Reply #7: daily dollar watch

[UpInArms]

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 84.69 Change +0.03 (+0.04%)

Greenback Goldilocks

http://www.dailyfx.com/story/special_report/special_reports/Greenback_Goldilocks_1168238597879.html



As the New Year started, the biggest surprise in FX land was the remarkable buoyancy of the US economy. Both ISMs (Manufacturing and Non) printed above consensus, with the former climbing back above the 50 boom/bust level of the month prior as it registered a reading of 51.4. And while housing continued to limp into a recession as Pending Home sales contracted another -0.5% in December, the biggest boost for dollar bulls turned out to be the NFPs. Employment data shocked the market with its strength as payrolls gained 165K against expectations of 110K. The news was even more positive in light of the fact that ADP and Hudson surveys at the beginning of the week were decidedly downcast with ADP actually predicting a loss of -40K jobs. The news reignited the whole goldilocks argument for the US economy as jobs growth has clearly offset the depressive effects of housing contraction and reduced the chances of a Fed rate cut in Q1 to virtually nil

Nest week the calendar is considerably lighter with only Trade Balance and Retail Sales as key event risks on the docket. The Trade Balance is expected to remain below $60 Billion as lower oil costs and lower exchanger rates should keep the gap contained. In either case, with TICs data printing far in excess of $80 Billion last month the Trade deficit issue isn’t likely to cause the dollar much trouble. Of far greater interest to the market will be December’s Retail Sales. The latest Christmas Sales data has been tepid at best as the US consumer appears to be tapped out despite relatively tight labor markets. Can the dollar rally continue? Only if the Retail numbers surprise to the upside. Otherwise the focus will turn right back to the weakening US consumer and this weeks power move may fizzle into range bound trading. – BS



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Weekly Outside Reversals Paint Bright Picture for Dollar

http://www.dailyfx.com/story/dailyfx_reports/daily_technicals/Weekly_Outside_Reversals_Paint_Bright_1168260393365.html

“character” of the decline into 1.2980 on Friday is convincing that a bigger turn to the downside is in the works. The dealer (4 hour) chart shows a well defined 5 wave decline to just below the 61.8% of 1.2761-1.3367. The structure favors at least a short term rally. Fibo resistance begins at the 38.2% of 1.3296-1.2980. This level is reinforced by the 01/05 high at 1.3104.

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USDJPY – The USDJPY held at the resistance line drawn off of 121.38 and 119.87 and has declined to the 20 day SMA at the 118.00 figure. Additional support is at the 38.2% of 114.42-119.67 at 117.67 followed by the 50% at 117.04. The daily is showing a symmetrical triangle from the 121.38 high in December 2005 (along with the inverse head and shoulders within the triangle). Triangles are often 5 waves – and this weakness looks like the beginning of a 5th wave down within the triangle. Alternating legs of triangles are also usually related by the golden ratio – 61.8%. Well, 61.8% of the 119.87-114.42 leg is 337 pips – when subtracted from the recent high at 119.67 – we arrive at a possible terminus for this leg of the triangle at 116.30. The 61.8% retracement of 114.42-119.67 happens to be 116.43. In summary, 116.30/43 looks like a very attractive area before a major rally attempt takes place.

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USDCAD – The USDCAD rally has stalled at the 4/3 high of 1.1771. With daily oscillators declining from overbought territory, bears may see some relief. However, a resistance line from a potential bearish channel rests at 1.1878 today, just above the 50% of 1.2732-1.0927 at 1.1830. That level is most certainly flooded with stops, which if taken out, the 11/15/2005 high at 1.1975 could be seen. As mentioned though, overbought conditions may lead to a correction first, with the 12/29 high at 1.1667 as initial support.

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