US Dollar Index – Technical Analysis Update WC 12th November

by Nick Simpson, Forex fx4x

Market Sentiment Overview – The US dollar index has seen steady gains this week after experiencing a drop back to the 80.30 previous resistance area, which then acted as support during the aftermath of the victory by incumbent President Obama. The dollar gained versus its major currency counterparts on risk aversion flows, as the greenback reversed its previous losses and then some.

Now the elections are over, financial market participants are facing the reality that a resolution of the “fiscal cliff” is key in the near term. Risk assets have seen extended downside moves with the S&P 500 and Dow experiencing the worst weekly basis decline since June; the US dollar index has gained accordingly.

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by Pebblewriter

Last Friday's action wasn't terribly reassuring for bulls or bears. SPX's dip to 1373 on the opening was largely a carry-over from Thursday's decline. And, from a technical standpoint, remaining above the May 2011 high of 1370.58 was net positive. The surge to 1391.39 eased traders' fears, but they quickly returned when SPX erased most of the day's gains by the close.

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by Jeff Miller, A Dash of Insight

Like nature, the media abhor a vacuum. There is so much time, and so little valuable content!

That is the best explanation I can offer for the latest media frenzy: The Fiscal Cliff.

It was the big theme on financial television, but also caught the attention of the mainstream news shows as well. This week's Barron's has the recessionary implications of "the cliff" on the cover. CNBC has continued its images of crashing vehicles and also introduced promotional messages and little buttons that all of their anchors wear.

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Money Morning Article of the Week

by Keith Fitz-Gerald, Chief Investment Strategist, Money Morning

Bitter, negative, expensive...I am hard pressed to find any positive adjectives describing this year's presidential campaign.

Evidently, the markets are struggling, too.

As was widely expected leading up to the election, all of the major averages got slammed in early trading on news of President Obama's victory. Just over an hour into yesterday's session, the Dow dropped 262.51, the S&P 500 tumbled 27.58 and the tech- laden Nasdaq fell 59.55. Oil tanked 2.95% and $2.62 per barrel to $86.08 while 10-year bonds saw yields plummet 6.20% to 1.63%.

O-bummer.

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4 Prior Week's Market Movers: Lessons and Ramifications for This Week and Beyond

by Cliff Wachtel, Global Markets and The Sensible Guide to Forex

Here’s a summary of last week’s prime market movers, their lessons for the coming week, what to do about them, and why any savvy investor needs to watch forex markets

Prior Week's Market Movers

1. US Elections: Before the results were known, there was both caution and speculation. Afterwards, there was concern that the Democrats, the more anti-business/investor party, had retained the Senate and Presidency. The end of the elections also allows markets to focus back on two bearish concerns, the fiscal cliff and the EU.


2. Fiscal Cliff Anxiety: There were no specific updates about it but concerns regarding the potential growth hit from the sudden imposition of higher taxes and reduced spending were widely cited last week. Optimists hold a deal will get done because otherwise the consequences will be devastating for the US economy and so common sense will prevail. Pessimists point out that the same argument failed to apply to US debt ceiling negotiations in the summer of 2011. These demonstrated Washington’s inability to face hard choices due to political gridlock. Risk assets got smacked and the US lost its S&P AAA credit rating. So much for depending on Washington’s sense of responsibility.


3. Greece:  The parliament approved new austerity measures, but there was concern that they might not and so invite a cash cutoff from the EU, evoking insolvency and contagion risk. Afterwards, the same contagion concerns remain because all know Greece can neither pay its debts nor meet austerity commitments.  But at least the denial can continue.


4. Weak EU Data and EU Official Comments: Markets fell following bleak forecasts from the European Commission and ECB President Draghi.

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