Commodity Chart Of The Day
Daily U.S. Dollar
(click image to enlarge)
The U.S. dollar broke down on an ugly jobs number, as the market is pricing in QE to come in the coming weeks. Not justified in my eyes, but needless to say, this puts the greenback at four month lows, cutting through support at 81.00 like a hot knife through butter.
Prices are down 5% in the last two months. Looking at a weekly chart, support was breached this week, and I see the next solid support under the market at 78.00. The last time prices were at those levels was in April. A 61.8% Fibonacci retracement on the move in the last 12 months would put the December contract at 77.50.
Monitoring the dollar is not only important for currency traders, but a number of commodities have and should continue to exhibit inverse relationships to the dollar. In the current environment, it is more important than ever to monitor the relationship between all the markets -- not just the market that you're trading. Case in point, the dollar and Treasuries should move in the same direction, and the metals should move in the opposite direction. These relationships may reverse in the future, so stay on top of current market dynamics.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.