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Online Forex Trading News, Anlysis, Tips, Reviews, and Videos.How low can you go?
It’s all about Dollar weakness. Markets around the globe are flying high knowing that Bernanke is blind to inflation and tacitly encouraging it. How anyone cannot believe that higher commodity prices are a direct result of Fed monetary policy is beyond me.
And


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How low can you go?

It’s all about Dollar weakness. Markets around the globe are flying high knowing that Bernanke is blind to inflation and tacitly encouraging it. How anyone cannot believe that higher commodity prices are a direct result of Fed monetary policy is beyond me.

And while there is some decent economic data coming out from around the globe, make no mistake about it—this is a US dollar story.

Tomorrow is a market holiday here in the US so banks, stocks, and commodities will all be closed which will tremendously decrease volume in the forex market, though it will still be open.

On the news front, in the UK retail sales figures came in better than expected which means that the BOE is running out of time and ammunition to make everyone believe their economy is weak. Recent data has showed that the private component of the economy is doing well, even though there is government austerity. Declining GDP due to less government spending should be heralded as a good thing and should no longer be used as an excuse for subjected citizens to high inflation.

Mixed economic surveys out of the Euro zone belie the point that as the anti-Dollar the Euro is moving to new 2011 highs.

Australia had higher than expected PPI data but more importantly; policy-makers said that there would be no intervention in the currency which keeps making all-time highs!

Stocks and commodities are higher once again, and I wonder if there will be any give-back toward the end of the day ahead of the long weekend.

In the forex market:

Aussie (AUD): The Aussie is at a new all-time high thanks to Bubble Ben and PPI figures that came in at a quarterly gain of 1.2% vs. an expected 1%, pushing the YoY figure to 2.9% from an expected 2.7%. The fact that Aussie policy-makers have stated they won’t intervene has given the Aussie carte blanche to move higher. (Click chart to enlarge)



Kiwi (NZD): It’s just Bernanke’s world and every one is living in it. The Kiwi is also higher, though somewhat muted as consumer confidence figures came in showing no gain or loss. That hasn’t stopped the Kiwi from moving above .80 vs. USD.

Loonie (CAD): With oil back to 2 and change, it is no surprise that the Loonie has blown through the .95 level and is approaching .94 vs. USD. Retail sales figures are due out later this morning and are expected to show a gain of .5%.

Euro (EUR): It’s good to be the anti-Dollar is you are a Euro bull. German IFO sentiment figures were mixed, with business climate coming in slightly lower, current assessment coming in a little higher, and expectations coming in lower.

Pound (GBP): The Pound is higher across the board as retail sales figures beat expectations by a wide margin, posting gains of .2% vs. an expected decline of .4%, pushing the YoY figure up .1%. The BOE is running out of excuses to keep rates low. (Click chart to enlarge)



Dollar (USD): In the shortened week, initial jobless claims, home price index, and Philly Fed figures are all due out later this morning. I’m not sure if any of these will be difference-makers as apparently the greatest risk in the market place is owning USD.

Yen (JPY): The Yen is surprisingly strong as perhaps they are receiving the brunt of the risk-aversion trade heading into the long weekend.

Well if Bubble Ben wants inflation, he just may get his wish. The problem of course is going to be his ability or lack thereof to control once it gets out of hand. How it affects the economy is anyone’s guess but I can assure you that people aren’t running out to buy homes because they think prices are going up.

It’s more like people are battening down the hatches and are preparing to ride out the pending storm. Meanwhile, money is pouring out of USD and making its way to just about anywhere else. Higher Yen and Swiss Franc values combined with risk appetite confirm this sentiment, as does the price of gold.

So there is still considerable risk in the market—it’s just that the risk is owning USD! Tomorrow the markets are essentially closed here in the US, so we could see some squaring of positions by the end of the day.

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