Tuesday, June 11, 2013

US Dollar In Trouble

What an interesting 24 hours! I could not believe the action especially in the Japanese Yen. Last night we had the Bank of Japan, as expected they did nothing. There was an initial pop in the YEN of 100 points, then a nice sell-off of more than half those gains. With me anticipating a move to the downside in US bonds, the YEN seemed like the best currency to sell with rising rates in the US. When bonds sell off it does tend to affect the Yen the most against the dollar! When I woke up this morning, the Yen was in the midst of a 200+ pip gain and by the end of this very day it was up more than 300 points from last night in Asia. Wow! Is the US dollar in that a bad of shape right now or was everyone caught short the Yen? Last week we saw a bigger move in the Yen and it came all the way back down in a couple of days to cough up all of those gains. Lets take a look at the daily Yen chart
The Japanese authorities most definitely are not happy by what they are seeing and I would not be surprised at all to see today's gains washed away in the coming days. I will keep you updated throughout the rest of this week. I do not see any reason for wanting to own the YEN, maybe something is afoot that we do not know about.

Next let's take a look at the Euro.
When the Dollar was rallying a couple weeks ago and above 84, I was very bold in predicting that the Euro would trade above 135 some time this summer. I stand behind this and by the looks of it and a view of the next chart, 135 is a hop, skip and jump away! We just need to hold above 132 for the time being. Let's take a look at the US Dollar
Does that look good? I smell trouble and as for the lingering TAPER talk, I say, yeah right! If the Fed was going to taper, the dollar would be looking a tad better than the above chart!

Although I am only showing these 3 currency charts, I would like to point out that the Cad looks great around 98. I would also like to mention the Aussie this evening, I promise to show this chart tomorrow, this currency has not been this low since September 2010. I did notice a 92 handle this morning and a bounce of more than 150 pips. Let's see what the chart looks like tomorrow, maybe we have hit a long term bottom.

Onto Bonds now, I am not going to say much because I just do not trust this market especially due to the FED. As anticipated last night, Bonds did fall through support but take a look at how quickly they were bought right back up, we may have witnessed a short term bottom, I promise you that I am watching this market the most.
Lastly, I will talk about the metals and again I promise to have charts on both Gold & Silver tomorrow. As I had expected, we did get more downside today but it was met with buying. I will not give credence unless we see 1385 and 22, and both markets hold these levels for more than a couple of hours. Until that happens, I remain cautious! The next big thing to watch for is the Jobless claims and retail sales reports due to be released on Thursday morning. Until then, be careful, as the volatility is most certainly picking up in all the financial markets.

Good Night
Martin




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