Global trade found price points on equities and oil that reversed a test of support on the three-day channel that has held price action in a sideways range since the release of QE2 and Non-farm Payroll data. Asian markets could not generate buying activity overnight, and that allowed the dollar index to test resistance at 77.80. European trade initially dropped lower, adding to the near-term selling of major currencies, but those moves reversed the moment that S/P 500 trade hit 1215 pivot point support.
With a spike higher in global equities in play, the crude oil market came to life, and in the regular 1-hour pattern of trade that contains most of the global market momentum, traders saw a 1.5% 60-minute move that helped reverse the Usd to test 77.00 on the dollar index.
Usd/Jpy and Usd/Chf are sitting close to all-time lows, as both Aud/Usd and Usd/Cad sit close to parity at $1 each valuation, which is in-line with volatile interest rate markets and bubble-like commodity markets that just cannot seem to get enough of the QE2-induced buying frenzy. Gbp/Usd and Eur/Usd are weaker against the greenback, completing a very mixed overal dollar-based picture.
The gold and silver markets are making solid moves higher, signaling that the global economy is already pricing in a de-valued Usd and getting its own hard-commodity reserve in place, just in case the U.S. Administration do manage to cripple the dollar and in doing so imbalance central bank dollar-denominated reserves.
Overall, there is a lot of intra-day noise coming from the markets, but currency correlations with equity and commodity moves have been weaker than at any time recently as the 4-hour chart channels continue their trudge sideways.
A very light economic calendar will allow the intra-day reversals to continue as each regional market opens and closes, but with the Usd losing and gaining ground in equal measure against a mix of major currencies it is unlikely that a clear mid-term picture will easily form this week.
Disclosure: TheLFB runs an automated trading program that is constantly one side of the dollar or the other, in-line with the detail posted in the article.