Tag Archives: US Dollar

US Dollar Updated

By Biiwii

A real time view of the US dollar index by daily chart.  Today the trend line support was just about hit.  Lateral support resides at 94-95.  RSI is not over sold, but it has dropped to and through levels where it bounced in the past.  This is actually a negative on balance now that it is below 50 and is in a deeper correction than any since the rally started last spring and summer.

usd

Here is a longer view that includes the rally’s beginning.  Notice how the major trend line (as opposed to the short-term one above) intersects the lateral support cluster.  That is what we’d call some nice confluence and I’d expect that pending interim bounces, Uncle Buck can make its way down there.  But it remains bullish on a bigger picture.

usd2

 

USD/EUR Implications

By Biiwii

Our pals at NFTRH.com noted the move in USD/EUR, with the FOMC acting as an accelerant to already likely short-term events.  We, I mean they :-) also babbled a bit about the gold miners.

But the following chart of hedged Europe fund HEDJ and three unhedged Euro items shows why I got rid of the way over crowded ‘currency hedged Europe’ trade.  If a Euro bounce and USD drop were likely, that hedge no longer made sense.

Note HEDJ negative while EZU pops.

I currently hold the last two items in the panels below per ongoing analysis about European exporters (a big pharma and a diversified industrial/manufacturer).  So far so good.  Not sure yet if I am going to take these profits.  I have to run, but need to think about the markets tonight (and I am sure NFTRH will have an update in the morning).

hedj

Around the Web

By Biiwii

 

NFTRH 334 Out Now

An important new theme is introduced with respect to the Fed and its unruly subject, Uncle Buck.  Lot’s of other good stuff too.

nftrh334

EM Contagion & A New Z.1

By Doug Noland

Credit Bubble Bulletin

With the (king) U.S. dollar index trading Friday above 100 for the first time since 2003, the unfolding EM – ongoing “global reflation trade” – unwinds broadened and turned more disorderly. Brazil is now lurching toward crisis. Friday trading saw the Brazilian real slammed for 2.6% to the low since April 2003, boosting y-t-d losses to 18.2% (down 27.2% y-o-y). Brazil sovereign CDS surged 13 bps Friday to 302, the high since early-2009. Notably, Brazil’s dollar yields surged 23 bps Friday to a multi-year high 5.08%. For the week, Brazilian (real) yields jumped 43 bps to 13.40% (traded as high as 13.79% intraday Friday).

May 13 – Bloomberg (Filipe Pacheco and Paula Sambo): “Bonds and stocks of Petroleo Brasileiro SA fell after a newspaper reported that the company is in talks with creditors to extend a deadline for publishing audited results and avoid a possible acceleration of payments. Petrobras’s $2.5 billion in bonds due 2024 declined 2.7 cents to 90.55 cents per dollar, the biggest daily drop since Jan. 30. Yields on the notes jumped 0.45 percentage point to 7.74%. The preferred shares of the company at the center of the nation’s biggest corruption probe slid 2.5%… extending this week’s slump to 10%. The Rio de Janeiro-based oil driller has held negotiations with about 15 banks and investment firms in the past few weeks to extend the deadline, Folha de S. Paulo reported…”

Continue reading EM Contagion & A New Z.1

Dollar and Stock Market…

By Tom McClellan

The Real Relationship Between Dollar and Stock Market

Dollar Index and SP500
March 11, 2015

If you think that you know the one true relationship between the stock market and the value of the dollar, you are wrong.  Or perhaps I should say more charitably that you are going to find yourself wrong about half of the time.

Continue reading Dollar and Stock Market…

Forex Traders…

By Elliott Wave International

Forex Traders: The Only Question You Should Be Asking

Elliott wave analysis foresaw the USDJPY’s recent rally. Find out what else we’re expecting for the world’s leading forex markets (plus stocks, gold, oil and bonds) — absolutely FREE

I can’t help it. Whenever I read the mainstream financial news, I feel like I’m eavesdropping on a job interview at Microsoft.

In case you don’t remember — Microsoft was made famous, in part, for asking prospective employees one single question: Why is a manhole cover round?

They wanted to assess how a person approaches a question that has many answers. And, many answers are what they got, from the most practical (i.e. “Because a manhole is round”) to the most philosophical (i.e. “The circle is the most aesthetically pleasing shape for the human eye.”)

I’ll now take you back to the world of mainstream finance where those in charge are regularly asked to answer this basic question: Why did market “X” move this way today? And, many answers are what they give.

Take, for a real-world example the March 9-10 upsurge to a 7-and-1/2 year high in the Dollar/Yen currency exchange pair. As for why the USDJPY rallied, the experts offered up these (and many more) explanations:

  • A February 6 robust U.S. jobs report
  • A February 9 hawkish speech by outgoing Dallas Federal Reserve President
  • A February 9 triple-digit rally in U.S. stocks
  • A February 8 government report showing Japan’s fourth-quarter GDP was lower-than-expected

The truth is, anyone can come up with endless reasons to explain market action — after the fact.

But what about anticipating the market’s next move — before it occurs? That is a question only EWI’s Currency Pro Service is equipped to answer. Case in point: At 9:44 a.m. on March 9, Currency Pro Service posted intraday analysis for USDJPY that identified a bullish contracting triangle on the pair’s 15-minute price chart.

For newbies, an Elliott wave contracting triangle is a sideways pattern comprised of 5 waves, A-B-C-D-E. They most commonly form in 4th wave or B wave position. And when one ends, the resolution is usually sharp and swift. Here is an idealized diagram:

The March 9 Currency Pro Service pinpointed the contracting triangle on the USDJPY chart and set the stage for a powerful near-term rise:

“The pattern can be counted complete, which suggest USDJPY will thrust higher toward the 121.84 high established in early December.”

The next chart shows you how the post-triangle thrust propelled prices right into the cited upside target at 121.84.

The mainstream experts always give you plenty of reasons why a certain market did what it did.

But EWI’s renowned Currency Pro Service analysts enable you to anticipate what a certain market likely will do in the coming hours, days, weeks and more.

And, there’s no better time to experience the incredible resource first hand. Why? Because for the second-time only, EWI has launched a Pro Service Open House event. Open, as in you get complete, no-cost access to Pro Service’s premier forecasts for not only Forex — which Investopedia calls “the most traded market in the world” — but also the world’s leading energy, metals, interest rates, and stocks.

This amazing one-week opportunity begins on Tuesday, March 10. Find out what’s in store for the markets you follow, free! Simply join the thousands of Club EWI members already taking part in the Pro Service Open House as we speak.


This article was syndicated by Elliott Wave International and was originally published under the headline Forex Traders: The Only Question You Should Be Asking. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

USD at 11yr High vs. Euro

By Elliott Wave International

Market insight: U.S. Dollar at 11-Year High Against Euro

And why now may not be the best time to bet on the greenback

Editor’s note: You’ll find a text version of this story below the video.

Get professional-grade forecasts for 48 world markets — FREE for 1 week

Register for Pro Services Open House today »

On March 4, we spoke with Jim Martens, our Chief Currency Strategist. His Currency Pro Service is participating in our Pro Services Open House, a free week-long event that starts next Tuesday at elliottwave.com.

Elliott Wave International: Jim, it’s a good time to talk about currencies, because the euro has just touched an 11-year low against the dollar. Did you ever think you’d live to see this day?

Jim Martens: Did I ever think I’d live to see this moment… Well, back in mid-2011, when EURUSD was trading near $1.50, we started talking about the upcoming retest of $1.1876, the 2010 low. We were convinced that the rally from that level was a correction — so EURUSD would ultimately fall back to it. It took a while to get there because what followed was a wide-ranging sideways consolidation in EURUSD — a triangle, in Elliott wave terms, an overlapping pattern labeled ABCDE that you see on this chart:

That triangle ended in May 2014 with EURUSD almost hitting $1.40. From that point we had been expecting a move below $1.1876 — and we had lower targets, as well. Most of them have been hit, and the interesting thing is that now, all of a sudden, the idea of the dollar/euro parity is becoming popular. Someone at Goldman recently talked about parity by the end of 2017.

Elliott Wave International: Do you think we’ll see parity?

Jim Martens: Well, in 2008-2009, we spotted a three-wave rally in EURUSD from 2000 to 2009 — and we classified it as a correction. That, again, suggests that the euro will eventually revisit the lows we saw back in 2000:

But maybe not just yet. The current timing of the “parity” talk in the media is key. It’s interesting that we see it now, after a huge decline. This is very typical! At major turning points, sentiment is supposed to be extreme. There is a reason why extreme sentiment signals a turning point: First the trend gets popular, then it becomes too popular, then there is no one left to buy (or sell).

But the markets are doing what they are supposed to be doing: inflicting the most pain on the most number of people. The majority always gets caught on the wrong side at big reversals. Always. For me, the news of the public piling into a trend is another snapshot of the market sentiment. That’s useful information. Markets fool the most number of people at the most unexpected moments, but by tracking sentiment — and the news — you can prepare yourself.

The key is, just because the environment is right for a turn doesn’t mean there is evidence of the turn. Wave analysis has built-in indicators that give you that evidence, and you have to wait until you see it — before you act.

What separates Elliott wave fans from the rest of the public is that the public has no basis for determining when the trend may be over. In fact, the longer the trend continues, the more people join in — and the more committed they become. But right now is not the time to stay committed to your EURUSD shorts.

Elliott Wave International: Thank you for the insights, Jim.


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March 10-17 at elliottwave.com. Get your free password now >>

This article was syndicated by Elliott Wave International and was originally published under the headline Market insight: U.S. Dollar at 11-Year High Against Euro. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

USD and Euro

By Biiwii

I’ll be the first to admit I’d have expected a correction in the US dollar by now.  Don’t get me wrong, NFTRH was on the fledgling USD rally last summer when it was still considered by many to be just another beaten up combatant in the currency wars.  But in thinking it had gone too far on over bullish sentiment, I was wrong in January.  Indeed, as noted a couple weeks ago in NFTRH 331“I continue to be proven wrong in expecting the US dollar to correct. Further, at this juncture the weekly chart pattern looks more like an over bought consolidation than a top.”

Moving on, the consolidation worked off the over bought situation by daily charts (weekly remains over bought) and today USD is making a new high.

usd

As for the Euro, the monthly works best to see where this thing may be headed.  As noted in NFTRH 332“Euro has failed to bounce by shorter-term charts and so the monthly is back in play with the lower channel line beckoning.”

With Uncle Buck’s break upward, this still looks to be the case.

euro

Around the Web

By Biiwii

  • Gathering thin reeds  –Jeff Saut  [biiwii comment; oh jeff, how could you own anything by putnam? oh, they’ve cleaned up their front running act?  i see.  all the same, no thank you…  not that it matters to you, but you are on notice for inclusion in this segment in the future.  putnam?  really?  every time I saw the ‘proud sponsor of the n.e. patriots’ ads this past football season, I wanted to hurl]
  • btw  –Josh Brown
  • HP Warns and Blames the Mighty Greenback  –Across the Curve  [biiwii comment: add hp to the list.  since q4 we have been on watch for the strong dollar dynamic to have some effect in corp. america.  not the end of the world, but an effect]

 

The Reality of ‘Flow’

By Alhambra Investment Partners

To many, the “strong dollar” will always be an economic condition. If the price of the dollar is rising, then it will be assumed, mostly by economists, to be a relative judgment in favor of domestic growth potential and reality. That view misses the very relevant fact that “dollars” are not necessarily of domestic origin or for domestic purposes. The eurodollar standard ensures that “money supply” is tied very closely to overseas financial factors, which include perceptions about the US’ place in the global economy.

So it may seem tautological to compare commodity prices denominated in “dollars” with the “dollar” itself. However, these are actually different systemic factors combining to intertwine financial function with economic function.

ABOOK Feb 2015 Flow Dollar Rising Commodity Inverse Continue reading The Reality of ‘Flow’