Monday March 6, 2006 - 11:29:24 GMT
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Black Swan Capital - www.blackswantrading.com
Crude vs. the buck
â€śThere are but few things more unbalanced to the mind than the act of suddenly winning or losing large sums of money.â€ť
Henry Howard Harper, The Psychology of Speculation
The chart below compares crude oil futures to the US $ Index (inverted) so you can see the relationshipâ€¦
This chart says that recently the dollar and crude oil prices have been moving tightly and inversely togetherâ€¦a rising in crude equals a fall in the buck or vice versa.
A couple of stories from Reuters this morning:
OPEC President Edmund Daukoru said on Friday that the global oil market is oversupplied by about 2 million barrels per day.
Top oil exporters Saudi Arabia, Iran and Kuwait said on Monday that OPEC was unlikely to cut output when it meets this week, despite lingering concerns about second quarter oversupply. (Reuters)
Crude is off 41 cents. A bet against crude might be a bet for the buck.
And when you consider the dollar price action (especially against the yen) this morning, on news that China will once again widen its trading band for its currency (supposedly this is good for the Asian-block currencies), you have to admit it represents good price action relative to the news.
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