Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Gold & Silver Corrective Rally is Almost Over - 20th Nov 18
Stock Market Going Sideways - Which Direction is Next? - 20th Nov 18
Technical Analysis Points to DOW 30k Next Target - 19th Nov 18
Stock Market Consolidating in a Downtrend  - 19th Nov 18
Next Tory Leader, Prime Minister Forecast and Betting Market Odds - 18th Nov 18
The Fed's Misleading Money Supply Measures - 17th Nov 18
Stock Market Outlook: Why the Economy is Bullish for Stocks Going into 2019 - 17th Nov 18
NO DEAL HARD BrExit Tory Chaos, Theresa May Leadership Challenge - 17th Nov 18
Gold vs Several Key Investments - 17th Nov 18
GDX Gold Mining Stocks Q3 18 Fundamentals - 17th Nov 18
Is Gold Under or Overpriced? - 17th Nov 18
Active Managers are Bearish on Stocks. A Bullish Contrarian Sign - 16th Nov 18
Will The Fed Sacrifice Retirement Portfolio Values For The "Common Good"? - 16th Nov 18
BrExit War - Tory Party About to Replace Theresa May for NO DEAL BrExit - 16th Nov 18
Aspire Global Makes Significant Financial Strides - 16th Nov 18
Gold Oil and Commodities …Back to the Future ? - 16th Nov 18
Will Oil Price Crash Lead to “Contagion” for the U.S. Stock Market? - 15th Nov 18
How NOT to Be Among the MANY Stock Investors Fooled by This Market Myth - 15th Nov 18
Tory BrExit Chaos Cripples UK Economy, Wrecks Housing Market Confidence - 15th Nov 18
Stocks Could End 2018 With A Dramatic Rally - 15th Nov 18
What Could Be the Last Nail in This Stock Bull Markets Coffin - 15th Nov 18
Defensive Stock Sectors Outperforming, Just Like During the Dot-com Bubble - 15th Nov 18
Buying Your First Home? Here’s How to Save Money - 15th Nov 18
US Economy Ten Points or Ten Miles to ‘Bridge Out’? - 14th Nov 18
US Stocks: Whither from Here? - 14th Nov 18
Know exactly when to Enter&Exit trades using this... - 14th Nov 18
Understanding the Benefits of Keeping a Trading Journal - 14th Nov 18
S&P 500 Below 2,800 Again, New Downtrend or Just Correction? - 13th Nov 18
Warning: Precious Metals’ Gold and Silver Prices are about to Collapse! - 13th Nov 18
Why the End of the Longest Crude Oil Bull Market Since 2008? - 13th Nov 18
Stock Market Counter-trend Rally Reaches .618 Retracement - 13th Nov 18
How to Create the Best Website Content and Generate Organic Traffic - 13th Nov 18
Why the Stock Market Will Pullback, Rally, and Roll Into a Bear Market - 13th Nov 18
Stock Markets Around the World are Crashing. What Not to Worry About? - 12th Nov 18
Cyclical Commodities Continue to Weaken, Gold Moves in Relation - 12th Nov 18
Olympus Tough TG-5 Camera Stuck or Dead Pixels, Rubbish Video Auto Focus - 12th Nov 18
5 Things That Precede Gold Price Major Bottoms - 12th Nov 18
Big US Stocks Q3 Fundamentals - 12th Nov 18
How "Free Money" Helped Create Sizzling Housing Market & REIT Gains - 12th Nov 18
One Direction More Likely for Bitcoin Price - 12th Nov 18
The Place of HSE Software in Today's Business - 12th Nov 18

Market Oracle FREE Newsletter

Free Online Trading Session

The US Dollar Reports of its death have been greatly exaggerated

Currencies / US Dollar Nov 06, 2017 - 05:05 PM GMT

By: Plunger

Currencies

In deference to Mark Twain, I will review the USD, general stock market, precious metals, the electric metals and various other topics.  In the past two weeks Rambus has been so prolific with such high impact charts that I find it a challenge to offer value added material so I offer charts with some different perspectives.

USD-No I Am NOT Dead Yet!

Currencies tend to be a very emotional subject. I try to be objective when analyzing them, sticking to the language of the market and it’s message.  It is always important to guard against the gold bug narrative, it can even influence our views of currencies.  Demanding posts insisting the USD is toast and immediately headed towards history’s ash heap seem closely related to this gold bug narrative.  The USD has spent the first 8 months of 2017 in a well defined downtrend, however it does not appear to be in a death spiral.  Actually the shouting and insistence that it must continue down has been a fairly predictable sign that its move downward was reaching its limit.  The dollar may have now completed a base and is set to continue its move higher.  This is not dogma as it could reverse downward, but for now it’s making all the right moves if the trend is higher.


Please review Rambus’ October 25 post on the USD as there is no other finer analysis anywhere:

I have often made the point that we are in a post bubble contraction.  It began with the financial crisis in 2007, however the central banks of the world and their interventions have truncated the natural corrective process and re-inflated the bubble due to financial engineering.  Ultimately,  if robust growth is to ever return to the world’s economies the PBC must be allowed to do its work in de-levering balance sheets.  Historically in the previous 5 episodes over the past 340 years, PBCs have taken 15-20 years to accomplish this.  So this is a slow process and the 8 month downtrend of the USD in 2017 could just be a little wiggle that turns out to be just a correction in an ongoing up-trend.  Time will tell of course.  In a PBC, the senior currency becomes chronically strong and acts as a magnet  attracting capital flows from around the world.  Over the past year this economic principle has been very hard to accept, however it may be getting ready to reassert itself.  I personally don’t trade currencies, however I watch them since they drive asset classes and knowing their trend gives us a clue of where these assets will themselves trend.

It appears we are at a crucial point in currency markets as the USD is beginning to reassert itself.  Lets look at the various currency charts vs the USD:

Euro- H&S neckline now broken:

Aussie Dollar– H&S break with price now violating the 200 EMA

NZD– The first to show its hand

Canadian Dollar– The ultimate resource currency

The Swissie: Et tu? Even the ultimate haven currency… 200 EMA violation.

South Africa Rand:

So one can see all of these currencies are now in a broad based breakdown vs the USD.  The USD took some time to gain traction and it’s NOT out of the woods yet, but these charts show that it would take some work to reverse this initial trend reversal.

In the chart below we see how the USD has broken above its lower horizontal channel line and is now attempting to overcome the resistance of the 30 W EMA.  Stochastics are indicating that it has the momentum to continue its move higher.

Below is the chart that has been subject to ridicule and derision, however it depicts what could occur when the PBC reasserts itself.  It is certainly not a guarantee, however it shows what may lie in store.

This next chart shows the relationship between the USD and the three metals: gold, silver and copper.  It is hinting that if the USD continues to rally it could make it difficult for these three metals to advance much further:

Finally, this USD chart poses the question: are the industrial metals getting ready to end their run for now?  It seems that in the past when the USD reversed from being oversold on the weekly that was the message:

Plunger

https://rambus1.com

Copyright © 2017 Plunger - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules