Saturday, 22 October 2016

A third week for King Dollar

US equities closed a little weak, sp' u/c @ 2141 (intra low 2130). The two leaders - Trans/R2K, both settled -0.1%. VIX settled -3.0% @ 13.34. With a break of rising trend from the 2114 low, the door is wide open to a brief foray <sp'2100. The real issue is whether things spiral if the 200dma is broken under.




Early morning weakness to sp'2130 was decisive enough to break rising trend from last week's low of 2114. Further, it provisionally confirmed the bear flag.

Despite equities leaning a little weak, the VIX was still unable to muster any upside, but then it was opex. The 15/16s look due next Mon/Tuesday. The key 20 threshold is due no later early November.

Meanwhile, in FIAT land....

USD, weekly

A third consecutive net weekly gain for the USD. We're already close to the DXY 99s, and a break above the giant 100 threshold is now viable within the near term.

Unquestionably, the Fed do not want to see the USD break >100. Above 100, most should recognise that the next big level isn't until around 120, which would make for a powerful 20% appreciation against other currencies.

Those equity bears seeking a major down wave should be flying the flag for a hyper-strong dollar. The USD is certainly not the only variable that will help shape the direction of the US/world capital markets, but its one of the biggest ones.

Goodnight from London

*the weekend post will appear Sat' 12pm, and will detail the US weekly indexes.