General Comments:
This week we have both a large amount of data coming out and a shortened week here in the States due to the 4th of July holiday on Friday. All eyes remain fixed on Crude Oil. The market very much expects Triche to raise rates later this week in an effort to slow inflation. At this point it looks as if they will follow through with that and if they do we expect to see the Euro retest the old highs. Bottom line is simply waiting to see how the rest of the world begins to battle inflation. Bumbling Bernanke and company tried to down play inflation in their statement last week. This is just plain ludicrous and shows what kind of a dream world he lives in. Even a person living in a cave knows that inflation is rampant and only getting worse. I realize it is their job to lie to us, but for the love of god, do they really think that all of us are that stupid? I realize the majority is, but those of you who can do the math, unlike our government, there is simply nothing to argue about. Inflation is here, it’s queer, get used to it!
EUR/USD:
The Euro is fixated on this weeks ECB meeting. We expect to see it test the old highs at some point this week. We do not expect this pair to be able to stay above 1.60 if it gets there at all. We still see the overall range we have been in maintained. While Triche is the biggest hawk in the world, his hands( or wings as the case may be) are almost as tied as the FOMC. Do not look for Triche to go on an all out assault on inflation. He is likely to try to do more jawboning than anything else.
GBP/USD:
This pair is trying to break out above 2.00. We expect it will follow through above that level but not before pulling back a bit in the first part of this week. We continue to be buyers of dips but on reduced position size due to the volatility that we are expecting this week.
USD/CHF:
This pair fell hard last week and is trying to find some support to bounce off of. We are buying this dip early this week. We ultimately expect parity to hold up as support for this pair.
USD/JPY:
This pair has seen a solid pullback as well. We had warned that the 108 level would act as strong resistance and we have now seen that come to pass. We are looking to buy this dip as well and hold on for the better part of the month. We feel that this pullback is simply the head fake move stopping out longs before this pair does in fact break out above the 108 resistance level.
AUD/USD:
This pair continues to try and rally above .9600. However the fact that is has been unable to get some legs under it, even in the face of continually rising commodities, shows a surprising lack of strength in this pair. We are attempting shorts above .9613 with stops above .9689. We are doing this with less that 25% of our max position size since we are trying to pick a top.
USD/CAD:
This pair continues to hover around the 101 level. We expect more downside movement out of this pair this week. We remain sellers of rallies above the 1.0134 handle. Stops are above 1.0189 and we are targeting parity.
