Monday, October 26, 2009

A US Dollar Recovery

The much anticipated US Dollar recovery is yet to be looked upon to whether it is a true sign that better times are ahead. From our previous posts, we did mention that the much awaited correction for the US Dollar is in place. Although, there are no real fundamental economic support to justify such a corrective move.
Since most economist have been weary that with the over blown deficits of the US States as stated before will dampen the US dollar more towards the year. Against all odds and cyclical signs of the a corrective move though technical in nature this end of the year.
The upcoming GDP report this thursday, the ISM manufacturing index plus the personal income reports due will provide a much needed boost for the US Dollar if the reports would be positive. As everyone else has already been questioning the suprmacy of the US Dollar as the World's Reserve Currency.

With the earlier correction of the GBP/USD as influenced by UK manufacturing report still lurks in the market. As the EUR/USD followed suit earlier in the trading session as the US Dollar Index made a recovery with the USD/JPY as well. These are signs that the market place may have reached a temporary exhaustion as traders makes necessary adjustments again towards the end of the months ' trading activity as we also do.

However, when such adjustment periods are done the probability of a carry over sentiments for the US dollar to continue its recovery will really depend on the economic reports. Although, mixed in market sentiments; we would see more positive outlook for the dollar as the signs in the stock market and investor's shifting to the US dollar may find some support.

The cross-rates atill remain our favorable choice to trade as the EUR/JPY ont he upside may still look good and for the GBP/CHF to do otherwise. But the USDX price levels above the 76.90 may only be the sole price signal that will determine the upside potential of the US dollar at this time.

Monday, October 19, 2009

Comparative Rate Analysis

Viewing the USDX movement for the opening of the week on October 19, 2009 we could see some short US dollar recovery versus the Japanese Yen as it tries to move in tandem with the USDX as shown in this chart. However, it is only seen as a temporary reaction due to technical basis on the USDX oversold levles on a day to day basis.
Although, the all time low of the USD/JPY was at the price levels of 87.11 registered in April of 2008; the USDX was at 71.40 from the lowest price of 70.81 basis pts. We may probably see some initial assault on this prices as the US Dollar still continue to move lower as of this writing. The 74.50 levels may prove to be tempting as the major sentiments still remain bearish. Watch the prices at the important psychological price of 89.60 USD/JPY when it breaks this support price the next assault will be back to the 87.10 levels.

The GBP/USD has been lagging behind the strength of the EUR/USD as it is currently working at the 1.6400 prices and the EUR/USD at 1.4946. The next objective however, for the GBP/USD is now at 1.6550 and 1.5080 for the Euro. As the USDX holds its bearish tone this may well be achieved in the next few weeks of even shorter. The only assitance that the US dollar may hold is only on a technical basis as it has been oversold or some economic reports that may trigger otherwise.

The continued strength of the Aussie and the Kiwi is relative obvious as they make new record prices. This may also have been the favorable carry trades that is now present with the US dollar being at its lowest interest rates compared with the Australian Dollar. As cash capital investments have shifted from Yen carry trades to the US dollar versus the Aussie.

Carefully weigh the trades with the rates as the obvious Major Trend is still bearish for the US Dollar.




Good Luck and Happy Trading !

Sunday, October 11, 2009

Balancing Signals

With the reinforced dollar decline from the beginning of the year of 2009 and gained a more significant momentum on the 3rd quarter; the US dollar as represented by the USDX have plunged in an orderly manner to the psychological support price of 75.90 basis points.
This may probably be the higher bottom from the all time low of 70.90 historical low, although there is no actual justification on this regard but can only be speculated as such. As shown on the USDX chart as of October 12, 2009 the USDX is making a normal reaction after a downturn.
On a cyclical level the downturn towards the low is aligned with the quarter ending of the year which our research have concluded that such a slow US dollar recovery may still be possible in a slower pace.
Alignments on the US dollar movement is also in sync with the other foreign currencies making record levels like the Gold prices at the levels of USD 1,061.50 new highs, the USD/JPY at the levels of 87.11 established at the same week when the USDX registered its 75.91 low as of the end of Oct. 09,2009. In tandem with this movement is the USD/CHF move to its price levels of at 1.0180 low; also made it interesting because based from the past trading experiences this have occurred more in line with the move of the US dollar Index.

And not leaving out the performance of the Aussie Dollar and the New Zealand dollar where registered highs was also established at 0.9088 and 0.7451 respectively. so we may anticipate a much anticipated corrective movement this coming weeks ahead short of a market correction based on economic indicators. .

With the GBP/USD corrective movement back down to the 1.5705 price levels helped the dollar temporarily before it would start moving back to its major trend upwards to the initial target of 1.6380. As for the EUR/USD since it has been the pace setter for most of the cuurency other than the JPY strength vs. the USD; the initial target objective would be 1.4880 or better.
Although, the more significant remarks from the Fed Chairman Ben Bernanke and the unexpected narrowing of the US trade deficit did help boost this recovery although seen as a temporary relief by most analyst. Yet the underlying sentiments for the USD to further erode still persist in the market place until some real recovery can be seen by investors and consumer confidence would be stable to higher as measured in the volumes and openinterest in trading activities.

Watch the fundamental economic reports that may try to sustain the US dollar's recovery to justify the technical outlook in the next few weeks towards the closing of the year.

Good Luck and Happy Trading !

Tuesday, October 6, 2009

Reinforced TREND

With the negative report on the UK Manufacturing figures the GBP/USD has made it's sell-off to the levels of 1.5874 low for the trading session and is currently working back for a correction at the price of 1.5906 as of this writing. However, the USDX is continuing its lows and may probably see some new lows as it attempts to reach its support price of 75.90 at the rate the momentum for the EUR/USD establishes some news highs for the last quarter of the year.

The weakness of the US Dollar gave rise to the Gold prices as it also made some newer high price at the levels of USD 1,043.33 and barely a low on the support price of 1,002.60. This indication above the 1,000 USD mark signifies that the prices may eventually maintain at this levels as there are really no signs of a US Dollar recovery.

We shall maintain our position since the persistent bias in the market still prevails as we have previously mentioned from our previous blogs since August 2009 when the Gold prices were still at the breaking point of 942.50 dated the August 18. The steady deterioration of the US dollar has been maintained in spite of the meeting with the G-20 and the uneventful reports favoring the economic recovery which until now only shows on the stock markets performance but not in the real figures of the US dollar. That is why until today the consumers has not build any such confidence in the value of the US Dollar. Specially against the NZD/USD ( New Zealand Dollar which has also been registering some significant new highs at the price levels of 0.7376.


Good Luck and Happy Trading !