Something to further your point of view. This excerpt was from Andy Busch's update this morning:

<<Prince of Darkness: In WaPo today, Robert Novak reports that, "Speculation that the Federal Reserve is about to begin inflation-fighting interest rate increases appears to be dead wrong. Fed Chairman Ben S. Bernanke is worried more about runaway oil prices contracting the global economy than inflating it through a wage-cost spiral. According to sources close to him, America's leading central banker has no plans for a raise."

"Bernanke, according to sources, disagrees more with the European position than is reflected by his public statements. In his June 3 speech, he said that the jump in oil prices could simultaneously slow already low economic growth while raising inflationary dangers -- recalling the "stagflation" of 30 years ago. Privately, Bernanke is said to be much more concerned about low growth.">>

I recently started publishing a new report on DailyFX.com that serves as a guide for our DailyFX+ currency trading signals. Until it gets its own place on the DailyFX page, I'll be posting it here in the Trader Sentiment and Positioning thread. I'd of course be willing to answer any questions you may have right here in the forum:

http://www.dailyfx.com/story/special...631146818.html

Thanks John... though the thought that I share a view with Bob Novak makes me sick to my stomach, I'll take what I can get.

It makes sense though, what Novak is saying. Earlier today, the Saudis agreed to amp up production, and I think that this is a sign that the world powers are now going to make a more concerted effort at keeping gas prices down (this is likely wishful thinking). If the G8 had come out and said that the USD would be a priority, that would have helped even more, but I guess they had more important things to talk about (don't ask me what).

David:

Thank you for sharing your commentary with us through this forum
medium and do hope that it will soon have its own designation on
the Daily FX page. Also it is appreciated that you have opened
the post up to answering questions. I do hope that all reading
your commentary glean as much from it as I have in my trading.

Thanks once again.

winterwhite

..

Although nearly 55% of traders are long, and data indicates that traders will only get shorter, is it possible that this reverses? Information coming from the G8 would make me think that people would be buying the EURUSD. expecting it to climb as no relief is in sight for the USD in the near future.

A bias in positioning of 55% if very close to an even split, so there is a very high probability of flipping back and forth around parity. I use sentiment indicators as a confirmation tool and only really follow it when there are significant milestones reached or major shifts. A look at the weekly article shows that EURUSD positioning is slowly trending towards a sustainable net long read and that is what I think is most important from this indicator.

I saw an interesting topic on the Trend line trading the other day... the Hong Kong Dollar. How does one trade that... i mean, it has to stay within a fixed range, and as the blogger pointed out, it looks like a double top has formed. Wouldn't it be a good idea to short it right now?

I wouldn't say the USDHKD exchange rate is set in a fixed range. The monetary authority just has a very active role in keeping it within what they consider tolerable limits.

Also, the pair could continue to go all the way up to 7.8300 (nearly 250 points higher), so I wouldn't say there is an urgency in a range trade.

Ultimately, though, trading this pair is very dangerous specifically because the policy authority intervenes regularly. You could be in a trade with a steady trend channel and they would inexplicably intervene and drive the market against you. It's like trading in a very low liquidity stock with one person holding 50 percent of the outstanding shares.

tjack is on to something the Hong Kong currency board is the oldest currency board ever. I know most pegs burn in a heap of flames but the Hong Kong Monetary Authority has repelled attacks and keep within the given range for 25 years.

\\usa.fxcorp.prv\Home\SF-Home01\jkenderski\FRBSF Economic Letter - Why Attack a Currency Board (11-26-1999).htm

Here's a good link if you want to freshen up and trade the HKD.

Attached Images

 

Our weekly DailyFX+ Trading Signals report is out:

http://www.dailyfx.com/story/strateg...237635118.html

I'm always willing to answer any questions on the report right here in the forum, so feel free to use this space to get in contact with me on this subject.

Also, the report now has a permanent home on the DailyFX page. It is under the "Weekly Range Breakout Barometer" towards the bottom of the page.

I know that this is broad, but what does everyone think about the USD's future? Interesting stuff on dailyfx:

http://www.dailyfx.com/story/bio1/US...997699858.html

The more and more that is written about the USD, the more it seems that the only major problem is oil prices (which in turn, drive up inflation and slow growth). If we look at this situation conservatively, it seems in the realm of the possible - though nobody wants to admit it - that we could enter a period of stagflation.

Does anyone else have any opinions on this? Is there any hope for the USD if oil prices continue to rise???

David:

Thank you for your commentary. I found it under "weekly strategies"
in the News section. Just one question. You refer to the "Pairs
Range Trade Report". Where is this report found?

Thanks again.


..

To preface, I'm a long-term dollar bulls; but I think the greenback could fall further in the near term.

Oil is a considerable problem for the US infrastructure as it hits both the business and consumer sector; but I think it's more important to think of how it effects the US and its currency relative to how it is impacting other countries and their own currencies. Yes, the US is being hit by high oil (especially as the largest consumer of energy); but the UK, Euro-Zone, Japan, etc. aren't finding it any easier. Realistically, the US has a far greater services base. In contrast, Japan and the Euro-Zone are more dependent on their manufacturing sectors. In those terms, we would consider the euro and yen in a worse position and therefore should sell off against the dollar.

But, the bigger picture is that there are grander influences in the currency market that will help determine direction. Interest rates are of greater importance for EURUSD now while risk trends and the health of the financial markets guides USDJPY. There's a lot to price in and IMO with oil already at an extreme it will have a decreased elasticity so to speak with respect to its impact on any single currency.

Anybody disagree? I have heard very good arguments that oil falling $50 could dramatically change the pace of the economy and exchange rates.

The "Pairs to Range Trade" report can be found under the "Trading" section on DailyFX.com once a week and under "Intraday Analytics" on DailyFX+ on a daily basis.

Incidentally, the most recent weekly DailyFX.com "Pairs to Range Trade" report just went out today and suggests we may see a nice trade setup in the EURCAD: http://www.dailyfx.com/story/trading...371847748.html

You can still get in the market... now's a great time to get in on anything involving the USD, and also a good time for the Euro. Since when bad news comes out relating to the USD, investors flock to the EUR, the EUR is enjoying a solid rally. Also, since the EU is virtually guaranteed to raise rates (since they're too proud to backtrack and admit that it will be a mistake to raise them... silly french) this rally could continue through next week, though it will likely slow down in the meantime and could see a moderate correction.

Get in now... its easy money!