
The fate of
the US dollar exchange rate is now entirely dependent on payroll figures. The
Fed has announced that Quantitative Easing will start on the road to being
history when unemployment hits 6.5%. It now stands at 7.6%. The currency market
has already begun to price in the ending of QE and, barring a major upset, the
question is not if it is going to end, but when.
So those of
us who trade currencies seek an indicator to let us know the answer to that
question. Can it be found in the trend of the dollar against the Euro? Most
certainly not. This is the worst of all predictors, for the simple reason that Europe has its own problems and its own motivation to
ensure that this rate follows an agenda that has nothing to do with the
greenback.
Can it be
found in the trend in bond yields? Perhaps, but here again we are dealing with
a complex set of circumstances in determining the significance of those figures
at any given time.
There is
one chart that might just fit the bill, however, and that is Gold. As it has
long since lost any real tie to the value of the major currencies and as it has
no industrial utility, unlike other precious metals such as, for example,
platinum, which is used in catalytic converters, its only role is as a hedge
against depreciation of the US dollar. Therefore its fate on a month to month
basis does indeed have the potential to tell us what we might need to know.
So there
you have it. A US dollar currency rate prediction kit comprised of the Gold
narrative over time and the monthly employment figures. All else is dependent
on these.
The Omicron
Forex Silver Trigger Algorithmic routine has already entered a short position
in Gold. It had been active and waiting for a trade trigger for some six days
prior to the Non-Farm Payroll release last Friday. Immediately after the
announcement it registered enough momentum to trigger entry to the trade, which
has already reached its first profit target and has had its Stop Loss moved to
Break-Even.
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