20080805

The WIG Index has broken the uptrend line and is still below long-term downtrend line:



The WIG20 Index has similar situation:



The situation does not look so bullish as before, nevertheless there is still gap from end of Jun, which will probably act as resistance. Very high close from US should show the direction for tomorrow.
Warren Buffett said in one of his letters to Berkshire Hathaway's shareholders: $2 billion daily of force-fed dollars to the rest of the world may produce global indigestion. Nevertheless, it helps to close the trade deficit as it makes American exports cheaper. Or does it really?
Below is a US trade deficit and EURUSD on the same chart:



As for the period 1971-2001 it worked fine: USD was rising - trade deficit was lowering; and vice versa. (It seems that EURUSD is leading indicator there). However, since 2001 the EURUSD has been rising AND the US trade deficit has been rising.

Sources:
[http://www.census.gov/foreign-trade/statistics/historical/gands.txt]
[http://www.berkshirehathaway.com/letters/2007ltr.pdf]
[http://www.npr.org/templates/story/story.php?storyId=14901181]
[http://www.rte.ie/business/2008/0509/usa.html]