Commitment of Traders
Technical outlook in the week ahead for the dollar, 10-year yields, oil and S&P 500.
Simple near-term outlook.
It’s not entirely clear what will happen in the near term, but the financial markets are already pushed to extremes by central-bank induced speculation. With speculators massively short the now steeply-depressed euro and yen, with equity margin debt still near record levels in a market valued at more than double its pre-bubble norms on historically reliable measures, and with several major European banks running at gross leverage ratios comparable to those of Bear Stearns and Lehman before the 2008 crisis, we're seeing an abundance of what we call "leveraged mismatches" - a preponderance one-way bets, using borrowed money, that permeates the entire financial system. With market internals and credit spreads behaving badly, while Treasury yields, oil and industrial commodity prices slide in a manner consistent with abrupt weakening in global economic activity, we can hardly bear to watch...
Simple cogent analysis of the price action in the capital markets. Take it or leave it.
Data and market positioning can explain movement in the currencies. It does not prove that there is no manipulation or a great conspiracy. It just means the markets are understandable without resorting to such explanations. Try it.
You might not like it. You may think it is a joke. Yet the fact of the matter is the dollar is posied for further appreciation. Be prepared.
The US dollar closed higher against all the major currencies during the holiday shortened week. The lack of liquidity may have exaggerated the weakness of Swedish krona and Norwegian krone, the poorest performing major currencies. Both lost about 1.5% against the greenback.
The least weak currencies were in the dollar-bloc. The Canadian and New Zealand dollars were practically flat, and the Australian dollar slipped 0.2%. The euro and sterling slipped about 0.5%, while the yen shed 0.7% of its recent gains.
When the dollar falls, we are told it is logical. The empire is crashing and burning. When the dollar rises, the markets, we are told are manipulated. Well, the dollar is back, and the technical correction ended, near we told you it would.
Deny it. Engage in all kinds of mental gymnastics to dismiss it if you must, but the fact is the US dollar is rising, and not just because of negative developments abroad, but positive economic developments in the US.
A look at the global capital markets as if analysis matters.
Contrary to the death of the dollar chatter, the US currency continues to appreciate. Here's why there is still punch left in the bowl.
No heavy ideological axe to griind or conspiracy theories to propound, just a simple look at the price action in the capital markets.
While the 0.001% of the world dine together and plan their next moves, here are the main events in the week ahead.
Yes the US does not practice laissez faire capitalism. It never did. It manipulates sets intersest rates. The fx market is still understandable and the dollar is moving higher.
There may be one great conspiracy dictating the course of the capital market, but if there is not, what is the near-term outlook for the dollar?