Commodities Warn Of Aussie Dollar Weakness
By Colin Twiggs
August 27, 2009 4:00 a.m. ET (6:00 p:m AET)
US Dollar Index
The US Dollar Index is consolidating between 77.50 and 79.50. Downward breakout is likely and would signal another down-swing with a target of 74*. Breakout above 79.50 and the declining trendline is less likely and would indicate a test of 81. In the longer term, breakout above 81 would signal reversal to a primary up-trend, with an initial target of the March low at 83.
* Target calculation: 78.50 - ( 83 - 78.50) = 74
The euro is testing long-term resistance at $1.44. Downward breakout from the gradually rising trend channel would indicate a test of primary support at $1.38. Further weakness in the spot gold price would warn of a stronger dollar/weaker euro. Breakout above $1.44 remains as likely, however, and would signal a primary advance to $1.50*; while penetration of support at $1.38 would signal a primary down-trend, with a target of $1.32*.
* Target calculations: 1.44 + ( 1.44 - 1.38 ) = 1.50 and 1.38 - ( 1.44 - 1.38 ) = 1.32
The euro is consolidating between 1.50 and 1.54 CHF, with any signs of weakness prompting further intervention by the Swiss National Bank.
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The dollar is consolidating in a narrow band above support at ¥94, warning of a downward breakout. Expect a test of the lower channel at ¥90, although there is bound to be some support at ¥92. Upward breakout from the trend channel is most unlikely; recovery above ¥98, however, would signal reversal to a primary up-trend.
The Aussie dollar is headed for another test of support at $0.82 against the greenback. The declining CRB Commodities Index warns of further weakness and breakout below $0.82 would signal another test of primary support at $0.77. Reversal above $0.85 is unlikely at present, but would indicate a primary advance to $0.90*.
* Target calculation: 0.80 + ( 0.80 - 0.70 ) = 0.90
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somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.
~ Thomas Sowell