Today's Forex Market: Shut It Down

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Includes: AUNZ, FXA, FXB, FXC, FXE, FXY, UDN, UUP
by: FXedu

Yes that’s right, I’m talking about the government. We are less than 24-hours away from a federal government shutdown and it is an embarrassment that it has come to this as grown men and women cannot come to an agreement. There is much blame to go around and I say just throw ‘me all out and start afresh.

Nevertheless, the markets couldn’t care less as stocks and commodities are still pushing higher as nobody wants to get in the way of Bernanke’s money pump. With oil at $111 and gold making new, nominal all-time highs, the only place in the world where there isn’t inflation is at the US Fed.

Meanwhile, Japan has shaken off another earthquake that occurred overnight and it is business as usual as the Nikkei has pushed higher.

In the Euro zone, Portuguese politicians may have made a big mistake when they rejected their own austerity measures in favor of the ones that are going to be imposed by Germany in order to receive the bailout funds. I guess it is politically more expedient to be able to blame someone else for the austerity coming down than to accept responsibility.

PPI data in the UK came in higher than expected though this is not necessarily "unexpected," everyone knows that the BOE has turned a blind eye to inflation. At least they have the guts to say yes there is inflation but we are choosing to ignore it; rather than Brake and the Fed’s complete denial that it exists at all.

In Canada, the number of jobs gained by the economy came in worse than expected, though the unemployment rate remained steady at 7.7%.

In the forex market:

Aussie (AUD): The aussie is rocking higher now firmly trading above 1.05 vs. USD which, as you may have guessed, put in another all-time high.

Kiwi (NZD): The kiwi is also trading higher as the only risk in the marketplace appears to be missing the boat on the inflation trade.

Loonie (CAD): The loonie is also higher despite a weaker than expected jobs report as its high correlation to oil is the rising tide lifting this ship.

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Euro (EUR): The anti-dollar properties of the euro make it the most sought after currency this morning despite Portugal requesting a bailout and a new round of bank stress tests that are forthcoming. As long as German economic metrics keep coming better than expected (like exports this morning), then the Euro remains more attractive than the dollar.

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Pound (GBP): As mentioned above, U.K. PPI input and output figures came in higher than expected showing that yes indeed inflation is very real and present in the U.K. The choice to ignore it is another issue entirely.

Dollar (USD): Another "no confidence" vote taking place today in the U.S. economy, with everyone selling dollars and plowing money into just about anywhere else regardless of risk. Right now the riskiest asset appears to be the U.S. dollar, and not being invested everywhere else appears to be opportunity cost risk as well.

Yen (JPY): The yen has resumed its downtrend and is weakening despite another earthquake that happened last night. While the market was disappointed with the lack of BOJ stimulus in response to the natural disaster, the fundamentals of the Japanese economy may be weak enough to encourage Yen selling.

Where have all of the leaders gone in the world? The world has become one giant popularity contest and the person with the most twitter followers wins! Meanwhile, the tough decisions that need to be made fall by the wayside, and everyone continues on like it isn’t their fault.

Blame game politics, not just here in the U.S. but abroad, have weakened the global economy and provided a false sense of security to those who need it the most. Meanwhile honest, hardworking people receive the brunt of the onus of trying to hold the generous global quagmire together, as they are forced to pay more for everything through the insidious tax known as inflation.

So I say just shut it down and purge the whole thing. It is sad that this is what it has come to and the games that politicians play affect real people’s lives. Only when we wake up and demand better, will things get better.

So keep selling that dollar, to try to offset some of the inflation you are forced to bear today!