Wednesday August 18, 2010 - 18:09:14 GMT
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Dollar Mixed; Trader Turn to Stocks for Direction
The Dollar is trading mixed at the
mid-session. The lack of any fresh economic news is encouraging investors to
seek direction from the equity markets. It seems the only market moving with
any conviction is the British Pound.
The British Pound erased early session
losses and opened better in New York following the release of the Bank of
England minutes which showed that the Monetary Policy Committee voted 8 -1 to
keep interest rates at historically low levels.
Besides voting to keep rates low, the BoE
also voted to maintain its asset-purchase program at 200 billion pounds. The
MPC discussed both easing and tightening at its latest meeting before voting
overwhelmingly to maintain the status quo.
The recent discussion has been about the U.K. inflation.
Some believe that it is too high and not likely to fall back under the BoEâ€™s
target rate of 2.0%. Based on the conviction of the BoE members at its last
meeting, however, it looks as if investors believe what the central bank is
saying about the inflation rate easing back toward the target by 2012.
Technically the British Pound found support
early this morning on an uptrending Gann angle from the 1.4229 bottom after
piercing a key 50% level at 1.5560. Regaining this level has put the market in
a strong position to post a daily closing price reversal today. This pattern
suggests the possible start of a 2 to 3 day rally back to 1.5746.
The Australian Dollar is under pressure at
the mid-session. The Aussie weakened after a report measuring the number of
jobs available for skilled workers fell 0.3 percent in August. The decline in
this wage index is a signal that the economy may be cooling, leading to the
Technically, the Aussie may be completing a
50% retracement of the recent short-term decline. A failure between .9039 and
.9083 could mean a secondary lower top is forming. This pattern could mean the
start of increased selling pressure.
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