Market round up
May 29, 2014The Dollar throne is shaking
As we have heard in the news earlier this week that Russia and China are trying to change the American Dollar currency when trading with each other. The first initiator on this move was Iraq when decided to use Euro instead of the US Dollar when selling Oil to Europe and other countries. By doing that, Iraq economy has improved rapidly as well as the Euro currency and by then the US has decided to go to war in Iraq. Similar thing happened with Cuba and the US did not allow it to continue. Today, we have a similar situation as I mentioned earlier, Russia and China are the first two initiators on this move and now Japan and France have joined them. What will the US do now since it is hard to face those big economies?
Email me your thoughts on Hussein.daami@savitrading.com
Only yesterday, Germany unemployment rate has unexpectedly increased from -15k expected to 24k. The number was the worst in years and because of that we witnessed a huge decline in the Euro against USD and JPY where it broke 1.36 levels and stayed there for a while. At Savi Trading we think EURUSD will go back up to 1.365 and there we will be looking to sell more of this pair. The decline will continue until Thursday next week (05/06/2014) before Draghi speech where he will decide what is going to happen to the interest rates. If the decision was positive then the EURO will stay at the same level from Wednesday evening since all the down movement has been priced in already. Otherwise, we might see a big movement to the upside. As far as the EURJPY is concerned, I recommended selling that pair since we know the situation with Europe and JPY is increasing since the risk sentiment is going down, we sold on 139.18 and we sold again on 138.80. I personally still quite bearish on the pair and I will be looking to sell rallies from 138.44 until 138.00 and 137.43.
Also yesterday, we witnessed declines in yield prices for the 10 years bonds which pushed the prices of the bonds to increase. And as a result, risk went down which dragged Gold with it where it got to 1259. This morning we saw more declines for the Gold to 1252 and we might see more decline in the next few days if the yield keeps going down for US bonds.
