Dollar Bulls Take Control

By: Alex Brandt
The dollar has strengthened across the board in volatility trading over the last few days. Clearly the dollar bulls are in control of the market now. The EUR/CHF is effectively unchanged from where North America closed out Wednesday. Talk of buy orders down at 1.4700/10. I believe that there will be some intervention if it falls below 1.4700. I expect a trading range of 1.38 -1.42 for EUR/USD over the next few weeks. The AUD/USD has found support at .9100, a move below .9000 could lead the way for further losses. Chinese economic data printed better, which could help cap the dollar rally. However, majority of investors now consider the US as a better investment then China. This could be attributed to China's recent moves to tighten stimulus, even though I believe that the US is doing much worse economically. When all this panic buying of US dollars is over, I think people will realize that the global recovery is not as bad as it seems and the risk trade will resume.

Highlights: 
EUR/USD: BIS seen buying under 1.4100

EUR/CHF: Trading at 1.4728 presently - risk of intervention

AUD/USD: Firmer on some bids, trading at .9123

China will explore new ways to use FX reserves in 2010 

Euro zone data scheduled for today: 
07:45 GMT: French PMI manufacturing for January expected 54.9 from 54.7, services 59.0 from 58.7

08:30 GMT: German PMI manufacturing for January expected 52.9 from 52.7, services 53.0 from 53.1

09:00 GMT: Euro zone PMI services for January expected 53.8 from 53.6, manufacturing expected 51.9 from 51.6

09:00 GMT: ECB monthly report for January 
European stocks set to open firmer.