Pound Sterling broke support at €1.23 on the weekly chart against the euro. Decline of 63-day Twiggs Momentum below zero warns of a primary down-trend. Breach of the rising trendline strengthens the signal.
Aussie Dollar threatens breakout
The Aussie Dollar is testing long-term resistance at $1.06 on the weekly chart. Breakout is likely and would signal an advance to $1.10*. Oscillation of 63-day Twiggs Momentum above zero suggests a primary up-trend.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
Gold and the dollar
Gold is undergoing a correction on the weekly chart. Declining momentum and breach of the long-term rising trendline suggest that the 5-year bull-trend is ending, but recovery above $1700 per ounce would indicate one more attempt at $1800 resistance. Respect of $1700, however, would indicate a test of primary support at the May 2012 low at $1525.
The Dollar Index respected resistance at 81 and is likely to re-test primary support at 78.50. Twiggs Momentum oscillating below zero already indicates a primary down-trend — confirmed if primary support is broken. Recovery above 81.50 remains unlikely, but would indicate an advance to 84.
* Target calculation: 78.5 – ( 81.5 – 78.5 ) = 75.5
Currency manipulation cost US economy up to 5 million jobs
Extract from a research brief by by C. Fred Bergsten and Joseph E. Gagnon, at Peterson Institute for International Economics, published December 2012:
More than 20 countries have increased their aggregate foreign exchange reserves and other official foreign assets by an annual average of nearly $1 trillion in recent years. This buildup — mainly through intervention in the foreign exchange markets — keeps the currencies of the interveners substantially undervalued, thus boosting their international competitiveness and trade surpluses. The corresponding trade deficits are spread around the world, but the largest share of the loss centers on the United States, whose trade deficit has increased by $200 billion to $500 billion per year. The United States has lost 1 million to 5 million jobs as a result of this foreign currency manipulation.
Read more at POLICY BRIEF 12-25: Currency Manipulation, the US Economy, and the Global Economic Order.
Hat tip to Simon Kennedy at Bloomberg.
Sterling threatens euro down-trend
Pound Sterling broke its long-term rising trendline against the euro and is testing support at €1.225 on the weekly chart. Retreat of 63-day Twiggs Momentum below zero warns of a primary down-trend. Breach of support would confirm. Respect of support is most unlikely, but would test €1.260 in the medium-term.
* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18
Aussie Dollar bullish consolidation
The Aussie Dollar is consolidating in a narrow range below resistance at $1.05 — a bullish sign. Breakout would indicate a test of long-term resistance at $1.06. Rising 63-day Twiggs Momentum, above zero, indicates a primary up-trend. In the long-term, breakout above $1.06 would offer a target of $1.10* but the RBA may take measures to prevent further appreciation. Reversal below $1.04 and the rising trendline is unlikely, but would warn of a correction to test primary support at $1.015.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
Gold breaks $1700
Gold broke support at $1700 per ounce, indicating a test of primary support at $1675. Breakout would offer an initial target of $1600*, with a long-term target of the May 2012 low at $1525. Declining 63-day Twiggs Momentum indicates weakness but values above zero still reflect a primary up-trend and the weakening dollar suggests strong support.
* Target calculation: 1675 – ( 1750 – 1675 ) = 1600
The Dollar Index broke medium-term support at 80 on the weekly chart while the dollar is approaching its September low against the euro. The 63-day Twiggs Momentum peak below zero indicates a primary down-trend — confirmed if primary support at 78.50 is broken. Recovery above 81.50 is most unlikely but would indicate an advance to 84.
* Target calculation: 78.5 – ( 81.5 – 78.5 ) = 75.5
The daily chart shows retracement to confirm resistance at 80.
Gold long tail as dollar retreats
Yesterday’s long tail on the spot gold daily chart indicates support at $1700 per ounce. Recovery above $1750 would signal another test of $1800. 63-Day Twiggs Momentum well above zero continues to indicate a healthy up-trend. A weakening dollar would strengthen the signal.
* Target calculation: 1800 + ( 1800 – 1700 ) = 1900
The Dollar Index (weekly chart) is testing medium-term support at 80. Failure would threaten a head-and-shoulders reversal. Breach of primary support at 78.50 would offer a target of 74*. 63-Day Twiggs Momentum holding below zero already suggests a primary down-trend. Recovery above 81.50 is unlikely but would indicate an advance to 84.
* Target calculation: 79 – ( 84 – 79 ) = 74
The DJ-UBS Commodity Index (weekly chart) respected support at 140, helped by the weaker dollar. 63-Day Twiggs Momentum above zero suggests a primary up-trend but reversal would re-test primary support at 126.
Nymex WTI Light Crude and ICE Brent Crude both trend downwards but the gap between the two is widening. Middle East tensions affect Brent Crude supply more than its West Texas cousin. 63-Day Twiggs Momentum holding below zero warns of a primary down-trend. Breach of primary support would confirm: WTI at $78 per barrel and Brent Crude at $90.
Euro recovers
The Euro is testing its long-term descending trendline in response to the weakening dollar. Breakout above $1.315/$1.32 would confirm the primary up-trend signaled earlier by 63-day Twiggs Momentum recovery above zero.
* Target calculation: 1.315 + ( 1.315 – 1.265 ) = 1.365
Aussie Dollar tests $1.05
The Aussie Dollar found short-term support at $1.04 and is testing medium-term resistance at $1.05. Breakout would indicate a test of long-term resistance at $1.06. Oscillation of 63-day Twiggs Momentum above zero suggests a primary up-trend. In the long-term, breakout above $1.06 would offer a target of $1.10* but the RBA is likely to take measures to counter further appreciation.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10