Trading The Greenback? Here’s What You Should Watch For

• May 16, 2005
• Dave Floyd

It was a week for the dollar bulls; that cannot be
denied.  Technically there is but one more level to overcome, 86.45-55,
after which there will simply be no argument.  Nonetheless, from a trading
perspective, the DXC will need to pull-back in the next few days in order for us
to be able to re-establish trades.  We were simply not able to play any
moves from late Thursday and all day Friday due to the short-term extended
nature of the charts.  It was one of the few times where overbought was a
useless indicator, as prices continued higher.

 

 

style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>AUD/USD:

The only
release likely to impact on markets is Q1 LCI – though it is a little after the
fact given the RBA has basically said that CPI is too low for hikes in the near
term. Still, it is the best lead on what’s in the pipeline.

Australian
Wage Cost Index looks set to increase by 0.9% q/q in Q1 (down from 1% in Q4’04).
This will bring Yr/Yr wage inflation to 3.7%, up from 3.6% in Q4’04. Private
sector wage inflation is seen at 0.9% q/q and public sector wage inflation of 1%
q/q driving this result. The market expects 1% – and below market result is
likely to find little resistance to the bid, so this may be a good chance to go
long.

 

style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>Summary of Key Technical Levels for
Timing Swing Trade Entries/Exits

Dollar
Index:   
85.89, 85.48, 86.48

style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>GBP/USD:style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>       
1.8407, 1.8440,
1.8510

style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>AUD/USD:style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>        
.7555, .7602, .7628

style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>NZD/USD:style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>        
.7020, .7102, .7159

style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>USD/NOK:style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>       
6.2885, 6.4100, 6.4400