Another lesson in Trading - Watch the Aussie this week

Tuesday, June 23, 2009

In a demonstration of what the Forex markets have been about lately, instant gratification, the dollar rose against the most currencies in what was seen as profit taking from the traders’ venture into risk appetite late last week.

Forex online Traders are hoping for some sign that all will be well this coming week when the US Federal reserve meets and this has hampered volume on Monday, as trading was extremely light, about 1/3rd less than what it normally is.

It seems that when there is nothing to report, the Dollar has a good day and analysts make excuses such as profit taking using big words like risk aversion. Don’t be fooled, the Dollar went up today because stocks got hammered, and this is the clearest most consistent indicator in the Forex market.

The Dow Jones Industrial Average fell over 200 points as the US business community is becoming more afraid of the changes that President Obama is seeking to bring. With the Congressional Budget Office (CBO) sobering up the healthcare debate with an estimate for over a trillion dollars that will be needed to overhaul it, the healthcare and medical and banking sectors got destroyed.
And as I try to do regularly with these entries is show everyone how to trade – more specifically, what news to trade on. If you missed Monday, don’t worry, Wednesday will be much of the same – I have not decided on Tuesday yet as it seems likely that a bounce is coming, but gloal events such as Iran and North Korea might change that.

Coming as a pleasant surprise to the Forex trading community was news from Germany that its business sentiment was higher. Being that the German banks are in dire straits and that the EU’s largest economy is in the worst shape it has been in since reunification in the early 90’s, I don’t want to see poll numbers – look at the real numbers and stay away from the Euro for a bit until they become clearer.

The place to be still in my mind is the Aussie, the high yields and the rising price of oil will help sustain the currency as the economy down under goes through some rough times. The Canadian Dollar as well looks like a good buy as well to me, but I am not as enamored with it because of its proximity to the US. The auto maker issue is still weighing heavily on the economy and you will see an spike in unemployment – which might offset the jump in commodity prices.

All in all, this will be a week of waiting – nothing really will happen until Wednesday’s fed meeting and so we wait. And while we do so, we try to make a quick buck – good luck.


Anonymous June 24, 2009 at 12:32 AM  

Can’t wait for Bernanke's comments meeting about the purchase of public debt…
Even thought, I don’t expect any inspiring news…
best of trades!

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