Wednesday, January 5, 2011

Treasury Top and Dollar Low?

US Treasury Bonds (ZB H1-D) have been trying to find a low since they bottomed in mid-December. There is the potential that the last few weeks have only been a “two-step” rally into resistance and there is now timing for the downtrend to resume.

The currency markets have been moving in lock step with the US Bond market, because rising Interest Rates force money into US Dollars. The Euro (6E H1-D) has timing for a potential high. It needs to clear the 1.353 level to turn the trend back up.

The British Pound (6B H1-D) has a similar setup to the Euro. The 1.5362 needs to hold or another leg down may ensue.

The Canadian Dollar (6C H1-D) has been very strong and actually broke out of a 14-week base last week. It hit first resistance and is now retesting the breakout at 0.9989 Whoever would have thought of Canada as a safe haven currency… Sadly, it’s yielding 0.11%

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