U.S. Dollar Index Enters Downtrend

After failing to take out its March highs on its most recent rally, the US Dollar index has since broken below its recent lows and entered into a new downtrend. The Dollar index also recently broke below its 200-day moving average, which is another negative technical sign.

Comments

[RiskReturnO...:]

Excellent. Explains the recent sector rotation -- long XLE (energy) as dollar weakens, short XLY (consumer discretionary) as consumers pay higher gap prices at the pump leaving them with less disposable income to spend at NKE and other discretionary places.

May 12 04:07 PM

[Roger Knights:]

Another sector that's started rotating is Gold, which jumped $10 today.

May 12 04:30 PM

[DONE_SONZ:]

Just as expected.

May 12 04:40 PM

[Andreas:]

business.timesonline.c...

May 12 05:58 PM

[marketman54:]

You can't print $7 trillion and not have this happen. We will be in for some major inflation in the next 6 to 12 months. There is nothing that Bernake will be able to do to stop this beast.

May 12 10:20 PM

[Moon Kil Woong:]

Marketman54. you are absolutely right. Well, Bernake can start fighting this beast by first stopping or reversing his gambit of blowing up the Fed's balance sheet and backstop guarateeing just about everything on the planet.

Next up, it seems the investment houses (oops I mean the bank holding companies) will get to jump into the fray by trying to float billions in corporate and bank bonds before inflation and interest rates spike. No wonder even Microsoft is trying to get present day cash at low rates. Borrowing costs are going no where but up.

My suggestion to people, refinance while you can. Don't expect a lot lower rates to do it tomorrow. It won't come.

May 12 11:07 PM

[MarvinMBA:]

This is just the beginning of the end of US Dollar Supremacy. I'm afraid that this downdraft is going to trigger a exit from the Dollar Reserve world that has existed up until now. Asian currencies are going to be in vogue in the future. The Swiss Franc is going to get some positive play and Gold is going to gradually move up from here. MarvinMBA

May 13 12:10 AM

[MarvinMBA:]

When inflations starts in earnest...by the end of the year think Swiss Franc, Canadian Dollar and the Aussie Buck...trading currencies could help preserve your portfolio because the market is also going to take a few hits from here. Our country is in deep Szzt for sure IMHO and unless the money machine stops were all going to pay a price that will kill us...another drop on the market and the dollar dropping too...how much more can we take????????????????????

May 13 12:15 AM

[Sasha B:]

First of all I'm no technical analyst, so you are looking for one ignore the rest of my post.

USD made higher high in March and failed to break it so far, but on the other hand December low is still a resistance level and I don't think it's a downtrend until USD breaks below 79. I say USD is on sale but it while it lasts.

I don't know what sector rotation is that RiskReturnOptimizer is talking about, but dollar has been declining since March and XLY is up 40% since it's March lows.

So far it looks that one can print money non-stop without any inflation in sight. CPI is out on Friday let's hope it's going to be inflation not deflation.

May 13 12:18 AM

[watmough:]

Just look at the 5 year trend for the dollar against the AUD or CAD. We bounced up sep 2008, we'll bounce right down again.

Is it any more complicated?

May 13 12:20 AM

[silverwood:]

As a far as the dollar falling one must keep in mind that it is measured by a basket of currencies. The Euro is the biggest weighting so eur/usd cross is key. As far as a measure of purchasing strenght all major currencies have been inflating so the inflation coming will be global in nature. Will the Fed try to support the $US with allowing interest rates to rise? I doubt it...got gold/silver?

May 13 01:20 AM

[Dora Doggins:]

It seems George Soros is Obama's true handler. If he is shorting America, so should you. How do you invest in the currency when the the president's former church of 20 years is Black Liberation Theology whereby the world's economy is a zero sum game and America has too much? Remember, his biggest contributor was (allegedly) George Soros. His Preacher said we should sing "God D**m America". He started his political career at the home of a man, Wlm. Ayers who said the ultimate takeover of America would require the death of about 25,000,000 resistors. Obama has not made a single mistake. Just don't roll up your sleeve at vaccination time.

May 13 09:09 AM

[Kirill:]

The dollar is weakening, but it is not a sell yet.

May 13 09:37 AM

[User 357705:]

Bye bye USD!

May 13 11:02 AM

[FiaPoko:]

And don't forget your tinfoil hat to keep the CIA mind control rays out!


On May 13 09:09 AM Dora Doggins wrote:

> It seems George Soros is Obama's true handler. If he is shorting
> America, so should you. How do you invest in the currency when the
> the president's former church of 20 years is Black Liberation Theology
> whereby the world's economy is a zero sum game and America has too
> much? Remember, his biggest contributor was (allegedly) George Soros.
> His Preacher said we should sing "God D**m America". He started his
> political career at the home of a man, Wlm. Ayers who said the ultimate
> takeover of America would require the death of about 25,000,000 resistors.
> Obama has not made a single mistake. Just don't roll up your sleeve
> at vaccination time.

May 13 01:44 PM

[conceptwizard:]

This will have a devastating impact on economic recovery if the dollar goes south, and if it loses it dominance as a world currency, the quality of life will change forever in the US.

May 13 01:46 PM

[EJL:]

Everyone shout "Fire!" in a crowded theater at once! You guys talk about inflation without looking at the drivers. Inflation equals increasing price levels for goods and services. If the economy is weak, labor mkt weak, and end demand is weak, who can afford to raise prices? All the money that was "pumped" into the system is mostly sitting with the Federal Reserve as banks' excess reserves. Why should they move those funds when they get paid interest and loan demand is off? The transmission mechanism for inflation will occur when that money starts being lent.

May 13 02:07 PM

[Daniel Harr...:]

At least someone knows their facts.


On May 13 02:28 AM maxe wrote:

> As usual you are mistaken, Gold and silver failing to to make substantial
> gains above their highs tells us that deflation is a bigger risk
> than inflation at this stage.
>
> When this rally comes to an end expect the dollar to rally to new
> highs, bringing the market down like a stone.
>
> This rally is an inflation inspired rally that gives us an insight
> into what will occur in a year or two's time when the market bottoms.
>
>
> This rally is also an indication of China selling US $ and buying
> commodities to restock for the near future and to hedge against the
> "eventual" decline in the US $.
>
> Just to remind you, the US$ was weakest at the top of the bull market
> and so was gold at it's strongest................ a long, hard think
> about that!

May 13 02:18 PM

[User 357705:]

The dollar bugs are having another fit!

May 13 03:01 PM