The Only Wild Card In The Dollar Short
With
the G20 behind us and not a whole lot of direction provided at the
conclusion, the market will continue to focus on the path of least resistance; a
weak dollar. The main currency with regards to that theme will be USD/JPY. A
test of nerves is shaping up as the only wild card on this short is whether or
not the BoJ intervenes.
The other item worth noting
overnight were comments from Bank of Canada Governor Dodge that essentially
overshadowed comments last week from Lapierre regarding CAD strength and its
effect on exports. Dodge apparently, based on his comments, does not share this
concern. The result has been a sharp decrease in the USD/CAD overnight. Now it
is a matter of when, not if, 1.1870 gives way.
Beyond that, the only other
item popping up on the radar screens is the price of oil as it approaches $50
bbl. The one beneficiary of this might be EUR/JPY as it sits solidly on its’
200-day ema at 134. A move in oil back through $50.68 bbl will be seen as key
and might signal another run back towards the old highs or at least to $52.35.Â
This may eventually have an impact on our short in USD/JPY and will need to be
watched closely.
As always, feel free to send me
your comments and questions.