Jes Black

June 5, 2007 12:00 AM New York

June 5, 12:00 AM New York: Dollar weakness is accelerating with USD bulls unable to preserve their gains from last week in spite of a round of positive fundamentals from the US and rallying treasury yields. A breach of 1.3520 in EURUSD and 0.8365 in AUDUSD implies a more pronounced dollar weakness for those pairs while a successful breach of 1.99 in GBPUSD is likely to result in another test of the psychological 2.00 level. Tomorrow?s services ISM could provide USD with some temporary reprieve, however the hawkish tone by ECB and BOE on Wednesday is likely to push the dollar lower. Depending on the overnight dollar price action, we may be looking to buy this dollar weakness ahead of the 10am ISM report, but will most likely stay on the sidelines in the event of a breach of the stated key level in EURUSD.

Confidence Rankings:
1 USDCAD: Near Term: Bearish Medium Term: Bullish
2 AUDUSD: Near Term: Bearish Medium Term: Bullish
3 USDJPY: Near Term: Bearish Medium Term: Bullish
4 GBPUSD: Near Term: Neutral Medium Term: Neutral
5 USDCHF: Near Term: Neutral Medium Term: Bullish
6 EURUSD: Near Term: Neutral Medium Term: Bearish

USDCAD accelerated its freefall on rising commodity prices and technical momentum eclipsing last week?s slightly disappointing GDP out of Canada. A breach of the multimonth channel is increasingly bearish with Canada?s PMI, housing, and jobs data likely to support the loonie rally further this week.
Short Term: Bearish
Medium Term: Strength in commodities and recovery in Canada?s employment bodes well for the loonie in weeks to come.

Trading Blotter: No open positions at this time.