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Quick Technical Look At The USD
From Nic Lenoir of ICAP
Following up on our call for a reversal in USD weakness, here is what we see in the very short-term: USDJPY has broken its downtrend channel as expected. 91.65 is now support and upon retest we would expect the market to follow through and go higher after this break.
EURUSD is apparently attempting to form a top. We have a quasi H&S formation but somehow little follow through on the initial break and we are back above the neckilne, so this could be a bear trap. This charts is awkwardly starting to look like a bearish diamond reversal, bu we don't really see those everyday and it's not a marvel of symmetry, so I would be cautious here. Still the resistance was tested today and held. If this reversal is for real watch a break of 1.4650 and then more importantly 1.4615 to open up more downside.
We stick to our original call the a reversal may well be happening. To all the equity bears out there that are also USD bears: you can't have both. It's a carry trade and borrowed USD are used for carry, so pick your favorite, but shorting both is probably not a very good deal... unless you are a relative value wizzard playing relative valuation fundamentals or a correlation breakdown prophet. I am neither.
Good luck trading,
Nic
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Is the dollar fungible enough to hide this in some other currency? Carry to gold carry to yen carry to silver carry to euro. LOL
On your first chart, could that also be a bull flag? Just like the SPX is doing now, look at 30 minutes 10 day chart of ES (or SPX cash if you want), doesn't it look like it's trying to form a bull flag on a parallel down channel?
But I agree with you, sooner or later USD will go up, no because of "STRONG ECONOMICS" but a run for hard cash...
Check this out... so now the new trend for people WITH GOOD CREDIT is NOT TO PAY your mortgage!
http://www.latimes.com/classified/realestate/news/la-fi-harney20-2009sep...
Well, what can I say... I mean the government is rewarding the irresponsible so why won't the responsible people join the party? I guess if this type of government keeps on going, soon we will have nation with people who don't have credit left... Which is good in a way if you think about it... SPEND WHAT YOU HAVE DO NOT BORROW! Stick that in Bermonkey's a$$! This maybe the push for USD no one is expecting where people are shunning away from "credit" and running toward "hard cash"...
Tomorrow 9/22/09 is a major cycle date, look for many asset classes to react against trend...... USD prime candidate.
http://www.kc.frb.org/SpeechBio/HoenigPDF/hoenigKBA.08.06.09.pdf
This is Fed's own Hoenig on Fed's performance. The USD has nowhere to go but down until the Fed starts to think about preserving its value. The Dollar is an orphan who is now being abused by its uncle Ben.
-ReturnFreeRisk
thanks for sharing the article, a good read, not sure that I had the same take away as you did. Seems like there is a recognition taht price stabilization is and should be the FRBs priority...
you cant be a dollar bear and a stock bear -- only on the sell side
Revision:
you cant be a dollar bear and a stock bear -- only on the sell side ...unless of course your outlook extends beyond next week/month
I've heard so many times about the dollar tanking on this site, combined now with their "calls" on that trend reversing...how could they ever be wrong?! lol.
You can be a dollar bear and a stock bear when folks recognize that prices must come down due to falling rents, wages and house prices,large and growing structural employment, and stifling debt levels AND folks at the same time contemplate/witness what the Federales will do to try and stop it.
The public chipped in 2 trillion or so meatballs to offset 2 trillion in private contraction ... nets to zero? recovery on?
Probably not.
The U.S. Dollar Weakness Has Investors Looking To Hedge With Currency ETF’s
http://etfdailynews.com/blog/?p=6235
You boys turn me on with your technical talk. For some reason I like the theory of some ZH anon poster: massive head fake for USD (stop and short cleaning) before complete collapse. Central Banks will do something big when the crapper tips over again in October.
it'll be a head fake for sure, and then a hopefully semi-orderly grind down till they find the sweet spot.
everyone's calling for a dollar rally because that's what happened in the last mess and this time around they wanna look clever, meanwhile it's gasping for air. plus, the "recovery" plan depends on a weak dollar.
but wdfdik? last april i was sure this rally wouldn't see DOW 9000...
dow vs dollar? no sane person would be long either one and only a fool would short 'em. the sidelines look safer at the moment, the dollar might be putting in an intermediate bottom and dow/s&p and intermediate top, but that should be a quickie because the dollar will clearly be sacrificed for good headlines and nominal GDP growth, a vain attempt to prop up real estate, etc.
if the ECB remains the last credible form of central bank coupled with its paranioa of inflation, i would imagine the first graph would continue to rise.
Japan has been down the ugly road we just started down, however, they cannot grow if their currency is strong the win/win between US and Japan is a stronger USD, this seems logical, but since misery likes company, the yen increases in value and the USD gets dusted. then the BISMARK or one world currrency comes into play, or G20 goes banking nuclear and hits the reset button and we all start over.
nick,
a stronger dollar is deflationary and prices go down. the bear would buy dollars and sell stocks. is the dollar and equities couple, i think that might make us a third world country. ummm...is that even possible?
I don't see how the dollar will strengthen, other than very temporarily, since the fundamentals are deteriorating rapidly. They will keep printing and a flight to quality may ensue as a result of a down move in stocks but I cannot see any long term catalyst to strengthen the dollar. Until our govt stops their policy of giving the banks free money and spending more than we have, the dollar will continue to debase.
Tax revenue does not come close to covering our expenses so there really is only one answer here.
The snowball has only just begun to roll down the hill.
This analysis is quite mistaken. The Fed is not printing dollars in order to provide liquidity or to strengthen the dollar: it is simply looting the country, it is a form of corporatism.
Collapse in demand will outpace every other factor and lead to a collapse in prices. Then the supply chain will collapse.
A sure-fire place to look is agricultural prices. They are in trouble again. That implicates the food supply chain. And don't think it won't happen.
I've said many times that, although our welfare state babies are under the bizarre impression that generations of Robert Moses-es and Lyndon Johnsons and Adam Clayton Powells, means the Federal Government and the society are one, NOTHING could be further from the truth.
When America gets sick, Uncle Sam withdraws all support, and that is what is happening now. If you think Uncle Sam is supporting American society now, you are a sad fool. That's like saying someone is appeasing your appetite by feeding you poison.
West Coast Hotel v. Parrish (1937) did not repeal Andrew Mellon's "liquidate liquidate liquidate." And the policy being pursued now is pure Andrew Mellon. It's as if the old monkey were still Secretary of the Treasury!!
Sick sick sick suburbia--going right straight to its grave.
Agree, the American peso is due for an oversold bounce.
hmmm, dollar is up big in after hours again, did the same on friday, but friday it hit 22.99.... Oh I get it... the 'Fed has a strong dollar policy' implies only in after hours trading... got it...
http://www.google.com/finance?q=uup
USD getting manhandled pretty good tonight (Kiwi triggered the charge). Gold/silver not reacting much at all, yet. Looks like a miror image reversal of what was happening around this time last night.
Seriously , technicals are useless in this funny money market. You will get slaughtered .
When the next round of deleveraging gets underway ( which may be now) paper assets will be marked down. Credit deleveraging wipes out paper assets, not $dollars. Investors will scramble to buy dollars. The Fed's purchase of worthless paper assets does not affect the value of the limited supply of real $USD's in existence. Deflation wil force investors to purchase dollars to meet real financial obligations, not paper ones.
WTF's a "quasi" Head & Shoulders formation anyway? Either its a h+s or it isnt - and if it nicks the neckline even by some, then it isnt. Its not a Shampoo ..
Pomo cash all pumped into Euro/Yen, up another 100bp, up 300bp over last 3 trading days. Technicians on USD would be savaged yet again, together with those equities bear trading on correlation with 1938. It's a fools errand, the Fed will find ways to print money even afetr official end of QE, it's the biggest of all bear traps building. Its insane to be long anything now, and totally mad to be short.
http://www.cnbc.com/id/15840232?video=1269329717&play=1
Another sickening video where Michael Pento takes on the idiots at CNBS.
Speaking of America's favorite financial network, I'll bet no one noticed CNBC Reports is no more, effective tonight.
Dollar up-everything down. That was the opening statement today on the markets. Even gold was down big. The PPT has created a zero sum disaster between currency crisis and a total market meltdown. Sophies Choice Ben!
Gold and silver generally retrace a little. Fills the gap, hovers, and goes on up again. Not worried about that one.
Edit: Just looked. PMs on the climb. Diamonds are not a girl's best friend. PMs are.
http://www.nowandfutures.com/d2/BehaviorOfGoldUnderDeflation.pdf
"We stick to our original call that a reversal may well be happening."
Once again delaying the inevitable fall below 60.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/621185...
in the past 6 months there have been so many "tops" the word has lost its meaning.
No, a top is always the one doing the screwing. Meaning is still the same. The US public is strictly a bottom.
I was expecting a dollar bounce so I played with DTO on thursday. All cash again, waiting for the next move.
There's reason why prophet is not spelled profit.
My long term USD indicator has been giving bullish warnings for some time.
MORE:
http://www.zerohedge.com/forum/market-outlook
Beyond the flight to "safety" when the stock market finally heads south, the other central banks are all going to end up trashing their own currencies. Not just because of an inevitable beggar (bugger?) thy neighbor policy but because there is no such thing as a hard money central banker and they all operate under the same flawed theoretical framework.
The others may be slow to the QE table but it's the only response they know, so the USD will have to gain in relative terms as they are forced to join the debasement party. In the end Charmin will be a better hard asset than any currency.
Don't forget what a strong dollar means: Uncle Sam is "liquidating liquidating liquidating." The collapse in demand and ensuing deflation are well under way.
As they used to say during the Depression, a dollar could buy you anything, but who had a dollar?
We will SOON be there.
Gotta disagree - USD/JPY will blow through 91.65.... will be interesting to watch the NYC open tomorrow.
Did blow through, on its way to 91. DXY being abused overnight; probing 76 and taking SPY close to new highs with it...
Um yeah, this is getting ugly right now. Go gold! Rah!
usdjpy @ 91.37 now
Where the dollar leads the GB pound follows (that's Gordon Brown). Whoever thought up quantitative easing, both the name and the behaviour, should have a lamp-post designated for them at the appropriate time of reckoning. Meanwhile the pound is at the mercy of almost anything whilst our politicians and banksters fiddle away like Nero, pun intended.
Nic,
Didn't you have stops at 1.48 on that EUR/USD short trade that you called last week?
What do you think Corney? Train wreck?
this relentless bottom picking in the dollar is almost becoming concensus !!!