Dollar

Stocks are up 233, Crude is up $4, Gold is up $14.   US Factory Orders came out weaker at minus 2.5% for the month - the second large decrease (prior month came in at -4.3 (originally reported at -4.0).  Stripping out transportation orders were down 3.7%.

The EURUSD broke through the 100 hour moving average (at 1.2832) and moved sharply higher (see previous post).  The high for the day is currently 1.2955. The pair has moved higher than the Monday's high.  The pressure on the US economy seems to beginning to be felt in the dollar.

There may be some resistance against the 1.2992 level which was a high corrective level from last Thursday (see chart above).

The EURUSD is testing the high for the day at 1.4270.   A break higher will target higher levels.

GBPUSD heading into the target area (see earlier post). A break above the 1.8129 will solicit additional buyers. 

The weekend events were indeed historic. Lehman Bros. looks doomed for bankruptcy.  Merrill Lynch will be purchased by Bank of America and it appears that the crisis will deepen with AIG making the choice not to be in effect taken over, and instead choosing to ride out the hurricane.   Morevoer, the events don't seem to neccesarily solve the problems that are at the root of the chaos. 

New York has come in and continued the move to the downside in the EURUSD.  The pair moved through the 200 day moving average at the 1.5225 level and gathered more steam to the downside.  Longs seem to be caught and will be helped only by shorts taking profits. 

With a range today from 1.5334 to a low of 1.5073, the corrections can be sharp.  I would think that those who are long would be happy to sell before the weekend against the 38.2% retracement level of todays move.  The range I would expect to see sellers would be from 1.5141 to 1.5155.  The problem is, will the chance present itself. 

The Dow is negative and it is having an effect on the dollar today.  Oil is up $1.40 or so.  Overall, the market is fairly quiet.

The EURUSD has been supported at the 1.5822 level post the ECB hawkish comments.  The Europe and London closes are next on the agenda.  The anxiety of the weekend is less this week so the volatility should be limited. 

The dollar is under pressure as USDJPY, EURUSD, USDCHF and GBPUSD all are in tandem.  Dow down 125.  The Dow is now officially in a bear market as it has declined 20% from the high.  Morgan Stanley Long term debt put under review.  Oil above $142.  Get ready for even higher prices and higher inflation. 

EURUSD has broken through trendline resistance at the 1.5771 level.  Watch this level this afternoon.

Thursday 3/27/08

Good Morning:

 
The dollar saw some strength in overnight trading. 
The markets are concerned that European banks will post higher losses due to the credit crisis. The Euro fell against 13 of the most traded currencies.   
World equity markets were mixed, with Asia falling, and European equities rising.

US Futures are pointing to a higher opening.

 
Oil: $106.37

Gold: $ 943.20

The dollar is now higher on the day against all the major currency pairs.   USDCAD higher (Canada lower) even after their stronger than expected rise in jobs.  The EURUSD has turned around as the EURGBP find profit takers and moves sharply lower.  USDJPY made it above the 102.51 level and after a brief dip to 102.41, has moved back higher.  GBPUSD has key support at the 2.0100 level.

According to Reuters:

The USD index is on track for the biggest gain since September of 2006  Up 1.2% on the week. 

So, this is good news for the Fed and Treasury as talk of lower rates is NOT hurting the dollar.  Oil is coming down. Gold is coming down.  Is the dollar ok?

Real Estate Slow, slowing consumer growth, but good growth from overseas. Dollar declines making imported good more expensive. Pass on higher costs mixed.