10 April 2008 - 1:44market commentary 4/10/08

Since it is already early Thursday I will just make this my comment for Thursday. Bernake opened his mouth and the dollar dropped surprise, surprise. I think even a blind man could have seen that coming. USD/JPY looks like its well on it’s way to going back below 100 and the dollar is worth less than the Swiss Franc once again. The Pound rallied nicely off of key support at $1.9650 last night and was helped out by a stronger than expected manufacturing report. Crude made fresh all time highs today due to Bernake’s dollar killing speech and a bullish inventory report which showed a draw of over 3 million barrels for the week. Gold also skyrocketed with all this going on and is riding oils coattails  at  this point. Tomorrows big news will be the Euro Area and the British interest rate decisions. I am not expecting a cut from the ECB and if they do cut it should shock the market into selling Euro. Meanwhile The Brits could very well cut rates if the housing market surveys are capturing the reality on the ground right now. A quarter point from the BOE is expected and should not hurt the pound much against the dollar but a half point would be devastating. If they do cut a half expect to see GBP/USD back to $1.9650 sometime tomorrow and GBP/JPY trying 192 before you know it. Actually since GBP/USD rallied today and just failed the last sessions high it is a short right now. Sine it was bought up today it is natural to expect it will sell before the announcement at which point it could very well rally. Unless of course they cut by 50 basis points which the market is not expecting.