Trichet Rocks Markets

June 2008 | Market Strategy

Yesterday we spoke of the medium-term potential for oil prices to fall, in line with our core view of a dollar revival versus the euro. Mr Trichet's hawkish monetary policy rhetoric has clearly dented that view, especially with regards to oil prices. The sell-off in the dollar led to a US$6.00/bbl jump in oil prices, changing the short-term technical picture for the commodity. A strong close tonight would suggest a further break higher next week, to possibly re-test recent highs. However, Mr Trichet did help our ongoing bearish view of interest rate futures. Indeed, December 2008 short sterling has fallen

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