Sorry to have missed the last few days of commentary I have been working on someone’s campaign. The big news of course is that the Fed printed another $200 billion out of thin air to try to prevent the collapse of the major banks. This without a doubt weakens the dollar with so much extra money flooding the market. Oil prices showed the true effect of this drastic last ditch effort, further weakness in the dollar. The double bottom which had formed in USD/JPY and also USD/CHF and GBP/USD proved very convenient. I can’t help but think that the big banks who this liquidity injection were the benefactors of knew about what was going to happen before it was announced and took that opportunity combined with the technical set up to buy the dollar yesterday and make a quick two cents on their money. Today everything is basically right where it was before the announcement what a difference a day makes eh? All the news out of Japan in the last view days was great and painted a rosy picture for the Japanese whose economy is now growing faster than that of the U.S. The Bank of Japan decided doing nothing was the best thing they could do and mentioned they would be eyeballing this second revision of GDP in their meeting minutes. Some expressed the fear that slowing exports to the U.S. from China would hurt their exports to China who uses much of their sophisticated technology in their products such as flat screen monitors. Even if the exports to china do start to slow (they are constantly growing) their trade surpluses will still be astounding. Considering everything I am seeing economically there is no reason that USD/JPY should not test 100 very soon. There was some very weak data coming from the U.K. over the last few days and I am really flabbergasted by its strength considering. Against the dollar I can see it gaining but not against the yen, it is just silly. It came down and tested the Fibonacci which comes in at 205 tonight and it looks like a nice short to me here at 206. Meanwhile loans and real estate are doing very well in Australia there is no shortage of credit being issued and is proof that the debacle threatening to collapse large U.S. and European institutions has not rattled bankers down under. Who knows maybe when all the bloodletting is finished they will come in and take over whatever is left. Employment also made healthy gains and the New Zealand economy is also releasing strong numbers. Japanese industrial production tonight at 12:30 should be worth paying attention too and off course tomorrow U.S. retail sales will be the highlight at 8:30. The dollar needs a really strong number to just prevent further decline much less gain value and I don’t think that is in the cards. More likely this will turn out to be another catalyst for further dollar selling.

If you really want to know what’s going on with the dollar I implore you to visit the following link. http://www.youtube.com/watch?v=GtWNa5ov2_w&NR=1 seeing the dollar in the toilet again today is no surprise what is a surprise however is that we are allowing this to happen. Poor Bernake the life long academic and Berkeley professor who once in his glory years OPPOSED the Federal Reserve is now it’s sacrificial lamb is slaughtered while the whole house of cards comes tumbling down. Greenspan is still dictating monetary policy while the poor fool who tried to speak the truth in the past bears the brunt of the impact of the decisions of his masters.

It feels vindicating to finally see USD/JPY hit 101.50 after waiting for it to happen for so long. I am glad this trade of the day makes me look good and helps make up for my disaster with the pound the other day. Now is really the time to put a fresh short dollar trade on since the pattern has completed itself on the five minute and we are right back where we started before non farm payrolls. Don’t expect a huge profits though since there is likely going to be a lot of profit taking going on today.

With yet another weak jobs report from the U.S. the USD/JPY finally hit my target of 101.50 and bounced pretty hard giving back everything it briefly gained against the dollar. It looks like everyone else in the market was also eying the 101.5 area which completes the Gartley pattern on the monthly chart. Meanwhile north of the border the Canadians found a way to add 50,000 new jobs and this helped USD/CAD test the 38.2% Fibonacci retracement of the big move from 1.1850 down to .9050 at .9749 before also giving back all of it’s gains on the day. Typical non farm payrolls price action, straight down and then straight back up the old shake and bake.

The carry trade is history. The Bank of Japan kept rates unchanged and was unanimous. I guess that means we wont see USD/JPY at 101.50 tonight but there is always tomorrow’s job data to make that a reality. Considering both the Challenger report and the ADP report the employment situation is not good but the markets could also be expecting that which explains the record weakness in the dollar. It is not at record lows against the yen however and has room t0 fall still. That is the one currency I have recommended buying for months and it is still a good idea to but y it today. We may see 101.50 as early as tomorrow afternoon in USD/JPY.

The dollar is in a nosedive need I say more? I thought the dollar would find some backbone but I was wrong.The BOE much to my chagrin kept rates unchanged and that started the dollar selling frenzy. Even weak German factory orders could not prevent it. If the BOJ raises rates right now it will be a double whammy of huge proportions.

Look for a chance to sell GBP/USD tomorrow when they cut rates. According to some economist forecasts they will keep rates unchanged so when they cut rates it should surprise the market a bit unlike the last two rate announcements I dissected for you. There should be some confusion before the announcement but overall GBP/USD has been rallying as of late so most of the position squaring before the announcement should favor a short position. Therefore it is advisable to enter and also exit before the decision. Afterwards you can reenter or stay in with a stop in place to secure your profits. If your dealer is worth its salt it will honor it or fill you right around it so the risk is slight in that setup.

The dollar strengthened overnight but once Europe opened up it was back to being sold off again. A nicely defined double bottom is in on USD/JPY but the dollar is having trouble rebounding against the yen and the stock market falling when Bush endorsed McCain didn’t help its cause. The crisis surrounding large bond insurers did not help either. Meanwhile the Canadian dollar rallied after bouncing off of the Fibonacci at $.9960 yesterday and received a boost by oil back above $100 a barrel. Sure you can point to inventories but the market may also be reacting to McCain basically sewing up the GOP nomination. It is well known that this person goes around singing “bomb, bomb Iran” so  it is not too much of a stretch to say the markets were reacting to him much like the stock markets did. Needless to say if the Mid East wars are expanded further there will be more large increases in oil prices and if McCain is elected this will almost certainly happen.  So we could be seeing a knee jerk reaction here. The Royal Bank of New Zealand did keep rates on hold as expected and the Kiwi still rallied as I expected it too. Bollard’s statement was quite hawkish in tone and did not hint at a rate cut anytime soon. The Aussie trade deficit continued to widen and this does not look good for the Aussie with growing current account and trade deficits Australia is starting to resemble the U.S. The BOJ is starting its rate setting meeting today and I expect to see a .25% rate increase coming out of that meeting when it concludes. There is some data coming out at midnight tonight which should be quite useful in forecasting their next move tomorrow night at midnight. The big news tomorrow morning of course will be the BOE and ECB interest rate decisions. Before them at 6 am German factory orders will be released and keenly eyed. Any reaction to them is likely to be muted until the ECB rate announcement at 7 although some improvement is expected over weak figures from the month before. If they are again weak we very well may see the euro fall even though they won’t be cutting rates. The BOE is forecast to keep rates unchanged but I disagree with that hypothesis, I am fully expecting a rate cut from the BOE tomorrow morning at 7:45 am.  After the dust settles from all that Pending home sales in the US are to be announced and the dollar may have a chance to seize the day if it can avoid being embarrassed by this number. The good news for the dollar is that this figure only shows the volume of pending sales not the prices of the sales. So the dollar may actually come out on top, at least for tomorrow.

I am expecting an opportunity to buy the New Zealand dollar around the time of the rate announcement of the rate decision. The pair does look like it will struggle overall in the foreseeable future as it does not look pretty on the charts but the no change decision has already been factored in. For that reason I see an opportunity to buy it when the rate decision comes out. That doesn’t mean that it won’t lose value prior to the decision I actually expect it too. That is why it becomes a buy when the announcement is made. If you want to you could sell it tonight and buy it tomorrow at around 3 pm.

The big news today was the BOC slashing rates by 50 basis points. Gold also dropped quite a bit as the dollar found a back bone and held it’s ground. It is a case of the chicken and the egg with the Loony price and gold both dropping. Oil back below $100 a barrel also needs to be factored into the mix. USD/CAD has stalled out at the Fibonacci coming in at $.9960 for the meantime. The Aussie did back off as I expected it would in another classic case of buying the rumor and selling the fact. The main reason the cad depreciated was that the cut was for 50 points instead of 25.  The Bank of Canada basically reiterated my assertion that the Canadian economy is dependant to a large degree on the U.S. still and uses this as their justification to slash rates now and in the future. On the other hand the RBA acknowledged inflationary pressures and pointed out heightened commodity prices as reasons to raise rates. Tonight’s GDP release form Australia is not very encouraging and neither was yesterday’s negative current account balance which came in at almost 20 billion. So another rate hike is doubtful unless gold prices eclipse $1000 an ounce and stay there. Tomorrow night the RBNZ is expected to leave rates unchanged and NZD/USD has sold off along with AUD/USD as a result. Tomorrow night NZD/USD is likely to rally especially if it sells off during the U.S. session as the dollar tries to mount a recovery. U.S. data on the horizon include factory orders, the beige book and the ADP employment report which will help traders decide what to expect on Friday from the NFP data. Looking at the charts it appears that the dollar wants to rally here however the data is likely to continue to be bearish for the dollar. Unless the markets decide to ignore the data and trade on the charts only the dollar should continue to decline. One could easily argue that bad data releases have already been factored in by the market especially because of all the doom and gloom comments from Federal Reserve members and “Hank” Paulson. Those guys are team players no doubt and their team wants a weak dollar, regardless of the lip service they pay. Long story short I expect weak numbers but the dollar is likely to rally anyways. However I am expecting some strength in the Kiwi just prior to and immediately following the rate decision.