A Revived US Dollar
USD strength is the soup du jour around the globe today. The greenback has gained against almost every major trading currency in the known galaxy. As we often state here, there is no singular explanation for why traders think what they think. What they do all have in common is the desire to profit from the thought that guides them. The best way of all to profit in the capital markets is to find the trend and follow it. (“The trend is your friend”) This strategy of course has some subtleties that make applying it tricky to be sure. Nonetheless more often than not the reason assets, particularly currency pairs, trend is because traders see the trend, or the beginning of a trend, or what they would like to believe is a trend, etc. and follow it. Period. Don’t be bamboozled by the financial media trying to explain why markets moved as they do/did. Usually these people have never or currently don’t trade anything but ideas with their fellow pundits. Watch the charts, for there is wealth and wisdom contained therein.
FTSE Rises to the Occasion
The Euroland stock markets have, as they say, found their animal instincts. This is a zoological metaphor meaning that they found their wallets and are buying. The Londoners and their investors around the world who follow along with their instincts are driving the index up smartly. The retracement from the falls of February have breached the .61 Fibonacci level and is moving up on higher than usual volumes. This means that there is significant sentiment behind the buying and therefore is likely to continue.
USDJPY is Pushing
The Yen is pushing the 109 to the US dollar level and has not been at this level since last September. The volume levels driving the buying are significantly (69%) higher than average. That means that 69% more trading than usual is taking place during the ascent. Price is rising and rising sharply, not gradually.
Sugar Keeps Spiraling Down
As the world’s commodities are priced in US Dollars, USD strength will drive the price of goods priced using dollars down. Logical and intuitive. Sugar has been falling for a lot longer that the USD has been strengthening, so this trade is doubly desirable: Strong fundamental and strong technical indications for the price movement. Just look at the chart: That is about all the analysis you need to perform to benefit from this trade.