Jack the Pipper

Lots of topping patterns (at least if one is looking for such evidence) seems to be on display after Friday’s close and big dollar reversal (dealers feasting on those dollar sell stops).

If you can believe it, the US dollar has gotten hammered in the last 12 hours — the euro and pound up over a percent at their day’s highs; the Australian dollar coming very close to US dollar parity.

JR and I are always amazed at the hubris of so-called “market gurus.” You know them when you see them. They use terms such as “it will go to xyz” as they discuss future prices of an asset.

The currency wars began a while ago–the financial press is now catching on as a theme fit to print. As we all know, China is at the center of this war and the primary aggressor.

Leading off today is none other than the Commitment of Traders report; we mentioned this in our weekly audio/visual summary provided to our Currency Currents Professional members on Friday.

Really, that’s what this Eurozone fiasco has morphed into – quiet desperation. Officials — whether those heading up Eurozone member countries, the IMF, the EU or the ECB — are all holding their breath and hoping that something they do, some of their economy-restoring and debt-reducing strategies, actually sticks.

Put the news about the European Central Bank choosing not to extend certain QE measures next to the Federal Reserve discussing new potential QE measures and you’ve got the big reason, right there in front of you, why the euro is gaining ground so quickly on the dollar.

The pace of growth in the euro zone’s services and manufacturing sectors slowed much more than expected this month, but surveys published on Thursday showed businesses were more optimistic.

There is no mistaking the role the Australian dollar plays in currency speculation. It is easily THE risk currency. It’s got growth (particularly the tight connection to China and the rest of Asia) and interest rates on its side. So when speculators are looking to capitalize on risk appetite, or when investors are looking for an extra yield boost, they look towards the Australian dollar.

Yesterday was a weird day. I say that because the correlations seemed all screwed up. Bonds were weak, commodities were basically flat to mixed (except for the precious kind), US stocks flattish, and yet the currencies were signaling risk appetite is back; well, except for the yen which strengthened big time yesterday (before intervention this morning).