$ For The Week of 10/9

I believe that the most significant factors last week were the revisions the BLS announced they will be making for the year leading up to March 06 and the future revisions to come, along with Greenspan's (remember him?) opinion on the housing market and the statements issued by the two Fed Govs.

We need to remember the underlying driver of all currencies: whether traders believe interest rates are going up or down. Over the last several months, there has been a relative balance between the 2 and the $ has traded between a range with no indication that one has a clear majority, as there has probably been a relative balance between the $ bulls and bears. That may start to change this week, because of the announced revisions and other news. Still, we have to see how the CC, Mortgage apps and Beige Book come out.

When could we see a clear indication that a majority of thinking exists either way? Right now, that can't be known, but if the fundamentals and other statements continue strong for the $, I would watch for a sustained break below 2500 for at least a 2-4 week period AND the absence of fundamentals/statements that say otherwise. As of now, given the info that's been released, we've seen the scale start to tip towards the $ bulls. Let's see how it continues from this point.

I agree that the dollar bulls will have the upper hand the next few weeks. Since interest rates are all but factored into the price action it should be technical and fundamentals as well as the intangibles that move the market. The intangibles fall on the dollar bull side as well. The COT data last week was clearly an indication that the big money has shifted to the dollar. With gold and oil prices falling that should help the consumer feel better going into the holiday season.

The one factor that may be somewhat overlooked is the equities market. With the Dow moving higher and with a surge into new territory, a big move could attract more foreign money. The big money tends to be drawn where higher returns can be expected. With more foreign funds coming into the equities market it could fuel demand for the dollar.

As usual we shall see as it unfolds one tick at a time, but at the very least more volatility would be to the delight of every trader.

My opinion is subject to change without notice or a sudden reversal in the market

The Korean nuclear test seems to be confirmed among many news sources-I really think this will have a profound effect on the Yen as Japanese military hawks will be extremely vocal. Japan is really left with no choice but to strengthen the miltary. The balance of power has really shifted in the region. Historically, there has been tremendous anymosity between Japan and Korea and now N. Korea.

At the least-this creates alot of uncertainty. As we all have seen many times, uncertainty usually creates a demand for $'s, at least in the short term. The term here may indeed be longer, because it is now established that a rouge nation has a nuclear weapon. The way I see it, the louder the world calls for sanctions against N. Korea and the more sanctions come to pass, the stronger the $ will get vs. the Yen. No one wants N. Korea to have nuclear weapons and if it becomes more and more apparent that they do-the Yen cannot help but weaken, absent strong government intervention.

WHAT HAPPENED to USD the past 40 minutes (London Open)?

Europe started shorting USD?

Not sure what you mean BK-It's the EURO that's being shorted...

Are we seeing the beginning of a real bull market for the $? The thinking has really been turned around since the jobs announcements/revissions last week and the statements by Greenspan and the two Fed govs, who were still concerned that inflation was not under control.

I think that there are several things which fundamentally are weighing very heavily on the market now. The upwards job revission is really thowing things for a loop. The BLS has publicly stated that it has "lost the keys" of it's methodology in determining the amount of new jobs the economy is creating. We have all seen how these NFP reports affect the market-so what can be expected now? On top of this is the N. Korean nuclear situation. The unease created by this is also fueling a demand for $'s, especially against the Yen.

There is a fascinating interplay going on between Greenspan and Bernanke. Bernanke has gone out on a limb by stating that he is depending on the "continued slowdown in new home construction" to reduce economic growth to sustainable levels i.e. 1-2%/yr. Greenspan has stated that he feels a bottom may have already been hit in the housing markets and he attributes this to the level of mortgage applications. I wonder how important THAT report will be this week.

Right now, there are a lot of Long $ positions in the market, as the EUR and GBP have dropped dramatically since about 4:00 EDT, which has come on top of Friday's action. In my opinion, todays movement is a continuation of the stong $ sentiment that started to brew last week, given the fundamentals that have come to be accepted in the market. The $ bull sentiment is so strong at this point, that traders have not yet taken profits from Friday. The Treasury Markets are reflecting (or leading?) the current sentiments. So the trend is set:

The $ is bullish until further notice-which will be the FOMC minutes, Fed Gov statements, Mortgage apps and Beige Book. You may see some profits being taken between today and tomorrow as there are a lot ot be taken, but if the fundamentals continue as they have been...the $ can only continue to get stonger and stronger....

Here is some very important info indicating the fundamentals have gone very bullish on the $:

http://www.bloomberg.com/apps/news?p...aJ0&refer=bond

and this:

http://www.bloomberg.com/apps/news?p...w3U&refer=bond

Look for a nice gain for the $ against the GBP and EURO in the London session tomorrow morning. Should be interesting to say the least....

A broker has been sending me "trade tips" for two weeks. Just before NFP, I actually posted their comment to go LONG on USD. We were all expecting a lower NFP number and I personally have been ridiculing their recommendation. Since then, then have been recommending LONG USD till today:


Hmmm.. Correction/Retrace/Ease recommended... so that means, short USD for the moment?

Hello Traders...

as I wrote earlier , dont want to trade against usd...

still prefer tarde from long usd side...

EUR-USD – possible 1,2460-80 target , trade from short side, selling area: 1,2575 and 1,2610-15 sl above 1,2640, important for next direction could be FOMC meeting later today….

Currently short from 1,2545…

GBP-USD – range 1,86-1,91 was broken yesterday, trade from short side, even 1,8250 or 1,81 target possible, i took small short when i saw new low today with tight sl, if not hold will try to sell againnear 1,86….

Short 1,8524 ….

USD-JPY – bulls have situation under control , correction possible, prefer strategy buy on dips near 119,25 or 118,85….

No positions…

USD-CAD – bullish above 1,1300-20 for move minimum 1,1400, weaker oil prices should hurt CAD… trade from long side…

No positions…

AUD-USD – aud is relatively strong ahead Stevens speech at 10.05 gmt today, propably clear direction we will see after this… range 0,7410-0,7465…, below 0,7410 possible 0,7350-70 and lower.. waiting for Stevens, watching gold prices…

No positions….

USD-CHF – look to buy on dips 1,2630-50 for 1,2780-2800

No positions…


good luck
Piotr

gbpusd climbed up to 1.8575
eurusd 1.2550s
usdjpy dropped from 119.75

this forex broker seems accurate to make their recommendations..

hmmm...

One call does not a career make-besides the call isn't all that good. EURO hasn't gone near 2610 and the pound hasn't gone anywhere near 8630...and the call needs a date and time stamp

Here's a call for you-stay long in NZD/USD as long as 6600 holds

We've seen a bit of consolidation in the GBP in the London session this A.M. We could yet see a move down in the GBP as traders may buy into a Hawkish FOMC report, but I think there is significance in the fact that traders apparently are holding their positions for the most part so far in the face of an important release.

I think a sustained break above 8600 will indicate that a serious sell off of positions is occuring prior to the FOMC minutes. It could run 50-60 pips above that if traders lose their stomach for holding profitable positions in the middle of a release. If the GBP holds below 8600, it will indicate that traders are confidant that the minutes will be hawkish and that their $ long positions will get even more profitable.

If you're interested in trading the FOMC minutes you'll need to watch the pair all morning. Based on the above, you'll know how traders who are already in the market stand. If you want to go with them, take a short position in the GBP prior to the FOMC release only if the pair is 8580 or lower. If it's gone into the mid 8600's stay away. Anything higher then the mid 8600's may be evidence that traders are selling their long positions into the rumor of a dovish release, but this is more risky in my opinion. Personally, i'm hoping to see it sitting right where it is now-8580.

Well, we had an intersting result for the FOMC minutes trade. I shorted the GBP @ 74 about 5 min before the release and got out @ 30. One trade absolutely does not make a career-but perhaps a bit of credit can be given for a correct assesment of where the market was and what the professional money was expecting the minutes to show. My opinion was based on the fact that traders had not taken the profits gained from Friday. Because they were still in the market (long the $) I assumed that they wouldn't be leaving their profits on the table to be eaten up by a dovish take on the minutes. The comments by the 2 Fed Govs last week might have been a clue and the bond market was apparently of the same thnking. Inflation bonds were showing higher rates and the rate on the 2 yr note (the most sensitive treasury) had also increased.

We'll have to see how the market shakes out from here. I don't think any major moves are going to occur between now and the London open. Perhaps profits will be taken then, maybe not. Once the smoke clears after London, another assesment can be made. No predictions here what may happen, but the temptation to take some profits will be awfully strong. I would imagine that if profits are taken, we'll see it early in the session.

There are several important economic releases scheduled for tomorrow including jobs, trade balance and beige book. Again we will try to assess what the smart money is doing prior to those trades, which will make the London session and early NY session bear close watching.

BTW-Props to ItMe for her calls on the EUR and GBP. They definately bolstered my opinion and gave me more confidence. I can't wait for the next time the fundamentals match the EW analysis!

EUR-USD – <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

<o> </o>

New low yesterday at 1,2501 after FOMC , strong bounce back today but at this moment still favor short positions…

Selling area 1,2575-90 and above 1,2610, sl above 1,2640-50 for 1,2460-80,

Important US Trade Balance today….

<o> </o>

Currently short from 1,2545…<o></o>

<o> </o>

<o> </o>

GBP-USD –<o></o>

<o> </o>

Pair now trying to back above 1,8600-15, next resistance near 1,8635-60 also looks good for short…<o></o>

Short from 1,8524 was stopped out…<o></o>

<o> </o>

Holding short from 1,8565, will add near 1,8645 sl above 1,8685<o></o>

<o> </o>

<o> </o>

USD-JPY-<o></o>

<o> </o>

As I wrote yestrday, correction possible…but still favor long positions… level to buy 119,25-30 or 118,60-85…<o></o>

<o> </o>

<o> </o>

USD-CAD-<o></o>

<o> </o>

As I wrote yesterday, bullish for 1,14 while above 1,1320, max today 1,1384, if You’re long try to take profit here at 1,1360 or put sl on entry level…<o></o>

<o> </o>



Fundamental:</PRE>

The Canadian dollar was down </PRE>

versus the greenback on Wednesday as another slide in commodity </PRE>

prices weighed on the currency, which could drift further given </PRE>

the lack of any key domestic data. </PRE><o> </o>



With no key Canadian data due out during the session to </PRE>

impact the currency, traders seemed content to focus on weaker </PRE>

commodities, particularly oil and gold, which often move in </PRE>

line with the Canadian dollar. </PRE><o> </o>



The commodity story has been hurting the Canadian dollar </PRE>

for a while now. What's kept it as high before that is the huge </PRE>

amount of M&A activity," said Bart Melek, senior economist, at </PRE>

BMO Capital Markets. </PRE>

"But I think that's kind of getting washed out of the </PRE>

market and a lot of the strong commodity-based fundamentals are </PRE>

weakening." </PRE><o> </o>

<o> </o>

USD-CHF – look to buy on dips 1,2630-50 for 1,2780-2800<o></o>

<o> </o>

AUD-USD – <o></o>

<o> </o>

Good demand noted this morning for topside Aussie calls after
strong employment data overnight. Traders note stops at $0.7485 and
$0.7495.

<o> </o>

200 DMA at 0,7478, now we are above this level…

<o> </o>

Bearish below 0,7440-50, bullish above 0,7500, still watching

<o> </o>

NZD-CHF-<o></o>

<o> </o>

Current 0,8362 … testing 50% fall from 0,9448 to 0,7375…

200 DMA below 0,81, also good support at 0,8100 ( trendline ), watching…

<o> </o>

USD-CZK-<o></o>

<o> </o>

Very interesting situation, long term downtrend-line on daily chart is underpressure, daily close above could be very bullish, on the other hand consolidation 21,7000-22,6000 also possible…

<o> </o>

USD-DKK-<o></o>

<o> </o>

Consolidation 5,7500-5,9500, supoort 5,85 then 5,80, also range –break to the upside possible…

<o> </o>

USD-HRK –

<o> </o>

Look to buy again on dip 5,85-5,86 for minimum 5,94-95…and for 6 and above later..

<o> </o>

USD-HUF-<o></o>

<o> </o>

HUF is a stronger than we expected at this moment range-break to the downside possible, watch support near 212,00, speculative traders can to take long here ( 212,50 ) with tight sl below 212 for move minimum 216, daily close below 212, we will have bigger chances for back to 208…

<o> </o>

USD-MXN –<o></o>

<o> </o>

Watch support 10,9200-9500, resistance 11,1000, bigger chances at this moment for bears

<o> </o>

USD-PLN - <o></o>

<o> </o>

If You are still long, You can take some profits here 3,1215-25 for rest put sl on entry level tp 3,14, look to buy on dips again…or on break to the upside

<o> </o>

More details about other currency than majors after weekend

<o> </o>

GOOD LUCK and GOOD TRADE

Nice post Finexo-keep 'em comin...

Looking at the trade balance this morning...I see that traders who have gone $ long from friday are still in the market. There has been some minor consolidation in the EUR and GBP, but the $ bullish positions have held thru London and early NY. The Fed minutes have had an impact, of course, in strengthening the sentiment.

We may have a situation similar to yesterday before the FOMC minutes announcement: Traders are holding their profits in the face of an important ecomonic announcement. You may want to hold right along with them.

Quite a bumpy ride but we have indeed seen a fascinating result. The trade bal widen ($-) when a more narrow number was expected. We did see the EUR and GBP spike up about 20 pips or so after the number was released. That's when things got very interesting.

Why did the EUR and GBP retrace to pre-release levels? Well consider this scenario: Traders have been $ long since last Friday and have remained so this week as we have not seen the profits made since then taken out of the market to any significant degree. When the TB was released and some $ shorts got into the market-the traders who have been $ long since last friday bought more $'s, in support of their $ long positions. The $ bulls are controlling this market right now.

Any sign of this reversing? I am short in USDCHF, and long in EURUSD and would like to see the $ come back down a little. Anybody know the outlook for next week? ( I know that could be a loaded question) Or maybe some insight as to what has happened in the past after a week like this?

Thanks
Rusty

This forex broker has been VERY accurate.. It predicted a USD rally, then they predicted to stop and now, they resume buying USD:

So I guess I will have to hold what I have for a little while longer. It's not hurting my margin yet But we shall see what next week brings.


Rusty

What we have seen this week and today is a fundamental confirmation of the overall bullish sentiment for the $. Retail sales are strong-which is no surprise given that jobs are plentiful and wages are up.

The most important underlying factor for continued $ strength is the price of energy. When it drops, consumers respond buy spending those extra $'s on everything else. Here in NY, I'm paying almost one dollar less for gas then 4 weeks ago. I know I have more money to spend on other things and I'm sure most consumers feel the same way to. There really isn't any big mystery here; when the price of something goes down, we tend to buy more of it and when the price of energy goes down, we tend to buy more of everything else.

So where to from here? Well the big question left is where housing is going. We know that inventories are up as people had been buying less new and older houses. Mortgage rates have decreased a bit as has housing prices. Is it possible to see a bottom in the housing market? I think there is a light at the end of the tunnel there, as Alan Greenspan has said and he is probably one of the smartest economists out there. Bernanke has stated that he is depending on a continued slowdown in housing to put a brake and the economy. If that brake is gone, where can they go but to talk more and more strongly about raising the rate.

We have seen the beginning of a real bullish market on the $. Last friday's job report was the cornerstone; yes there will be some profit taking in all the shorting we have seen in the EURO and the GBP, but the $ did break thru 2500 against the EUR. Given all the info that has come out over the last week, can we establish that the new valus of the $ is about 2480-90 vs the EURO and about 8530-8540 vs the GBP? Let's see where NY closes.