Dollar Mixed at Midsession on Light Trading

The U.S. Dollar is trading mixed against the major currencies at the midsession. The economic news this week has caused a choppy, two-sided trade.

The U.S. Dollar is trading mixed against the major currencies at the midsession. The economic news this week has caused a choppy, two-sided trade. Yesterday the Dollar weakened when crude oil and equity markets rallied sharply higher. Today, equity markets are up slightly on light trading while the energy markets have had no follow-through rally at all.

The EUR USD is up slightly at the midsession. Today’s rally in the equity markets is helping to renew thoughts of demand for higher risk assets, but fresh money doesn’t seem to be trying to chase the Euro higher. Traders appear to want more confirmation that the Euro Zone economy is recovering before committing to the long side in a big way.

The size of the U.K. deficit is helping to keep downside pressure on the GBP USD. Traders continue to worry the government will not be able to fund this deficit. Earlier in the month the market broke when the Bank of England increased the amount of funding available for its quantitative easing program. Investors should continue to pressure this market as long as the BoE is printing money and the deficit remains large.

The USD JPY is up slightly on the strength of the equity markets. Traders seem ready to use the carry trade again to fund the next rise in equities once they get a signal that the stock market is ready to blast off. This should keep downside pressure on the Japanese Yen.

The USD CAD is down at the midsession. This appears to be a delayed reaction to yesterday’s rally in the energy and equity markets. Speculators may be buying the Canadian Dollar in anticipation of greater demand for crude oil when the global economy begins to recover.

Greater demand for higher yielding assets is supporting the AUD USD and NZD USD. Light volume appears to be limiting gains. These two currency pairs may sell off into the close if the equity markets weaken ahead of tomorrow’s option expiration.

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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