Thursday, 28 May 2015

The USD variable

The USD saw a fractional net daily decline, settling -0.03% @ DXY 97.38 (intra high 97.88). There appear two scenarios for this summer, either renewed cooling to the secondary bearish target of DXY 90/89.. and then the 120s, or a straight up move to the 120s. Regardless of the near term, USD looks increasingly strong into 2016.

USD' daily'2, outlook

USD' weekly


I have had a fair few posters understandably tell me lately that the USD is not the be-all determinant for the US capital markets this summer.

I would absolutely agree that the USD is just one of many variables, but it is surely one of the most important, certainly in the top three.

Without question though, a stronger dollar puts downward pressure on most $ denominated asset classes. For anyone watching the precious metals or Oil recently, this is especially the case.

Two scenarios

More than anything, I want to emphasise that even if the USD cools across June/July.. perhaps as low as DXY 90/89, the broader trend remains exceptionally bullish.. at least to the DXY 120s. Whether that occurs in a hyper-spike before year end.. or not until late 2016, I really don't think it particularly matters.

Best guess for the near term? Some kind of Greek deal is reached.. with the can kicked another few months forward.. with the Euro rallying.. and the USD cooling.

If that is the case, then the precious metals will be helped a little, and more so.. WTIC Oil. There still appears possible renewed upside to $65/67 or so.

Best case equity upside remains at the monthly upper bollinger - currently in the sp'2170s. In the scheme of things though, we're only talking about another 2% higher.

Looking ahead

Thursday will see the usual jobs data, pending home sales, and the latest Oil and Nat' gas inventory reports.

Goodnight from London