Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

U.S. Dollar Weakness Couldn't Do the Trick

Currencies / Forex Trading Nov 21, 2009 - 03:08 AM GMT

By: Ashraf_Laidi


Another Friday, Another Yen Day While the dollar rebound accelerates on broadening risk aversion, the Japanese yen remains the best performer among major FX, just as was the case in the last 3 Fridays. The case for continued yen strength remains based on the currency's low yielding stature, the central bank's looming end of corporate bond purchases (unlike FOMC whose desire to withdraw liquidity is strictly in talk rather action) and the US Treasury's escalating borrowing, which limits rebounds in the USD and renders JPY lustre against other FX.

Dollar Weakness Couldn't do the Trick for US Stocks We warned on Monday that dollar weakness alone could not do the trick in propping US equities to new highs especially amid fading support from the macroeconomic angle. 4-month lows in Oct industrial production, 6-month lows in Oct housing starts and slowing Oct core retail sales underscored the absence of economic validation and the crucial role of USD weakness as the main driver to higher US equities. This was especially the case as US indices have outpaced those in Japan (Dow/Nikkei ratio at highest since Dec 08) and the UK (Dow/FTSE at 3-month highs). In fact, the imbalance within US equities was highlighted by the fact that the Dow stood at 7-month highs relative to the S&P500.

S&P-Dow 50% Failure & Euro Support The ensuing retreat in equity indices and the implication for FX merits special scrutiny after the prominent failure for the S&P500 to break above the 1,120 level (several failed attempts), which marks the 50% rebound of the decline from the 2007 record high to the March 666 low. While the S&P500 never closed near that level, the Dow did close above its 50% retracement equivalent of 10,335 on Monday, Tuesday and Wednesday, but more importantly, will fail to close above it for the week. FX players are well aware of the twin failures in these high profile indices.

What to Watch in FX & Oil JC Trichet's support for Bernanke's Monday remarks about the importance of USD strength went unnoticed as the euro continued to power ahead against the greenback yesterday, but today's pullback requires extra caution from EUR bulls. $1.4825-30 in EURUSD is a closely watched level as it signifies a clear break of the 50% retracement of the rise from the Nov 3 rd low (1.4626) to the Nov 11 th high (1.5048). The price held up despite 7 daily attempts to break it over the last 3 weeks. A close below $1.4820 today implies the weekly breach of a crucial technical level, which would call up the next support at $1.4700.

Risk aversion could especially intensify next week after Japan 's Nikkei closed at fresh 4-month lows, falling for the 4 th consecutive week -- its longest since Sep-Oct of last year. The resulting selloff in the higher yielding AUD and NZD was concentrated in NZD amid pressure on RBNZ to scrap its inflation target. But with the RBA signalling hints about a temporary pause in its tightening (in Dec), AUD could see its share of more deleveraging.

GBP broadens selloff as GBPUSD drops for the 4 th straight session, nearing $1.6420, but support is found at $1.6280. EURGBP breaks out of its 5-week trend line resistance of 0.8950 and is likely to make a run for 0.9060. USDCAD extends its 4-day winning streak to a 2-week high of 1.0715, eyeing the 2-month trend line resistance at 1.0770, a break of which to call up 1.0850. CADJPY, EURJPY and GBPJPY eyeing 82.20, 131.10 and 144.50 respectively.

By Ashraf Laidi

Ashraf Laidi is the Chief FX Analyst at CMC Markets NA. This publication is intended to be used for information purposes only and does not constitute investment advice. CMC Markets (US) LLC is registered as a Futures Commission Merchant with the Commodity Futures Trading Commission and is a member of the National Futures Association.

Ashraf Laidi Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules