falling oil prices and the newest technical charts in Foreign Exchange

Foreign Currency Exchange Outlook: Keep in mind the phrase “What have you done for me lately?” The US Dollar got lucky yesterday. The GSEs are going to be saved (not new news). The stock market accepted regional banks losses (stock markets are always foolish).

The US Treasury Secretary spoke in support of a strong dollar (golly).

The only thing real behind the dollar rally is the price of oil falling so dramatically.

We need more of the same in oil and also for upcoming housing data tomorrow and Friday to be as expected. We have to assume that bad numbers are already priced in, so better-than-expected numbers could potentially be US Dollar friendly. We also get the Beige Book today, which could be salted and peppered with bad adjectives, but the Beige Book seldom moves the Foreign Exchange Market one way or the other. We also get the usual Wednesday Energy Dept inventory report today, probably again showing a drop in demand in the US.

In sum, The US Dollar has only two things going for it—falling oil prices and the newest technical charts in Foreign Exchange. These are not exactly a sound basis for a continuation rally—we’d really rather have some fundamentals, too. But a breakout on the chart is nice, and may suffice, subject to the caveat that oil must continue to fall or at least stabilize around $120-125.

Bye For Now

Barbara Rockefeller