Heading into the new decade, it appears as though some big changes could be in store for the economy, stocks and several other major financial sectors and investments. The dollar appears primed for a major upward move, which would effect the trend in many speculative investments including currencies, oil, gold, and more.

The state of the economy appears to be much better than it was heading into 2009 when recession was the hot button topic on Wall Street. Some analysts are suggesting the fourth quarter of 2009 could result in a four per cent growth in gross domestic product. Most agree the economy has bottomed out, with real estate and consumer spending among catalysts.

The dollar seems poised for a significant push for the coming year. Fundamental and technical analysts agree on this. The improving economy has caused some fundamental momentum and technical traders suggest the dollar has broken through support levels against most currencies and some commodities.

One Euro is currently worth $1.4339, well below its 2009 high over $1.51. Even more important for the near future, the Euro has shown little bounce from its current position. Most analysts are forecasting the dollar to reverse direction in 2010. This should be especially significant against the Euro and Pound which surged strongly against the greenback during 2009.

The dollar is also holding up fairly well against the yen after a brief tenure at historic lows against its Japanese counterpart. After touching down at 85.365 yen, the dollar is currently worth 92.61 yen and climbing.

The dollar and yen are an interesting pair going forward as the US and Japanese appear to be on similar paths toward economic redemption. They have also been in synch in maintaining lower interest rates, which goes against sharp gains in either currency.

Gold has been hammered against the dollar in the last few weeks of 2009 after soaring to an all time high of $1,218.25. One ounce of gold is now worth $1,092.60. Some analysts were recently suggesting $2,000-plus for gold in 2010. This seems hard to fathom if the US economy improves as is expected.
Oil also appears primed to take a hit after holding in the $70-80 per barrel range for several months. With supply and demand doing nothing to dictate higher prices and OPEC holding steady, an improving dollar should drive oil lower in 2010.

With so much on the horizon, it appears certain the first year of the new decade should give some direction for the medium-to-long term fortunes of many financial sectors.

Neil Kokemuller
2:32 PM EST
Wednesday, December 30, 2009