Tomorrow People Carve Turkeys. Tomorrow Traders Could Carve The Dollar

What will happen over Thanksgiving?

Today, I wanted to go over a possible scenario which could happen over the Thanksgiving break and onto December. At about this time last year, I remember thinking to myself that the holiday would keep the markets quiet. That is exactly the opposite of what actually happened. From November 21st through December 1st of 2006, we saw a major collapse of the Dollar. Fast forward a year later and here we are on November 21st, 2007. The Dollar has already been beaten to death and the Fed is saying that there will be an economic slowdown in the next couple of years. If history repeats itself, we could be in for a major Dollar collapse over the Thanksgiving holiday.

Let’s take a look at the EUR/USD a year ago and compare it with today’s chart.

EUR/USD

Looking back at the EUR/USD 2006, you can see that the Euro rallied against the Dollar by over 600 pips!

As of today, the Euro has already rallied over 700 pips since the beginning of October. The Euro is also trading at extreme highs with stochastics already signaling an overextention of the Euro bulls. However, with the Fed becoming more public about their decision making, it has been made pretty clear that we could see another rate cut by the end of Q1 2008. This could be a brewing of a "perfect storm" for the Greenback.

Now let’s take a look at the Cable in 2006 and compare it with today’s chart:

GBP/USD

In 2006, the Cable jumped up a whopping 1000 pips from November 21st to December 1st!

As of today, the Cable has already rallied over 1200 pips since mid September! The difference with the Sterling is that it has dropped over the recent days which makes it look even more likely that we’ll see another strong push upwards over the Thanksgiving holiday. Daily stochastics are trending up nicely and I wouldn’t be surprised to see the Cable rally all the way back to its previous high at 2.1160, which was made back on November 8th.

 

I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.

Now onto the Fundamentals:
  • Fed Forecasts Slower Growth and More Out of Work Next Year
    • The housing collapse and credit crisis will slow economic growth and nudge up unemployment next year, the Federal Reserve said Tuesday in a first-of-its-kind forecast that some economists believe will lead to interest rate cuts early in 2008.
  • Bernanke Sees Slower US Growth
    • Federal Reserve Chairman Ben Bernanke said Thursday that a host of economic problems, including the severe housing slump, will cause business growth to slow noticeably in coming months. Bernanke told Congress’ Joint Economic Committee that the central bank is watching developments closely, but gave no signal that it’s prepared at the current time to cut interest rates even further. He stressed that the central bank was keeping all options open, saying the Fed would be closely watching economic growth and the threat of inflation.
  • "Model Behavior"

    • Super Model Gisele Bundchen has decided that she wants to remain the world’s richest model by insisting that she be paid in almost any currency but the U.S. dollar! OK… Now the dollar has been officially dissed! Sure guys like Rogers, Buffett, Gross, Butler, Wiggin, and Bonner have dissed the dollar because of the fundamentals… But when a super model decides to side with us, well then we’ve got ourselves what I’ll call… "Model Behavior"!\

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