Last Updated on Monday, 13 July 2009 10:18
Written by Derek Frey
Monday, July 13th, 2009
Forex Markets This Week
The S&P has and is breaking supports and continues to churn lower as we have warned in past issues. While we could see another run towards 900, if we do it is nothing less than another opportunity to short near that level. I have and will continue to say that stocks are NOT up trending, but in fact, stuck in a sideways range between 750 and 950 and will remain in that range for at least the rest of the year. This all matters to forex markets because the S&P holds enormous influence over the flow of funds around the world. If stocks falter as we expect, then we will see money run to Dollars. Which I agree makes no sense at all, but it IS what is happening. As I said over a month ago here, sell stocks & commodities on rallies and buy Dollars on dips, or wish you had later. The same still stands as it has worked very well, we are now up over 700 pips for the month so off to another good start.
EUR/USD:
Sells taken in the 1.40’s to 1.41’s should be solid entry points as discussed last week. Look for breaks towards the 1.38 level to take profits or at least lock in gains. We could see a much deeper correction but for now we will just look very near term. Same comments as last week as it still applies. We are recycling these comments for a third week as it continues to work, “if it aint broke don’t fix it” I have heard it said.
GBP/USD:
The cable remains resilient but offering great opportunities on both sides. We are predominately looking for rallies near 1.63 to sell into this week. We are still looking for this pair to fall back below 1.60 before month end. These are also the same comments from last week and they too apply this week again. We have seen 1.60 tested a few times last week and used that both to exit shorts and enter longs. We are more biased to the short side at this time.
USD/CHF:
This pair remains a buy close to the 1.08 level. This pair could see a move back into the low teens before this rally stalls. Same comments as the last few weeks and they still stand. They have paid off nicely the last few weeks and we see similar movements in the weeks ahead. I am not trying to be lazy this week but again these comments worked and we expect that to continue.
USD/JPY:
So we did see the downward action I talked about in past weeks. Near term we want to be cautious but still looking for major rallies to sell into.
AUD/USD:
We are seeing the .8000 level retested and will again look to sell above it. This is a larger play on a commodities slow down as the global recovery continues to be muted to slow at best. So while I got emails last week saying I was crazy when I made this comment, now it looks not so crazy ehh? I would like to see .80 retested and am selling into rallies in the ladder half of the week.
USD/CAD:
Now that Oil has more or less hit my downside target I am looking to begin to sell rallies in the USD/CAD as this pair has moved quite a ways away from it’s “normal” range due to oil. If as I suspect, oil stabilizes and trades between 50-75 for the rest of the year, the Canadian should be able to trade on its own merits again and if we see that then this pair should move lower overall.
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