Today's chart of the day focus is on China, despite its currency theme. Basically, while everyone is too busy talking about Greece, EFSF, Italy, PIIGS, EU Banks and all sort of other "obvious" stuff - a surprise is brewing in the East. It seems that the current "conditions" (quote of the day below) indicate that China could be a large disappointment leading into 2012. It seems that various markets that depend on China including Copper, Coal, Soybeans, commodity currencies, Asian exporter's currencies, mining stocks, European luxury retailers, Macau casino stocks, Hong Kong property and many others are signalling that not all is well in China!
Next few charts of the day will focus on these markets and today we start with commodity currencies above. US Dollar seems to have failed to make a new low below the 2008 panic, against Loonie and NOK. This shows strength. At the same time, USD vs Aussie and Kiwi are setting up "bull traps" against commodity bulls (guys like me), as they fail to remain below 2008 panic lows. Luckily, I have been in cash for a long time expecting a move similar to this, as the US Dollar is now in the process of flushing out shorts and many weak hands.
I still hold an opinion and have already for a long time, that the US Dollar is "toast" in the long run and remains in a secular decline which started in 2002. Having said that, currently we are in a counter trend correction in this very long term move and I also happen to own some US Dollars and short precious metals (also considered currencies), with a plan to buy some more Dollars on pullbacks. Remember... the Dollar has rallied during every single US recession since the 70s.