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US Dollar Slumps to New Lows - British Pound (GBP) 2.10 - Commodities Soar - Dollar Rally Expected

Currencies / US Dollar Nov 07, 2007 - 01:33 PM GMT

By: Nadeem_Walayat

Currencies Best Financial Markets Analysis ArticleThe US Dollar slumped sharply to new lows against major currencies which included falling to $2.10 to the British Pound. The latest sell off was attributed to comments by a chinease official who suggested that China should look to transfer its over $1.4 trillion of forex reserves to 'stronger' currencies. "We will favour stronger currencies over weaker ones, and will readjust accordingly," said Cheng Siwei, vice chairman of the National People's Congress.


Commodities surged on the news with crude oil hitting a new all time high of $98.60 and Gold flirting with its all time high of $850.

Technically the US Dollar is now oversold against the British Pound and against all other major currencies. This suggests that a rally in the US Dollar is now due that could carry the British Pound towards the two year support trendline, which suggests a decline to between £/$ 2.03 and 2.04 over several weeks.

If the rally in the dollar occurs then this would likely have a bearish implications for commodities that have greatly benefited from the falling dollar that has brought crude oil towards $100 and Gold towards $850. The reaction could take crude oil to below $90 and Gold to below $800 over the period of dollar strength.

By Nadeem Walayat
Copyright (c) 2005-07
Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of analysing and trading the financial markets and is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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