Tag Archives: US Dollar

Emerging Opportunity?

By Biiwii

Ever since the Emerging Markets tanked below last ditch support in August, we have been watching for a rebound to what is now major resistance.  On EEM that is around 36.  At 36.20 we are there.

It had looked like a no brainer shorting opportunity, but a funny thing happened along the way; the USD got very wobbly and the Fed has started mentioning poor old Uncle Buck’s name a lot lately in their policy meetings.  See this post for charts of USD, Euro and a great graphic culled from out there on the Twitter machine showing USD mentions by our fearless but maybe a little uncomfortable monetary leaders.

Back to the post’s main theme, a breakdown in USD would further instigate commodities and the likes of the EM’s.  So the tenuous state of the dollar should be watched closely now since many other markets are going to take their cues from it.

eem monthly chart, emerging markets

Pure Gold & Soggy Dollars

By Monetary Metals

We’re going to be introducing some new formats. One of them is quick article links, with the good ones labelled Pure Gold and the bad ones labelled Soggy Dollars.

Pure Gold

When a Fed-induced boom turns to bust: “In the lynch-mob atmosphere that inevitably follows the bust cycle of Fed-induced business cycles, it was not hard to convince Americans that the corporate bankruptcies and the subsequent recession were the handiwork of criminal executives.” Of course, this sentiment prevails today too. Look for the coming “corporate crime wave“.

A Soggy Dollar

The headline reads, “China Bought Gold With Proceeds From Record Sale Of US Treasurys”. It’s been in the news for a while: China is selling Treasurys (i.e. dollars). The PBoC is forced to sell dollars and buy yuan, to prevent a yuan crash as people are selling yuan. However, many mistake this for China “de-dollarizing” in favor [of] gold.

According to this article, China sold $83B of Treasurys (i.e. dollars). And how much gold did they buy? Less than $600M, or 0.7%.

…Same Dollar ‘Rampage’

By Alhambra Investment Partners

July Closes With Same ‘Dollar’ Rampage

The “dollar” has ended the month much the way it started. Despite headlines suggesting the dollar is “down” today, it is very much proving to be disruptive across every proxy. Gold was down to $1,080 at the AM fix before rebounding. Commodities were sold broadly, with copper back near $2.359, down almost $0.02 at some parts of the futures curve; oil is down too, with WTI in the front back close to $47.

ABOOK July 2015 Dollar Copper 31st Continue reading …Same Dollar ‘Rampage’

Dollar’s Grand Masterpiece…

By Alhambra Investment Partners

The ‘Dollar’s’ Grand Masterpiece Almost In Full View

When US retail sales jumped in May on seasonal adjustments alone, economists and mainstream commentary lost all composure as they were certain that meant the “slump” was over and the dominant narrative would continue. The same occurred in Europe over a slight pickup in overall lending, not even in the household or business sectors, which was proclaimed as nothing but the beneficence of QE already working. Neither of those “certainties” lasted more than a month, as US retail sales in June were “shocking” and lending in Europe quickly fell back to its normal flatline (which the ECB has really not been able to affect through its entire five years of deep experimentation).

This is nothing new, of course, as every uptrend is extrapolated into the recovery while at the same time every bit of weakness is qualified “temporary” or “anomalous.” The result over time is the regular saw-toothed monthly variation steadily sinking on that “unexpected” but somehow persisting downtrend. If you don’t observe the overall context beyond those shortest variations you might actually expect a domestic or global recovery intact.

Continue reading Dollar’s Grand Masterpiece…

US Dollar’s Wave 3…

By Elliott Wave International

The US Dollar’s 2014-2015 Rally: Wave 3 in Action

An excerpt from our free 14-page report shows you how the Elliott Wave Principle can “Boost Your Forex Success”

I always say trading forex markets is like riding a bike — except that said bike has one flat tire and the ground beneath it is covered in ice.

So why are they so popular, you might ask? In fact, forex is the most liquid market on earth, where trillions of dollars change millions of hands every day.

The reason people are so willing to ride that bike — so to speak — is because if you can stay on, the rewards are often unmatched. The trick, of course, is staying on.

There’s no such thing as a fool-proof strategy. Slips and scrapes are bound to happen. But as the title of Elliott Wave International’s chief currency strategist Jim Martens’ go-to guide reveals, there is definitely a way “The Elliott Wave Principle Can Boost Your Forex Success.”

Here below, you can read an exclusive excerpt from Chapter 1:

Chapter 1: A Useful Trading Methodology

Of the many ways the Wave Principle can improve trading success, for me, points 1, 2, and 6 are the most important. I like to trade with the trend, and the Wave Principle allows me to identify that trend…

Continue reading US Dollar’s Wave 3…

Large Investors Can’t Buy US Dollars

By Steve Saville

I was recently sent an article containing the claim that during the next financial crisis and/or stock-market crash there will be a panic ‘into’ the US dollar, but that unlike previous crises, when panicking investors obtained their US$ exposure via the purchase of T-Bonds, the next time around they will buy dollars directly. This is wrong, because large investors cannot simply buy dollars. As I’ll now explain, they must buy something denominated in dollars.

If you have $50K of investments in corporate bonds and stocks, then you can sell these investments and deposit the proceeds in a bank account. You can also withdraw the $50K in physical notes and put the money in a home safe. In the first case you are effectively lending the money to a bank and therefore taking-on credit risk, but the deposit will be fully insured so the credit risk will be close to zero. In the second case you have no credit risk, but there will be the risk of theft. The point is that it is feasible for an investor with US$50K to go directly into US$ cash.

This is not true, however, for an investor with hundreds of millions or billions of dollars.

If you have $1B of investments and you want to ‘go to cash’ you can, of course, sell your investments and deposit the proceeds in a bank account. The bank will certainly be glad to receive the money, but less than 1% of the deposit will be covered by insurance. This means that more than 99% of the deposit will be subject to credit risk (the risk that the bank will fail), which can be uncomfortably high during a financial crisis. In effect, depositing the money at a bank will be risking a loss of almost 100%. Not exactly the safety you were looking for when you shifted to cash!

Also, if you have a huge sum of money then removing the money from the banking system will not be an option. First, you probably won’t be permitted to convert such a sum to physical notes, but even in the unlikely event that you are permitted you will have the cost of transporting, storing, insuring and securing the cash. This cost will be large enough to preclude the exercise. Furthermore, accumulating a physical cash position of that magnitude will have the undesirable side effect of drawing greater government scrutiny to your business dealings.

Therefore, if it’s US$ exposure that you want and you are looking for a place to safely park a large quantity of dollars for a short period, you really have no choice other than to lend the money to the US government via the purchase of Treasury notes or bonds. That’s why a panic ‘into’ the US dollar will always be associated with a panic ‘into’ the Treasury market.

Around the Web

By Biiwii

Market Analysis & News From Around the Pipes…


Silver-Gold Ratio & USD

By Biiwii

Okay, one last precious metals short-term micro management exercise before moving back to a more generalized market view.

Actually, this one is pertinent to many other items as it is our gauge for the probabilities of an anti-USD ‘inflation trade’ bounce.  Silver-Gold ratio is still alive despite silver’s hard down this morning, and Uncle Buck is still below his MA 50 despite today’s strong bounce.


Anti-USD & Euro QE ‘Me Too!’ Trades Updated

By Biiwii

Hey, I know I always seem to need to give these things nicknames (Armageddon ’08, Fiscal Cliff Kabuki Dance, etc.).  Maybe that is a reflection of how non-seriously I take modern finance on a fundamental level.  What we have here are policy and media driven hysterias, both to the positive side and the negative, swaying an emotional collection of players to and fro.  It is more of a game than a science or well heeled, buttoned down profession.

So currently, on an interim basis we are working the ‘Anti-USD inflation trade’ (a bounce in inflation expectations and associated ‘hard’ assets) and the Euro QE ‘Me Too!’ trade, with its template being the US QE that has worked to hyper boost (stock) asset prices.

It appears that the mealy mouthed Fed, still refusing to bail out any savers that are left (both of them), has kicked another leg out from under the US dollar, which had for some reason been discounting a Fed that would begin raising the Funds Rate by now like a normal entity in a normal post-crash bailout environment would have done upon achievement of its objectives.

‘But no, we just need to tweak a few more positive data points out of it or wait until we see the white’s of inflation’s eyes’ implies the Fed.  Whatever, the dollar is down this morning and the anti-USD inflation trade should get a bounce in its step, in line with one of our main themes.  If the May low is violated, Uncle Buck could take a pretty deep correction.

Continue reading Anti-USD & Euro QE ‘Me Too!’ Trades Updated