Tuesday August 30, 2005 - 11:21:12 GMT
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Black Swan Capital - www.blackswantrading.com
Good $ price action...
“Listen to what the market is saying about others, not what others are saying about the market.”
One thing we thought stuck out yesterday—among all the other things—was good dollar price action relative to the news. What looked like the beginning of a dollar rout on Sunday evening, turned into a pretty good day for the dollar thanks to the reversal on Monday—even before crude pulled-off its highs.
Something that stands out today, to a lesser degree, but adds to the equation, is disappointing Japanese and UK economic news (key news links above for full story). And last week, we didn’t see any dreamy economic numbers out of the euro zone either. This isn’t to say things look rosy in the US—everyone heard the salvo Mr. Greenspan launched on Friday. But, this currency thing seems to be a relative game. And in a relative game the best looking ugly choice often wins the prize.
And if we were attempting to “talk our story” (and you know we would never do such a thing here) we would add this comment to Mr. Greenspan’s warning about housing: If the Fed has just indicated its concerned about asset bubbles then there is an increasing probability rates move higher--into the restrictive zone—again confounding the expectations that US rates must stop going higher.
To summarize today’s short piece:
1. Japanese and European growth expectations may be dashed—again
2. The Bank of England may consider cutting rates—again
3. The Fed will move rates higher--again
All reasons why we are leaning heavily on the side of the fence that says: The dollar correction is over—new highs ahead.
Jack Crooks - Black Swan Capita
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