Connecting The Dots

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Posted by Market Anthropology

on Thursday, 13 April 2017 10:56

Headed into what we anticipate will bring some fireworks to the currency markets this month, the US dollar index has again turned down modestly in the front half of this week. 

Screen Shot 2017-04-13 at 10.31.35 AM


Currently trading behind a series of lower highs and lows from this past December’s cycle peak, our expectations remain for a breakdown below the index’s long-term uptrend extending from the July 2014 breakout.


Over the past few months...

....contiinue reading and viewing 10 more large charts HERE



Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform

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Posted by Marc Faber va Mike Gleason

on Wednesday, 12 April 2017 07:10

101060441-92532219r.1910x1000Transcript Below:

Mike Gleason: Well, to start out here Dr. Faber, before we get into some other stuff I wanted to hear your comments on the state of the U.S. economy. Now, it appears the Federal Reserve has finally gotten serious about moving rates higher at least modestly. U.S. equity markets seem to be discounting that fact, focusing instead on the so-called Trump trade. Markets are pricing in a huge infrastructure spending program and tax cuts stimulates that could overwhelm any modest tightening at the Fed. Now that efforts to reform healthcare seem to be failing we expected some of the optimism surrounding president Trump's other initiatives would leak out of the stock market but so far that hasn't happened.

Stocks remain near record highs and there isn't a whole lot of interest in safe haven assets including precious metals. So, what are your thoughts here Marc? Is now a time to take some profits and move towards safety or is there still some good upside in equities?

Marc Faber: Well, I think that in terms of the economy I don't think the economy is as strong as people believe or as the statistics would show and recent trends have rather been indicating some weakness is auto sales, not a particularly strong housing market and we have several problems as a result of excessive credit. So, I think that the economy is not going to do as well as people expect and concerning the huge infrastructure expenditure that Mr. Trump has been talking about, it is about a trillion dollars over ten years, maximum. In other words, a hundred billion a year.

In China in 2016 in the first ten months the infrastructure expenditures were 1.6 trillion, in other words 16 times higher than what Mr. Trump is proposing. So just to put this in a perspective. Now throughout Asia and the emerging world there will be a lot of infrastructural expenditures in the years to come. The question is will stocks go up because of that, maybe some stocks will go up and some will not. So, we have to be now increasing the selective in what we purchase in terms of equities. My sense is that the economy in the U.S. is weakening and not strengthening.

Mike Gleason: It is also possible markets aren't responding to fundamentals and we ought to consider those ramifications. The advent of high frequency trading and massive intervention by central bankers could mean markets become more irrational than ever. It is possible for instance to see stock prices being bid higher despite slowing GDP growth, rising interest rates and congress failing to deliver fiscal stimulus here in the U.S. I mean, how artificial do you think markets are and to the extent today's markets aren't real, how much long will the central planners and bankers be able to maintain this illusion that they've created?



Canadian dollar to weaken as policy path diverges with US

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Posted by Anu Bararia

on Friday, 07 April 2017 07:41

The Canadian dollar will weaken over the coming months, pressured by an uncertain economic outlook and the prospect of higher interest rates in the United States even as the Bank of Canada stays on the sidelines, a Reuters poll showed. 

While the loonie may gain a little in the short term on expectations of stronger first-quarter economic growth in Canada, the survey of close to 50 foreign exchange strategists showed it will weaken to C$1.35 per U.S. dollar in three months and close the year at the same level.

It is already 3 % lower than at this time last year.

Even as the U.S. Federal Reserve raised rates in March - its second hike in three months - and plans to hike twice more this year, the Canadian central bank is not expected to boost rates until 2018. It cut them twice in 2015.

"It is essentially a policy differential story," said Shaun Osborne, chief currency strategist at Scotiabank.

"Some people have started ... thinking that perhaps with the Federal Reserve now appearing a bit more fully committed to raising interest rates, that may mean something for Canada in the near- to medium-term ... which I think is way too premature."

Even though respondents expected the loonie to rise marginally in one month to C$1.34 from Wednesday's close of C$1.3434, the forecast range remained wide, running from C$1.28 to C$1.39.

"We are possibly looking at the early stages of a renewed sell-off in the Canadian dollar in the next few weeks," Osborne said. "There is just a lot of uncertainty here at the moment that rather suggests to me, anyway, that some of the strength we have seen in the Canadian data over the past few weeks is probably not sustainable."

640x640-5 3Data from the Commodity Futures Trading Commission and Reuters calculations showed that speculators have increased bearish bets on the Canadian dollar to the most since March 2016.

Wells Fargo, the top forecaster in Reuters FX polls in 2016, expects the currency to weaken 5 % over the coming year to C$1.41.

Caution ahead
Despite a recent run of strong domestic data, Bank of Canada Governor Stephen Poloz has maintained a cautious stance on monetary policy, saying a premature rate hike could cause a recession in Canada as the economy has not yet fully recovered from the shock of weak oil prices.

The price of oil, one of Canada's key exports, at around $55 a barrel, is still down over 50 % from its mid-2014 high. Commodity analysts polled by Reuters are still unsure if output curbs by OPEC members will be enough to offset the increase in U.S. production.

That does not support Canada's highly indebted households that on an average owed C$1.67 for every dollar of disposable income in the fourth quarter, much of it because of cheap mortgage borrowing to chase ever-rising house prices.



Myriad of Signs

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Posted by Przemyslaw Radomski

on Wednesday, 29 March 2017 07:05

In yesterday’s alert we emphasized that the breakdown in the USD Index should not be trusted as it was not confirmed and there were several good reasons to think that it would not be confirmed. The breakdown is already invalidated and – again, as discussed yesterday – this is actually a strong bullish sign. Is the decline in the USD Index over and is the big slide in the precious metals sector just around the corner?

In short, that seems quite likely. Naturally, there’s much more to the precious metals market than just the USD Index and it’s prudent to analyze more factors than just this specific index. In other words, it is of utmost importance especially at this time, but there are many other important signs to keep in mind. Still, let’s start today’s analysis with the U.S. currency (charts courtesy of http://stockcharts.com).

1 fdfTCfC

In yesterday’s alert, we commented on the above chart in the following way:



Best Currency Positions For April 2017

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Posted by Seeking Alpha

on Thursday, 23 March 2017 07:28

saupload life 2Bin 2Bin 2Ba 2Blight 2BbulbSummary

Here is a new list ranking currencies based on relative purchasing power. Overvalued and the least undervalued currencies are at the top. The most undervalued currencies are at the bottom.

This list is combined with a list of currencies ranked on differences in interest rate with the US. Based on these numbers, I discuss some carry trades.

Finally, I will discuss developments and opinions for a number of currencies with relative purchasing power in mind.

....continue reading HERE


Some Thoughts About The Recent Price Action


Dollar losses appear to be part of a larger adjustment in the capital market.

Yellen, Dudley, a reversal higher in the price of oil, and the passage of healthcare reform by the US House of Representatives could help underpin the dollar.

The dollar bloc has lagged in recent days.

The gains the US dollar scored last month have been largely unwound against the major currencies. The dollar's losses against the yen are a bit greater, and it returned to levels not seen late last November.

The downdraft in the dollar appears part of a larger development in the capital markets that has also seen the US 10-year yield slide 25 bp in less than two weeks.

...continue reading HERE



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