[Trader333]

For the moment, I don´t correlate oil to the currency fluctuations but of course it could be ignorance and naivety on my part.

In mine and many others view the weak dollar has helped fuel the rise in oil prices. However, there is no real difference in demand compared to that of around 8 months ago when the price was below $80 and in fact demand has declined. In many ways the rise is not unlike the tech boom bubble a few years back. The rise on Friday was directly related to a comment made in Israel by a leading politician that they have no alternative but to attack Iran. This was later refuted by others in Israel and the US so it may well pull back on Monday. Personally I think the rise is not matched by demand and has been sustained by speculators and I have a bet that the price will fall below $100 before the end of this year. It is just a bet though because I learned a long time ago not to try and predict market direction.


Paul

[cowpip]

Good point, Trader333... you're probably right - the comments from Israel probably started the ball rolling. The tie between the dollar and oil is probably a lot more complex than I was thinking when I posted that comment. In many ways, it may even constitute a reinforcing feedback loop: news concerning israel's possible intentions hit the wires and cause a jump in oil, which (combined with employment news) allows the US dollar to depreciate. That depreciation probably reinforced the upward move in the price of oil, which may have also in-turn reinforced some weakness in the dollar?

I guess the source of the dollar decline / oil rise doesn't really matter. As traders, we just need to know that it happened, recognize what may happen in the future as a result, and follow the crowd.

Originally Posted by torero

What struck me on Friday was GBPUSD went up while GBPCHF went down. Seems the market is diverging giving signs in money moving unilaterally (I think?). Any idea on this movement?

Swissy is (as you undoubtably know) a safe-haven currency. There was definitely some safe-haven activity occurring on Friday (even in treasuries). In my mind, that helps explain the drop in GBP/CHF. To me, the rise in GBP/USD simply means that GBP weakened (yes, weakened) less than the USD. GBP seems to have weakened against most of the other majors, which makes sense given how precarious the UK economy seems to be relative to the other majors.

[cowpip]

Originally Posted by torero »

For the moment, I don´t correlate oil to the currency fluctuations but of course it could be ignorance and naivety on my part.

Here's a chart that illustrates the relationship fairly well, in the latest issue of the Currency Trader magazine (I don't read it [but it is pretty good for those who are new to forex], but was pointed to it by a friend).

EDIT: The relationship seems to be getting stronger the lower the dollar goes (or the higher the euro goes, or both). It was pretty weak at the beginning of the chart, imo.

[ztrader]

Originally Posted by cowpip »

...
I guess the source of the dollar decline / oil rise doesn't really matter. As traders, we just need to know that it happened, recognize what may happen in the future as a result, and follow the crowd.
....

cowpip, you hit it right on, "it doesn't really matter". Most traders seem to go astray from what is right in front of them, their chart, their method. Stick to what shows on your chart and method you use. If your method signals a LONG and if it so happens that the dollar decline/oil rise, so be it. Take your profit. Go with the market flow and market timing. It's hard to go wrong with that.

ENJOY!

ztrader

[GammaJammer]

Originally Posted by torero »

What struck me on Friday was GBPUSD went up while GBPCHF went down. Seems the market is diverging giving signs in money moving unilaterally (I think?). Any idea on this movement?

usd/chf is more often than not the big mover when the dollar's really moving these days - look at the behavior of eurchf for proof. Behaves far more like a CHFx than a EURx.

GJ