Bogus Report Breaks the U.S. Dollar

A newspaper report Monday evening from a London newspaper that the demise of the dollar was imminent because an international cabal of Arab and Asian countries, friends and foes alike, wanted to dump the dollar when pricing crude oil. This story was subsequently denied by by numerous sources, but the market impact was real.

The current administration has no energy policy that increases the immediate supply of fuel to power the US economy. We are at the mercy of an unstable middle east on the cusp of becoming a nuclear power, and President Obama is only interested in giving the citizens his version of socialized medicine which they do not want. One of yesterday's big challenges was finding enough of the right size white jackets for a photo-op of "doctors" on the White House lawn who were supportive of Obama's unwritten medical reform plan.

With Washington's current priorities, is it any wonder that a bogus story can have a big impact?

The Australian economic success story, and the surprise increase in the interest rate there to 3.25% was reassuring to an equities market already on a roll. With the Dow in the process of having consecutive plus 100 point advances, the dollar seemingly has little upside this week. Currently the euro has rallied to 1.4740, about 100 less than the season high.

This pair looks like it has more upside, but with the 4H RSI now above 70, it is probably too late to jump in with a new long. If equities were to have an unexpected retreat and the euro goes with it, try to buy the pair in the 1.4650 area. Use an appropriate money management stop. The target is over 1.48.

Comments

[TinyTim:]

Price oil in anything they want.
It has no real impact because of easy conversions on FOREX.
I doubt they're taking a lot of dollars for oil now (except from US and Chinese).

What this really does is draw the USD further away from remaining the de facto reserve currency. If this happens, and I don't see it in the near future, it will force Congress to quit playing with our money like it was Monopoly. I'm sure the IMF will insist on it.

Oct 07 04:13 AM

[TruthChaser:]

Skip the snide remarks about the "doctors" advocating for "socialized " medicine and stick to what you know a little about. Just because those cited "deny" it does not make the story bogus. In fact, the real story would be if nobody in the world thinks the dollar should be dumped as the de facto world currency because oil and most other commodities are priced in dollars. Face it, Shell, the dollar is now on a slow decline into 2nd rate status and within a few years it will share the stage with the Yuan, the Euro, the Yen and perhaps some Gulf States unified currency-and the only question long term for traders in currencies is how they short the dollar. [e-mail]

Oct 13 08:59 AM