Monday December 4, 2006 - 02:40:12 GMT
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Black Swan Capital - www.blackswantrading.com
Aussie: Correction time?
â€˘ Japan's wages failed to increase in October (Bloomberg)
â€˘ Eisuke Sakakibara, former currency- policy chief at Japan's Ministry of Finance, said there's a ``30 to 40 percent chance'' the Bank of Japan will raise interest rates this month. (Bloomberg)
â€˘ Key Reports:
10:00a.m. Oct Pending Home Sales. Previous: -1.1%.
"We believe the world wants a weaker U.S. dollar about as much as U.S. consumers want to pay more at the pump for gasoline," writes Joseph Quinlan, chief market strategist for Bank of America's Investment Strategies Group. "Despite all the chatter about global imbalances and the need for a correction in the greenback, the world, in our opinion, just isn't ready for a sizable, secular decline in the buck. Such a move would undercut the primary source of growth of many nations: exports."
Joseph Quinlan, Bank of America (quoted in Barronâ€™s)
FX Trading â€“ Aussie: Correction time?
There is no doubt the fundamental backdrop suggests the dollar can go lower, much lower. But near-term, you know that, I know that, and the proverbial shoe-shine knows that, based on the fact that itâ€™s headline material everywhere. That usually means correction time.
Our favorite for playing a correction at these levels is the Aussie dollarâ€”technically it appears extremely extended. The open interest (red line in the chart below) is lurching into the extreme one-way bet zone. And by the way, Australia disappointed the market with news that home-building approvals dropped:
â€śDec. 4 (Bloomberg) â€“ The Australian dollar dropped after a government report showed home-building approvals fell in October.
â€śThe number of approvals to build or renovate houses and apartments fell 7.4 percent from September to 12,214, the Bureau of Statistics said today in Sydney. The median estimate of 23 economists surveyed by Bloomberg News was for a 1.5 percent drop.â€ť
This could be a good excuse for â€śprofit taking.â€ť
Aussie Dec â€™06 futures daily:
Jack Crooks, Black Swan Capital www.blackswantrading.com
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