It’s earnings week, and big names making “true confessions” include IBM, Intel, Coke Caterpillar, City and more. GE’s abysmal earnings report and forecast last week really took the wind out of the bulls’ sails, and there’s no reason things should change this week. Wachovia just missed its earnings forecast big-time this morning.
And then there’s the dollar. The Group of Seven nations met over the weekend, and the G-7 surprised investors by expressing concern about sharp swings in major currencies. This was seen as supportive of the US dollar.
“Since there was an expression of concern against sharp fluctuations, there is a chance in the near term that the dollar will be bought back, especially against the euro,” said Haruhisa Takagi, head of foreign exchange spot trading at Sumitomo Mitsui Banking Corp.
The greenback gained on the news, then gave most of it back as traders realized the G-7 was just blowing hot air.
“The dollar’s weak trend doesn’t change just because a G7 communique expressed concern about the currency’s weakness, as it is based on fundamentals,” said Tohru Sasaki, chief forex strategist at JPMorgan Chase Bank.
The dollar had a lot riding on the G-7, and unless there is currency intervention soon, we could see the dollar head lower. Look at a weekly chart of the greenback …
The dollar is oversold on a weekly chart, so a bounce is possible. Then again, it can remain oversold for a long, long time. The short-term direction in the dollar should push gold around …
And let’s look at oil …
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