U.S. Dollar Quietly Surging Higher

Includes: UDN, UUP
by: Emerging Money

By Tim Seymour

The U.S. dollar is quietly surging higher, and this morning kissed the closing level of July 24 last year, which marked multi-year highs. The dollar (NYSEARCA:UUP) (NYSEARCA:UDN) level of greater than 84 on the DXY takes you back to July 2010. What's different about this move is that this is a dollar move due to built-in fundamentals, not a flight to quality. Even the move of July 24 last year takes you to the nadir of European Union sentiment right before the European Central Bank went on a verbal offensive to shore up confidence.

This dollar move is built off of rising rates, a falling deficit, improved consumer spending, and a central bank (Federal Reserve) that will be less accommodative than other central banks into the next couple of years -- because they can be. Note that the chart below shows a channel the dollar is clearly breaking out of, but the channel has always been higher off the decade-low move.