The Dollar Is A Beast - Higher Highs To Come

Oct. 17, 2016 6:04 AM ETInvesco DB USD Bullish ETF (UUP), UDN, USDU


  • The long consolidation in the greenback.
  • The dollar has been making higher lows and higher highs since May.
  • The technical breakout was significant.
  • Where will the U.S. currency go - short, medium and long term?
  • Regardless of the election, the dollar is eventually heading higher.

The U.S. dollar broke above a significant level of technical resistance after seven months of consolidating between 92 and 97.61 on the November dollar index futures contract on Tuesday, October 11, 2016. The dollar did not wait for two significant events. First, the November 8 election that will decide the next President of the United States has weighed on the greenback. Memories of a Brexit vote in June that drove the pound from $1.50 to under $1.30 against the dollar are an example of what a surprise election result can do to a currency market. However, the case may be that when all is said and done, the election results will trigger a rally in the dollar regardless of who wins the contest.

The second momentous event for the dollar will be the last meeting of the Federal Open Market Committee of the U.S. central bank. At last glance, over 60% of the market believes that the Fed will hike rates by 25 basis points at their December meeting, down from 80% in the prior week. The Fed minutes released on October 12 were surprising in that while the market knew there were dissenters at the September meeting, there was no indication of whether the Fed is ready to act in December. In fact, the Fed changed its language from "imminent" to " reasonably soon" when it comes to the next rate hike. In Fed speak; there is a world of difference between the two. In a comment on another article I wrote last week, one commenter suggested that the next words of choice for the central bank will be "definitely maybe." With interest rates in negative territory in Europe and Japan, the odds are that any interest rate hike would fuel the dollar to rise and head for above the

This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

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His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website and blogs on his own site He is a frequent contributor on Stock News-

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