Buck Bolts As ECB Steers Clear
Intervention–or the threat of
intervention–was one of the only things propping up the euro and holding down
the dollar last month. But the President of the European Central Bank, Wim
Duisenberg, said the ECB would not intervene in world currency markets to
support the euro in the event of more Middle East violence. Market opinion also
holds that there will not be a coordinated intervention among
central banks, especially with a US election less than one month away. This
situation and other factors were pointed out in Friday’s Futures
Trading Outlook. December Euro FX futures
(
ECZ0 |
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PowerRating), from the Implosion-5 List,
popped lower and are trading just off all-time contract
lows. Swiss francs
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PowerRating) and Japanese yen
(
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PowerRating), from the
Implosion-5 and Pullback From Lows List,
respectively, are also down on the session.Â
Energy contracts are also trading lower and following through for second day
on Turtle Soup Plus One
Sell signals from Friday. Bridge News reported that the Saudi oil minister
said “OPEC…countries are ready to give the market what it needs,”
perhaps unilaterally. This oil-bearish pessimism comes ahead of an OPEC oil
output meeting, a Middle East Peace summit attended by Clinton, and at the
completion of a five-day oil strike in Venezuela, the cartel’s second largest
producer.Â
Lower oil prices and a stronger dollar are both dollar positive for stocks.
Stock index futures are still digesting Friday’s heady gains. But the positive
fundamentals from the buck and oil as well as an unusually high number of up
signals–five–from the
Market
Bias Indicators Page, points to a much higher-than-normal likelihood of a
continuation of Friday’s strong move off last Thursday’s lows.Â
 The coffee
market is looking at dryness in Brazil, and forecasts for no moisture in the
near futures, as reason to buy the contract. Coffee came off six-year lows and
rallied as much as 7% to the top of a two-month range before selling off in a
Turtle Soup reversal (Turtle Soup reversals occur in the same day as a 20-day
high rather than in the following day of the Turtle Soup Plus One
signals).