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Obama's SOTU Address Spurs Rebound in Risk

Last updated 1/28/2010 2:37 AM ET (GMT -5) 2 Comments

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Boris Schlossberg

Director of Currency Research, GFT

The EUR/USD& nbsp; dropped below  the psychologically key 1.4000 figure in early Asian trade today hitting its lowest point in more than six months as it tripped stops all the way to 1.3930. The pair however managed to recover most of its losses in the wake of President Obama’s speech which proved friendly to risk assets.  Risk FX staged  a strong recovery with Aussie, cable and kiwi all following suit to the upside after President Obama focused on economic themes promising to extend middle class tax cuts, provide tax incentives for small business and urged Congress to finish work on the jobs bill “without delay”.

The speech was well received, with CBS News instant poll reaction showing that 87% of the respondents favored it and only 17% disapproved of its content.  The positive public response should bolster Obama administration’s legislative efforts  and perhaps restore some investor confidence which has been shaken over the past month by a combination of weaker economic data out of G-20, fears of  monetary tightening from China  and political turmoil on both sides of the Atlantic.

 For the time being the rebound in high beta FX appears to be tentative and the price action is likely to be choppy today with little economic news to drive flow until the North American open. Nevertheless, the bounce in risk appetite suggests that the slide in the EUR/USD is over for now especially if the DJIA average holds the key 10,000 level.  

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Comments (2)

alexjbrandt

January 28, 2010 at 04:27 AM ET

I wonder how the president is going to double US Exports in 5 years. A strong dollar doesn't exactly help his proposal. Could be why the risk trade has rebounded a bit since his speech. We better prepare for $10 a gallon for gas :P

Semaj

January 28, 2010 at 08:06 AM ET

Obama's gonna find out what his leather soles tastes like. Just my thought :)

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.