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U.S. Dollar Index

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beware the NFP 🤕  

This is something one of the DailyFX analysts provided.  He also spoke a little about EURUSD:  Find the full article here: EUR/USD Eyes Fresh Yearly Highs After Topside Break of Bullish

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Longer-term, if the Fed is able to increase price pressures but also leave rates near zero for longer, the policy would be negative for the dollar.

“What’s going to happen is when you have all the other central banks starting to pull back their stimulus, starting to show signs of tightening, the Fed is going to lag on that, said Edward Moya, senior market analyst at OANDA in New York.

“You’re going to see that interest rate differential not be in the dollar’s favor. It’s just providing a longer-term bearish outlook for the greenback,” Moya said.




Edited by dmedin
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The Fed's new policy mix would appear to have significant adverse implications for the US$. The US is a massive consumer of international capital through its twin (fiscal and trade) deficits. The Covid shock saw the US$ lose interest rate support for the dollar, the new Fed policy locks that in that loss and steers investors to expect lower real yields – not something that currencies usually like. All else equal, the US$ would appear to need to fall to entice foreigners into US assets.

The US is not only the most vibrant major economy, it also has an armful of tech leviathans changing the world and dominating global equity indices. The Fed’s policies have no great relevance for Amazon, Microsoft, Tesla etc but, in fostering periods of higher inflation, it is endorsing stronger economic growth which will broaden the attractiveness of US equities. With Japan’s economic revolution under Shinzo Abe having petered out before Abe stepped down for health reasons and with the ECB likely to take a year to complete its policy review – and biased to under-deliver, the Fed has added to US exceptionalism rather than detracted from it.

The new policy is not about creating inflation for its own sake. It aims to sustain the conditions that might be consistent with higher inflation; conditions which should support US corporate profits. None know how ‘hot’ a modern advanced economy needs to run before inflation becomes a problem. What is clear is that, in the US, the threshold is, probably well, above the average growth rate of the ten years pre-Covid (2.4%). The Fed know that monetary policy is nearing the limit of what it can achieve. They are effectively passing the baton to politicians and encouraging them, through fiscal policy, to have a go and they will.

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The world's hardly worth living in any more.

Anyway ... even although it looks like the dollar's rally is over, commodities are still down and so is the Euro and GBP.  Let's see if tomorrow presents a buy the dip opportunity.

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What shall we say, Veronica?  We're looking for the price to make a decisive rejection of the 200 EMA, as opposed to breaking through it (whipsawing), before we can say for sure that there is a trend and we commit our money.  🤓


US Dollar Basket_20200911_10.39.png

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Here is where the price is now (at the time of writing).

In the past, price has gone up and down.  From this point on, it may go up or go down.  Indeed, it is highly likely to go up and down, or down and up.

This has been today's expert market analysis from the DailyB0llocks.


US Dollar Basket_20200914_01.18.png

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Here's a good one for you Peregrin Took.  See, the lagging span is below the cloud, behind the current price and moving away from the candles; the Cajun chicken is below the ten-cans line, the cloud ahead is turning red again and you've got bearish candles.  So it is a short :)


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