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USD Strength Returns December 3rd, 2014

December 03
02:20 2014

US Data Still Improving We “Should” See USD Strength Continue

Its always a little daunting when one makes a call on the USD strength (and price swings wild the other direction) due to really no other choice other than gold. Just imagine what would happen if they weren’t keeping the price of gold down. In short PANIC, and thats why they have a large incentive to maintain the low price of gold. I just had to mention that after having to eat crow for a day in the London live training session yesterday 🙂

Enough of Gold for now though because I want to point out ,as I mentioned about a year or so ago, that the fix to the financial crisis and more importantly future crises is really very simple. I cant remember the data of the commentary but I am sure some will remember me saying that all it would take to get the banks to essentially regulate them self is pass a law that attaches the personal wealth of the top 10-100 employees of the TBTF banks to performance and risk. Just think of how much more careful they would be with other peoples money if theirs was attached to it as well. Some will say thats somewhat the case with some of the banks since the top 10 at least own a sizable chunk of the shares, therefor they do lose a bunch of money when/if the bank fails. However thats not going far enough to keep them from fraudulent activities. In my view, long before the government should be bailing out these banks the top 100 employees should have to liquidate ALL assets to throw into the pot of saving the bank long before any public money should be dispensed. Just a thought and it seems to be gaining traction. Check out this 70 seconds of Daniel Hannan MEP for Southeast England. Not only does he show how screwed up EU policies are but throws in that fix for the crisis as well. Good stuff.

EUR/USD First Push Down After Fake Out

This first push down on the EUR/USD has higher probability for seeing the second due to the fake out to the upside along with the stop run above last Fridays highs on Monday. In short they are up to something and have shown a sizable chunk of their hand, not to mention it agrees with the fundamental picture. However the move Monday does show that they can and will swing price when its in their interest to do so.

Today I will be bias for the short but the levels are a little dicey considering the efficiency of the push down yesterday. The 1.2400 level looks good but the proximity to the Asian lows is concerning. If that does not hold then they will likely push to 1.2419 before a turn for the next push. If they can manage to push to 1.2400 during the Asian session then the Asian highs will come into play but I would prefer to see the test and push back down a bit before seeing them run stops above the Asian highs. There is a small chance for the long at yesterdays lows but probability is low.

EUR/USD hourly chart 12-3-2014

GBP/USD  Follows Suit With Intraday Push

The move on the GBP/USD does qualify as a push but without getting below the lows has a little less probability. Having said that I should point out that the GU has been running intraday pushes more clearly as of late so I will still have a small bias for the next push down. The best level to get the short is at 1.5665 but if that cant hold the 1.5700 level having the hourly 200 as confluence will be the next place I look to short. I will be open for a long at yesterdays lows but will need a good reason to change my bias.

GBP/USD Hourly chart 12-3-2014

EUR/JPY Holds Range

When they push currencies around on USD strength this is what is typical for the EUR/JPY since we have the EU and UJ moving opposite directions. I will be open on direction for this pair today but the probability for the break to the upside is better considering the weak Yen. The question is whether or not the EU holds up enough to let it break.

There was a nice set up this morning I didnt catch for the long but if any members took it, taking profit at yesterdays highs would be best just to be safe before any Euro weakness kicks in. Otherwise the safer entries for the London session are the Asian lows at 147.55. Otherwise I will be open for the short at the highs but will be cautious since the break higher has a better chance.

EUR/JPY Hourly Chart 12-3-2014

Forex News Today

The calendar starts with Services PMI from Euro Zone countries. The ones that stick out the most are Spain being just above the 50 level. A drop below significantly could get Euro weakness rolling. The same goes for a big miss on German figures. Otherwise I dont expect a surprise upward although it would most likely be Germany if there was one. UK Services PMI is expecting a rise slightly so a bigger disappointment should get the GBP weakness going. If its close or as expected the GBP should hold its ground with the exception of the EUR/GBP.

The NY session starts with ADP Nonfarm. Expected to drop a bit I have my doubts they will push much baring a large miss. They seem to be caring less about ADP these days unless it deviates substantially. Later is ISM Non Manufacturing PMI expected to improve. If it does it will signal further US data improvement and add to USD strength. It would take a larger disappointment to slow the USD strength the way I see it. The Feds Plosser speech has potential to keep up the USD push as well but with all the dribble lately I expect more of the same and may be muted for movement if they have already pushed on other data.

Aussie traders have Retail Sales figures to watch out for tomorrow morning. With GDP disappointing yesterday probability is higher for a disappointment.

Happy Trading




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