Dollar Index Posts Weekly Reversal Bottom

After reaching a 15-month low early in the week, the U.S. Dollar closed higher for the week against a trade-weighted basket of currencies. Technically, this closing price
reversal,

once confirmed, often leads to a 2 to 3-week retracement. The daily chart suggests that a move through 77.50 is necessary to turn the main trend to up.

The low for the week for the Dollar was posted shortly after …

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Lower global equity markets are helping to push the U.S. Dollar higher as investors shun risky assets for a second consecutive day. Traders began getting nervous earlier in the
week

after Fed Chairman Bernanke mentioned the level of the Dollar in a speech. This was followed by supportive comments from European Central Bank President Trichet who used a speaking opportunity to

announce his agreement with Bernanke and to try to talk up the Dollar.

The recent pace of the decline in the Dollar has been giving traders a clue that sentiment may be shifting. This shift started at about the same time that China was talking about

changing the value of the Yuan. While China remained hard-nosed about its currency this week when pressed by President Obama to change its ways, speculators were beginning to bet that China would

eventually cave in to international pressure and make a small adjustment in how it pegs its currency.

The combination of comments from Bernanke and Trichet along …

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Euro Traders Sensitive to Efforts to Talk Up Dollar

The U.S. Dollar posted a strong gain versus major currencies on Thursday as investors pulled money out of higher risk assets and sought refuge in the safer Greenback. Recent weak
U.S.

economic data is making traders think twice about buying riskier stocks and commodities at the current lofty levels.

The EUR USD traded sharply lower early in the Thursday trading session but managed to erase …

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The U.S. Dollar is trading higher against most major currencies this morning with the exception of the Japanese Yen. Easing in equity, gold and crude oil prices is sending a
signal
to

traders to lighten up positions and book profits after the recent decline in the Dollar. The inability to accelerate the Dollar to the downside is also contributing to the rally. Shorts seem to
have

pulled offers after the down side momentum started to flatten out.

The December Euro failed to take out $1.5000 which came as a surprise to traders. Yesterday’s rally in the Euro following comments from Luxembourg’s Juncker should have given the
Euro

the green light to challenge the high for the year at $1.5063, but when traders failed to print $1.5000 last night, the market turned seller.

The December British Pound is trading weaker. Overbought conditions are contributing to the weakness, but the major concern for traders today is the U.K. economy and the country’s

debt situation. Investors …

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Dollar Loses Ground to Euro, but Finishes Mixed Versus Others

The EUR USD posted a sizable gain. Tuesday’s supportive comments from European Central Bank President Trichet were not enough to stop the Dollar’s slide today. Matters weren’t
helped

after Luxembourg premier Jean-Claude Juncker said that the Euro’s rally hasn’t hurt the Euro Zone recovery. This comment gave traders the green light to drive the currency higher. If upside
momentum

continues at the current pace, we could …

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Housing Starts Fall Unexpectedly; Treasuries Could Benefit

This morning it was reported that the Core CPI rose 0.3% while Housing Starts fell 10.6%. Treasury futures are trading a little lower after the news. A higher CPI number will be
an

indication of inflation which helps push interest rates higher. This will put pressure on the December Treasury Bonds and Treasury Notes. A sharp sell-off in the equity markets could trigger a
flight

to safety rally in the Treasuries. Both of these scenarios are possible today which means a two-side trade is likely. Watch for volatility. The surprise drop in the housing starts could support
the

Fed’s notion for interest rates to remain low for a prolonged period of time.

U.S. Equity futures are trading sideways to lower after an attempt to reach a new high for the week overnight failed. December E-mini S&P 500 futures made a high this week at

1112.00. A breakout above this level could trigger a sharp rally to …

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Dollar Manages to Hold on to Gains

The U.S. Dollar managed to close higher today despite late session attempts in New York to erase earlier gains. This is strong evidence that most of today’s rally was due to

short-covering rather than fresh buying. Comments from ECB President Trichet were supposed to show support for Bernanke’s comments from yesterday, but actually helped ignite the rally in the
Dollar.

Technically, the Dollar is oversold on the daily chart. This …

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The U.S. Dollar is trading higher overnight based on oversold technical conditions. Yesterday’s comments from Fed Chairman Bernanke regarding the Dollar may also be triggering a

short-covering rally as well a position-lightening. The overnight action has not been sufficient enough to call for a change in trend.

Yesterday, Bernanke expressed concern for the Dollar, which was a surprise to some since the Fed Chairman rarely talks about the U.S. currency. In his speech, he said he remains

committed to a strong Dollar like the Treasurer usually says, but he failed to come up with a strategy to boost the greenback. In addition, he talked about interest rates remaining “exceptionally

low” for “an extended period”. It’s hard to believe that the long-term down trend will change for the Dollar given that interest rates are expected to remain low.

The short-term trend may reverse temporarily because traders usually get nervous whenever a central bank official talks about their currency. This usually leads to counter-trend

trading as investors reel …

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Asian-Pacific Nations and Bernanke Comments Drive U.S. Dollar Lower

The U.S. Dollar finished lower against all major currencies today. The down move was triggered by comments from high ranking individuals including Fed Chairman Bernanke and a
Chinese

banking official.

Federal Reserve Chairman Bernanke said late Monday morning that the Fed is likely to keep interest rates exceptionally low for “an extended period.” These three words helped push
the

Dollar to a …

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The weaker Dollar is helping to drive December Gold higher overnight. Since gold is priced in Dollars, the decline in the Dollar is making it more appealing to foreign investors.
Keep

in mind that the higher this market goes, the wider the ranges. Watch for volatility to continue to expand.

Equity traders will be watching retail stocks today following the U.S. Retail Sales Report. The driving force in this market is still the weaker Dollar. As long as global interest

rates remain historically low, look for U.S. equity markets to continue to rise. Economic and earnings reports could help to produce volatile swings in the markets but should not be enough to
change

the trend to down at this time.

Interest rate futures could see pressure today as Treasury Bonds and Treasury Notes continue to compete with the higher yields being offered by the equity markets. A worse than

expected U.S. Retail Report will send a sign that the economy is still under pressure. …

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Thursday, November 12, 2009

Stock index futures closed higher but weakened late in the session after soaring in the morning. Yesterday’s quick surge early in the trading session put them into overbought territory, giving investors an excuse to take profits. Throughout this entire rally since March, traders have not been too fond of chasing markets higher, so a correction from current levels will not be unusual. Short-term, this market should continue to move higher as long as the Fed keeps interest rates low and the world continues to use the Dollar as a carry currency.

Treasury futures finished higher. Cash markets were closed because of the Veteran’s Day holiday. This helped give speculators a free look at the upside before hedging pressure returns Thursday. The weakening equity markets also helped contribute to the strength. A rise in equity prices today could force the Treasury Bonds and Notes to retreat.

The Dollar mounted a comeback after hitting a 15-month low against a trade-weighted basket of currencies early Wednesday. The December Euro once again failed in its attempt to break out over the recent top at …
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DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every …
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Wednesday, November 11, 2009

The Treasury market is closed because of Veteran’s Day so Treasury futures have very little news to guide them. The rise in the stock market is once again driving up yields, which is pressuring prices. Investors are asking for higher interest rates in order to compete with the yields being offered by the stock market.

The lack of economic reports today is shifting the focus by U.S. equity traders to the U.S. Dollar. The prospect of the Fed keeping interest rates low for a “prolonged period” of time is helping to boost stock prices overnight as investors continue to treat the Dollar as a carry currency. Because of the recent Fed FOMC decision to keep interest rates historically low, bullish equity traders have a 30-day free ride. In other words, there is nothing in the economic picture in the short-run that could derail the current rally.

The U.S. Dollar hit a 15-month low against a basket of currencies last night on the prospect the Fed will keep interest rates at low levels for a prolonged period of time. This assumption …
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November 11, 2009

GBP USD Falls after Bank of England Releases U.K. Economic Forecast

Excessive volatility hit the GBP USD early this morning following the release of the Bank of England’s forecast for economic growth and inflation. In the report, the BoE warned that the U.K.’s economic recovery was just beginning and continuing strength during the recovery period remains “highly uncertain.”

Since the global financial crisis began, the BoE has at times been aggressive in fighting the recession while at other time drawing …
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DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. …
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Tuesday, November 10, 2009

The U.S. Dollar is trading slightly better this morning versus most major currencies after the bashing yesterday sent the trade weighted Dollar index to a 15 month low. Short-term indicators are oversold which could lead to a short-covering rally today.

Yesterday the Dollar was under pressure because over the weekend the Group of 20 decided not to issue a supportive statement and instead agreed to support continued economic stimulus. This led to a move by investors into riskier assets and away from the U.S. Dollar. This trend is expected to remain in the market for the foreseeable future as long as U.S. interest rates remain the lowest in the world. Investors are once again treating the Dollar as the world’s carry currency.

The December Euro stopped short of a new high for the year yesterday. Despite conditions that warrant a weaker Dollar and stronger Euro, traders may be concerned about possible action to weaken the currency by the European Central Bank if the Euro gets too hot.

The December British Pound is trading weaker this morning. Investors …
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November 10, 2009

U.S. Dollar Gets Trounced after G-20 Finance Ministers Offer No Support

The U.S. Dollar was trounced on Monday after the G-20 finance ministers failed to discuss the value of the Dollar at their week-end meeting, thereby, effectively offering no support. In addition, they decided to keep stimulus measures in place until the global economy can show sustained gains.

The real selling pressure hit the Dollar after an IMF report issued at the meeting stated that the Dollar has moved closer …
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DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The …
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Monday, November 9, 2009

Demand for higher risk assets is helping to trigger a strong rally in U.S. stock markets. Although the markets are still below their highs for the year, appetite for risk is expected to continue for some time which gives the indices plenty of time to attack the major highs. The action by the Fed last week combined with bearish unemployment report is expected to keep pressure on interest rates which is helping investors build confidence in the long side of the market.

Interest rate futures are under pressure this morning. Increased supply from this week’s Treasury auction is helping to attract selling pressure. The stronger stock market is encouraging treasury traders to shift money into higher yielding assets.

The U.S. Dollar is getting trounced overnight after the G-20 finance ministers failed to discuss the value of the Dollar, thereby effectively offering no support. In addition, they decided to keep stimulus measures in place until the global economy can show sustained gains.

The real selling pressure hit the Dollar after an IMF report issued at the meeting said, …
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Click on the link below to view today’s charts and hear Jay’s analysis.

http://www.screencast.com/t/RYzQJvcT

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DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value …
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November 8, 2009

Weak U.S. Economy May Not Mean Weak Dollar This Time

The U.S. Dollar closed trading mixed after trading in a range most of the day following the release of a poor October jobs data report. The loss of 190,000 jobs was somewhat of a surprise. Traders were positioned for a loss of 175,000 jobs. The unemployment rate climbed to a 26-year high to 10.2% and the world didn’t fall apart. Traders either believe this is the bottom in unemployment or they have become complacent …
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