All I can say is that when you have Geitner, Summers, AND Bernanke all chiming in with comments about the need for a strong dollar, smart money listens – and dumb money had better be prepared for some wicked volatility (against their short position). In the extremely interventionist world in which we find ourselves, my sense is that you really need to reevaluate a short dollar position when the three highest US financial market officials are telling you that they don’t like your attitude.

In any case, let’s notice that since my last posting of this chart earlier today, gold prices have down-ticked a bit, while the DXY (cash dollar index) has climbed to 76.50 from 76.00. On a Friday ahead of a weekend when the central banks could intervene Sunday night, I will not be surprised to see the DXY and its ETF the PowerShares DB US Dollar Index (NYSE: UUP) continue higher, which could put some intense pressure on gold prices and the SPDR Gold Shares (NYSE: GLD). Be careful out there!

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of

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Comments

Ric
10 Oct 09, 07:29

Geitner, Summers, AND Bernanke Lobbying for the U.S. Dollar

Even if there were to be major concerted intervention in the FX markets by the central banks to attempt to puch the dollar up it will fail miserably and cost a lot because there is no longer any credibility to the U.S. system. With the U.S. debt at 11.9 trillion and counting there can be no success in attempted dollar support because the intervention is backed by nothing. People can no longer be fooled. There would have to be a major upswing in the U.S. economy to give intervention any credibility and there is none in sight. People who fear fx intervention are thinking inside a box, a paradigm, that no longer exists. There has been a global shift due to the U.S. world indebetedness and that alone governs the value of the dollar, not silly central bank intervention.

TL
11 Oct 09, 19:32

Are you kidding ?

I agree with Ric. Its total lip service and non-sense. There isnt anything they can do. The spending will continue, the debt will grow and the dollar will drop. The bond markets are failing and the Fed is monetizing the debt. All drivers point the dollar going down - including the economy.

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