The macro implications of USD climbing any higher ( and I mean – literally…..a pip or two higher ) are considerable.
If you f0llow / track “$dxy” ( normally I don’t – but given the current market conditions…it may provide a “smoother view” of general USD strength/weakness) the index is literally ( at this moment ) pushing at the highs from last year at 84.10
The implications would be a “higher high” – and essentially a break of the consistent downtrend from 2008.
The implications are truly alarming.
Personally ( as I’ve come to understand markets will always look to “stretch” as far in each direction as possible before correcting ) I really don’t see it happening, as the implications of a “strong dollar” would seriously impede any idea of “recovery” ( if in fact you believe in “the recovery”…..we all know I don’t) so…….at best – we watch the level here today, and put ol Kong to the test.
Obviously I am salivating to get short USD – yet again.
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Unreal – I am commmenting on my own post before it’s even been read…..
$dxy hits “84.09” here this a.m – Can you believe it???……00.01 from taking out the old high.
if we “stick and turn” here – ( as I imagine ) you’d have to agree – these markets will push you as far as possible in either direction in order to take you out.
That’s about as close as I’ve ever seen – literally…..00.01
Gotta love it.
Just saw a cot reading of 97 yen bears to 3 bulls. Gee wonder how this will. We could see the dollar and market fall today. I’m positioned lightly as such now.
Ya the market has to squeeze every last player before it moves hey. I guess that’s why I focus on small positions first and no stops so I can take the pain and then add and then kill
Lookin good man – I trade in a very similar fashion – small orders “around the horn”…no stops.
I’ve tried twice to jump “long Yen” and have more or less broke even on the trades in general – but watch like a hawk, as it “has to correct” at some point. I think it will be a wopper – just need to be patient.
Ya if 97 percent of traders are short yen I can’t even imagine how hard it will rip the other way once it turns
Exacto!
“I really don’t see it happening, as the implications of a “strong dollar” would seriously impede any idea of “recovery” ( if in fact you believe in “the recovery”…..we all know I don’t)”
You may be ruling out the possibility of a rally in BOTH the dow and the dollar.
(Such as in 1979-1985 and 1995-2000)
http://static3.businessinsider.com/image/5150b4df6bb3f7051f00002a-940-705-618-/moneygame-cotd-032513.jpg
These certainly were times of a booming economy along with a strong dollar. The US could see a lot of capital inflows coming from the Japanese and especially Europeans and that applies to the markets as well as the currency.
Audjpy looks like its about to break its multi month trendline. It’s on!
Im thinking the complete opposite – an environment where both the USD as well as U.S equities fall together.
As nutty as it sounds – I’m “still” looking at a scenario where we see USD head down and JPY move up…….it would be absolutely wacky (in that months / years ago I would never have these opposing trades) but considerations of short AUD/JPY as well long AUD/USD come to mind.
Crazy I know – so we will see.
I agree w yen up and I am kind of warming up to dollar down w the market as we have already seen major dollar strength w market strength. Correlations are not rules. I always try to keep that in mind. It’s hard to allocate the term ‘safe haven’ to any currency these days w all the juicing
Well said good man…..it remains to be seen where “risk off” currency action will go during the next period of “aversion”.
Yen takes big infows during “risk off” under normal conditions ( as Japan’s debt is publicly owned and in little risk of default – ever ) so with the “elastic band” stretched so far in one direction “anyway” – Wow!
My thoughts being ( as the entire planet hastily diversifies out of USD ) – the next time around ( coming soon to a theatre near you ) JPY is literally going to explode higher in comparison to moves in USD – with respect to safe haven flows.
As a fundamental trader – I’m not sure what it would take to have me “get long USD”……but will consider it sometime late June / early July I imagine – when USD hits it’s 3 year cycle low.
Interesting notes. Thank you!