 2013 performance, I was a little frustrated in the latter half of the year, with equity markets failing to relent. Let’s see if US equities can close up another 30% this year. I won’t rule anything out of course, but I would be quite surprised if this happened. The slow path to monetary policy reversal has finally kicked off following the December taper, and as markets start to take this more seriously, I expect this will have a weighing influence. Stocks have been very well supported by monetary policy until now, and while the path to tightening will be very long on drawn out, we are still on this path now and this should start to be more realistically discounted into the price. Despite my background and loyalty to FX markets, I maintain my core view that the US equity market is the most important market to watch at the moment, as it is the only market that has failed to respond in any way thus far to the expectation for higher rates.

kruger insights january 2, 2014

New Explorations – Once we see capitulation here, it will likely open the door for increased volatility and will expose any risk correlated currencies, particular the commodity bloc and emerging market currencies. While the Australian Dollar took a heavy hit in 2013, I think it is quite possible that we see another round of Aussie weakness in 2014 which takes AUD/USD back towards and potentially below 0.8000. Similarly, I will be looking for relative weakness in the higher yielding New Zealand Dollar, which has yet to really respond to the shifting global macro economic landscape. Moving on, given that I am a currency guy, I think it would only be fair to give a little more attention to cryptocurrencies this year. I am not sure how this all will play out, but the idea is certainly compelling, and I think it will be interesting to watch and see what kind of volatility we get with Bitcoin in 2014. If for nothing else, it will be a fun academic exercise. Technically, we should be getting into the swing of 2014 today, but it might not be until Monday when we finally get a return to liquidity at full capacity.

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