Tuesday March 21, 2006 - 08:59:43 GMT
Share This Story
Black Swan Capital - www.blackswantrading.com
The buck's crude connection
â€śI want a one-armed economist so that the guy could never make a statement and then say 'on the other hand...'â€ť
Ebb and flow is the name of the game. That means if you get stuck on your own story you can get damaged very quickly in these marketsâ€”especially those of the leveraged variety.
For exampleâ€”sweet crude! One day we canâ€™t get enough. The next we have a glut. From the Journal this morning:
â€śIf predictions from energy analysts are any measure, more oil supplies may indeed be pouring into U.S. coffers. According to a Dow Jones Newswires survey of 10 analysts, government inventory data due tomorrow will show U.S. commercial crude inventories rose an estimated two million barrels on average in the week ended March 13.
â€śLast week's data revealed oil stockpiles had risen to their highest since the end of May 1999, inflaming fears of a supply glut, despite strong global petroleum demand.â€ť
A trader quoted in the Journal story said we could get a â€śtest of $60.â€ť Can anyone say $55?
Why do we care where oil goes? Well, because itâ€™s another brick in the wall of our dollar analysisâ€”thatâ€™s why. Of late, crude and the buck have been trading in mirror-image-like fashion i.e. as crude rises, the buck falls and vice versa...
If we couple the crude-buck chart above with the seemingly dollar bullish comments from Fed Chairman Bernanke Monday night, we have the raw material of a potential dollar rally/correction of the multi-day or multi-week kind, we know not which.
We also like the fact the dollar got up off the canvas immediately following another pronouncement that â€śthe dollar is going to weakenâ€ť from perpetual dollar bear Mr. Warren Buffet, the Oracle of Omaha. Heâ€™s not sure if itâ€™s â€śthis year or five years from nowâ€ť but it will weaken â€śover time.â€ť Feel free to trade off of that. There are few of us alive with deep enough pockets to play that game.
The odds at this moment, not a year or five-years from now, seem to suggest a snap back in the buck is in the cards. But, that just a storyâ€”weâ€™re not in love with itâ€”we only want to profit from it. Stay tuned.
Black Swan Capital Subscribe to the Black Swan Letter
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."