Saturday, 17 October 2015

US dollar is driving ALL global markets. Bottoming against all "other stuff"? eg. stocks, EUR, and Gold?

The US dollar is driving global markets. ALL global markets. It's an important point to understand, especially right now. This post shows charts for three markets to briefly illustrate the point, but more broadly, my view is that USD is bottoming against pretty much all "other stuff". Yes Virginia, a period of USD strength against all other stuff would likely coincide with a period of global debt deflation. Don't be blind to the possibility.

Stocks first. I believe the S&P 500 is nearing a big secondary peak. In other words, it is topping against the US dollar. Which would of course mean that the US dollar is bottoming against stocks. Not many people look at it that way, but it's useful to do so.

Currencies next. EUR/USD is by far the biggest component used in calculating the US dollar index. The big picture trend is down, and EUR/USD has turned lower from trend line resistance. I believe this decline will extend. In other words, USD will rally against EUR.

Finally Gold. It's at a point now where I believe at least a near term decline is likely. I've had a target of 1250+ for Gold for some time. If it beats last week's high that target will still be achievable, but I think that is a huge IF. For now, against last week's high, look for USD to rally against Gold.

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