Last week brought sharp sell off in the Dollar. After massive gains late last year, when global crisis broke out in full, USD has been under steady pressure. Among other reasons for this, increased borrowing to finance string of bailouts is cited as a culprit. While US is not the only country putting strain on its budget, Dollar's role as a reserve currency, puts it in a spot light.
Some pundits claim that world's economy has turned the corner and is slowly recovering. According to some, the dollar will be the biggest looser, since US growth will come with lower interest rates, higher inflation expectations and greater financing risk than most other economies. The US currency has fallen 10 per cent since March. This week it reached its lowest point against a basket of currencies since December. Main beneficiaries were emerging markets and commodity-linked currencies like the Australian Dollar or South African Rand.
It remains to be seen just how accurate doom sayers are. Our systems had spotty performance last week, breaking about even. We see it a sign of stabilization, in a longer term. Please see results before and follow the link for details.
(Sunday 05.24.2009.)
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Here are the results for last week:
- Daily Pound made 4 pips ;
- Daily Euro made 41 pips;
Follow the link on the right to view details.
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Last week's results.
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Last week we suggested a trade in AUD-USD. Our plan was to sell it at 0.7462. Unfortunately, dollar came under stress and trade didn't work. Our stop at 0.7550 was touched for a loss of 88 pips.
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It would appear that after long period of time JPY is decoupling from USD. They start to move on their own merits, not in the same direction. This week USD-JPY moved in a way similar to USD-CHF, which is more historically typical. This process is likely to continue in the future, which should be most evident in USD-JPY.
We expect USD to get stronger in coming days and weeks at the expense of Yen. Plan is to buy USD-JPY at 95.34, looking for 96.50. Also, we think that farther general weakening of JPY is just ahead of us.
We wish everybody a great trading week!
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Once again we must stress that the trades highlighted here are only a small sample of our trades. If you have any comments or would like to obtain more information please contact us at info@spectrumforex.com .
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Risk disclaimer:
Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.
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