I think that many traders feel that the Fed is the equivalent of a secret cabal bent on world domination. My response to that frequently heard assertion is that the Fed may be a cabal and they may even be bent on world domination but they are not very secret. In fact, if you are willing to do the research there is a lot of very useful information released by the Fed everyday. Some days this information is a little mundane and has no perceivable impact on the market but there are days when exceptions occur and forex traders and other investors should pay attention.

Today is one of those exceptional days. This exception is a spike in loan amounts delivered to the Fed's partner banks through the daily auction. When I see this number spike up above $15 billion in a single day I pay a lot of attention as it usually coincides with shifts in the value of the USD. Those shifts generally turn into sharp reversals or disruptions in the trend. In the video, I will illustrate exactly what I mean by that and show you the URL you can use to get this same information for yourself.

A spike in loans means the Fed is trying to handle a liquidity shortage, which is likely to cause a problem with the value of the USD. Although a "sure thing" doesn't exist, this is a significant indication that the USD may be losing steam and we could be in for a surprise if these injections of capital continue to escalate into the weekend.

Video originally featured at www.pfxglobal.com

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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."