The Dollar Dog Didn’t Bark: We Are Now On Sea Change Watch

The Dollar Dump did not come last night, and the Monday Stock Surge evaporated as well. We are seeing the footsteps of a sea change in markets, but it won’t be sudden or straightforward.

Case in point: Gold has dropped very sharply, enough that Neely seems prepared to call the top in, although shortly after his morning newsletters Bernanke tried to diss expectations of a pending rate increase, and gold promptly shot back up (see chart), but is still down for the session. Equities fell sharply after digesting Ben’s statements, then have recovered a bit.

The Japanese Prime Minister’s speech was a non event – he hasn’t figured out what to do yet.

More interesting is that the Euro has been trading below a key level of $1.4872 (and below its 50DMA). This can raise predictions of a drop towards $1.44, but Mother Market likes to fool, and Neely’s wave count allows one more jink back up. Again, this revolution won’t be televised, but will sneak up in a few false breaks before it hits. We seem to be close.

The currency duo to watch is the AUD/USD. The AUD is a big beneficiary of the USD carry trade, and its fall (when it occurs) is a great signal of the sea change in positions globally. I will post later on a possible cause of its demise coming from the Prime Minister’s policies at the Copenhagen conference. Simply put, they embody economic suicide for Australia. Likely the markets do not believe they will ever be put in place, but we shall see if something happens this week. If the AUD breaks below 90c (specifically 89.50), the next level down is around 83c.

About Duncan Davidson 228 Articles

Affiliation: NetService Ventures

Duncan is an advisor to NetService Ventures, where he focuses on digital media and the mobile Internet.

Previously he was at four start-ups: Xumii, a mobile social service based on a Social Addressbook; SkyPilot Networks, the performance leader of wireless mesh systems for last-mile access, where he was the founding CEO; Covad Communications (Amex: DVW, $9B market cap at the peak), the leading independent DSL access provider, where he was the founding Chairman; InterTrust Technologies ($9B market cap at the peak), the pioneer in digital rights management technologies, now owned by Sony and Philips, where he was SVP Business Development and the pitchman for the IPO.

Before these ventures, Duncan was a partner at Cambridge Venture Partners, an early-stage venture firm, and managing partner of Gemini McKenna, a joint venture between Regis McKenna's marketing firm and Gemini Consulting, the global management consulting arm of Cap Gemini.

He serves on the board or is an adviser to Aggregate Knowledge (content discovery), Livescribe (digital pen), AllVoices (citizen journalism), Xumii (mobile social addressbook), Verismo (Internet settop box), and Widevine (DRM for IPTV).

Visit: Duncan Davidson's Blogs

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