Since putting in a top on 7/9 the US dollars trajectory has been lower but clearly that has changed today catching a bid and higher by better than 1% as of this post. I have been suggesting in recent posts that we get a bounce from oversold levels and it appears the market is delivering. In today’s action we can clearly see a higher low and higher high with futures fast approaching all key MAs I use in FX…the 20 day SMA, 34 EMA and finally the 50 day SMA.
If you look closely you can identify a gap that formed from the close on the 7/10 and the open on 7/11 that I expect to be filled on this ascent putting futures at a minimum at 83.64 or 1.5% above current trade. Obviously if the greenback catches a bid we will see other crosses lose value as is playing out today with all majors getting hit today. The fact that the ECB and BoE both left rates alone at 0.50% today could also have contributed.
Dollar Index Futures, August 1, 2013
Tomorrow expectation for NFP are 184,000 and unemployment 7.5%…without any curve balls expect the greenback to continue to grind higher and other crosses lower. My favored FX plays would be short exposure in the Swiss and/or Euro with stops above the recent highs and bearish plays in the Loonie. .9750/.9800 should contain upside in the CAD.
The Fed did not give a clear signal on their timing on an interest rate increase but based on the action since yesterday…the dollar higher, energies and stocks higher and bonds getting roped the market appears to be pricing an increase. The market is always right so expect as we digest Fed rhetoric this to last at least a few days if not weeks.
To discuss in more detail this chart or any others you can reach me at: mbradbard@rcmam.com or 954-929-9997
Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.
At anyone time there are three prceis: bid is the highest price someone is willing to pay; asked or offered is what someone is willing to sell for; last is the last price at which shares changed hands (of historical interest and the most often quoted real time price.) When you buy at the market, you expect to get the offered or asked . If you are sure that you are looking at the NBO (national best offer) and are not getting it, your broker may be making extra money on the side by being paid for order flow and routing your order to a market maker who isn’t offering the best price. This is a risk when you go with a deep deep discount broker: they are going to make their money somewhere. What you save in commission you lose (and more) in bad fills.