Dollar On Shaky Ground
Dollar bulls may be few and far between, as a potential rate hike has now become a "buy the anticipation, sell the rumor" play. Even the most hardcore bulls like Marc Chandler has taken a step back to rethink the dollar.
After making a series of lower highs and lower lows, the dollar could very well test the lows near 93; while a series of resistance levels could snag any upside potential.
Last night, a few BoJ officials wanted to move the markets with their words. For some unknown reason, BoJ Governor Kuroda blurted out that the yen was "very weak" as to lead the market to believing it was too weak.
This is interesting on a few fronts:
One, a weaker yen was modus operandi numero uno. It was not "very weak" when it was down 25, 30 or 35 percent, but that 40 percent mark is the sweet spot.
Two, this comes at a very interesting point, following the G7 meetings. The market expects the Fed to increase rates solely based on non-farm payrolls and nothing else because, frankly, the data out of the US is borderline, if not outright, recessionary.
The Fed will never hike rates into a stronger dollar. As I said many of times, the Fed will work its way into the currency war by taking down the dollar. But much like their gold charade, the Fed has someone else do their dirty work.
The dollar is typically inverse of the yen, and by increasing the yen the dollar is almost guaranteed to fall by default. A falling dollar - in theory - supports the Fed's inflation projections.
It also gives the Fed more breathing room to throw around the idea of a rate hike.
Please visit my linked idea on the dollar. It is trading very much between S/R, while maintaining the downward trajectory.
Still projecting the DXY with an 80-handle by mid-summer.
After making a series of lower highs and lower lows, the dollar could very well test the lows near 93; while a series of resistance levels could snag any upside potential.
Last night, a few BoJ officials wanted to move the markets with their words. For some unknown reason, BoJ Governor Kuroda blurted out that the yen was "very weak" as to lead the market to believing it was too weak.
This is interesting on a few fronts:
One, a weaker yen was modus operandi numero uno. It was not "very weak" when it was down 25, 30 or 35 percent, but that 40 percent mark is the sweet spot.
Two, this comes at a very interesting point, following the G7 meetings. The market expects the Fed to increase rates solely based on non-farm payrolls and nothing else because, frankly, the data out of the US is borderline, if not outright, recessionary.
The Fed will never hike rates into a stronger dollar. As I said many of times, the Fed will work its way into the currency war by taking down the dollar. But much like their gold charade, the Fed has someone else do their dirty work.
The dollar is typically inverse of the yen, and by increasing the yen the dollar is almost guaranteed to fall by default. A falling dollar - in theory - supports the Fed's inflation projections.
It also gives the Fed more breathing room to throw around the idea of a rate hike.
Please visit my linked idea on the dollar. It is trading very much between S/R, while maintaining the downward trajectory.
Still projecting the DXY with an 80-handle by mid-summer.
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