The Advisor Weblog

---

• Hourly perspective for US session
• USD/JPY pressured to the downside
• GBP/USD: Technical points
• Majors’ sentiment for today
• Starting the day

Hourly perspective for US session Posted: 28 Sep 2010 06:40 AM PDT Here is the hourly perspective for US session: http://www.fxstreet.com/technical/analysis-reports/currency-majors-technical-perspective/2010-09-28.v02.html

USD/JPY pressured to the downside Posted: 28 Sep 2010 05:49 AM PDT After intervention, pair is back under pressure. Apart from dollar weakness, the fact is that this September 30th is half fiscal year in Japan, and that should favor last minute yen buying in Japan. Despite in ranges, yen crosses had a bearish tone for these days. Technically, pair is just above the 61.8% retracement of the 82.87/85.94 rally at 84.05, with indicators heading south supporting the downside for today. Only above 84.45 static resistance area and 50% retracement of the same rally could revert short term bias. Another factor that favors the downside in this cross, is the COT report: it shows that most of retail traders are long in the cross, and the herds are usually wrong: as higher the % of longs, as higher the chances of further falls. Whether BOJ will intervene and at what level, that’s something I can’t confirm. Still don’t expect the pair to lose easily 83.00 price zone.

GBP/USD: Technical points Posted: 28 Sep 2010 05:28 AM PDT Here is GBP/USD updated for today: http://www.fxstreet.com/technical/forex-strategy/the-best-pair-to-trade-now/2010-09-28.html

Majors’ sentiment for today Posted: 28 Sep 2010 05:02 AM PDT Here is the majors’ sentiment for today: Eur/Usd: Neutral Gbp/Usd: Bullish Usd/Chf: Slightly Bullish Usd/Jpy: Bearish Eur/Gbp: Bearish Eur/Jpy: Neutral Gbp/Jpy: Neutral

Starting the day Posted: 28 Sep 2010 05:01 AM PDT Hi everyone, and welcome back. Dollar has come back under pressure since early European morning, despite mood is mixed today in market: both euro zone and the UK data was quite encouraging, favoring both currencies against dollar; however, Pound continues printing fresh highs, while Euro can’t overcome yet the 1.3500 level. Stocks are barely unchanged in Europe yet mostly positive, while US futures are slightly down right now. Not much definitions yet across the board, thus dollar seems ready to start a bullish corrective movement, more interesting maybe than what we see early week. If so, I would expect Pound falls to be a bit more limited. Anyway! we have some fundamental data today, so here is the link for today’s calendar: http://www.fxstreet.com/fundamental/economic-calendar/ Have a great day!

You are subscribed to email updates from The Advisor Weblog To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610

What's with the US Dollar/Equity Market Correlation?

Lately, the US dollar and the US stock market have been in lock-step. Below are the S&P500 and the US currency ETF "DBV". You don't need statistics to see they are highly correlated (why a good graph is better than a good statistic!).


It has not always been this way. Looking at the rolling correlation that looks at the past 252 daily returns, using the dollar's value against the major currencies (see here) prior to 1995, and the trade-weighted dollar subsequently. This currency index has higher values for a lower value of the dollar, opposite to DBV ETF, but the important point is that current dollar/equity correlations are at an all-time absolute high. The dollar is now driving the stock market--or vice versa--at an unprecedented level. The implications, to me, are not obvious. [addendum: commenter John noted that DBV is a carry trade ETF, not a currency value ETF. So, I still don't know what's going on, but at least I'm not as confused as before]