Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

EURO, USD and Equities in light of No decision from FOMC

Stock-Markets / Financial Markets 2010 Dec 14, 2010 - 01:25 PM GMT

By: Bari_Baig

Stock-Markets

Best Financial Markets Analysis ArticleWe had the OPEC meeting which went almost unnoticed and today we have the FOMC. Would there be any policy change or let’s just say would the post meeting communiqué shed light on any possibility of tightening? The answer is a resounding No! And anyone anywhere expecting otherwise has gotten it totally wrong.  Same could also be said about further easing therefore at best this meeting shall be one where committee members meet, have a brief discussion session and then call it a day, as if it was a “get together”.


We for one are glad that the meeting shall have minimal effect on the “Green Back” which came under serious nailing yesterday from all quarters. It was Moody’s who said if the tax and unemployment packages go through in the current form then it would have no choice but to cut U.S rating or for initially add a negative outlook. This along with lesser liquidity played to green back’s disadvantage.

Euro was perhaps amongst the biggest gainers as it triggered stop after stop to push higher and from 1.318s pushed up relentlessly as if that wasn’t enough, today with the exception of Asian trading when the pair was awfully quiet, moving in a 30 pips range however, in European trading, Euro took to the upside and posted a high of 1.349s almost knocked at the door of 1.3500s. This is serious! And we mean it. We are not discounting the fact that Euro had plenty of days to break to the downside as we had thought would be the course of action nonetheless the Euro bulls be it speculative in nature managed to flip the coin.

What we find interesting is that the strong statements from German officials on Sunday showing support for Euro didn’t single handedly push euro higher, rather the pair seemed to dwindle and it wasn’t until Moody’s news which sent the green back lower that Euro became strong. So, as we have said before not once, not twice but a number of times regarding Euro strength that it is in essence U.S Dollar weakness that pushes Euro higher. Do we expect U.S to be downgraded? No, and even if the outlook is made negative it would be months before the rating might be downgraded because what Moody expects, first needs to be validated.  What [might] happen has already in near term done considerable damage to the green back as absolutely no decision from FOMC might be taken slightly negatively by the street and some more pressure could be felt by the green back but this shall only be temporary. Euro has big problems at hand which for some reason aren’t being publicized as much as they were two weeks ago. Could it be the calm before the storm? That is what it seems like. Belgium underwent a downgrade by Standard and Poor’s, some other ought to be in the pipeline. Comparing Euro’s chart to Dollar Index we find, Euro to have a slight edge over the U.S Dollar index.

“If” Dollar Index is making a topside top then looking at Euro’s chart we see a downside top forming. Dollar index is currently trading at 79.2s from where it reversed twice as can be seen in the chart. A close below would surely put a dent in the trend and give more credence to the plausible top right now.

They say a cat has nine lives, and to us it seems Euro is using those cat lives fast. The overall trend remains bearish, the weakness of U.S Dollar cannot be accredited to Euros bullishness, and it is only an adjustment in the price wars for now.

Now, turning our attention to the equity markets.  Dow has broken the peak of November 9th and is on its way to new highs.  Yesterday Dow traded to mere fractions of the peak but in last half hour turned lower. What we found interesting was the sudden rush of pessimism that came in from all direction as U.S equities turned lower that perhaps everyone got it wrong! We were bullish before the breakout took place and we remain bullish of U.S equities and most other global equities. As we write Dow has inched ahead to 11,500. We wrote yesterday that “Dow might experience jitters between the previous peak and 11,550 and once the jitters are settled then a move upward to 11,700 would take place”. For now everything seems to be going rather smoothly. No jitters and everything seem calm but the FOMC’s statement is due out today and that could cause some unrest to the equities for some time and breaking their rather smooth assent.

Looking at the chart above we can see what caused the street to panic as Dow started to ease off from the highs. Many thought it was a bull trap but they have been proven wrong thus far.  New highs lie ahead as we maintain 11,750s a near term target for Dow. 

The economic data out of U.S was good as the commerce department showed an increase in retail sales by 0.8% which was better than the consensus of the economist. The Business inventories came at 0.7% where as the streets guesstimates were of 1%.  We are glad that the number was lower and not beyond 1% or that would be a cause of concern for the economy because that would reflect sales are that much weaker. Retail sales are ahead and that shall further strengthen the view and give more  

By Bari Baig

http://www.marketprojection.net

© 2010 Copyright Bari Baig - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules