EUR/USD Forecast
USD Dollar Forecast
Forecast: USD Forecast for 2010, so far spot on price prediction as the yearly outlook is unfolding.
USD Forecast
First of all happy new year to all! I hope 2010 is filled with blessings and grace for all. That we may all open up our hearts just a little more to love and become a light in the world for all others to see. Your trading is largely reflective of who you are and your success in the markets depends on this.
Bernake recently spoke and when asked about the price of gold he remarked that the us dollar is the world’s reserve currency and that foreign investors realize it is the most liquid instrument in the world. The Fed either believes the us dollar is fundamental or that simple because it is the world’s reserve currency there will be continuing strong demand. In 2009 during the financial crisis we saw the yen also is becoming a reserve currency as well as a safe haven.
Power Plays For 2010
The Yen should remain to be strong even though the Japanese economy is weakening as a flood of money is moved into the yen as an alternative dollar play and countries diversify their reserves. When the Fed exit does occur their is going to be growing uncertainty in the market and the money flow will increase into the yen regardless of intervention from Japan or not.
Dollar forecast for 2010
The United Kingdom is however building up record government debt and experience many of the same deteriorating factors in their economy that the United States is suffering from but without the pound holding reserve currency status. The pound has recovered considerably from it’s 2009 lows and this seems like a good opportunity to take on short positions against the pound. I do have friends who live in the UK who say their are no signs of a weakening economy with signs of housing turning around and manufacturing increasing. The financial services sector does make up a sizable portion of the UK economy and with the new tax law many hedge funds are expected to leave in droves. The financial services in London creates a lot of jobs and if they leave the rest of the economy will feel it.
2010 buy and hold money play: Sell GBP/JPY
The Fed has yet to mention and exit strategy and there are many who believe the Fed will not be able to stop inflation that has the potential to sore out of control due to current Fed policy of readily printing money. While the easy money continues there is a strong possibility the weak dollar slide continues and the EUR trades to all time highs against the USD in the first half of 2010.
Other traders are talking about 2010 being the year of the us dollar. When and if the tight rope walk act of providing liquidity to the markets without causing inflation by Fed chairman Ben Bernake spins out of control or the next wave of failures hits the US the us dollar once again is going to experience a flight to safety and we will experience a sharp dollar correction with an extremely strong dollar.
2010 traders money play: EUR/USD first Long then Short
A reminder to always have a trading plan in place for each trade you take and stick to it!
Once That Got Away
I recommended in early 2009 to purchase silver as it was trading at about $7 an ounce while gold was on a tear. Historically the ratio between gold and silver works that first the market experiences a move in gold followed by also an appreciation in silver.
Missed Opportunity of 2009: Buy XAG
Today silver is trading at a $17.72 an ounce a home run for sure. I exited the trade early near $12 an ounce making a very nice gain however I did not stick to my gains and hold the trade for the longer term as I had planned. In retrospect I should have taken some off the table and then continued to add back the position I took off on pullbacks.
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