COMMENTARY

• Dollar Rises As Week Begins - Start of a Counter Trend Rally?
  Written by Boris Schlossberg
  Last updated 10/12/2009 4:57:10 AM ET
  The dollar started the week on bullish note rising against all the majors on the back of hawkish comments from St Louis Reserve President James Bullard and some downbeat news from Europe and UK. In remarks made in front of the National Association of Business Economics, Mr. Bullard suggested that inflation may be a greater concern than the market believes despite the wide output gap.
  1 comment
• Will Hawkish Fed Help The Dollar?
  Written by Boris Schlossberg
  Last updated 10/12/2009 3:32:58 AM ET
  For the second time in the past two days Fed officials have assumed a more hawkish posture with respect to monetary policy in a clear attempt to strengthen the dollar. In a presentation to an economics conference, St. Louis Federal Reserve President James Bullard warned that inflation pressures in the US economy may be greater than the market believes. Speaking in front of the meeting of the National Association of Business Economics, Mr. Bullard staid, “I am concerned about a popular narrative in use today ... that the output gap must be large since the recession is so severe ... [and] any medium-term inflation threat is negligible, even in the face of extraordinarily accommodative monetary policy. I think this narrative overplays the output-gap story."
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• U.S. Dollar: Can The Gains Be Sustained?
  Written by Kathy Lien
  Last updated 10/9/2009 5:29:11 PM ET
  The U.S. dollar strengthened dramatically on Friday, leaving many currency traders to wonder whether the dollar has finally hit a bottom. USD/JPY rose 1.6 percent, the strongest percentage gain in 2 months. The GBP/USD also sold off aggressively, paving the way for further losses. However in order to consider whether the gains can be sustained, we have to first understand the drivers behind the sharp rally in the dollar. Over the past few weeks, the dollar came under severe selling pressure and even hit fresh year to date lows against some currencies. In that type of environment, it doesn’t take much to turn things around. Comments from Fed Chairman Ben Bernanke triggered profit taking in the dollar after he suggested that the Fed will be prepared to tighten when the economy improves. Granted this is a relatively obvious statement, the timing was perfect for the dollar. We have been talking all week about “Where the Fed Fits In” on the global easing and tightening scale and up to now, Fed officials only expressed their reluctance to implement an exit strategy. Even though we still do not believe that the Fed is close to removing their ultra easy unconventional monetary policies, they are strategically moving themselves closer to their peers or could be attempting to indirectly prop up the dollar.
  3 comments
• U.S. Trade Narrows, CAD Hits 1 Year Low on Employment Numbers
  Written by Kathy Lien
  Last updated 10/9/2009 9:20:46 AM ET
  The stronger than expected U.S. trade numbers helped to ignite a sharp rally in the U.S. dollar. The trade deficit in August was $30.71B compared to -$31.85B the previous month.
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• Dollar Bounces as Bernanke Hints at Exit
  Written by Boris Schlossberg
  Last updated 10/9/2009 6:39:58 AM ET
  As the week came to a close in Asia and Europe ,the dollar received a boost from comments by Fed Chairman Ben Bernanke that suggested the Fed is beginning to prepare an exit strategy from its ultra accommodative monetary policy. In remarks made last night, the Fed chairman noted, “"When the economic outlook has improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration."
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• A Change of Policy From the Fed?
  Written by Boris Schlossberg
  Last updated 10/9/2009 4:50:31 AM ET
  Fed Chairman Ben Bernanke stated last night that the US central bank will be ready to tighten monetary policy as economic conditions improve prompting a reflex rally in the dollar especially against the yen. The Chairman said, "When the economic outlook has improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration."
  3 comments
• EUR/JPY Opportunity to Sell at 132.21
  Written by Bradley Gareiss
  Last updated 10/8/2009 6:20:03 PM ET
  A bearish Gartley pattern is forming on the EUR/JPY.
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• U.S. Dollar: Where Does FED Fit In Part 2
  Written by Kathy Lien
  Last updated 10/8/2009 5:16:27 PM ET
  The U.S. dollar traded lower against all of the major currencies with the sharpest losses seen against the Australian dollar, which surged on the heels of the strongest job growth in 2 years. Earlier this week, we penned an article titled “Where Does the Fed Fit In?” and we truly believe that the recent price action in the currency market reflects the answer to that question. Three central banks made monetary policy announcements this week with 3 very different outcomes. The Reserve Bank of Australia hiked interest rates, the European Central Bank grew a bit more optimistic while the Bank of England left the door open for further easing. There is a good chance that all 3 of these central banks could make changes to their monetary policy before the end of the year. The Federal Reserve on the hand will most likely leave their Quantitative Easing program unchanged. They have not been in a rush to remove their unconventional measures, especially following last week’s disappointing non-farm payrolls report. This dynamic reinforces our belief that the dollar could continue to fall.
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• ECB's Comments Trigger Roller Coaster Moves in EUR/USD
  Written by Kathy Lien
  Last updated 10/8/2009 9:38:07 AM ET
  The European Central Bank interest rate decision has triggered a tremendous amount of volatility in the EUR/USD. Initially the currency pair raced to a high of 1.48 as the optimistic comments from ECB President Trichet and lack of new concerns on the euro reinforce the recovery story.
  4 comments
• No Change in QE for BoE - Pound Holds Gains
  Written by Boris Schlossberg
  Last updated 10/8/2009 7:30:38 AM ET
  Aa expected the Bank of England left its overnight rates at 0.5% and kept the quantitative easing program at 175 Billion pounds. The Bank maintained its neutral language with respect to QE noting that, “The Committee expects the announced program to take another month to complete. The scale of the program will be kept under review.”
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• Risk FX Rally Continues - A Turn in the Pound?
  Written by Boris Schlossberg
  Last updated 10/8/2009 5:25:49 AM ET
  Risk FX staged another strong rally in Asian and early European sessions today aided by a number of factors that supported the global economic recovery trade. In US the better than expected numbers from Alcoa which saw aluminum demand rise by 11% in Q3 helped lift equity futures in after market hours and sent Nikkei higher by more than 1%. Despite the fact that some of Alcoa’s gains may have been exaggerated by cash for clunkers program the markets were encouraged to see ongoing demand from EM nations as infrastructure build outs continue in the region. As we’ve noted many times in the past China, not US is the new driver of global growth and until and unless Chinese demand cools, the recovery theme will continue to dominate trade in the currency market.
  3 comments
• Bonus GBP/USD Short Opportunity at 1.6102
  Written by Bradley Gareiss
  Last updated 10/7/2009 8:19:33 PM ET
  A bearish Gartley/double top is forming on the GBP/USD.
  15 comments
• USD/CHF Break Out Levels...
  Written by Roger Stojsic
  Last updated 10/7/2009 5:18:00 PM ET
  Has the 6-mo. lanslide ended, or is the swissy still searching for a bottom?
  4 comments
• U.S. Dollar: More Protectionism is Bad
  Written by Kathy Lien
  Last updated 10/7/2009 4:56:58 PM ET
  It is not surprising to see the dollar recover after selling off significantly in the beginning of the week. In every downtrend there will be relief rallies which is what we have witnessed today. The dollar traded higher against the euro, Australian, New Zealand and Canadian dollars, but not before each of the 3 commodity producing currencies hit fresh year to date highs. The U.S. economic calendar was once again devoid of any major economic releases, giving investors the opportunity to let their imaginations run wild. Although there are many reasons why the dollar should continue to weaken, the primary reason is the improvement in risk appetite. So if risk aversion returns and equities give back their recent gains, the relief rally in the dollar could become a full blown turn. Concerns about losses in the commercial real estate sector and the unrealistic expectations of a V shaped recovery have made investors a bit nervous. However with no major U.S. economic reports due for release this week and 2 central banks making monetary policy announcements tomorrow, we still believe that interest rate differentials will drive the currency market.
  7 comments
• ECB and BoE Preview: Any Risk of Fireworks?
  Written by Kathy Lien
  Last updated 10/7/2009 10:13:37 AM ET
  With no U.S. economic data on the calendar this morning, the dollar benefited from profit taking on short positions and marginal risk aversion as concerns about commercial real estate losses in the U.S. return.
  4 comments