| O&F FOREX News & ViewsBy: Head Trader, Derek Frey | |||||
| August 18, 2008 | |||||
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| General Market Comments: | |||||
| We continue to see higher than “normal” levels of volatility. The Dollar continues to find and hold support levels and maintain its rally. The underlying fundamentals, however, do not support this strength. Not that fundamentals mean much in this environment but it is worth pointing out. The FOMC continues to print money like a teenager who just stole mom and dad’s credit card. Even though this treasonous administration tried to pull the wool over our eyes by no longer publishing M3, we can still see the creation of this money in the form of TFC (Total Fed. Credit.) If all this sounds complicated it is not. Think about it. We are in the middle of a real estate melt down. If in the face of that meltdown builders continued to just build, build, build, what would happen to the value of not only the new homes they are building but the value of all homes? That is correct they would lose value. We all learned about supply and demand and how it affects price in our first few days in economics 101. Unfortunately those are lessons that Bernanke and company either did not learn or are trying to ignore. They seem to think that creating more money will help get us out of the problem we are in, but that is about as logical as saying that the way to fix the real estate mess is to build more houses. Bottom line here is, I trust this strength of the Dollar about as much as I trust this administration. | |||||
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Europe |
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| EUR/USD: The Euro has seen a virtual meltdown. We are seeing some support levels try and hold up near the 1.47 level. We expect strong support near the 1.45 to put in a near term floor for this pair. We are not yet ready to become buyers but we are gearing up for just that in the not too distant future. We would prefer to see a V shaped bottom once we do turn back up but frankly we will take what we can get. GBP/USD: This pair also free fell after breaking support below 1.94. We do not see any major support levels for this pair except trend line support that we are testing at this time. We are looking to become light buyers near or below 1.86 level with stops starting out below 1.85. USD/CHF: This pair has also seen a huge move in the past two weeks. We are looking for this pair to build a bull flag in the near term. We are expecting the flag itself to form between 107.50-110 so we should have enough of a range to trade within later in the week. |
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| ASIA
Yen, Australian Dollar |
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| USD/JPY: This pair has actually held up the best against the Dollar. We are seeing more and more evidence that this pair is recoupling with the S&P500. We continue to target a move to 112-114 before this pair reaches a top. We remain buyers of dips on this pair but caution is advised as while we expect volatility to contract in other pairs, in this par we actually expect volatility to increase. AUD/USD: This pair continues to feel pressure from the pullback in commodities. Go back and reread that sentence. The key in there is the word pullback. Pullback implies a pull back from the predominate trend which in this case is up. We are looking to be buyers here near the 87 level with stops below 86. We in no way think that the commodities bull is dead. This is simply a pause within a much larger bull market. |
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| North America
Canadian |
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| USD/CAD: This pair is also heavily tied to the commodities sector. We are sellers above 106 with stops above 107 this week for the same reasons we are bullish the Ausi. |
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| Questions or Comments? Call us toll free: 866.636.6378 or Email the author directly: [email protected] |
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