This past week we thought we would see upside follow-through on the dollar. The dollar did start the week pushing higher but then turned and hit new lows. Our trailing stops took us out at breakeven so it was no harm no foul. This week we have a deluge of data. We have the all important FOMC meeting on Wednesday and then we end the week with the monthly NFP report, and we have many other smaller reports coming out every day this week. The markets have already priced in a cut of .25 by the FOMC so the direction hinges on the "guidance" they give in their statement about future cuts. With gold trading near $800 an ounce and crude oil trading above $93.00, the Fed is walking a very thin line between trying to help out the mortgage industry and slowing inflation. We expect that they will have to say something to slow the freefall of the dollar. If they fail to support the dollar then $1000 gold and $100 oil will be seen before Christmas.

Europe
Euro, Pound, Swiss Franc
EUR/USD:

The Euro continues to rally against the dying dollar. The ECB has whispered that 1.45 on the Euro would be a potential point at which they would intervene. So it looks as if the market is pushing up to that point to test the resolve of the ECB. The trend remains up but we'll be careful as a correction should be right around the corner.

GBP/USD:

We saw this pair start the week out with a big pullback and then a strong turn around back to the upside. We are now seeing this pair test the highs near 2.0650. This trend too remains up but we also stress caution as a counter trend move looks inevitable.

USD/CHF:

This pair did not follow through to the upside as we had expected, but it has still not fallen below last Monday's spike low. We are looking to put on some small long positions with stops below 1.16.

Asia
Yen, Australian Dollar
USD/JPY:

This pair spent the week drifting sideways in a tight range that has formed a bear flag on the daily charts. We are looking for a downside break out from this flag that pushes this pair back below 112.

AUD/USD:

This pair also started out the week with a strong pullback only to then rally to new highs. This pair is very closely following the price of gold. The trend is strong and remains up so for now we will not fight the tide, but will not overweight any new long trades when chasing this market if not already in.

North America
Canadian
USD/CAD:

This pair continues to trend lower and we are still waiting for a signal that a dead cat bounce is coming; until we get that signal we will wait patiently on the sidelines.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.