Last week we continue to see the Dollar putting in at least a temporary top. We expect that top to hold for the near term and are therefore selling into any rallies that attempt to retest recent highs. We have the ECB meeting this week but a cut is already priced in and likely to have a counter-intuitive move higher in the Euro after the cut.
Euro, Pound, Swiss Franc
We see more stabilization and even a gradual turn up as we move through the first part of this month. As mentioned above, we are buying into dips ahead of this weeks ECB meeting. Having just come back from Barcelona Spain, I can say from first hand experience that tourism and industry remain strong, at least there, despite reports to the contrary. Especially when compared to the tourism here in Florida, living here for the last 5 years now, I can report that I have, and do, notice a slow down in the tourism in and around the beach town that I live in. So that simple Macro fundamental comparison confirms what both my models and charts are telling me which is the resumption of Euro strength over the Dollar.
This pair is also poised to rebound with the Euro. The overall banking blunders have affected England more than its European neighbors, but “a rising tide lifts all ships.”
We continue to buy pullbacks in this pair so long as last months lows hold.
We continue to sell rallies in this pair though not as aggressively as some of the other pairs. We do see a possibility of breaking above recent highs once more before turning with the other majors in the more macro direction, which is down based on simply looking at weekly or monthly charts. We are looking for a final blow off of this macro bear flag we are in, to signal the turn.
Yen, Australian Dollar
We are looking for a continued bounce higher in this pair as the week grinds on. We feel that any medium term buys made below 100 will be rewarded before the year is out. This week we are buyers of dips especially any near 97 with stops below 96.
The Aussi continues to be a buy the dip pair as well. While there is talk of global deflation we simply feel that it will be a short term phenomena unlike the inflation that is due to set in once the reality of the Trillions in newly created money being added to the system sets in. Fundamentals do work over time and the world has fundamentally set itself up to go into a global inflationary period due to the actions taken in the just the past few months let alone the past 10 years. So this week we are happy buyers near the .65 level.
We remain sellers of rallies here this week and are happy to take and hold any sells in the mid 120’s this week should we rally back up that far at all.
Odom & Frey Futures & Forex
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