U.S. Dollar Weakens After G-7 Statement

The U.S. Dollar weakened overnight following the release of the G-7 statement.

The U.S. Dollar weakened overnight following the release of the G-7 statement. Many traders had been looking for a comment supporting the Dollar, but instead the G-7 members said “excess volatility and disorderly movements in exchange rates have advance implications for economic and financial stability.”

Look for today’s U.S. ISM Non-Manufacturing Index to move the markets today. Traders are looking for a rise from 48.4 in August to 50 in September. A number greater than 50 should trigger increased demand for higher yielding assets.

A slight boost in demand for higher yielding assets is helping to boost the EUR USD. The USD CAD is trading weaker as investors anticipate a recovery in equity markets following last Friday’s sell-off. Firmer gold is also helping to support the Canadian Dollar. Weak oil price are helping to limit gains.

The GBP USD and USD JPY are trading flat to better. Oversold technical conditions continue to provide light support for the British Pound. The USD JPY is trading a little weaker, but technical factors could drive the Dollar higher versus the Yen. A trade through 90.40 will confirm last week’s closing price reversal bottom and could trigger a rally to 93.00 over the short-run.

Demand for higher yielding assets is up overnight. Gains are being posted in the AUD USD and NZD USD as traders are positioning themselves ahead of tomorrow’s Reserve Bank of Australia meeting. Traders are betting on a .25% interest rate hike by the RBA.

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