World stock indices continued their upward trend in November, led again by solid gains in US markets. The Euro was the standout winner among currencies, strengthening against the Dollar and Yen and pulling other European currencies along with it as well. Energy prices strengthened at the end of the month. Base metals were strong throughout the month as were prices of Gold and Silver, which benefited from stronger energy markets and the weakening Dollar.
GAINS IN THE EURO-YEN MARKET
Our Trading Systems were able to profit in November from gains in the Euro-yen crosscurrency market, which moved to a record high of 153.46. The Euro staged a dramatic rise against all major currencies on the back of strong money supply expansion and speculation that the ECB will soon hike rates at a time when the US may cut them as expansion softens. The Yen rallied against the Dollar as well but was unable to match the Euro’s advance.
MIXED MARKET RESULTS LEADS TO LOSSES IN COFFEE
Superfund Trading Systems’ positions in coffee saw an overall negative result in the two major coffee markets. NY Coffee futures finished the month with gains of over 10.5% as bad weather in Brazil reduced crop estimates by 35%. However, long positions suffered when London Robusta coffee futures lost 5.4% on news that Vietnamese Robusta production may rise by over 25% this season.
LOSSES IN THE AUSSIE BOND MARKET
Our Trading Systems took losses in the Australian 3 Year Bond in November. In an anticipated move because of inflationary concerns, the Reserve Bank pushed rates to 6.25%, the highest level in almost six years. However, weak employment and slowing home loan approvals in October contributed to a swift advance in bond prices as speculation rose that the Bank would halt further rate increases until later in 2007.