Barry Ritholtz shares an interesting note on the rally in the dollar. The MACD has turned up and crossed over, signalling that traders and U.S. dollar carry-traders are nervous about their short positions in the dollar. With the Japan-easing underway, its possible that during the course of the year, the yen will replace the dollar as the primary funding currency. Time to bet on a return of volatility in risk assets.
On another note, the Canadian dollar is set to weaken relative to the greenback, should the rally in the dollar gain traction.
We know that “Short the US Dollar” has been a crowded trade for some time now. And, after falling 41% from 2001 to 2008, the fat part of the collapse has already happened.
Will it continue? That’s what today’s chart looks at.
How likely is it that the rest of the world will stand idly by and allow: a) US manufacturing competitiveness a huge advantage via weak currency?; 2) Massive US debt to be inflated away through dollar weakness?
Quite possibly not, as other currencies engage in a race to the bottom. The chart below suggests a dollar rally is in the offing:
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US Dollar Index Weekly with MACD
Courtesy of Ron Griess of The Chart Store
Adam Hewison strikes again with the ten-thousand-foot-view of the market with three new technical analysis videos on the Dollar Index (DXY), Crude Oil, Gold - These are relevant analyses given that crude and gold are both priced in US dollars:
The above chart is Adam showing the declining trend of the US Dollar Index along with the positive (standard) MACD Divergence… and the recent positive trendline break. As such, his video is entitled:
“Has the US Dollar Index Bottomed Out?”
Adam then moves to the Crude Oil market in his video:
“Crude Oil: Lower Levels Ahead?”
Hewison writes:
“The crude oil market continues to soften and is now close to some important levels that I think we should look at. In my new video we look at what is happening in this market right now and what we expect to happen in the future.
As we have indicated in our earlier posts, we are now in the official “silly season” for trading. What I mean by that is the markets will be very thin, choppy and can be moved by a relatively small amount of money.”
Finally, Adam posts a quick 3-min update on Gold strangely titled:
“It’s Officially Silly Season for Gold.”
We are already in the “silly season” and what I mean by that is after December 15 most traders are not serious about the markets and they’re not committed to any large positions for the balance of the year.
As you will see in the video, gold has fallen back to an area that should provide support, however it will remain choppy and thinly traded for the balance of the year.”
Source: Barry Ritholtz, The Big Picture
