Since the last currency update using monthly charts, Uncle Buck is turning a resistance level to support. This will be firmer with an August close above.
Euro broke down from a wedge we had been following by weekly charts after getting very close to a post-Euro crisis target at the big downtrend line.
Canada dollar remains bearish after failing at resistance as projected.
Hey guess what? The Fed had some Minutes out today in which they ruminated about the employment market and inflation targets. Mr. Plosser was the rational one as usual, talking about what could happen if rates needed to be raised sooner than the market anticipated and other Gloomy Gus stuff like that.
Anyway, Unc got a new spring in his already bouncy step. The self-explanatory daily chart is from this morning’s pre-market NFTRH key ETF update, created before this latest burst obviously. The US dollar – so doubted by so many only a couple months ago – is now getting over bought.
We had the US dollar in a bullish pattern back in July and wouldn’t you know a sharp rise came in concert with a stock market drop. The US market, like others in the developed world keys off of policy making and its ability or willingness to [pick one... mute, compromise, repress, devalue...] the currency. So the sharp rise in July did not go down well with asset markets.
As the stock market bounces it is not surprising that Uncle Buck has consolidated above the pattern neckline. MACD and RSI look suspect and if USD rolls over the stock market could continue to benefit. A strong visual support area is noted at the moving averages.
Well, Unc has been rallying hard lately. At least part of this must be in anticipation of some hawkish talk expected to emanate from Jawbones shortly. But what if they continue to glad hand the market? The over bought US dollar could be vulnerable to some extent.
We have not checked in on this motley crew at the public site in a long time (NFTRH keeps a running tab each week). Here are the monthly views of the basket cases we call major currencies.
Uncle Buck and his reserve status were leveraged to the hilt by “The Hero” and now his successor is trying to gently talk the Fed out of its policy stance over time. In other words, tightening is going to come one way or another and Janet Yellen is trying to go the orderly route. When this process becomes disorderly, the USD is likely to benefit from the liquidations elsewhere in the asset world.
Technically, USD is in a long basing pattern. There are those who think it is basing before a renewed decline, reading a Symmetrical Triangle (continuation) pattern into poor old Unc. I think the odds are it is bottoming over the post-2008 years when inflation – try as they might to have promoted it – simply has not taken root *. Leaning bullish, watch support and resistance.
Guest Post by EWI
Very few people know that the United States did not create a monetary unit pegged to “buy” some amount of metal, as if the dollar were some kind of money independent of metal.
In 1792, Congress passed the U.S. Coinage Act, which defined a dollar as a coin containing 371.25 grains of silver and 44.75 grains of alloy. Congress did not say a dollar was worth that amount of metal; it was that amount of metal. A dollar, then, was a unit of weight, like a gram, ounce or pound. Since the alloy portion of the coin was nearly worthless, a dollar was essentially defined as 371.25 grains — equal to 24.057 grams, or 0.7734 Troy oz. — of pure silver. (15.43 grains = 1 gram, and 480 grains = 1 Troy ounce.)
Not that I want to poke fun at an asset (it’s more its promoters that deserve the poking) that I have considered essential monetary insurance (read: value) throughout its cyclical bear market. In fact, I believe that Europeans especially should be paying attention now as Gold-Euro fans its way along after closing the Euro Crisis ‘fear gap’ from 2010.
Is it just me or is this chart of the Japanese Yen sneakily bullish, or at least working on a potential bottom of some sort? We’ve been following Yen vs. Nikkei in NFTRH for months now and the NIKK has got a bearish looking pattern in the mirror to the Yen. A break of the neckline would target 101.
Guest Post by Ino.com
|US DOLLAR INDEX
|POWERSHARES DB US DOLLAR INDEX
|US Dollar/Canadian Dollar
|JAPANESE YEN Jun 2014
|SWISS FRANC Jun 2014
The June Dollar was higher due to short covering overnight as it consolidates some of Tuesday’s sharp decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If June renews the decline off April’s high, weekly support crossing at 78.91 is the next downside target. Closes above the 20-day moving average crossing at 79.69 are needed to confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 79.69. Second resistance is the reaction high crossing at 80.06. First support is Tuesday’s low crossing at 79.09. Second support is weekly support crossing at 78.91.
One is dropping below its MA 50′s and the other is popping above, after the ECB sat on its hands with rates but made a lot of Jawboning about ‘unconventional’ stimulus in the battle against the dreaded deflation.
It is unbelievable the degree to which people still have confidence in these clowns (including the ones packed into the little clown car here in the US), but apparently they do.