Thursday, October 29, 2009

Dollar Trade

The U.S. Dollar carry trade continues on as the equity markets continue to sell when the Dollar strengthens and are bought on a weaker Dollar. During last few trading sessions we have seen the Dollar gain strength and on increasing volume as the Dollar bears scramble to cover their shorts in what is now a very crowded trade and have to unwind their equity positions. The equity markets have also come into some strong trend lines that will act as support levels as the Dollar approaches resistance levels. The equity markets have seen increasing volume as there is finally institutional involvement with the markets and the Dollar may be seeing signs of capitulation.


UUP

SPY


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