I keep posting about the US Dollar because it's at an inflection point. Here's my previous post where I broke out the USDX spot price and June future and embedded an interview with Soros. Now I'm going to break down the components of the US Dollar Index Bullish Fund ETF (via PowerShares) into their June 2009 futures. Here are the weights.
Euro 57.6%
Japanese Yen 13.6%
British Pound 11.9%
Canadian$ 9.1%
Swedish Krona 4.2%
Swiss Franc 3.6%
Here's the chart of UUP via stockcharts.com. It just pierced through the 50 day and will soon be ready for judgment at the inflection point.
Central Bank interest rate moves and "non standard measures" of easing will determine currency values against the USD at this point. For example:
Bank of Canada lowers rate to 0.25 percent
European Central Bank mulls more easing: Trichet
The EUR/USD needs to find support either at 1.275ish or 1.25 to give it a chance to break out of that wedge to the upside. Also read this article from DailyFX.com Euro/US Dollar Loses Correlation to S&P 500 - Time for Turn Lower
JPY/USD is in an ugly looking bearish wedge. It's under the 50/200 day moving average and needs to make a move here.
GBP/USD hit right up against the downtrend line and pulled back. I drew a possible support level in there but it looks choppy.
CAD/USD looks like it's in a wide channel. You can see the reaction from today's rate cut. Economic health aside, if commodities keep moving lower it could affect the Canadian Dollar.
Swiss Franc June 2009 Future (barchart.com)
If you're eager to get short the US Dollar via UUP or buying the UDN (bearish USD ETF) I'd make sure these charts start building strength imo. The day will come. Also check out the option action in $UUP. 5,000 blocks are open on the 24 May and June puts. There are also 4,000 puts spread out from the 22.5-26 strike in June (outnumbering calls). 5,000 were open on the April 25 puts but they expired worthless. September is interesting. 17,700 September 27 calls are open and 11,900 22 puts. Are they trying to strangle some premium here or finance a crazy out of the money trade??? Effen interesting to say the least.
Note: These are the June futures contracts not the spot prices I charted out.
The $UUP or $UDN ETF is "based on the Deutsche Bank Long US Dollar Index (USDX®) Futures Index™ (DB Long USD Futures Index) and the Deutsche Bank Short US Dollar Index (USDX®) Futures Index™. The Indexes, which are managed by DB Commodity Services LLC, are rules-based indexes composed solely of long or short USDX® futures contracts."
"The ICE US Dollar Index is calculated by Reuters in real time from a multi-contributor feed of the spot prices of the Index’s component currencies. The price used for the calculation of the Index is the midpoint between the Reuters top of the book bid/offer in the component currencies. This real-time calculation is delivered to the Exchange and redistributed to all data vendors. The prices of the DX futures contracts are set by the market, and reflect interest rate differentials between the respective currencies and the US dollar.
https://www.theice.com/publicdocs/nybot/ICE_Dollar_Index_FAQ.pdf
