Tuesday, January 3, 2012

Dollar gains to extend…

The markets will drag themselves out of the New Year reverie and back behind desks. Whether this will generate a direct resumption of Dollar gains or some cagey early consolidation is yet to be seen. From what I can see the risk is for the rally to resume quite quickly and may well do so today. Overall there is still a bit more upside that should last a week or two though the directness will probably reduce as we progress. By the end of this month we should begin to see weakness reappear into the spring timeframe.

The most dramatic deviance from the Dollar upside was in GBPUSD. It has inserted a weird and wonderful series of moves that almost feel as if “they shouldn’t have been” since it is hard to fit them in any consistent move in either direction. It has placed a big question mark over exactly what it wants to do. In the weekly structure the risk is in line with the general Dollar bullishness. This is probably the most appropriate interpretation but best wait for this to be confirmed. If GBPUSD fails to go down it could point to a sudden rush higher into spring that would imply a move above 1.7042… This is a particularly weird one – until it clarifies itself take care.

USDJPY needs a special mention. As you know I have been searching for the bottom and had thought a break above 78.00 may well do the trick but that was quickly squashed. For now it is probably safer to wait for stronger signals. EURUSD appears to require a correction higher so possibly this could be given a piggy back by USDJPY. Below 99.00 would be more bearish.

As the year starts be aware of the basic Dollar bullish risk but do also keep in mind the rather rusty and risky nature of the market until it begins to gather steam…

May I take this opportunity to wish you all a truly happy, healthy, peaceful 2012… and errr… end of the world.

Ian Copsey


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