The US dollar was sold off
from the start of the North American trading session yesterday. The chart above
shows the action against the Euro (the rising EURUSD chart indicated a
weakening dollar), but the rot also set in against the pound sterling, the
commodity currencies (Aussie, Kiwi and Loonie [Canadian dollar]), the Japanese
Yen, Swiss franc and gold.
The cause of all this
greenback negativity seems to be the conviction among market participants that
the Federal Reserve will not raise rates or even announce a start to rate rises
in next week’s FOMC Monetary Policy Statement. The September meeting has long
been touted as the most likely one for a start to interest rate rises if they
are to be in place this year, but indications now are that the members of the
committee are not in any way united on the way forward under this heading.
The Stop Loss (SL BID) line
in the chart above indicates a long trade that the Mandelbrot routine got into
at the 1.1203 price level. This trade was still going strong at the time the
chart was captured for this commentary.
Strength of selling seen in Crude Oil price action
after inventory data
It is interesting to observe
the dollar price action in relation to Crude Oil yesterday. The chart above
shows Light, Sweet Crude for October delivery. It had responded to the dollar
weakness by increasing in price (a lower dollar is typically reflected in
rising oil prices). However, the US Energy Information Administration (EIA)
weekly report on oil inventories in the US
It can be seen in the top
chart that the EURUSD pair also accelerated upward immediately after this news
release.
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