Wednesday, September 06, 2006

The Dollar Won't Die

From Non Farm Productivity to Unit Labor Costs to the ISM Non Manufacturing Index--we are still seeing economic indicators that hint at another possible rate hike by the Fed. All 3 reports came out higher than expected causing the dollar to rally yet again. Are you getting familiar with this scenario yet? The dollar drops and then positive economic reports come out causing it to rally again. This is why we are seeing so much range bound movement. And even though we are seeing good intraday movement, we are still not getting any clear longer term trends.

Could the Fed raise rates yet again before the year end?

I doubt they will, but I wouldn't count it out entirely. Interest rate futures show that 19% of traders think the Fed will raise the rates again before the end of the year which is up from 16%. However in a larger perspective, this is down from 71% in July so the expectation of another rate hike is still slim.

The only pair I'm really looking at right now is the AUD/USD. Like I said yesterday, it made a new 20 day high and I said that I would wait for a dip to buy. I'm expecting the dollar to gain a little more ground in against the Aussie over the next day or two and if the price goes back up and breaks the 7720 area, I will enter long.

Other than that I don't see anything to compelling to risk my money on.

Alba had a close call trade today. There was a break of the EU low at 9:40 but I always avoid trading around news least the ones I think are important. I'm glad I stayed out because the price retraced back up and it would've ended up a bad trade. So it's been a pretty dry couple of weeks as far as number of Alba trades but with the EUR/USD being flat as a pancake, I don't mind staying out.

So what's happening tomorrow? Hmmmm...absolutely nothing!

Yea, this is a short entry because I don't really have anything else to talk about. I will still watch the markets (of course!) but my expectations of seeing alot of action aren't that high. I'll definitely be multi-tasking as I trade!

Happy trading everyone.


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