Global markets look set to remain volatile until year-end, as the dollar reverses several months of gains and hits a 2-1/2 month low against the euro, and as oil falls to the $40-a-barrel level despite OPEC's historic supply cut.
Experts tell CNBC that the greenback is out of favor again and that investors will have to rely on intuition, rather than charts and history, as a guide in this new market landscape.
Greenback: No Longer in Favor?
The euro-dollar may strengthen to $1.48, says Richard Grace, chief currency strategist at CBA, after the dollar plunged against the euro and yen in overnight trade.
Expect Further Dollar Erosion
Between now and beginning of 2009, Olivier Desbarres, director of FX strategy at Credit Suisse sees further erosion of the dollar. He outlines the factors weighing on the dollar.
It's a Dollar Weakness Story
"Traders are starting to cotton on to this whole dollar hegemony situation which may be at risk in 2009," said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
Gallo sees the dollar losing its status as the world's reserve currency in the next 3 to 5 years.
Gallo has revised up his forecasts for euro-dollar and sterling-dollar as he is worried about the picture for the dollar in 2009.
Technicals & History Won't Give a Clue
Think intuitively, don't look at technicals and don't try to compare this downturn to anything in the past because this is different, says Kirby Daley, senior strategist at Newedge Group.
Are Commodities Oversold?
The long-term prices of commodities are trading above the current spot price, which implies commodities have been oversold, says Russell Norton, regional head of commodities at Barclays Capital.
No Floor Under Oil Prices
Worries over demand destruction were probably the main reason for the slide in oil prices, says Russell Norton, regional head of commodities at Barclays Capital. He tells CNBC that he doesn't see a floor under oil prices in the near-term.
How to Play China's Infrastructure Theme
In the near-term, investors looking to play China's infrastructure theme can look at cement companies and railway construction firms, suggests Jing Ulrich, MD & chairman for China equities at JPMorgan Securities.
HK Market Will Remain Volatile till Year-End
The Hong Kong market will remain volatile for the remainder of 2008 but not as volatile as the past month, says Jerry Lou, China strategist at Morgan Stanley. He tells CNBC that the volatility will last for another 6 months.
Get Risky and Buy Gold
Next year should be a great year for risk assets and the “obvious, safe bet” for next year is gold, Max King from Investec Asset Management told CNBC.
“People tend to be most risk averse when they should be taking risk and the most risk happy when they should be risk averse,” King said.
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