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Eurodollar Future – March 2010

Nicole Elliott from Mizuho Corporate Bank at 12/18/09


Comment: The USD money market has shut up shop for the year, many only too glad to do so. The authorities have ensured that no one is cash-strapped, but that does not mean we are out of the woods. Open interest is down again following December’s expiry, now running at almost half 2007’s peak, underlining the rapidly shrinking balance sheets. If Japanese banks are to be allowed to re-build their capital bases over the next ten years, this process could continue indefinitely. Oh dear! This contract has begun its next small step higher towards 99.750.

Strategy: Attempt small longs at 99.625, adding to 99.570; stop below 99.550. Upside target 99.680/99.725.

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