This from the comments section, and some great points / questions raised by valued reader “Rob”.
Great trading man…I’m glad to hear you’ve been doing well.
You bet USD is most certainly the “current” world’s reserve currency, and yes “obviously” takes flows as other assets denominated in USD are sold (an incredible privilege for the U.S – but unfortunately one that is currently being “so abused”).
We don’t see it in a day-to-day sense but….the fact is – the rest of the planet has had enough of the U.S abuse of it’s reserve status, and is making considerable effort to “insulate itself” from further devaluation. USD will rise but ( in my view ) only as a product of these market mechanics and NOT because anyone in their right mind is outright “buying USD”.
With some 85% of global forex transaction “still” involving USD ( as being the worlds reserve we have to appreciate how many countries “must” hold USD as a means to buy commods ) the ship can’t turn on a dime. It’s a cruise liner – not a speedboat.
Don’t be fooled. The macro vision has USD going to zero…while the shorter term zigs n zags may very well suggest USD strength.
In my view IT’S BY DEFAULT – in that USD is “still” the reserve, and as risk comes off – assets denominated in USD are sold and cash is raised.
EU is a disaster, China looking to slow moving forward, and a complete and total joke of recovery in the U.S. No one “wants” to buy U.S dollars. It’s “relative strength” is a mere by-product of simple market mechanics.
As I see it anyway…..
Great stuff Rob….you’ve obviously got your head screwed on right. You can take my crap with a grain of salt, and even better with a nice shot of Tequila.
Nice comments, Kong! Sums it up well IMHO.
Call me crazy….
We’ve got to zoom out further, and look past a simple stock market in a given country as – currency movements sit one rung higher on the ladder.
Speculation will always be exactly that….and for me at least – is kinda fun.
I don’t make any long term plans these days…as I don’t feel you can really afford to.
Yes, go with the flow…. have an open mind…. no need “to be right”…. that kind of thing?
When you ‘look further out’ – how far out – monthly chart / 10y type view?
At present it really depends if I’m correct about the Fed / U.S economy and an expected “increase” in QE moving forward.
( I know I’m right – but the timing can’t be nailed down ) A player as powerful as the Fed can easily turn things upside down with a single press release so…..things could literally “change over night”.
When I look “further out” you’ve got me cloned ( or at least with a large reserve of “extra livers” in the closet ), I’m half man half machine – and my dog handles most of the trading for me.
Very well said – unfortunately most have their heads buried in the sand…
The only long term plan I am doing, is buying gold ( the real thing – not paper). Thats just me…..
You my friend……you know what’s going on.
looking at Dollar index dont you think Kong that this week dollar will drop ? it just touched a strong resistance ,,
Good eye Farhan as yes USD is getting very close to an area of overhead resistance.
Monday is a low volume “day off” so I will be watching closely in the late evening when Asia and then London get rolling.
I closed a number of orders Friday, but still have a couple irons in the fire.