3 Reasons the Dollar Is About to Rally: A Contrarian Case for the Greenback

Everyone hates the US Dollar - again.

The Fed is openly signaling to the markets that it is not going to stand by the buck. The current headline article at Bloomberg.com pertains to New York Fed president William Dudley's statements that inflation is too low, and unemployment is too high, for the Fed to stand by and watch as a passive observer. Get ready for more unconventional easing measures.

Which means the poor dollar is going to get thrown out the window as the Fed revs up the printing presses at full speed. There's no hope for the greenback!

Or is there? I feel like somebody's gotta stand up for the greenback. I also think there are some key points that the mainstream financial media is ignoring in presenting this one-way trade.

So, here's a three-fold contrarian case for the dollar.

1. Contrary to Popular Belief, the Dollar's Trend is UP

But don't just take it from me - look at the chart (click to enlarge):

View the Original article

Hung Australian Parliament Raises Questions About Forex Sentiment

The weekend news of a hung Australian Parliament, after general election votes showed no clear winner on Friday, leaves the market with an initial fundamental challenge to overcome, on a week that is relatively light on planned macro-economic releases. The high correlation between AUD and the S&P 500 may be tested at the open of trade, as speculative interest monitors the tests of upside resistance at 1075 on the S&P, and compares that to the 200-day SMA resistance on Aud/Usd at 0.8950. A failure of both asset classes to break higher could instigate a solid test of 0.8830 and then maybe a visit to the July low around 0.8550 on Aud/Usd. As traders witnessed with the value of Gbp after the U.K. election failed to produce a clear-cut winner, the market does not tend to get too bullish on currencies that are backed with political question marks.A sell-resistance outlook may be the best approach in the near-term.
Disclosure: None About the author: The LFB

View the Original article