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Tuesday
17/01/2012 8PM GMT
The
commodity currencies rallied today but both have been held by
resistance with, the Aussie dollar coming off 1.040 and the Canadian
dollar coming off the 99.00 level and we expect both top work there
way lower and the Euro also, is failing to rally – we expect more
dollar strength and the reason why is simple...
The
global economy is contracting, the fiscal crisis in Europe is set to
continue and China is slowing up. The rally today was triggered by
Chinese growth being marginally better than expected but the fact is
the economy is growing at its slowest pace in 2 ½ years and also,
the holiday period has made Q4 figures better and everything points
to a slowdown.
The
short covering rally was triggered by better than expected figures
which were still poor for China and with the prospect of more slowing
the rally has faded/
Trading
Summary
AUD:
The Aussie has key resistance at 1.040 and we expect this to hold and
were looking for a break of 1.020 to confirm a near term top and
expect huge downside if this occurs to 80.00 in the next few months.
GBP:
We have been trading short since 1.62 and our latest short taken was
at 1.54 we broke hard and have banked 50% of our profit. We will add
it back on any rally to 1.54 on falling momentum and key resistance
is now 1.55 in line with the mid Bollinger band.
CAD:
Key resistance is 99.00 and key support is at 97.00 – we have been
selling since the rally up to 99.00 and remain bearish. Were moving
up to test 99.00 right now and we think this is a great level to sell
into on falling momentum.
EUR:
We
have been shorting the Euro since the 1.42 level and selling back to
the trend line on rallies and banking 50% of our trade near support
and we did this again on Friday as we fell back from 1.29 and we have
rallied again to this level today but it should hold firm and 1.30 is
key resistance. Were looking for a choppy trade to 1.20 or lower.
JPY:
We
are flat and playing the range between 76.50 – 78.00 with a dollar
bullish bias and would look to buy into support on a momentum turn up
and its being tested right now.
Good
News Apparently
Below
are 4 reasons, investors are bullish according to the news wires:
Manufacturing
in the New York region expanded in January at the fastest pace in
nine months:
The
US is making slow steady progress in terms of the economy but the US
cannot kick start global growth for a long time and overseas events
are being watched by investor, such as the fiscal crisis in Europe
and China's prospects for growth
German
investor confidence rose the most on record in January. Spanish
borrowing costs fell at an auction :
Big
deal Germany is not the problem in Euro zone its other countries and
the Spanish auction went OK but there will be more auctions to come
and after the S & P downgrades of many nations we expect
borrowing costs to rise again and this is without all the other
problems present in the zone which is now in recession.
China
Economy grew at
its slowest pace in 10 quarters which investors think will pressure
on Premier Wen Jiabao to ease monetary policy:
He
can't do much – China is an export orientated economy and its
markets are shrinking and will shrink further. There is no domestic
demand to pick up the slack, debt levels are high, inflation is high
and this leaves little room to kick start growth and China is heading
for a hard landing.
The
Global Economy is in a Crisis Which Will Get Worse
Banks
and brokers, all talk about the worst is over and any bit of good
news or news not as bad as expected is a reason for saying the worst
is over but its not – the worse is yet to come. With this in mind
continue to buy the dollar on dips and look for the Euro to trade to
1.20 or lower and keep an eye on the commodity currencies – they
could have seen there highs for year and could finally break hard to
the downside.
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