Interest Rate Watch - Oil Ready For Final Spike?

What's Trichet Going To Do - Or Say?

The Bank of England – BOE, and the European Central Bank seemed to cast a cloud over the currency markets on Wednesday. Expectations that both Banks will hold rates steady on Thursday left traders with a relatively tame trading day. The chart below shows an unusually quiet GBP-USD pair  trading a very tight 30 pip range for the NY Session.

 

Chart Above - Pound Trades in Tight 30 Pip Range Ahead of Rate Announcements

 

Oil – Ready for a Blow Off Top?

I hear more and more speculation that Oil has no overhead resistance and will soon be spiking to heights of $150 - $200! Could we be ready for a blow off top? Usually when there is chatter of unlimited, unbelievable prices (Do you remember the books titled like “Dow 30,000” just before the Tech Bubble Burst?) this helps the bulls to run over the cliff at full speed - faster than Wylie Coyote! Further, there is also talk of raising margin requirements for the Oil pits that would potentially slow down the speculation.

The question is -  is the current price above $120 sustainable and valid? Economists looking for high prices to curb demand are detached from the reality that the high price of oil is a weak US Dollar issue - as all Oil is settled in US Dollars. The sooner Hank Paulson and Ben Bernanke acknowledge, accept, and react to this fact - with paying more than lip service to a strong dollar - the sooner we all will pay less for gas and oil.

 

When The Going Gets Tough, ... Filler Up – and Charge It!

The US consumer is continuing to spend on credit with a surprise number of over $15Billion! This is way above the consensus expected range of $3B to $7.5 Billion. The report coming at 3pm Eastern time could be viewed as good or bad depending on your angle. The currency markets ignored it completely. Could it be that the middle class is filling their gas tanks with plastic?

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