Eurodollar Future – March 2010

Nicole Elliott from Mizuho Corporate Bank at 11/13/09

Comment: Front month Eurodollars and five-year TNotes have got the message: interest rates are likely to stay low for a very long time. Very low, so that we witness a one-off shift lower in the whole of the yield curves of the major currencies – not just in Japan. This futures contract has reached our upside target but as bullish momentum is very steady allow for an extension to 99.725. Front June and September contracts have a lot more upside potential. Remember though that as we approach 100.00, and if year-end pressures loom, front Dec is the most vulnerable on the downside.

Strategy: Possibly attempt small longs at 99.625 but only if prepared to add to 99.545; stop well below 99.500. Upside target 99.725/99.800.