I’m not sure if this is a bear flag (chart 1) or an ascending triangle (chart 2). Will the dollar go up or down in the next month or so? Can’t really be the triangle because normally it’s a continuation pattern, that is if the dollar was going up before the triangle formed, then it would be a valid ascending triangle.

So I guess a bear flag – or a rising wedge – it is.

Regardless of the type (reversal or continuation), rising wedges are bearish.

$USD down = stock market up.

jun22_usd2

jun22_usd

This was news to me! Is the Australian dollar still considered a fiat currency even if it’s backed by the commodities?

And I wonder why Canadian dollar isn’t like this — we’ve got plenty of commodities.

The Australian dollar is a commodity-based currency and is currently the sixth most traded currency in the world currency market (behind the US dollar, the euro, the yen, the British pound and the Swiss franc).

It accounts for approximately 5% of the total volume of foreign exchange transactions (approximately 1.9 trillion dollars a day). Its popularity is due to the fact that there is little government intervention in the currency and a general view that Australia has a stable economy and government.

au_dollar

For much of its history, the Australian dollar was pegged to the British pound however, that changed in 1946, when it was pegged to the US dollar under the Bretton Woods system. When this system broke down in 1971, the AUD moved from a fixed peg to a moving peg to the US dollar. Then in September 1974, it moved to a moving peg against a basket of currencies called the TWI (trade weighted index) because of concerns about the fluctuations in the US dollar. This continued until December 1983, when the then Labour government under Prime Minister Bob Hawke and Treasurer Paul Keating “floated” the Australian dollar.

The Australian dollar is now governed by its economy’s terms of trade. Should Australia’s commodity exports (minerals and farms) increase then the dollar increases. Should mineral prices falls or when domestic spending is greater than exports, then the dollar falls. The resulting volatility makes the Australian dollar an attractive vehicle for currency speculators and is the reason why it is one of the most traded currencies in the world despite the fact that Australia only comprises 2% of the global economic activity.

Over the last 23 years as a free floating currency, the Australian dollar has usually served as a proxy for gold due to the fact that Australia is the second largest producer of gold after South Africa. Fluctuations in the price of gold have seen corresponding rise and falls in the Australian dollar.

Don’t dismiss this paper just based on the title… give it a chance. It’s a very interesting read on currencies, world economies, gold and globalisation (23 pages).

One World Currency 509 One World Currency 509 Kris Martin Armstrong: One World Currency…This is the next step in the evolutionary process of the World Economy.

Formation still in play. Today the U.S. dollar dropped quite a bit, giving the market a boost.

Click chart to enlarge
apr13_usd

Just about everyone is counting on (GS: 217.19 -1.17%) to announce excellent earnings tommorrow and the market to go up. I’m 90% certain that GS will be down tomorrow but not brave enough to buy another “lottery ticket” – I’ve got enough of those at the moment 🙂

To re-cap, the negatives at the moment:

  • Bailout indecision / no-pass
  • Madoff – this, IMO, is as big as Enron. Affects over BIG 350 stocks!!
  • Retail sales tomorrow – anyone expects a good number?
  • BofA cuts, over 2 years but nonetheless

Omigod, something’s up that we don’t know about! Yen is in the 80’s and Euro/dollar is jumping around. I’m just relaying info, as I personally have no clue.

Anyone got ideas? Something big is apparently happening, but as usual we’ll be the last to find out.

I’m prepared for a big down day tomorrow, too bad don’t have any index shorts.

Staying up all night! too giddy. Armageddon is upon us again?