USD Slot Slides

Written by JS T. Alexander | 10 November 2009

Slow Growth - No Interest

The US Jobless Report last Friday had a limited trading session which prompted speculation that its aftermath will spill-over on the Asian and European Session on the opening for this week. We have seen the USDX go to the 75.03 low levels with the GBP/USD touching its 1.6841 high and the EUR/USD at 1.5020 respectively.

It is a clear bias sentiment that any slight correction on the USDX or dollar vlue only gives an additional momentum to go lower although in a slow and orderly manner as most analyst say in the process. The dollar index (DXY), a measure of the US Dollar against a trade-weighted basket of other Foreign currencies, fell as low as 74.930, a level last seen since August 2008. It recently traded at 75.041, down from 75.760 in North American trading late Friday.

With the Federal Bank' s so called Dovish outlook for the deteriorating dollar as an indication that low interest rates will remain for the longer period of time. However, the ill effects of the US dollar with other trading partners like China, who happens to have a huge chunk of Foreign US dollar Reserves are also looking at other investment opportunities outside of the US area.

After a weekend meeting of Group of 20 policy makers offered no support for the U.S. unit. Traders also took heed of an International Monetary Fund report issued at the G20 meeting that said the dollar has moved closer to "medium-term equilibrium" but "still remains on the strong side."

The EUR/USD moved back above the psychologically important $1.50 level for the first time since Oct. 26. It tried to push higher and recently traded up about 1% at $1.5000, up from $1.4840 on Friday. European government have frequently complained about the weakness of the U.S. dollar, arguing that the euro is being forced to bear the brunt of adjustments between the U.S. unit and other Asian currencies. But the contentions of most Institutionals watching the deteriorating US dollar although convinced of its bearishness has been in concert with a financial policy that ' the US Dollar is too big to fail 'which the Fedreal Reserve Bank already has made certain strategies to control it's orderly movements. This is another issue which we shall be discussing in the near future.

Meanwhile, the USD/CHF holds its value at the 1.0031 and no such signs of any interventions from the SNB which have been quiet for sometime now. And the USD/JPY is at 89.90 - 90.00 as of this writing. No other news related to the current market is expected as the overwhelming negative sentiments of the US dollar prevails in the market until such time some stronger economic reports would say otherwise.

However, we find more favorable on the cross-rates with the GBP/CHF still intact on a long-term position closest to its price level of 1.6785-1.6800 but not lower on these support prices. Expect some corrective moves again on a daily basis as the GBP/USD holds firm to lower on certain corrections on its prices and increase volatility as we move forward for the second week of November. With the high prices established this opening week the further outlook will remain towards the high side to complete its Elliot Wave formation which we have maintained since August 18, 2009.

This is in line with the prices of GOLD registering a high of USD 1,111.14 on 11-09-2009 that led the downward momentum for the USA Dollar Index. Cash capital flows continue to shift as the Gold prices adjustment for inflation is expected to be priced at USD 1,250.00 in the long-term analysis.