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Gooooooood Monday to all !

In an extremely rare occasion, i can choose to be not blue ! I am on vacation. However you folks know me . . i am always here with you koala readers through hardship and good times therefore …

I AM BLUEEEEEEEEEEEEeeEEEEeeee. Ok.

The EUR/USD decides to climb for a change and has recovered from it’s low of sub 1.4600.

Our main market sentiment clue the S&P 500 on the other hand remains stable and marches on to attempt a test at the top of the current range $1120.

Oil in the meanwhile has stopped dropping for now, around $72+ on my chart. Oil has remained relatively range bounded for sometime now and it really seems to be suggesting that the economy is right about there now. $70+ USD for Oil. I wrote about how oil can serve as an indicator for the economy a while back. Be sure to read it for a deeper understanding of the crazy stage we call the global economy :P

Gold has resumed it’s climb for now, reporting at $1122. With regards to gold, i have a VERY valuable lesson that i will like you all geeky koalas to remember. What goes up fast will probably come down hard too.

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Now, we all know the US seems to be doing pretty ok for now with the better than expected Non-Farm Payroll report and Retail Sales, what started the global bullish engine today?

My opinion, relieve from the Dubai Crisis. Abu Dhabi supported Dubai with a $10 billion bailout. HA! you thought you would never hear the word again right? Bailout is still a “popular” market event. The mere whisper of it may even cause the riskiest of the risk seekers to start their hunt.( Probably the dreaded Kangaroos )

You may be wondering then, so why won’t the US Dollar continue to rise in value since the US seems to be doing good and now the world seems to be doing good too. Ah my young Padiwan Koala, you must remember that sentiments are fickle!

Scenario 1

World concerned about Dubai. US posted good economic data.

Sentiment = ” Ah! US seems to be doing ok for now. Lets grab some money there while the storm is out there in the world.

Scenario 2

Dubai Crisis received bailout. Lower risk. US remains as good economic data posted.

Sentiment = ” Now. Hmmm. US and the World are both apparently ok now. WAIT. Ha! Trust my PHD in Economics to decipher such complex relationship. While both are doing ok, the World offers better yield since the US Federal Fund Rate is so low. Ok World, here i come. ”

There you go, a simple, practical but often true example of the fickle nature of sentiments.

Remember however that any news development may upset this balance and hence this is why i ALWAYS said that forex is never an easy play.

As i said in my weekly review of the EUR/USD , we have important news these week too. Ranging from German sentiment reports to the US Federal Fund Rate. These all have potential to upset the balance and hence be careful. Make use of the economic calender below.

Upside pressure may result in the test of 1.4665+ and next 1.4719+ while downside sees 1.4600 as an immediate target followed by 1.4565+.

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Folks who have been here always for me asking about my health etc, i offer you my sincere koalaish thanks. Now that i am on vacation, i can finally make peace with sleep and spend more time koala-ing. Is there any topic or feature you would like to see? Write to me and let me know.

Trade safe as usual.

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