Wakeup Call: USD Higher

Daily Forex Fundamentals | Written by Saxo Bank | Dec 09 09 08:40 GMT |

This development is confirming the negative correlation break-down from Friday and suggests that USD bulls have more to hope for in the short term. Calendar Economic Data Releases Country Time (GMT) Name Saxo Consensus Prior US 15:00 Wholesale Inventories MoM (OCT) -0.5% -0.9% What's going on? The USD goes higher and now firmly trades above its 55 DMA in most crosses (but not USDJPY). This development is confirming the negative correlation break-down from Friday and suggests that USD bulls have more to hope for in the short term. That also means that stocks are likely to be under pressure. The S&P500 edged lower and now flirts with the trendline support since March (1085 today). The technical picture has produced a risk-reward favoring 'dip-buying', but only above the trendline support. Geithner seeks to extend the $700B TARP until next October. FX FX Daily stance Comment EURUSD - Sell upticks toward 1.4750. Next downside objective at 1.4635, then <1.4500. USDJPY 0/+ Beware large range. Interested in strategic long, but only at good price (low 87.00’s perhaps). EURJPY 0/- Might be overdone short term. Sell ahead of 131.00, for a try lower again. GBPUSD - Sell as the big 1.6250 support area is giving way – could try 1.6000 soon. USDCAD + Interesting upside down head and shoulders in play around 1.07. Buy with stops below 1.0550. Equities Equities Daily stance Comment DAX 0/- Sell at the break of 5665 targeting 5635. S/L above 5682. FTSE 0/- Sell at the break of 5217 targeting 5191. S/L above 5233. S&P500 0/- Sell at the break of 1087 targeting 1079. S/L above 1090. NASDAQ100 0/- DJIA 0/- Futures Commodities Daily Stance Comment Gold 0/- Sell at the break of 1124 and target 1110. Stop above 1130. Silver 0/- Sell at the break of 17.42 and target 17.15. Stop above 17.50. Oil (CLF0) 0/- Sell at the break of 72.35 and target 70.50. Stop above 72.80. FX Options FX-Options Comment EURUSD Vols follows higher as dollar bullishness continues. Back end risk reversals still point towards a higher dollar so expect this theme to continue. USDJPY Mid to back end continues to see good bids as spot fails to rally. Upside JPY puts are also being aggressively bid so the market is well positioned for a move higher in spot. AUDUSD Few downside strikes starting to see good bids. The rest of the curve remains steady. Gamma is expected to ease after tomorrow’s employment report. Saxo Bank Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. 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