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Currency

US Dollar Outlook

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Posted by Jordan Roy-Byrne

on Friday, 13 October 2017 07:02

The US Dollar Index (USDI) bottomed in September a hair below 91.00 and has recently rallied up to 94. We were skeptical Gold would break its 2016 highs as it failed to show strong performance in the wake of the USDI’s decline to new lows. The market was discounting a coming rebound in the USDI and/or future weakness in Gold. In any event, although the USDI broke key levels which leave its bull market in question, it became quite oversold and was due for a sustained rebound. 

First let’s look at the big picture with a monthly bar chart and the 40-month moving average. As you can see, the 40-month moving average has been an excellent trend indicator and especially since the mid 1990s. The USDI lost that support in July and in addition, made a lower low. Neither happened during the previous two bull markets. 

Oct122017USDm

When comparing the bull market to the recent two bull markets we find that the recent correction began at the point at which the other two bull markets advanced toward their inevitable peaks. 



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Currency

The US Dollar reserves the right to grow

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Posted by RoboForex

on Tuesday, 10 October 2017 06:34

The US Dollar is still interesting and attractive to investors, despite the statistical fluctuations.

The US labor market statistics in September was surprising, but not as impressive as it might have been.

Improvements in the Unemployment Rate and the Average Hourly Earnings will allow the US Federal Reserve to tighten its monetary policy.

The first October week was quite effective for the American Dollar. The main currency pair updated the low at 1.1668 it reached on August 17th and then was corrected bit, but made perfectly clear that there might be more declines. If there is a reason, the “bears” will come quickly.

The US labor market statistics in September is astonishing. The numbers were expected to be quite high, but the market was really surprised by the readings it saw. The Unemployment Rate was 4.2% in September after being 4.4% the month before. This is the lowest value of the indicator since 2001, over 16 years. It’s highly unlikely to be a mistake: the Participation Rate increased up to 63.1% against 62.9% in August. It appears that the labor market is really feeling good.

Another positive thing is the growth of the Average Hourly Earnings. In September, it expanded by 0.5% m/m after adding 0.2% m/m in the previous month and against the expected reading of 0.3% m/m. On YoY, the indicator increased by 2.9%. That’s a very good result.

However, this is where good news ended. The Non-Farm Payrolls decreased by 33K, although it was expected to expand by 82K after adding 169K the month before. The report says that the decline in some industries likely reflected the impact of hurricanes Irma and Harvey, which made the country nervous last month. But if one takes a closer look at the NFP numbers published in July and August, one can see that the indicator was revised downwardly twice. If one adds the September reading to this period of time, the overall picture won’t be very promising. Still, the fact that the US labor market is usually pretty stable makes all above-mentioned numbers look not so horrible. It means that the September decline will be eliminated in October or November, unless there are some serious stresses of course.

The Unemployment Rate and the Average Hourly Earnings data shows that the inflation in the USA is rising. This, in its turn, supports the Federal Reserve in its intentions to tighten the monetary policy. After they published the September reports on the employment, expectations relating to the key rate increase in December 2017 increased up to almost 80%, according to the CME futures. This was the reason why the USD rose.

EURUSDH4

 Click Image For Full Size

The best way to see investors’ attitude to the USD is the EUR/USD pair behavior. Let’s take a look at the H4 chart, which shows the downtrend. The key element of the current movement is the price’s consolidating around the support level, and one of the most possible scenarios implies that it may return to the upside border of the descending channel. One of the targets close to the resistance level is the retracement of 61.8% at 1.1875. If this scenario continues, we can expect the price to rebound from the upside border and resume falling to reach 1.16. also, we shouldn’t exclude a possibility that the instrument may break the current resistance level and start forming a new rising impulse. The main short-term target of this impulse will be the local high at 1.2092.

Author: Dmitriy Gurkovskiy, Senior Analyst at RoboForex

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Attention!

Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.



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Currency

Bitcoin after Rebound

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Posted by Mike McAra - Sunshine Profits

on Friday, 06 October 2017 09:16

Bitcoin was spoken about at the Sohn Investment Conference. On CNBC we read:

Dan Morehead, chairman of digital currency exchange Bitstamp, said bitcoin and other digital currencies will likely become assets serious investors will want in their portfolios.

"Bitcoin's essentially going to revolutionize currency, or money," Morehead said on Wednesday at the Sohn Investment Conference in San Francisco, which was attended by portfolio managers and asset allocators.

"If it does work, the upside is so high, it's a rational, expected thing to have in your portfolio," he said.

First of all, Morehead is obviously interested in the success of Bitcoin as he heads up a digital currency exchange. So, you have to take his assertions with a pinch of salt. Having said that, there are parts of this assessment we agree with. The most important one might be that “serious investors” will indeed want to hold Bitcoin. Actually, they might want to hold Bitcoin already. While it might not be public knowledge, it might be the case that as much as 5% of hedge fund managers have small stakes in Bitcoin. At the same time, only 0.5% of hedge funds would actually hold the currency. This might be indicative of the interest of “smart money” in Bitcoin. Hedge funds might be very interested in including Bitcoin in their portfolio but they either don’t have the technical means to do so or are wary of unclear legal status of the currency. If you recall what happened with gold after the first large gold ETF was set up in 2004, this might be the kind of thing to expect from Bitcoin. So, if we do see a Bitcoin ETF, we might see a lot more buying fueled by people who currently want to hold Bitcoin but cannot.

For now, let’s focus on the charts

bitcoin-alert-2017-10-05-01

 

Bitcoin after Rebound



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Currency

Mr. Market, what are you telling us about the dollar?

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Posted by Jack Crooks - Currency Currents

on Thursday, 05 October 2017 01:48

Black Swan Currency Currents

 

Quotable 

“Be ready to change your strategy with the environment. (The environment, not your strategy, is the data).” 
__Mark Weinstein

Commentary & Analysis

Screen Shot 2017-10-05 at 1.31.33 AM

 

Screen Shot 2017-10-05 at 1.27.11 AMWatching the currency market over the past couple of days has been akin to watching paint dry. In my case the paint drying analogy is probably because I have a few different scenarios in my mind and find all of them plausible (see, Orwell’s Doublethink lives in the minds of traders). My continuous question as I watch currency price action: Mr. Market, what are you telling us about the dollar?

Three simple scenarios now rattling in my head:

1. The correction is over the dollar is heading for fresh new lows as measured by the US dollar index. This is not my favorite scenario now, primarily because the dollar is getting yield support.

US dollar’s relative yield has risen as US rates across the curve have risen. Over the intermediate-term rising relative yield has correlated well with either dollar support, or a rally.

Below is a chart showing the 2- and 10-year yield spreads Eurozone-US, United Kingdom-US, Australia-US, and Canada-US. Relative yield has been moving in favor of the US against the pack: 



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Currency

Why Precious Metals Are The Better LONG-TERM Store Of Value Over Bitcoin

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Posted by Steve St. Angelo - SRSrocco Report

on Wednesday, 04 October 2017 06:16

Many precious metals investors are starting to question whether gold and silver are still the best store of wealth in the future.  The reason Alternative Media community is starting to have doubts about their gold and silver investments is due to the rapidly rising value of the cryptocurrency market.  Also, a number of precious metals analysts have jumped ship and are now only supporting the cryptocurrencies as the next best thing since sliced bread.

While some precious metals analysts now believe that Bitcoin and cryptocurrencies are the better assets to own in the future rather than gold and silver, I do not belong to that group or mindset.  I differ from these analysts based upon my energy analysis.  Unfortunately, these analysts that promote cryptocurrencies as the “New” digital assets of the future, are ignorant about the Falling EROI – Energy Returned On Investment, or are clueless to the dire energy predicament the world is facing.

I’ve received many emails from followers who wanted to know my opinion on the matter of “Precious Metals vs. Cryptos.”  So, I thought it would be a good idea to discuss the fundamental reason why I believe the precious metals are still the KEY ASSETS to own in the future.

GOLD vs. BITCOIN:  Price & Monetary Traits

While the gold price has increased significantly since 2000, Bitcoin’s price has gone up exponential in a short period.  The amount of gold that can be now purchased with one Bitcoin has increased dramatically from less than a half ounce at the beginning of 2017, to 3.4 oz currently:

Bitcoin-vs-Gold-Oz



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