Has the USD lost its love?

US housing market is still very poor and there are big worries about consumer spending. While the US economy is not in the doldrums when you compare this currency to other, US fundamentals look poor.

However; after the NFP we have just seen and the topping pattern that is forming on the GBPUSD, i think we will see some pull back and the USD gaining some of its lost ground. First we need to see a break of structure before i would step infront of this bull train but after this i see GBPUSD falling back to 2.0460 to 2.0500.

I still see the GBPUSD bullish in the medium to long term. Oil denominated in USD is putting pressure on the USD and also long term central bank diversification will maintain this bullish trend in the longer term.

China must be putting some of its vast reserves into other currencies and i hardly see the fed wanting to put any major halt on this USD decline with all that it can do to revive a stumbling US manufacturing base. Not only this, when you consider that the Chinese administration are concerned that their economy is over heating, a falling USD does not help their cause, could this bring added pressure on the Chinese to revalue the Yuan once again? Something Paulson et al would like to see.

Thanks Charlie

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Nov. 7 (Bloomberg) -- The dollar slid to record lows against the euro and the Canadian dollar on speculation China's plans to diversify its foreign exchange reserves will involve selling U.S. assets.

While China selling USD assets might cause the USD to fall further and cause further demand and inflationary pressures for products from the Chinese economy, by diversify into stronger currencies they will be pegging the Yuan to stronger currencies which might help their cuase in the longer run.

I also wonder if this is a calculated effort to lower the USD which will cause USD budget deficits to shrink over future quarters. We all know this has been a major issue. Bush did say a few months back that tackling the deficits was one of his major challenges over the next few years.

I think we are seeing some major rebalences in the global economy occuring.

Could the diversification of the Yuan be Chaina moving one step closer to a freely traded currency in coming years? After all a freely traded curreny isn't just traded against the USD!

Oil prices have also smashed through record highs this morning and commodity currencies have proved the most significant gainers against the dollar as a result. When will teh CAD stop appreciating?




The Canadian dollar has risen by well over 1 pct against its US counterpart to hit another multi-decade high of 0.9056 per usd, while the Australian dollar -- which gained an additional boost from the Reserve Bank of Australia's rate hike overnight -- has come very close to the 0.94 usd mark.

'When the value of the world's foremost reserve currency is falling just as fast as the oil price is rising, what better choice is there than the currencies of gold and commodity producers, whose values are also being underpinned by central banks pursuing fairly aggressive monetary policies?,' said Neil Mellor at the Bank of New York Mellon.

I think we are heading for 2.14. The 78.6 of the 1980 high to 1983 low is at this (2.14) level. This would also mean that the Euro would hit 1.50 at the same time considering the relative daily range of these currencies in comparison with each other. Both pairs will have a hard time moving higher than these resistance lelves. Unless China really does start dumping!!

However, my systems have not given me an entry in these run away markets. Been trading the futures markets but my longer term trading style for FX has not yielded much this week. Shame! Hence why I have been working day and night for weeks on a trend following system.........

Its not the USD losing any love, instead it's losing all of it's backing.

Was there any love to begin with?