Reply #2: daily dollar watch

[UpInArms]

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 88.05 Change +0.32 (+0.36%)

The “Burn Baby Burn” Balance Sheet

http://www.dailyfx.com/index.php?option=com_content&task=view&id=1671&Itemid=39

"It is my view that the U.S. economy continues to be operating at a strong, healthy pace, that should continue into next year. I think we can look forward to continued growth in the U.S. economy that this year will be about 3.5%."
Thomas Hoenig, president of the Kansas City Federal Reserve Bank.Friday, June 17, 2005 09:25 GMT

The “Burn Baby Burn” Balance Sheet

Think about it. Almost 200 Billion dollars. That was the amount of US Current Account deficit in Q1 2005. More accurately the figure was actually -$195.1 Billion which was well in excess of the -$190 Billion market expectations. Now with oil prices at record level of $58.50/bbl and the greenback fully 9% higher against the euro since the beginning of the year, next quarter’s Current Account deficit is almost assured of passing the -$200 Billion mark.

The FX market which has been duly ignoring the persistent US deficit problems for the past two months, suddenly woke up to the fact that US Balance Sheet position was rapidly deteriorating and rallied the euro against the dollar for over 200 points in matter of hours on Friday.

Undoubtedly, Friday’s rally was driven mostly by short covering, as the euro hardly presented a bastion of strength to the world, yet with only a smattering of 2nd tier economic releases, most of which are expected to compare unfavorably with the month prior, it’s reasonable to assume that the retracement in the dollar may continue.

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Dollar Remains Under Pressure From Majors

http://www.dailyfx.com/index.php?option=com_content&task=view&id=1672&Itemid=39

EUR/USD – Euro showed surprising resiliency to the advances by the dollar longs after the greenback repeatedly failed to push the single currency below the psychologically important 1.2000 figure. As euro longs continue to push deeper into the dollar head territory, current retrace by the euro bulls will most likely be capped at 1.2460, summer of 2004 trading range high. Indicators signal a trend reversal with ADX (DMI) on the daily chart at 39.04. Stochastic is remains below oversold line on the daily chart at 15.96. The Stochastic on the dealer (4HR) chart is dipping below the overbought line at 69.37. RSI is neutral on the daily chart at 37.51 with the 4-hour chart RSI also neutral at 60.48. MACD made a bullish crossover deep below the zero line on the daily chart and is crossing above the zero line on the dealer (4HR) chart. In case the reversal fails greenback longs will most likely resume their advance and push the pair below the psychologically important 1.2000 figure.

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USD/JPY – Japanese Yen traders continued to ignore the price action in other majors as the pair hardly moved after breaking below the 10.00 figure. As trading remains subdued yen bulls will most likely fail to push the pair below the 108.00 figure and most likely give up recent gains to the dollar, with the pair most likely retreating back above the 109.00 figure. Indicators signal trend reversal, with ADX (DMI) dropping to 24.95. Stochastic is at the overbought line on the daily chart at 78.5 with Stochastic on the 4-hour chart climbing above the oversold line at 28.62, thus providing yen bulls with a chance to mount a counterattack. RSI is treading below the overbought line at 59.76 on the daily chart, with dealer (4HR) chart and is neutral at 43.42. MACD remains above the zero line on the daily chart, while treading along the zero line on the 4-hour chart.

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Have a Great Day Marketeers!