Are they really selling short America? The U.S. Dollar is the headliner and not in a good way. The winner at the moment is the Japanese Yen as another bout of unwinding carry trades hit all markets. Between the Yen rally and the Fed Chairman’s dialogue, the U.S. Dollar didn’t have a chance on Friday.


The U.S. trade balance offers a couple positive things for the Dollar but not enough to pull off a rally during Friday’s trade. A narrowing deficit should play down increasing anxiety about the sliding Dollar. Inflation fears and a weaker U.S. Dollar were noted by Bernanke as the economic results of what he called a “weakened” dollar, which is currently at historic lows against many currencies.

French and Italian Industrial Production readings decline for September overnight would seem to restrain the upward momentum for the time being in the Euro.

Profit taking in the Euro should only be temporary.

The Swiss Franc is clearly enjoyed the result of an ongoing flight to quality buying.

Canadian Dollar: While we don’t see a definitive reason to call for a top in the Canadian, recent political comments seem to have temporarily capped off the currency. It is probably time for a profit taking correction. I think you may suspect that I am still bearish the Dollar against most currencies, but I am bullish the Yen. I believe it is time to get long. Look for a correction in the Canadian Dollar while keeping an eye on metals and oil as a key to direction.

There has been a slight disconnect between the Dollar and gold. Also in a slightly negative story overnight, it was noted that some Indian dealers were seeing disappointing festival sales, possibly due to the significant rise in stalled prices right into that critical demand window.

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