The U.S. Dollar climbed higher against all major currencies today except the Yen. The Yen proved to be a winner as traders continue to unwind carry trades. While we are having a correction in commodity prices at the same time of the unwinding, I will caution traders to be aware of over extensions in metals, energies, grains and the Canadian Dollar. I think that the commodity-based Currencies like the Aussie and the Canadian could get pelted in the near term by this play. I still like the Yen. It could be time for a move back to the highs of 2005. The British Pound was overbought also and took it on the chin today.
There were no U.S. economic releases today in honor of the Veteranâ€™s Day holiday, though that does not mean trading was slow or boring in any way at all. No rest for the wicked. We saw a large dose of risk aversion throughout the markets. Commodity prices fell across the board on Monday, with gold hit by falling oil prices and a rise in the Dollar, while base metals faltered in line with sliding stock markets as investors trimmed exposure to risk. Also adding to the force of these moves was a lack of liquidity. Traders took some off the table while U.S. banks were closed today. Profit taking from currencies against the U.S. Dollar caused by an overly aggressive rise in commodities has caused a few vacuums in markets around the globe. Anxiety may be creeping in on the impact of record high oil prices and on the battle to contain inflation.
We will have a heavy dose of reports the rest of the week including PPI (expected up .1% or .2%) and CPI (expected to be up .3% with the core number up.2%) will be out on the 14th and the 15th respectfully.
I am including news on oil and commodities in todayâ€™s report, because they will play a major part in this weekâ€™s trade (the unwinding of the Yen Carry and, of course, commodities priced in U.S. Dollars).
Crude prices experienced losses in trading today after Saudi Arabia said OPEC would be meeting informally in Riyadh to discuss rising prices and ever-increasing demand. OPEC is planning on discussing increasing output of oil. The meeting will take place this week, November 15th and 16th. It will be a panel discussion. Conversations are likely to revolve around the likelihood of oil reaching $100, and how to deal with such an issue. The perception of the meeting is that it is to ease the recent run up in prices.
What may be a bit more significant is that the heads of states of each of the 12 OPEC member countries, plus incoming member Ecuador, are due to meet on Nov. 17-18. Heads of state are not expected to make any coordinated policy decisions at the event. However, I expect market moving statements surrounding oil all week long. The meeting will only be the third official meeting since 1975. OPEC's 12 members are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. Ecuador plans to rejoin the producer group at the summit. The first OPEC heads of state summit was held in Algiers, Algeria in March 1975. The second was held in Caracas, Venezuela in September 2000.
This report may include information garnered from the following references: CBOT, Bloomberg, Reuters, Interactive Investor, Cattle Network, Earth Times, AgReport, Aol Money, CNN Money, Market Watch, The Forex Market, Yahoo Finance, FXsol, Financial Times, iWon, Report on Business. The Hightower Report.
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency and investors may lose all or more than their original investments, and the impact of such events is already factored into market prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer Investment Group, LLC or its subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed.