On May 1, 2013 the June 2013 U.S. Dollar Index opened at 81.740 and closed the month on May 31 at 83.401. In May we saw a high of 84.595. This past week the Index opened at 83.695 hit a weekly high of 84.430 and as mentioned above closed the week at 83.401.
Now the Federal Reserve (Chairman Ben Bernanke himself) knows how a weaker U.S. dollar helps U.S. exports. Did you see today’s U.S. export number for April in the U.S. Trade Balance Report? The number was the second highest on record. Any threat to U.S. exports — a strengthening U.S. dollar — could hurt exports, in turn hurting the U.S. economy, which could hurt jobs. Look at the price action in the U.S. Dollar Index over the past few weeks. See how it rose sharply on the days confidence was high the Fed would taper stimulus sooner than later. The scaling back of QE3 heading toward ending QE3 will more than likely have a very bullish effect on price.
So, we see that the U.S. Dollar Index would really need to come down a bit before any announced tapering of U.S. stimulus. The real question becomes: Do you think Ben Bernanke will taper QE3 before he leaves his post as Fed chairman early next year? Have a prosperous trading week.
Proceed to Page 2 for the latest COT Data...
In the COT report, you can see all the way back to Feb. 1, 2013 big money started a bull posture as the U.S. Dollar Index was bouncing off of 79.000. You can see this very clearly as Dealer Intermediary added to net shorts. This past week we saw a very slight drop of net shorts by Dealer Intermediary to -28,640 contracts. Leveraged Funds dropped net shorts to -5,531 contracts, Asset Managers are net long at 7,204 contracts, and Other Reportables dropped net longs to 15,350 contracts. Overall a bear move this past week.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
On the daily chart below you can see even with the price action over the last few days, ADX is at 21.9 and while this number is rising it is still a weak trending market. With the weak trend, watch for a range to develop. MACD is bearish and Stochastics are in oversold territory. With the oversold territory and weak trend, watch for a correction up. Could it be that 82.500 is once again a range bottom?
Click to enlarge.
On the weekly chart below you can see weekly ADX at 22.3, also a weak trending market. Weekly Stochastics are correcting from overbought territory.
Have a prosperous trading week.
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