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Flash: USD momentum continues as Gold corrects - Societe Generale

FXstreet.com (Barcelona) - Sebasiten Galy, Senior FX Strategist at Societe Generale notes that the USD momentum continues after a short respite yesterday following a similar pattern of correction seen in Gold.

He see it as a counter party to the pressure on the short USD long EM/Commodity/Inflation/Asia trade of the past few years. Further, he believes that what is remarkable is that it is resuming even before the testimony of Bernanke on Wednesday. Admittedly, he adds, “There is little clarity in the data for him to change much his stance.”

From a technical point of view, Galy adds that taking out barriers in USD/JPY EUR/USD USD/CHF (EUR/CHF) accelerates the move in the USD. Further, he sees that AUD/USD has the strongest bearish momentum at the moment, while EUR/GBP is flirting with the MA(50) and MA(100) both at 0.85. He finishes by wring, “The temptation will be to take out these levels, but the more remarkable fact is that significantly lower than expected inflation is not pressuring GBP much. Lower commodity and energy prices are slowly percolating through the system to the advantage of consumers in developed countries and at the expense of commodity producing countries.”

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