wmeubank@ocp.kcmo.com
THE REAPER
P.O. Box 84901, Phoenix, Arizona
(August 14, 1997) CURRENCIES: The only currency that is even coming close to holding its own of late against the U.S. Dollar is the Australian Dollar. Like many other financial markets, the U.S. Dollar should see a trend change in early/mid- September. Monitor the time of the eclipse. The German D-mark and Swiss Franc are showing signs of attempting to bottom against the U.S. Dollar. The trading public is too bearish on the Swiss Franc, German D-mark, British Pound and Canadian Dollar. Australia could have the premiere currency and economy during a time of major earth changes. British exports dropping at the fastest rate in more than six years makes it unlikely the Bank of England will again raise interest rates. This led to the sharp sell-off in the British Pound. We will have to see if the six-year highs the U.S. Dollar made against the German D-mark, and the four-year highs against the Swiss Franc, leaving technically and psychologically oversold conditions in these European currencies, result in more than just a “dead cat” bounce. The Japanese Yen is bottoming. Production in Japan fell 3.1% on a month-to-month basis in June. Prospects for industrial output gains are poor. Domestic auto sales have slipped. Housing starts are weak. Japan still has banking system problems. The Nikkei Dow has made a mini head-and-shoulders top with resistance at 20,000. The U.S. Dollar is supported by high real interest rates, a strong economy, and currency chaos in both Europe and the Far East. The trading public is too bullish on the U.S. Dollar. The volume of currency futures and options traded in the United States daily is $14 billion.
RECOMMENDATION–Futures investors profitably long September U.S. Dollar Index take profits. Futures investors long September Australian Dollar use .7289 open protective stops. Futures investors long September Japanese Yen use .8289 open protective stops. Futures investors may sell December U.S. Dollar Index short on a wide range, heavy volume, low close below 99 with 100.3 open protective stops, or may buy December U.S. Dollar Index on a strong close above 101 with 99 open protective stops.
R.E. McMaster, Jr.
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