This text is from blog famous currency strategist Joel Kruger .
LOSE-LOSE SITUATION – I never like watching my positions on Fridays. It is the worst day for trading and quite often results in inevitable frustration. On the one hand, if trades are running well, the complete stop of the cold Friday close leaves an unfulfilled and unsettled feeling. On the other hand, if trades are moving in the wrong direction, there is a sense of unnecessary prolonged torture that must be endured throughout what is supposed to be a weekend of rest.
ONE LONG FRIDAY – This past week has felt like one long Friday. The markets have offered little comfort and show no real directional bias as we inch towards the final hours. While we have seen a minor resurgence in the US Dollar against most currencies, the lack of follow through feels like a bit of a tease. My broad based and aggressive US Dollar bullish bias from current levels remains firmly intact, but I fear we will need to wait until next week to see the market start to really follow through as I project it will.
UTTERLY PERPLEXED – Fundamentally, I remain perplexed with the performance in US and global equities. Market participants are amazingly content on buying stocks because of the incentives offered by ultra accommodative central bank monetary policy and government stimulus, while blindly ignoring the fact that the measures implemented by these central banks and governments are inherently risk negative. While these measures are certainly welcome and necessary to help remedy the ailing global economy, they are far from a full bill of health endorsement.
THIS IS WHAT MAKES SENSE TO ME – Simply put, US equities have no business tracking just 10% off of the pre-crisis record highs from 2007. By extension, global equities have no business trading where they are, and if my theory of the US being the first in and first out of the economic downturn proves correct, I would expect to see non-US economies continue to lag on the path to recovery. This means that currencies across the board should grossly underperform the US Dollar going forward. After all, the same accommodation and stimulus measures are being implemented across the globe, and any arguments for US Dollar weakness on Fed QE should be grossly mitigated by the fact that we are seeing similar monetary policy and government action around the world.
Joel daily forex technical analysis video :
TECHNICAL CONFIRMATION – Technically, my views are well aligned with the fundamentals, and currencies and equities look more than ready for some material setbacks over the coming days and weeks. Interestingly enough, even commodities are looking overextended, with gold and silver likely to see some intensified selling soon enough. It probably won’t happen today, but I continue to look for material weakness in all these markets, with the US Dollar as the overwhelming beneficiary. You know what….I think I might just stop checking markets on Fridays and give myself a longer weekend….but probably not 🙂 .
