Happy holidays everyone!  I hope this holiday season finds you happy and healthy.  Take a moment to reflect on the good things in your life.  Many of us, especially as traders, focus on the negative, and need to be reminded of all the good things around us.  2008 has been a wild year and one that will not soon be forgotten, at least not without a lot of help from captain Jack :).  I suggest trading very little these next few weeks as liquidity will steadily dry up as the rest of the year grinds on.  Near term we expect some more Dollar strength but that strength is temporary at best and we will be fading it as always.  Be safe the rest of the year and lets all make 2009 the best year yet here on FXStreet!   

That is really all one can say about yesterday’s FOMC decision.  I have seen a lot in my time but i must admit i did not see that one coming.  So now it presents us with a new challenge…on one hand they are willing to do whatever it takes to fix the current situation and on the other hand they have now exhausted their traditional ways of managing these crises.  So will their new and untried can of tricks save the day?  History shows that it is not likely.  Even though we did not expect this extreme action by the Fed we do see Dollar strength coming on the back of this move.  We are looking to accumulate Dollars these next few days that we expect to hold into the first week or so of 2009. 

So this week we have the FOMC meeting which should set the tone for the rest of the year.  Everyone expects them to cut rates down to .50%.  This is really not the main story.  The main story will be what new “tricks” they try and create now that they have run out of their traditional “ammo”.  This foolishness should continue until at least the inauguration.  Once Obama takes over and begins opening up all the “books” the game is likely to shift dramatically again.  This week we are expecting a counter intuitive rally in the Dollar after the FOMC cuts rates.  This flies in the face of Econ. 101 but has been the case in all other major rate cuts.  Look at how far the Euro has rallied since the ECB cut for example.  We are expecting something similar to come out of the FOMC meeting though we expect it to be short lived and basically a sucker rally in the Dollar.  Look to continue to sell Dollars on rallies as we have consistently said in this post these last few weeks.   

Markets woke up stunned today to find out that what was thought to be a done deal with the Automakers turns out not to be.  The dog and pony show surrounding this has been ridiculous.  On top of that we learn about more fraud in the stock market.  Our overall system is in such bad need of an overhaul and yet no one has any ideas.  I hope that the light Obama says he sees at the end of the tunnel is a way out instead of another freight train.  The Dollar has now made a clear turn lower as i have been talking about in other posts.  The Dollar will likely see a dead cat bounce next week on the back side of the FOMC announcement but do not be fooled by it.  The Dollar is dead, now it is just a matter of burying it. 

Hello again everyone.  I just returned from speaking at the Forex Traders Association in Houton on Saturday.  I want to say thank you to every one there for hosting me and having such a great event.  I want to especially thank Mona and Anton.  I hope to see you all again soon.

So this week we are faced with digesting the worst   NFP report since 1974 and at the same time anticipating the FOMC meeting next Tuesday.  I have been and continue to talk about the turn back down in the Dollar and that overall theme remains in play. I continue to look at Dollar rallies as selling opportunities.  Also I am going out on a limb and saying this about oil…we will see $125 a barrel again before we see $25…if i am right it has huge implications for all markets but especially the Canadian.  Stock markets are expected to be choppy at best this week a they too begin to anticipate the next FOMC meeting and more importantly the implication of the next cut…

Yesterday I mentioned that i expected the curriencies that recieved rate cuts would respond to those cuts by rallying.  A counter intuitive idea of course.  We have seen that play out as expected now.  However, there is an overwhelming amount of preasure still on these currencies.  Triche’s comments clearly left the door open to more cuts to come so that idea will act as a wall in the way of rallies in the near term.  NFP remains a wild card tomorrow so continued caution is advised.  We do expect the tone that ends this week will carry over and set the new tone for next week.   

Hello everyone, i hope you all had a great Thanksgiving.  We are faced with the first of a number of interest rate descisions this week.  The RBNZ starts it off tonight with their cut followed by ECB and BOE.  These cuts are for the most part priced in but I expect we will get a counter intuitive rally out of the very currencies that get cuts.  Be very careful the rest of the week as NFP ends the week with a bang.   NFP is also expected to be a trainwreck and anything less should cause a rally in both stock markets and the majors but if it comes out as expected or worse…look out below!