http://kingworldnews.com/kingworldn...t_-_Roadmap_to_Bottom_of_Western_Markets.html
Currencies
Its all about the boy
There is only one game in town and it is the US dollar.
For as long as western stock markets were in a cyclical bull move and rising then the US dollar was in a downtrend.
As Mr Bernanke found out, if you really do print money and throw it from a helicopter window the only way it can go is down.
But now that the tide has turned and markets are in risk-off mode, the US dollar should have a major rally.
On our road maps the final low of western markets is due about late October 2012. The upward phase of dollar move could last for the same period. On balance, we expect a 9-12 month rally to achieve a major retracement of what the dollar has lost in the past few years.
This move is essentially underway now. The signal was the break of 76 on the DXY or trade weighted index. On the cross rates, the signal was the break of 1.40 against euro and 1.60 against the pound.
On the euro-dollar rate, a target of $1.30 seems very probable and $1.20 is possible. We would wish to close the trade near $1.25 to be on the safe side.
On the DXY we have a target of 86 with 90 very probable and the move could even extend up to 95.
For sterling, the initial target is $1.50 with a secondary level of $1.40 possible.
Only against the yen has no clear reversal been signalled yet. A move through Y78 would imply Y80. A break of that could lead to Y85. However, at present, the pain trade is still to be long yen.
We ask ourselves what could go wrong with this reversal and these targets, and the answer is anything that would debase the dollar.
If in late October the Fed is tempted to step in with QEnth then this could abort the dollar rally. We will need to run close trailing stop loss levels on all positions.
However our view is that a clear reversal has been achieved and will lead to a strong and progressive rally of the US dollar. There are no other trends this clear.
We suspect the Canadian dollar is likely to hold up a bit better than the Australian dollar but the fact is both will slide. This means that ranked in order of strength it is likely to be the Yen, US dollar, sterling, euro, Canadian dollar and Australian dollar.
Robin Griffiths
Private Wealth Strategist
Cazenove Capital Management
October 4, 2011
Currencies
Its all about the boy
There is only one game in town and it is the US dollar.
For as long as western stock markets were in a cyclical bull move and rising then the US dollar was in a downtrend.
As Mr Bernanke found out, if you really do print money and throw it from a helicopter window the only way it can go is down.
But now that the tide has turned and markets are in risk-off mode, the US dollar should have a major rally.
On our road maps the final low of western markets is due about late October 2012. The upward phase of dollar move could last for the same period. On balance, we expect a 9-12 month rally to achieve a major retracement of what the dollar has lost in the past few years.
This move is essentially underway now. The signal was the break of 76 on the DXY or trade weighted index. On the cross rates, the signal was the break of 1.40 against euro and 1.60 against the pound.
On the euro-dollar rate, a target of $1.30 seems very probable and $1.20 is possible. We would wish to close the trade near $1.25 to be on the safe side.
On the DXY we have a target of 86 with 90 very probable and the move could even extend up to 95.
For sterling, the initial target is $1.50 with a secondary level of $1.40 possible.
Only against the yen has no clear reversal been signalled yet. A move through Y78 would imply Y80. A break of that could lead to Y85. However, at present, the pain trade is still to be long yen.
We ask ourselves what could go wrong with this reversal and these targets, and the answer is anything that would debase the dollar.
If in late October the Fed is tempted to step in with QEnth then this could abort the dollar rally. We will need to run close trailing stop loss levels on all positions.
However our view is that a clear reversal has been achieved and will lead to a strong and progressive rally of the US dollar. There are no other trends this clear.
We suspect the Canadian dollar is likely to hold up a bit better than the Australian dollar but the fact is both will slide. This means that ranked in order of strength it is likely to be the Yen, US dollar, sterling, euro, Canadian dollar and Australian dollar.
Robin Griffiths
Private Wealth Strategist
Cazenove Capital Management
October 4, 2011