The Dollar Should See Higher Levels–Here’s Why
Despite a much
anticipated payroll number, which disappointed, the volatility in the
aftermath and dollar resilience is worth noting.
Both the January number and the December revision
were lower than what the market had expected. The dollar was immediately sold
off to the 83.40-50 level, while the EUR, GBP & CHF rallied. However, within
moments, comments from PBoC’s Zhou indicating that now was not the right time
for a Chinese revaluation and Greenspan sounding upbeat about the current
account and some signs of fiscal discipline from the Bush administration bid the
dollar right back up. We now (7:10 AM PDT) sit right back where we started
today just prior to the number 83.90-84.10. Only a move through 84.10 will
likely ignite any interest, but it could be quite strong.
This weekend’s G7 meeting, while closely followed
seems as though it will come and go without much accomplished in terms of new
policies, specifically the yuan. So, it seems likely that the continued tug of
war for a trend will continue. Based on the data and resilience of the dollar
today, I still stick with the belief that the dollar will see higher levels in
the days and weeks come.Â
Open Trades:
Long:Â EUR/CHF, EUR/CAD
Short:Â NZD/USD
Also looking for a short in AUD/USD but not
seeing technical deterioration as of now.
As always, feel free to send me your comments and
questions.