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Friday, January 27, 2017 8:12:52 AM
Is It Time To Buy The Dollar Again?
* January 26, 2017
On a cyclical basis, the dollar will make new highs in 12-18 months. However, short-term considerations remain complex.
Our FX strategists remain wary of betting on a strong dollar against the euro and the yen in the coming weeks, at least not until U.S. bond yields drop below fair value on our gauge. This would better reflect rising trade and geopolitical tensions between the U.S. and China from the new Trump administration.
For the next few weeks, a dichotomy could emerge between the narrow dollar index (DXY) and the broader trade-weighted measure. While lower U.S. bond yields will be supportive of the euro and the yen, they could do very little for EM and commodity currencies. With EM and commodity currencies highly leveraged to global trade and the Chinese economy, they will be vulnerable to any flare up of tensions between China and the U.S.
Bottom Line: The dollar correction is advanced but is now likely to become more differentiated. Tensions created by a protectionist and bellicose Trump are likely to push U.S. bonds into expensive territory. While the attending bond rally could support the euro, the Swiss franc and the yen against the dollar, these same tensions are likely to lift the dollar against EM and commodity currencies.
https://blog.bcaresearch.com/is-it-time-to-buy-the-dollar-again
• DiscoverGold
Click on "In reply to", for Authors past commentaries
* January 26, 2017
On a cyclical basis, the dollar will make new highs in 12-18 months. However, short-term considerations remain complex.
Our FX strategists remain wary of betting on a strong dollar against the euro and the yen in the coming weeks, at least not until U.S. bond yields drop below fair value on our gauge. This would better reflect rising trade and geopolitical tensions between the U.S. and China from the new Trump administration.
For the next few weeks, a dichotomy could emerge between the narrow dollar index (DXY) and the broader trade-weighted measure. While lower U.S. bond yields will be supportive of the euro and the yen, they could do very little for EM and commodity currencies. With EM and commodity currencies highly leveraged to global trade and the Chinese economy, they will be vulnerable to any flare up of tensions between China and the U.S.
Bottom Line: The dollar correction is advanced but is now likely to become more differentiated. Tensions created by a protectionist and bellicose Trump are likely to push U.S. bonds into expensive territory. While the attending bond rally could support the euro, the Swiss franc and the yen against the dollar, these same tensions are likely to lift the dollar against EM and commodity currencies.
https://blog.bcaresearch.com/is-it-time-to-buy-the-dollar-again
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
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