U.S. Dollar Battles Hard Before Closing Lower

The U.S. Dollar had a volatile two-sided trade today as traders reactedto a friendly employment report, an unofficial report that the bankstress tests would show better than expected results and a smoothTreasury Note auction.

The U.S. Dollar had a volatile two-sided trade today as traders reacted to a friendly employment report, an unofficial report that the bank stress tests would show better than expected results and a smooth Treasury Note auction.

Overnight the U.S. Dollar was up on speculation that Bank of America would need up to $34 billion in new capital. The Dollar’s gains started to erode as the New York opening approached as number crunchers began to doubt the figure.

Traders did not even have a chance to react to the BofA scenario as this morning’s better than expected ADP employment report triggered renewed interest in risky currencies. The report showed the smallest decline in jobs lost since June 2008. The U.S. Dollar weakened on the news but then regained its strong pre-report status.

Throughout the New York trading session the Dollar tried to rally several times but each attempt was met by solid resistance. Later in the day it was learned that the final bank stress test results which are due to be made public after tomorrow’s stock market close may have been leaked. The rumor circulating was that U.S. banks may be in better shape than expected. Dollar bulls were once again forced to exit long positions as secondary buyers would not show up to drive the Dollar higher.

Finally the Dollar lost all support late in the session on the news that the Treasury’s latest $22 billion T-Note auction went better than expected. This was a clear sign to traders that maybe the stress test results were going to be nothing to worry about.

The U.S. Dollar had a volatile two-sided trade today as traders reacted to a friendly employment report, an unofficial report that the bank stress tests would show better than expected results and a smooth Treasury Note auction.

Overnight the U.S. Dollar was up on speculation that Bank of America would need up to $34 billion in new capital. The Dollar’s gains started to erode as the New York opening approached as number crunchers began to doubt the figure.

Traders did not even have a chance to react to the BofA scenario as this morning’s better than expected ADP employment report triggered renewed interest in risky currencies. The report showed the smallest decline in jobs lost since June 2008. The U.S. Dollar weakened on the news but then regained its strong pre-report status.

Throughout the New York trading session the Dollar tried to rally several times but each attempt was met by solid resistance. Later in the day it was learned that the final bank stress test results which are due to be made public after tomorrow’s stock market close may have been leaked. The rumor circulating was that U.S. banks may be in better shape than expected. Dollar bulls were once again forced to exit long positions as secondary buyers would not show up to drive the Dollar higher.

Finally the Dollar lost all support late in the session on the news that the Treasury’s latest $22 billion T-Note auction went better than expected. This was a clear sign to traders that maybe the stress test results were going to be nothing to worry about.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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