Monday October 4, 2004 - 17:49:01 GMT
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GREENBACK MAKES A COMEBACK
The dollar continued a strong rally that started overnight and lasted well into the NY session today as the euro slide continued to take place. The dollar opened in early Asia 1.2515 and slowly grinded to 1.2675 in NY today on the back of possibly pre G7 fears over the weekend. The end of last week we saw a lot of dollar selling which looks now it could have been on the back of fears of what may happen or be said during the G7 meetings over the weekend. With no breaking news on the reevaluation from China, it seems as though those fears were short lived and now the buying back of all those dollars has the greenback surging ahead of this weeks all important NFP on Friday. The euro saw a new high in place last Thursday at 1.2440, and has slowly retraced all its gains back to 1.2257 lows seen in NY. There is important support at 1.2245 now and a break of this level opens the door for more stops to be taken out to the downside. Option plays continue to cap the market as there is a 1.2450 and 1.2475 options in play and that has us still in the 1.2500-1.2000 range. There was a large 1.0500 option bought 2 weeks ago in euro and now that we have not gotten above 1.2450, some think it is possible for this 1.0500 to be in play. The only piece of news this morning in NY really made no major impact as US Factory orders came in -.1% but ex-transportation was +1.3% as well as July revision up to +1.7% from +1.3%. This gave the dollar a small boost to its eventual highs but nothing major otherwise.
Technically Speaking: Gold prices were down $6.00 today and precious metals were all down as well. With the slide in euro and the bounce in $CAD, we did not see much of a sell off quite yet happen in the AUD$. We are waiting for the other shoe to drop here. There is an RBA announcement due on rates tomorrow and this should keep the Aussie trapped in a small range, but the RBA is to say there is no rates change and AUD$ should fall further.
Gain an Edge: We look to sell Aussie at current levels and again at .7240 with a stop in place at .7280. Our take profit is .7075.
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