Monday December 3, 2007 - 13:00:16 GMT
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Black Swan Capital - www.blackswantrading.com
FX Trading â€“ Maybe!
Talk of a dollar bounce is beginning to surface in several quarters. Reasons given are many, here are a few:
1) Improving US current account as US exports grow because of a weak dollar and US consumers save because of a weak economy.
a. The component of US exports increasingly to emerging markets and away from Europe could set the stage in the months ahead for a US rebound as European economies decelerate i.e. the relative game thing.
2) Dollar sentiment hit a low recently based on survey data.
3) Decoupling theory questions marks:
a. Euro-zone and UK economies arenâ€™t exactly looking strong
b. China growth, though still a rumor, showing signs of â€śslowingâ€ť a bit
c. Japanâ€™s forward momentum in doubt as subprime woes hit there too.
d. Commodities prices are getting hit; crude â€śall the way backâ€ť under $90.
4) Last, but not least, The Economist cover page this week of the US dollar going down in flames (the Paul Montgomery magazine cover indicator, as noted by Elliott Waveâ€™s Steven Hochberg and Peter Kendell)
5) Risk capital flowing into the US to pick off seeming undervalued assets e.g. the Dubai capital that no one wanted when it was targeting a ports deal at the top of the cycle is now the White Knight for Citigroup as we head quickly toward the trough.
Itâ€™s a market. Anything can and will happen. Just ask our trading account if you donâ€™t believe us.
Jack Crooks Black Swan Capital
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