Expert technical analysis of financial markets by JC Parets
by Sam Gatlin
The question we’re asking ourselves today is a big one.
Is the US Dollar breaking down from a multi-year consolidation?
With the dollar rangebound all year, we haven’t experienced a trending currency market.
When the dollar is trending higher or lower, we have a good idea of the impact it is likely to have on other markets.
However, when it is trendless, the dollar is neither a headwind nor a tailwind for risk assets.
We think that could be changing.
by Ian Culley
From the Desk of Ian Culley @IanCulley
The US Dollar Index $DXY is finishing the day relatively unchanged.
Today’s much anticipated CPI print failed to move the needle for the greenback.
On the flip side, $DXY’s most significant component – the euro – is ripping toward a new year-to-date high.
by Ian Culley
From the Desk of Ian Culley @IanCulley
Let everyone grumble over the Japanese yen.
I get it. The yen was cast as the villain decades ago, and something or someone must take the blame for the VIX hitting 65 earlier this week.
While I prefer to point my finger at the preceding low-volatility environment, the November election, and potential rate cuts, the yen certainly played a part.
But the real question isn’t who, what, when, where, or why.
Instead, every investor wants to know…Was that it?
Is the selloff over?
I think the worst is behind us.
Here’s why…
by Ian Culley
From the Desk of Ian Culley @IanCulley
Remember when anything priced in yen was trending higher?
It wasn’t too long ago that if you were looking for an uptrend, all you had to do was throw the yen in the denominator, and voila.
Just last month, the dollar hit a new 34-year high against the yen—levels not seen since the 1980s.
But the tables are turning in favor of the Japanese currency.
While most central banks are either cutting interest rates or considering future rate cuts, the Bank of Japan (BOJ) is hiking—a policy shift that puts a bid beneath the yen…
by Ian Culley
From the Desk of Ian Culley @IanCulley
One week, the buck is breaking down. The next, it’s ripping higher.
With commodity currencies rolling over, the dollar-yen sliding lower, and the US Dollar Index $DXY failing to hold its recent breakdown…
What’s it going to be this week?
So far, the Bulls are in control.
But that could change if dollar bears violate these critical levels…
by Ian Culley
From the Desk of Ian Culley @IanCulley
The bull market is back!
The major indexes are hitting new all-time highs, and so is gold.
Small-caps are ripping. Crypto is ripping. And the most heavily shorted names on the street are squeezing higher.
I’d expect the US dollar to break down as stock market bulls rush to put their greenbacks to work.
Instead, the US Dollar Index $DXY is holding steady. Dollar-yen is refusing to roll over.
And risk-on commodity currencies – the Australian, Canadian, and New Zealand dollars – are failing to trigger buy signals.
Stock market bulls don’t seem to care about the lack of risk-on signals from global currencies.
As long as that’s the case, neither should we.
But can you imagine how US equities will respond if the dollar finally takes a dive?
by Ian Culley
From the Desk of Ian Culley @IanCulley
The talking heads are forecasting choppy market conditions and a significant correction for Q3.
News flash: The market has been messy for months. And we already experienced a stealth correction beneath the surface.
I’ll keep an open mind, but if commodity currencies start breaking out…
by Ian Culley
From the Desk of Ian Culley @IanCulley
The smart money is snatching up Canadian dollars.
Last month, commercial hedgers extended their Canadian dollar exposure to their largest net-long historical position.
While positioning represents a condition – not a signal – we can only view the hedger’s appetite for the loonie in one light…
