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U.S. Dollar Appears to be Bottoming. Is this the End of the Commodities Rally?

Commodities / Commodities Trading Feb 08, 2018 - 05:52 AM GMT

By: Donald_W_Dony

Commodities

The U.S. dollar appears to be finding a floor at $0.885 after six weeks of sharp declines. What does that mean to commodity prices?

The "Big dollar" slid almost six percent since mid-December aiding many commodity prices to stage a strong rally.

Gold bounced up 8.4 percent, silver soared 10 percent and WTI roar upward by 15 percent.


However, all of that "natural resource" joy came to an end in the 1st week of February when the dollar found its footing at $0.885.

Since then, gold has come-off 3.5 percent, silver has retraced over 8 percent and oil (WTI) prices fell 7.2 percent.

Bottom line: Commodity prices are often dictated by the currency that they are denominated in. In this case, it is the U.S. dollar.

As the dollar appears to be finding a floor after six weeks of declines, commodity prices are starting to take it on the chin.

Should the "Big dollar" start to rise, as our models suggest that it will, then most natural resource prices are expected to slid even further.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2018 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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