ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
The Royal Bank of Australia (RBA) surprised markets by leaving rates unchanged at 3.75%. Forecasts pegged the RBA for another 25 basis point increase. The markets reacted with an instant and steep drop in the Australian dollar against all major currencies. For example, the Australian dollar dropped over 1% against the U.S. dollar. (See chart … Read more
The U.S. dollar index is only trading back to levels from last summer. However, from a technical standpoint, the dollar has broken out: the short-term downtrend has ended, and the current move has considerable upside potential. *Chart created using TeleChart: The chart above shows that the dollar’s break below the 200DMA in May led to … Read more
I did not think I would consider (this soon) whether the dollar’s short-term downtrend is ending. I thought this month’s unemployment report put an end to the dollar’s relief rally, but the dollar has surged in the past 3 days to recover all its losses since the most recent peak in mid-December. Even the Australian … Read more
The dollar’s recent relief rally stalled out December 23 (see chart below), and December’s disappointing jobs report may have officially ended it. The apparent working thesis supporting the dollar’s relief rally has been an expectation that an imminent recovery in the labor market would motivate the Fed to raise interest rates sometime soon. December’s disappointing … Read more
(Repost from January 7, 2010) Naoto Kan, Japan’s new Finance Minister, took office today and promptly requested that currency traders sell the yen. This stance further supports September’s backtracking from an implicit stronger yen policy earlier suggested by out-going Finance Minister, Hirohisa Fujii. Japan has now officially returned to the de facto competitive devaluation that … Read more