The definitive U.S. Dollar Rally Thread

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  • Mon, Dec 21, 2009 - 12:40pm

    #11
    Peak Prosperity Admin

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    Re: The definitive U.S. Dollar Rally Thread

Here is a long term dollar chart  from Jesse’s Americain Cafe  http://tinyurl.com/yg9uqp9    What rally?

This short term chart also from Jesse, shows fibonacci retracement points and a significant resistance line at 79.5.  The euro would have to break below 1.41 for this target to be reached.    Again,  what rally?   This is a two week short covering, profit taking, year ending bounce that has failed to hold above 78, much less get to 80 or higher.  

Inflation is always and everywhere a monetary phenomenon – Milton Friedman  

The MZM money supply graph for the last 5 years – http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=MZM&s%5B1%5D%5Brange%5D=5yrs

The price of gold is up nearly 300% in that same 5 year time frame http://www.kitco.com/charts/popup/au1825nyb_.html

Bloomberg reports this morning that Bernanke has won the fight against deflation and offers as evidence the TIPS bond prices. 

What price does the dollar index have to hit for the deflationistas to give up?  What price gold? oil?    The US is running deficits in excess of 10% of GDP.   No matter how much balance sheet repair is done by individuals,  the government is going to spend for us.   

  • Mon, Dec 21, 2009 - 02:18pm

    #12
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    Re: The definitive U.S. Dollar Rally Thread

[quote=Gigem77]

Here is a long term dollar chart  from Jesse’s Americain Cafe  http://tinyurl.com/yg9uqp9    What rally?

This short term chart also from Jesse, shows fibonacci retracement points and a significant resistance line at 79.5.  The euro would have to break below 1.41 for this target to be reached.    Again,  what rally?   This is a two week short covering, profit taking, year ending bounce that has failed to hold above 78, much less get to 80 or higher.  

Inflation is always and everywhere a monetary phenomenon – Milton Friedman  

The MZM money supply graph for the last 5 years – http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=MZM&s%5B1%5D%5Brange%5D=5yrs

The price of gold is up nearly 300% in that same 5 year time frame http://www.kitco.com/charts/popup/au1825nyb_.html

Bloomberg reports this morning that Bernanke has won the fight against deflation and offers as evidence the TIPS bond prices. 

What price does the dollar index have to hit for the deflationistas to give up?  What price gold? oil?    The US is running deficits in excess of 10% of GDP.   No matter how much balance sheet repair is done by individuals,  the government is going to spend for us.   

[/quote]

Gigem,

LOL, you really expect a 2 week move to look significant on a 25+ year chart? 

When oil was more than double its current price (last year), it paid handsomely to be a deflationist. So the lower the dollar goes, and the higher gold goes, the more profit potential for the deflation trade. Inflation/Deflation is a trade, not macroeconomic gospel.

I think its obvious that this market doesn’t care whether your an inflationist or deflationist, its an equal opportunity rapist. 

  • Tue, Dec 22, 2009 - 02:48pm

    #13
    Peak Prosperity Admin

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    Dollar and Equities Divergence

This chart was taken from http://www.slopeofhope.com .  The black line represents the Euro (roughly inverse of the dollar), and the blue line represents equities. 

You can see a pretty strong correlation between the two until just recently, when the dollar has gotten stronger and equities have been unaffected, so far. What does this divergence mean? Either equities are in a holding pattern for some calendar year-end window dressing, or the dollar is approaching a plunge. I think its the latter. A dollar double bottom in the 71 area would create the most confusion on both sides of the trade.

What do you think?

  • Tue, Dec 22, 2009 - 04:03pm

    #14
    Peak Prosperity Admin

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    Re: The definitive U.S. Dollar Rally Thread

Good chart Jeff,

The dollar is very strong, bonds are selling off, and gold is selling off.  At this point, the financial markets are not concerned with the long term prospects for the US dollar – rather the markets are acting as if cash is king and the most valuable asset.  US equities are holding – but other markets have slipped over the last couple weeks (china, brazil).  Couple underlying themes right now are certainly the Euro risk, and that M3 is contracting rapidly.  This might cause a move from risk assets as people need to raise cash simply for transactional purposes.  The shortage/shrinking of credit leads to a higher demand for dollars.  Deflation might be gaining the upper hand at the moment.

  • Sat, Jan 30, 2010 - 02:25am

    #15
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    Dollar Is Going Ballistic

The stock market is severely oversold but still can’t rally.

The VIX has a bullish flag.

And the dollar rally remains strong.

“I love the smell of de-leveraging in the morning”

  • Sat, Jan 30, 2010 - 07:05pm

    #16
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    Re: The definitive U.S. Dollar Rally Thread

This week the fed indicated that dollar swaps with other central banks will end as planned in February.  This is extremely bullish for the dollar, since other central banks will have to buy dollars off the market to transact interbank business.  Of course, the fed does not always do what it says……

  • Sat, Jan 30, 2010 - 08:07pm

    #17
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    Re: The definitive U.S. Dollar Rally Thread

[quote=docmims]

This week the fed indicated that dollar swaps with other central banks will end as planned in February.  This is extremely bullish for the dollar, since other central banks will have to buy dollars off the market to transact interbank business.  Of course, the fed does not always do what it says……

[/quote]

Doc,

I saw that as well, and it was the topic of a Weiss newsletter a friend forwarded me (I don’t subscribe).  There are a number of potential financial toilet bowls beginning to swirl (The PIIGS and China i.m.o., plus of course Du-bye-bye).  ALl of this is extremely bullish for Uncle Buck.  

  • Fri, Feb 05, 2010 - 03:26pm

    #18
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    Dollar breaks 80!

With the dollar hitting 80, has anyone seen any projected upside targets for the USD?

In an interview last month, Mish was looking for the dollar to hit 81.5 and then pullback, but to eventually make its way to 90+. Personally, I think the bull market in the dollar that started in 08 is still intact, but time will tell of course.

Bernanke must be loving this.

  • Fri, Feb 05, 2010 - 03:36pm

    #19
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    Re: The definitive U.S. Dollar Rally Thread

If you want to see the Elliott Wave perspective it’s free week on their site. They predicted this strengthening dollar a while back. I don’t recall on how long they think it will go, but they are feeling very very bearish on stocks right now.

  • Fri, Feb 05, 2010 - 04:07pm

    #20
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    Re: The definitive U.S. Dollar Rally Thread

[quote=rickets]

cause a move from risk assets as people need to raise cash simply for transactional purposes.  

[/quote]+1 to those words.

Piling into US$’s and Treasuries, quite ironic

The panic for CDS sovereign protection is continuing this morning and investors take solace in the US$ and US Treasuries. Quite ironic of course since statistically the finances of the US government if local and state governments are included aren’t much different than Greece but investors have their late ‘08, early ‘09 playbook out where everything is sold and money is parked in US dollars. If sovereign debt concerns spiral, it will be gold that will be the last man standing in a fiat currency world and while I understand the short term psychology of investors to sell it along with all other commodities, the reason for its ownership only rises in the current environment.

IM never so HO running a playbook from ’08-’09 won’t end well.

 

 

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