U.S. Dollar Crushed . . . .

[errolanderson]

Risk of U.S. government shutdown is blamed for recent calamity in the U.S. dollar (USD). But problems stateside are much deeper than this (IMO). Fantasy land of U.S. equity boom occurring despite international investment now flowing away from U.S. markets. And narrowing bond yields continue to warn of an possible incoming U.S. recession.

Meanwhile The U.S. Fed and Bank of Canada talk up higher interest rates as consumer debt soars to historic highs. And the Fed want to unwind it balance sheet threatening to flood the U.S. bond market.

We are all witnessing a major economic event . . . .

[Daylate]

🤤depressing..... But Trump says everything is in high gear.

Maybe double down on fukital pharmaceutical companies.

[ajl]

What chart are you reading? US dollar is down somewhat but hardly crushed. The dollar is likely to go higher from here as the reflation trade has ended. Evidence is oil prices trending lower from here. US government shut down is likely to be beneficial in the long run as hopefully curbs to spending are enacted. If you want debt levels to be reduced, you are going to have to let interest rise by slowing the printing press and that is happening also good. I agree that the US equity rally is over but what a ride. It was inevitable that it would end at some point because of two things, buy the rumor and sell the fact (tax cuts) and now a wait and see mode as too whether or not earnings are going to follow. Rightfully there is some doubt about the later as the economy both inside and outside the US is weaker than optimistic predictions.

[errolanderson]

U.S dollar now at a three (3) year low. Dollar has lost 5% over the past quarter and about 14% over the past year. Given this is the global currency-of-choice, this is a significant loss of value (IMO).

The start of 2018 has not been kind to the USD . . . Crude oil and loonie have in-part been beneficiaries.

[Oliver88]

U.S dollar now at a three (3) year low. Dollar has lost 5% over the past quarter and about 14% over the past year. Given this is the global currency-of-choice, this is a significant loss of value (IMO).

The start of 2018 has not been kind to the USD . . . Crude oil and loonie have in-part been beneficiaries.

What are your thoughts on the Fed Reserve increasing interest rates to strengthen $?

[errolanderson]

What are your thoughts on the Fed Reserve increasing interest rates to strengthen $?

They won't and if they do, it'll be 'meek' at-best . . . .

The market is starting to dial-in this reality. That is now pressuring the USD. And should the U.S. economy slide into recession, the Fed won't be unwinding their balance sheet as advertised either. QE4 could be born (IMO). The Fed is now in a very difficult position.

[errolanderson]

Huge fallout in the U.S. dollar . . .

Irony of revving U.S. economy due to corporate tax cuts, but steady international money flow away from U.S. markets. Jamie Dimon (JP Morgan) believes U.S. economic growth could approach 4% in 2018.

Gold and loonie surging as result of USD plunge.

U.S. unemployment posted at 4.1% while real unemployment is apparently 8%.

The strange world of economics . . . .

[Rareearth]

Chart of the Day: The Buck Is About to Get Flushed

By Jeff Clark, editor, Market Minute

The U.S. Dollar Index has been in a strong downtrend for over a year. It’s fallen over 5% in just the past two months.

When we looked at the dollar earlier this month, we noted the index was headed toward its September low at about 91 (the second horizontal red line on the chart below). And we cautioned that, if that level did not hold as support, then there was a lot more room to fall before the dollar reached its next support level.

Well… look out below.




After a couple of days of trying to gain some footing, the U.S. Dollar Index turned lower again yesterday. It’s oversold. And investor sentiment (a contrary indicator) is quite bearish on the buck.

That might be enough to cause a short-term bounce. But I don’t think so.

Look at the MACD and RSI indicators at the bottom of the chart. There’s no sign yet of any positive divergence. This tells us the downtrend is strong and likely to continue.

To me, it looks like the dollar is on the verge of a “flush-out” move.

A flush-out is that final, dramatic decline that occurs at the end of a prolonged downtrend. Investor sentiment is usually quite bearish. Technical conditions are almost always oversold. Yet, in spite of all that, the asset still can’t manage to bounce.

That’s when the last of the holdouts finally throw in the towel. They’re exhausted from holding on to a position that does nothing but fall. So, they finally hit the “sell” button.

I expect that’s what will cause the next big drop in the dollar—which should bring the U.S. Dollar Index to its next support line, about 3% lower from here.

In turn, that action is likely to spark another nice move higher in gold.

[Hopalong]

Just wondering if, and or when, U.S. trade policy will come back to bite them in the ass.
For many years, economic wisdom was that protectionism hurt those who practised it more than those who did not.
Latest run up in their stock market seems counter intuitive.
Result could be swing in U.S. to left and socialism, thinking of Bernie Sanders, also a protectionist.
International investment money might start to favour free trade parts of the wold.

[errolanderson]

U.S. dollar (USD) again in heavy decline . . . supportive to U.S. grains and cattle board.
But again powering loonie above 80 cents.

All the talk is about U.S. inflation this week. But U.S. Consumer Price Index (CPI) actually remains below year ago levels. USD fallout doesn't speak to a robust American economy . . . .

Strap-in . . . this situation suggests heightened price volatility for both stocks and commodities.

[macdon02]

I have a few contacts and the story i am hearing is two fold, Apple for example are repatriating USD but they are already long USD assets but thru off shore tax havens and have hedged their usd exposure ( no point making 2% a year on the interest if you get killed on the usd exposure)Secondly a friend at BOA says their research alludes to some number north of 700 billion eur has to be sold by USA corp under this new HIA policy\they talk to most USA corps)

one thing for sure we have Japan,China on hold buying treasuries the we have the FED QT then we have corps selling bonds to repatriate profits and then we have governments borrowing vasts amounts everyday. This is against a back drop of higher inflation and higher interest rates ,No wonder the yields are ripping.

How it's explained to me....

[biglentil]

The USD has lost 14% of its value in the past year against a basket of other currencies that are also losing purchasing power. The USD compared to a basket of all indicators such as gold, bitcoin, real estate, oil, food.... the situation is much much worse. That does not bode well for the world's reserve currency. To add more pressure on the USD factor in the alternative trading system Russia and China are turning on at this very moment (a Yuan backed by gold with convertable oil futures)(their version of SWIFT). Also consider the attractivness of decentralized cryptocurrencies where peer to peer transactions can be made quickly without a middleman, next to no transaction fees, and without exchange fees. IMO a mountain of USD is coming home to roost

[monte]

Trump likely wants a lower USD to make imports more expensive. I thought I read the US Trade deficit is growing.

He put forward a budget that leaves big deficits. That can't be supportive of the USD.

Interesting times.

[Stampsguy]

Trump definitely wants a lower dollar but I think it has more to do with helping the exporters. Going to make it harder to compete on grain sales for us.

[sumdumguy]

I believe the US is intentionally trying to drive their dollar down to make their exports more saleable and improve their trade deficit. A low dollar is beneficial to their economy as some of our best export years came with a very low Cdn dollar.