Daily Murmur 25/10/10

by Gary Glover

 This is a chart of the U.S. dollar futures index, which is a derivative of the U.S. Dollar index.  The futures will mostly overshoot the cash index on the high and low side and it generally marks more extreme reversals so any major reversal signs are normally a leader of the cash position.  You can see last week marked a massive bullish hammer formation and typically these type of patterns become solid lows.  Based on this chart we can assume some sort of rally is likely to follow after it builds a better low, which means that the Australian dollar should weaken if this occurs.  A weaker Australian dollar has recently correlated with weaker commodity prices so our Resource sector could be vulnerable for a pullback soon.  Gold’s bearish reversal last week also confirms with this view of the U.S. dollar.


Disclaimer

Gary Glover is an Authorised Representative (Rep No. 259215) of Novus Capital Limited ("Novus"). Novus is a holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.