Dollar Sharply Higher, Hits Ten Month High, Oil Sharply Lower, Takes Out Key Support
September 2nd, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
EUR/USD is getting down into some harder support. As we approach EUR/USD 1.43, consider paring down profitable long dollar positions. A brutal short squeeze on EUR/USD could be unleashed at any moment, assuming 1.43 remains intact.
Congratulations long dollar crank players/euro shorts. Just remember: Pigs get slaughtered.
The case for continuation on the currency moves is that oil remains in breakdown mode and has just taken out $110 to the downside. Next support is $100.
If you’re winning on long dollar, though, consider carefully the extreme state of the oscillators and EUR/USD support through the 1.43 to 1.44 zone. I wouldn’t fight it, but if you do, expect to get squeezed. If your plan is to dump/cover on momentum here, watch your MACD on the two and four hour intervals.
Via: Bloomberg:
Crude oil traded near its lowest in five months as producers and refiners prepared to restart output at facilities after Hurricane Gustav passed the U.S. Gulf Coast without causing major damage to offshore platforms.
Gustav was downgraded to a Category 2 hurricane before it crossed the coast and is weakening as it heads inland. Royal Dutch Shell Plc will begin checks today and may restore full output in three to five days. ConocoPhillips said there was no significant damage to a platform in the area.
“It’s a big surprise that Gustav wasn’t as powerful as people thought,” Jonathan Kornafel, a director at Hudson Energy Capital in Singapore, said in an interview with Bloomberg Television. “We’ve seen this before with hurricanes, where the market comes off strongly once the storm makes landfall.”
Crude oil for October delivery was at $108.72 a barrel at 2:47 p.m. Singapore time, down 5.8 percent from the close of Aug. 29 on the New York Mercantile Exchange. It fell as much as 6.1 percent to $108.33 a barrel earlier. Yesterday’s trading is combined with today’s for settlement purposes because of the Labor Day holiday in the U.S.
Natural gas for October delivery was at $7.502 per million British thermal units, down 5.6 percent, while October gasoline was at $2.6850 a gallon, down 5.9 percent.
“The worst of the fears have been calmed,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “The fact that prices are so quickly reverting back to these levels shows that maybe the underlying bearishness in the market is still there.”
Oil prices have fallen 25 percent from the record $147.27 a barrel reached on July 11 on signs of slowing global demand and as the rising dollar reduced the appeal of commodities.
