Short Sterling – June 2010

Nicole Elliott from Mizuho Corporate Bank at 12/16/09

Comment: Rising open interest in most contracts suggests extreme caution as the money market is still dysfunctional. Counterparty risk remains key, and now sovereign risk looms. Whether bankers get a bonus or not is irrelevant to this equation. We continue to feel that futures prices will sneak higher as hopes for a strong(ish) recovery fade.

Strategy: Buy at 98.920; stop below 98.780. First target 99.100 and then 99.220.