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Posted by Alterama on October 9, 2007, 9:59 pm
ALTERAMA 10-09-07 10:00 PM
ALTERAMA currency market outlook does not constitute and advise to buy
or to sell. ALTERAMA is not responsible for any loss that could result
from its market analysis. Alterama is a registered CTA and CPO.
The dollar surrendered its day-earlier gains Tuesday asinvestors
reentered a thin post-holiday market amid uncertainty over interest
rates.
An even thinner market Monday allowed the dollar to advance on
positive U.S. employment data released Friday. But with Columbus Day
over, as well asholidays in Japan, China and Canada, currency
investors who continue toquestion U.S. economic fundamentals switched
their support to the euro and yen.
At Alterama we think thta the recent US Dollar respite is over. The
release of minutes from the September Federal Open Market Committee
meeting offered the dollar a brief reprieve before the euro went to
intraday highs at $1.4115.
In September, the Federal Reserve cut its benchmark rate, sending the
dollar into a tailspin. The minutes reflected the Fed's concerns over
the dollar's decline, stating: "Inflation risks could be heightened if
the dollar were to continue to depreciate significantly."
Alterama;s analysis is that, iof the Fed is concerned by a significant
depreciation IF it trigers inflation (not sure, becaure the Chinese
currency among other is peged to gthe US Dollar) it is ready to accept
an orderly decline.
Typically last quester is book squarring time and nobody wants to be
seen with a melting currency in its books.
Alterama's techincal analysis is also Euro bullish: the recent
pullback went very close from the trend line started on August 18th
and the oscillators are no longer overbought. Furthermore ADX is
strenghtening while the trend is obviously up.
Alterama's target is currently 1.48 for the Euro but it's a moving
target.
For more information, please visit our web site www.alterama.com
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