Whose Afraid Of The IMF?
Dollar holders — as the currency slid in reply to the International
Monetary Fund’s annual report. In the report, the IMF warned that the buck
could be in for a steep “depreciation,” pointing out that a poor
and potentially worsening current account deficit could undermine the
until-recently strong dollar.
September dollar index futures
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DXU1 |
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and potential downside inertia by registering on the
Implosion-5 List since last month. The IMF said the dollar could come under
additional pressure should US productivity figures fall. Last month US
productivity rose, but the rise was attributed to layoffs which translate
into fewer hours worked, rather than greater output, as being the primary
reason for the increase.
The current account deficit will continue to rise if investors closed
bets that the US assets will perform relatively better than assets in other
countries. European assets would be one of the major beneficiaries and
traders were front-running the possibility that the economies in the EC bloc
might perform better than in the US.
The euro FX futures
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ECU1 |
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PowerRating), the leading contract on the Momentum-5
List and the currency most heavily weighted on the dollar index, head
faked lower but exploded after trading above yesterday’s last hour’s range,
the exact trigger of an Off The Blocks entry after a pop-down opening (in an up-momentum market). Similarly, Swiss francs
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powered higher after a lower start and powered higher through their own Off
The Blocks entry. Both contracts etched outside days on their highs, which
are generally very constructive patterns. The ECU1 gained .00520 to .90210,
and the SFU1 gained .0032 to .5952.
The Japanese yen
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JYU1 |
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six-week high, also exploded as September dollar index futures
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DXU1 |
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weakened. The daily bar left today works to confirm the gap-up expansion bar
from three days ago and suggests additional upside. The JYU1 ended up .0054
at .8248.
Another market that merits keeping an eye on in light of the dollar’s
weakness is gold. Gold is dollar-denominated and often rallies when the
dollar drops in price as the metal becomes less expensive. December gold
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GCZ1 |
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appeared on today’s Momentum-5 List and closed at a two-month high.
Going in opposite directions,
August lean hogs
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LHQ1 |
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PowerRating) made good on its Momentum-5
reading by trading to new highs while August pork bellies
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sank to make good on their
Turtle Soup Plus One
Sell
signal. Hogs closed up .175 after being up another cent, while bellies
approached their limit down level before closing down 2.625 at 96.525.
September cocoa
(
CCU1 |
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PowerRating) is another market that has been showing
recent signs of momentum and closed higher. Cocoa sets up tomorrow in a
Pullback From Highs setup and today’s bar also closed bullishly.