Well, it certainly seems that currency traders finally took notice of the massive selloff in treasuries last week. By Friday, I was somewhat incredulous that the $ had hung in and actually rallied in the face of the worst, two-day selloff in bonds that anyone had seen in years. You had to figure that, eventually, bonds had to rally back or the dollar would puke. Fortunately for us PM-pushers, we got the latter!
First, take a look at the chart for the Dec10 10-year Note and notice the appearance of the dreaded, "Poseidon's Anchor" formation:
For now, lets not get too carried away, however. The USDX is still within the range I laid out on Friday. Until we get a break of 79.50 on this chart or 79 in the cash USDX, there's really nothing to write home about. The USDX, however, must be closely watched this week.
Our precious metals had a great day. As I type, the Feb11 gold is at 1397 with a high of 1400.20. The March 11 silver is 29.55 with a high of 29.74. As long as Blythe doesn't sneak in a try to pound them down in the time remaining on the Globex, we will wrap up a perfect Monday and be set up for significant gains later this week. No POMO tomorrow but $16B on Wednesday and Thursday will certainly not hurt our chances.