Bobbys Corner-Open Market-Feb.23.2010

Good Morning:

The greenback picked up some ground again overnight. An unexpected decline in today’s German business confidence  added to the Euro’s woes.  Speculation mounted that the US economy will rebound faster than the Euro Zones.  Fed officials are downplaying last week’s rise in the discount rate-and are letting the markets know that higher rates are not imminent.

World equity markets  are mixed-and US futures are pointing to a lower opening this morning.  Yesterday the Dow dropped 19 pts.
As the USD rose-copper, oil, and gold all lost ground in overnight trading.

Oil: $79.09                              Gold: $1111.20 

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Dec.24.2009

Good Morning:

The USD lost ground overnight as speculation that the FED will keep their stimulus measures in place to act as a  driving force to revive the US economy.

World equity markets rose. Expectations that the global economic recovery is gaining traction has investors looking to continue the world wide equity rally.

Oil, Gold and commodities in general all rose.  Copper is this years metals leader with a 132% increase in 2009.

Oil:$76.35                                  Gold:$1102.20

HAVE A GREAT DAY-GOOD LUCK &  HAVE A MERRY CHRISTMAS

Bobbys Corner-Open Market-Dec.7.2009

Good Morning:

The USD rally continued into the overnight session, as investors consider if global economies are strong enough to digest higher interest rates that some central banks are implementing (or contemplating implementing).
The change in USD sentiment was quick after Friday’s job data was much stronger than expected.  We went from a weak dollar to strong dollar in a matter of hours.  We will see if the rally has found legs-or if it will be short lived.
The JPY also rose overnight on interest rate concerns.

Asian equity markets were mixed, and European markets are lower.  US Futures are also lower at this time.
Gold fell as did copper, which lead to a drop in industrial metals.  Oil also fell to $74.56 in early NY trading.

Oil$74.65                              Gold:$11.41.50

North America’s economic calender is fairly quiet  today-with Fed Chairman Bernanke speaking today.

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Oct.26.2009

Good Morning:

The USD fell over the weekend as signals that the global economic recovery is gaining momentum moved investors away from the USD to higher yielding assets. 

World equity markets are higher, and US Futures are pointing to a higher opening this morning.
Oil traded either side of $80/bar.  Metals were higher, and copper hit a 13 month high.

Oil:$80.24                        Gold:$1054.40  

Have a GREAT DAY & GOOD LUCK

AUDUSD moves off the lows as metals rise. A look at the AUDUSD/Copper correlation

The AUDUSD has moved back higher after testing the 100 hour moving average at the 0.8087 level.  The price of copper – an industrial metal and proxy for other metals which Australia is a supplier – has been rising and stands at the highest level since Octber 2008. This move has helped pull the AUDUSD off the low today. 

In the chart above it shows the price of the lead Copper Futures price on the left hand scale (red line) vs the price of the AUDUSD on the right hand scale (Blue line).  As the chart illustrates, the two tend to move in tandem, with the AUDUSD leading the way on the upside and the downside.  

The correlation between metals and the AUDUSD, is why the currrency pair is said to be a commodity currency.  The value tends to track the metals, the metals tend to track the currency. 

The industrial metals are of course, highly sensitive to the economic activity.  With the growth in the global economy likely to be led by the emerging economies like China – with developed economies like the US lagging - the Australian dolllar, by virtue of its geographic proximity to China and reliance on industrial commodity exports, should benefit.  This explains the underlying support in the currency pair. 

Of course, the value of a currency versus others has a corrective impact on relative economies.  As the value of a currency rises, it could make exports less competitive abroad – all things being equal.  As a result, there may be some reluctance to have too strong of a currency as steps forward in economic activity, may be offset by a slowing of export activity due to a too high currency.  This eventually leads to corrections in currency values and go a long way toward keeping the markets honest.  It is never a one way street forever. 

Using indicators like moving averages, help the trader to sniff out the corrections.  If prices dip below key averages – like the 100 hour moving average -  they should be met with additional selling that corrects the pair even further.  Eventually, a target level is met – often at a Fibonacci Retracement level – and then the  main trend continues.  

So be aware that corrections can and do occur.  The charts will tell the story even if fundamentals may say something else.  It is always recommended to trade the trend, but corrections can be very painful. So stay alert.