Posted by fredsaid on 31st of Mar 2021 at 06:24 pm
Has there been a time in history where commodities and the USD
have both gone up at the same time ? Since usually when the $
strengthens, commodities weaken. Commodities, Inflation and
higher oil prices are almost a given so how can the green back also
get stronger during this time ?
Posted by chartboy on 31st of Mar 2021 at 08:56 pm
Yes, they have done so for the past several months. The reason
being currency values are all relative. While the US has used
excessive debt financing which usually causes price depreciation,
the relative “bang for the buck” we have been getting for it has
been much higher than most other countries that are dealing with
covid. So, it has not depreciated relative to other currencies
(yet).
Of course, that trade will only go on for so long until it
unwinds, and it has been heavily technically driven. A huge driver
for that was macro funds coming into the year almost universally
net short the dollar and then DXY reversed in January off big
weekly Demark lines. That set into action a squeeze with everyone
eyeing upside Demark levels on the DXY here in the high 93-94.20
area that also reside right where the old ten year uptrend line is
currently.
Given the enormous size of these macro markets they dont turn
on a dime. That is why you will start seeing intermarket reactions
like we did today before everything lines up perfect and trends
fully reverse. In fact, it those relative changes ahead of the
actual trend change that cause intermarket divergences, which
support the technical aspects that eventual produce the actual
trend reversal.
Posted by timebandit on 1st of Apr 2021 at 09:39 am
The other thing that can drive value of the dollar is rates. Is
the dollar's rise the market telling us they expect the Fed will
have to raise rates sooner than thought? We shall see.
Interesting. I feel much more comfortable that
commodities, oil and inflation are likely. I do need to
convert about 100K of USD to CAD this year. I just wonder how
high the USD can go this year. Maybe I'll just keep selling
it slow and steady if and as it goes up. The inverse H&S
on the USD scares me a little.
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Has there been a time
Posted by fredsaid on 31st of Mar 2021 at 06:24 pm
Has there been a time in history where commodities and the USD have both gone up at the same time ? Since usually when the $ strengthens, commodities weaken. Commodities, Inflation and higher oil prices are almost a given so how can the green back also get stronger during this time ?
Yes, they have done so
Posted by chartboy on 31st of Mar 2021 at 08:56 pm
Yes, they have done so for the past several months. The reason being currency values are all relative. While the US has used excessive debt financing which usually causes price depreciation, the relative “bang for the buck” we have been getting for it has been much higher than most other countries that are dealing with covid. So, it has not depreciated relative to other currencies (yet).
Of course, that trade will only go on for so long until it unwinds, and it has been heavily technically driven. A huge driver for that was macro funds coming into the year almost universally net short the dollar and then DXY reversed in January off big weekly Demark lines. That set into action a squeeze with everyone eyeing upside Demark levels on the DXY here in the high 93-94.20 area that also reside right where the old ten year uptrend line is currently.
Given the enormous size of these macro markets they dont turn on a dime. That is why you will start seeing intermarket reactions like we did today before everything lines up perfect and trends fully reverse. In fact, it those relative changes ahead of the actual trend change that cause intermarket divergences, which support the technical aspects that eventual produce the actual trend reversal.
The other thing that can
Posted by timebandit on 1st of Apr 2021 at 09:39 am
The other thing that can drive value of the dollar is rates. Is the dollar's rise the market telling us they expect the Fed will have to raise rates sooner than thought? We shall see.
Interesting. I feel much more
Posted by fredsaid on 1st of Apr 2021 at 09:27 am
Interesting. I feel much more comfortable that commodities, oil and inflation are likely. I do need to convert about 100K of USD to CAD this year. I just wonder how high the USD can go this year. Maybe I'll just keep selling it slow and steady if and as it goes up. The inverse H&S on the USD scares me a little.