Yesterday I discussed how good the take off had been, and how strong the Euro and Australian dollar were looking, especially against a weakening US dollar. Today all I can say is that these currencies look as though they have done enough energy building, and are immediately ready to accelerate sharply. "Fast markets" comes to mind as a term.
The extreme bullish price action, backed up as it is with plenty of bearish market sentiment, is compelling!
Particularly note worthy is the Australian dollar, which faced with a continuation of rates remaining on hold at what are historically low levels, still looks set at the starting blocks of a very fast sprint higher. I would suggest the RBA announcement that rates remain the same today, will see the local currency immediately headed much higher. It has the feel of a market that has a "need" to buy, but is waiting for a fall on no rate change news, Basically everyone needs to "buy", and is living in "hope" of a fall to better levels. It just isn't going to happen I would suggest, and we will see the market higher through this week and in the years ahead.
If you missed yesterday's report, it follows below, then the FxMax Directions which are up over 100% this year, notionally entered by a third party at 2% risk per trade.
Commentary from Yesterday,
Yet another very nice take off on this next leg of the long journey to EUR/USD 1.5000,
and of course the AUD/USD to 1.1300.
Both are possible by year end, and the Australian dollar is on its way to 1.1800, most likely next year!
There is not a lot new to say. Europe as expected has held. There has been no under funding of sovereign debt issues in Europe. Then there is the Australian dollar. I struggle to see what is so difficult to work out, and why some major banks are again forecasting 80 cents? Is that because that is what they once said could never be surpassed, or perhaps they remember that target from a not so long ago Goldman Sachs report.
The Australian Dollar story is straight forward.
Just 23 million people sitting a pile of the world's wealthiest rocks, with 2 billion people just to the north who want to build new homes, roads, hospitals, office towers etc. Rather simple math really !
Then there is the US dollar, the currency of an "old world" economy. Nothing wrong with that, but we are hardly likely to see fresh historical surprises to the upside in such a mature economy. Added to that, and apology for the repetition, but the "strong dollar" policy really is the "orderly decline of the dollar" policy. For the administration to suggest they wanted a lower currency could trigger market dislocation on a massive scale. Far more effective has been the back corridor acquiescence to a declining currency that will support global revenue streams and even the manufacturing industry.
The US dollar remains in long term decline. The Euro has burdened tremendous negativity, and is now beginning to rally toward correct fundamental value. The Australian dollar, well it is a long march which still has some way to go.