The move higher in crude prices was prompted by a combination of elevated geopolitical unrest rooted in Russia's uncooperative stance with NATO and the suggestion that Saudi Arabia may scale back its recent increase in production amid declining prices (I don't get it). The move higher in oil sent the USD lower against the crosses after an overdone August rally.

Look for USD general weekness to pull back into the overdone moves against the majors. It is a comfort zone for the market, which is in a no-mans land, at present. Trading probability is low, and you are assuming greater risk in this environment.

The US economic reports released today saw improvements in both weekly jobless claims and the Philadelphia Fed manufacturing survey. Weekly jobless claims improved to 432k, down from 450k a week earlier. Notably, the Philadelphia Fed manufacturing survey was better than expected at -12.7 in August, versus calls for an improvement to -14.0 from -16.3 in the previous month. The July leading indicators deteriorated to -0.7%, compared with -0.1% from June.

Traders will now look to tomorrow's speech by Fed Chairman Ben Bernanke at 10am EST. Most importantly, the market will be looking for hints on future policy adjustments and indication that the FED, on behalf of the tax payers, will provide further bailout support for Fanny and Freddie incompetencies and mismanagement.

Good Luck with your trading and be careful out there!

Chris Lori

Tags: USD, OIL