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Currency

DXY Index Eyeing Test Of Two-Week Range Lows

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Posted by Daily FX

on Thursday, 09 November 2017 06:56

 

During a quiet like this one, traders may begin to experience déjà vu, that is, each day seems like a carbon copy of the last. Such has been the case for the US Dollar, as it remains within the two-week range carved out since the end of October. The range, between 94.29 and 95.17, has little reason to break one way or the other, given the lack of drivers on the immediate horizon.

Chart 1: DXY Index Daily Timeframe (July to November 2017)

DXY-Index-Eying-Test-of-Two-Week-Range-Lows body 110917 DXY

For now, particularly in the run up to the Thanksgiving holiday in the United States in two weeks time, the prospect of tax reform legislation will be the key source of influence for the US Dollar. Speculation around the Fed is lower down the totem pole as a major influence; markets have been pricing in a 100% of a 25-bps rate hike in December for the past two weeks.

As it were, the DXY Index remains between two key levels, 94.29 (the neckline of the inverse head & shoulders pattern, as well as the July 26 bearish outside engulfing bar high) and 95.17 (the July 20 bearish outside engulfing bar high). Given price action today across individual USD-pairs, in particular EUR/USDUSD/CAD, and USD/JPY, it seems the most likely outcome in the near-term would be for a test of the 94.29 range low in DXY.

See the full DailyFX economic calendar here.

 



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Currency

The Bitcoin Bubble Debate Rages On

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Posted by Mike Shedlock

on Tuesday, 07 November 2017 06:45

Screen Shot 2017-11-07 at 5.57.18 AM

Very Definition of a Bubble

On November 2, Credit Suisse CEO, Tidjane Thiam jumped on the bubble bandwagon with this statement: Bitcoin Is the ‘Very Definition’ of a Bubble.

From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” he said at a news conference in Zurich Thursday. He added that in the history of finance, such speculation has “rarely led to a happy end.

That's a rather curious definition of bubble. Using the same rationale, every financial instrument meets the requirement. The only reason to buy any stock or bond is to make money.

Realistic Bubble Definition

Wikipedia Definition: "An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future. Asset bubbles date back as far as the 1600s and are now widely regarded as a recurrent feature of modern economic history Historically, the Dutch Golden Age's Tulipmania (in the mid-1630s) is often considered the first recorded economic bubble."

It Cannot Be a Bubble

On August 15, John McAffee on Business Insider wrote: Here's why you can't call bitcoin a 'bubble'.



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Currency

The USD-Reports of its death have been greatly exaggerated

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Posted by Plunger

on Monday, 06 November 2017 06:56

In deference to Mark Twain, I will review the USD, general stock market, precious metals, the electric metals and various other topics.  In the past two weeks Rambus has been so prolific with such high impact charts that I find it a challenge to offer value added material so I offer charts with some different perspectives.

USD-No I Am NOT Dead Yet!

Currencies tend to be a very emotional subject. I try to be objective when analyzing them, sticking to the language of the market and it’s message.  It is always important to guard against the gold bug narrative, it can even influence our views of currencies.  Demanding posts insisting the USD is toast and immediately headed towards history’s ash heap seem closely related to this gold bug narrative.  The USD has spent the first 8 months of 2017 in a well defined downtrend, however it does not appear to be in a death spiral.  Actually the shouting and insistence that it must continue down has been a fairly predictable sign that its move downward was reaching its limit.  The dollar may have now completed a base and is set to continue its move higher.  This is not dogma as it could reverse downward, but for now it’s making all the right moves if the trend is higher.

Please review Rambus’ October 25 post on the USD as there is no other finer analysis anywhere:

I have often made the point that we are in a post bubble contraction.  It began with the financial crisis in 2007, however the central banks of the world and their interventions have truncated the natural corrective process and re-inflated the bubble due to financial engineering.  Ultimately,  if robust growth is to ever return to the world’s economies the PBC must be allowed to do its work in de-levering balance sheets.  Historically in the previous 5 episodes over the past 340 years, PBCs have taken 15-20 years to accomplish this.  So this is a slow process and the 8 month downtrend of the USD in 2017 could just be a little wiggle that turns out to be just a correction in an ongoing up-trend.  Time will tell of course.  In a PBC, the senior currency becomes chronically strong and acts as a magnet  attracting capital flows from around the world.  Over the past year this economic principle has been very hard to accept, however it may be getting ready to reassert itself.  I personally don’t trade currencies, however I watch them since they drive asset classes and knowing their trend gives us a clue of where these assets will themselves trend.

It appears we are at a crucial point in currency markets as the USD is beginning to reassert itself.  Lets look at the various currency charts vs the USD:

Euro- H&S neckline now broken:

sc-549

Canadian Dollar– The ultimate resource currency



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Currency

Jack Crooks: Hawks Unleashed Could Rock The Markets

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Posted by Jack Crooks - Currency Currents

on Friday, 03 November 2017 07:15

Tuesday 31 October 2017

Quotable

“ For theories and schools, like microbes and corpuscles, devour one another and by their strife ensure the continuity of life.. ”

                                                                                                                                                           __ Marcell Proust

Commentary & Analysis

Hawks unleashed could rock the markets

Screen Shot 2017-11-03 at 7.26.05 AM

Run pug run; hawks are in the house!!

The chief hawk in this narrative is Stanford Economics Professor John Taylor ( JT );  aka the creator of the Taylor Rule for monetary policy. Should President Trump pull a surprise out of his hat this week ( Would it be a surprise if President Trump didn't surprise??), and appoints JT head of the US Federal Reserve Bank the market will most likely get rocked in a big way as the monetary hawks emerge from their well guarded cages..

According to the Taylor Rule, the current target for the fed funds rate should be about 2.94%% instead of the paltry 1.15%% it is now. Mr. Taylor's appointment wouldn't suggest an immediate 200 basis point rate hike from the Fed; but it would suggest future rate hikes will be faster and more furious than now anticipated.

Thus , here is how the market would likely react:



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Currency

Why Is Bitcoin a Big Deal?

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Posted by Of Two Minds - Charles Hugh Smith

on Wednesday, 01 November 2017 06:32

Centralized banking and all other forms of intermediary rentier skims are presented as solid. If history is any guide, these supposedly solid entities may well melt into air.

Why is bitcoin considered such a big deal? Why has it grabbed so much mind-share, and why is it skyrocketing? And why is the cryptocurrency sector going bonkers?

coindesk10-30-17

The short answer is that cryptocurrency is the first major innovation in money in 300+ years, back when central banks first emerged in the late 1600s as centralized clearing houses for international payments and sole issuers of national bank notes/currency.
(Those who trace central banking to the Bank of Amsterdam's founding in 1609 might say it's the first major innovation in 400 years.)
Why is it an innovation? There are four basic reasons:
 
1. It's a form of private-sector issued money. It is not issued or controlled by any government or central bank.
 
2. It is structured in a completely different manner than conventional central-bank issued currency: it is a digital form of money that is issued as payment for those who maintain the database (the blockchain) on their privately owned computers. Since the blockchain is distributed over numerous computers, it is decentralized and distributed rather than centralized.
 
3. It enables trusted transactions between parties without requiring the services of an intermediary, i.e.a bank which acts as a trusted clearing house for transactions.
 
4. In the case of the first cryptocurrency, bitcoin, its issuance of tokens (coins) is limited by its design to 21 million coins. No central authority can issue more bitcoins, nor does the structure of the bitcoin blockchain allow for further issuance.
 
To grasp the significance of these four characteristics, we have to go back to the early history of modern capitalism.
 

 



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