Energy traders were taken by surprise this Friday. Not by the better than expected unemployment data. Rather it was the reaction by currency traders to the good news.
For the first time since the collapse of Lehman Brothers, the U.S. dollar staged a rally on good economic news. Currency traders have begun to price in a rise in US interest rates occurring sooner than previously anticipated. Until Friday, any surprise good news on the economy has met with buying of the euro and selling the US dollar.
The unexpected strength of the US dollar brought the energy complex to its knees.
This week will be a great test of dollar bull's trading plans, as the US Treasury will again be flooding the market with bonds. Any weakness in demand for the bonds send bond prices lower, giving dollar bears the opportunity to mount a come back..
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