The US dollar continues to strengthen, and broke into the 88s (DXY) today, the highest level since June 2010 - the time of the EU bond rate scare. A break >90, would bode for a continued move to 100 in the first half of 2015.
USD, monthly'2, rainbow
USD, monthly'1, 15yr
Summary
The fifth consecutive green candle on the monthly 'rainbow' chart, and we're already in the first target zone of 87-90. We have a massive support floor in the 78/80 zone, and it sure doesn't look like we'll be down at those levels for some considerable time.
Indeed, the only issue now is whether we see the 90s before year end, or in Jan/Feb. For the USD bulls, it should make little difference. What is clear, a break into the 90s should mean we'll hit the giant 100 level by summer 2015.
Implications
A higher USD is bearish for ALL US $ asset classes, and that certainly includes equities. However, the equity bears face the problem that capital flows into the USA are strong, and are likely going to increase. So... we could see a higher USD, but equities still broadly climbing.
The most adversely affected aspect will be in commodities, especially the precious metals and Oil. We already have a clear break down in OIl, losing the $90 threshold, and now on track for $65/60 next spring. Similarly, Gold looks on track to test (if briefly) the giant $1000 threshold.
So much for the 'dollar doomers'.
Perhaps the most notable of the $ doomers is Peter Schiff. I have to say.. and take me especially seriously here.. I have massive respect for the Schiff. He had correctly warned about the property bubble and CDS problem a full year or two before that issue blew up. He tolerated being laughed at, day after day... and was unquestionably proven right.
Yet.. Schiff has been completely inflexible when it comes to currencies. He has continued to call for a dollar collapse, and here we are.. on the threshold of a massive multi-year breakout. I have to wonder, what will Schiff say when the USD is in the 100s next summer?
Looking ahead
Friday will be largely about the monthly jobs data. Market is expecting net job gains of 240k, with a headline jobless rate of 5.9%. That does not seem overly optimistic, and I'd certainly expect a number at least in the 175-225 zone.
There are 3 fed officials on the loose, including the Yellen, who will be in Paris, with an entire pack of banksters.
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*I should add, all comments are most welcome. It has been a busy few weeks, not least because of the many messages/emails.
Goodnight from London
