With the world focused on the events that will be taking place in New York this week, the annual convergence of the world’s who’s who for the opening ceremonies of the United Nations, the week is set to be a non-Forex focused week. 

The Dollar, having come off of its least effective week of trading, a week that saw it fall to year lows against most major currencies might be taking a break from the freefall that it has been on.  The respite for the Dollar might just well be a product of the stock market and its traditional mid-September slump than anything good coming out of any agency or economist desk. 

The standard safe-haven flows that we will see in the Dollar can also be attributed to profit taking – a cause of sudden spikes in currencies that have been battered over a moderate period – a cause that few analysts ever site.

The UN meeting might well have some drama in the Forex related area, but this in unlikely given the focus on nuclear, sovereign territorial rights and Middle East peace.  If you remember, the UN less than one week ago endorsed a plan for a new global order with respect to reserve currencies – slighting the Dollar’s current status as king of the reserves. 

But with the world lovin’ Obama and out of respect for his big speech Tuesday and the ensuing cocktails and mixers, I think they (the UN) will wait for the balloons and confetti to be swept up before delving into “real” work.

The Forex traders this week do not have much in terms of data either to get them going.  I personally would keep an eye on the British Pound, there is much speculation as to the state f their banking system – and I sense that something might be coming down the line that will break the back of those long on Sterling. 

The Lloyds fiasco in the past few days is not it – there is something else, but I have not been able to figure it out just yet. 

My view, don’t be long GBP the next week or so. Forex traders can also keep their eyes on the Asian Pacific Rim, the Aussie and the Yen have been dancing in tandem and it is a beautiful site – but it is unsustainable – something has to give.  My guess is it will be the Australian Dollar as the Safe-Haven stalwart Yen will benefit from the Stock slides about to happen. 

Oh, and if you thing the Stock markets won’t slide because every analysts you see on TV is telling you how great the stocks are – talk to me in two weeks.  Just remember where your stocks were today, September 21st, 2009.

Trade safe – and smile.

Trading the USD. The Dollar finished off last week with a rebound session on Friday after falling to a new low on the year against a basket of currencies.  The reversal of the down trend for the Dollar late in the session was widely viewed as profit taking, although there is some speculation that investors’ appetite for risk is waning which boosts the safe-haven appeal of the Dollar.  The ICE Dollar Index, which is the standard measurement of the greenback’s value against a basket of six major currencies, gained .4% to 76.457, after having bounced off Thursday’s one year low of 76.010.

 

The Dollar starts this week’s trading session at 1.4708 to the Euro after having been up .3% on Friday, 91.45 versus the Japanese Yen, a .19% gain, 1.627 to the British Pound after having risen more than .8% and 1.0693 against the Canadian Dollar which was just about even with the USD in Friday’s session.

Trading the GBP.The British Pound Sterling had a rough session on Friday after it was made public that the British government had set tougher-than-expected conditions for the potential exit of Lloyds Banking Group from a state-run arrangement to protect its assets. The news about Lloyds underlined the perceived delicateness of the British banking sector at this time and undermined the interest that traders have had in the Sterling. 

 

The Sterling begins this week at .9038 against the Euro which rose .4% on Friday against the British currency, 1.6754 to the Swiss Franc which also gained .4% against the Sterling and 148.59 versus the Japanese Yen which had a .67% gain against the Pound on Friday.