Saturday, July 18, 2009

USDX : BATTLE AT '80' on the USDX

The Bulls are back at Wall Street. As risk aversion gives way to green shoot optimism, the safe haven USD has come off its recent highs.
The chart below shows a crossover of the 50day MA below the 200day MA.

That is clearly a BEARISH SIGNAL!

Could we retest recent lows on the USDX if the rally in US equities continues?

On the other hand, it will be interesting to see how the USD would react to sell off in equities; if such an event were to occur in the last quarter of this year.

The USD manages to retain it position as the currency of Central Banks for lack of a better alternative. The US government continues to pile on more debt and the FED keeps interest rates artificially depressed for now.

Fundamentally, the current monetary policy is clearly not sustainable, and its only a matter of time before the system starts to fall apart.
Imagine interest payments on US Govenment debt when interest rates start to rise! The market could start dictating interest rates to the FED sooner than you might expect!

Sadly, the guys at the helm, will listen to no one, and continue to borrow their way out of indebtedness!

Lastly, Guy Lerner quotes the views of David Rosenberg
(Chief economist and strategist for Gluskin Sheff and Associates) on the USD, and his general market outlook.
David Rosenberg is one 'expert' whose commentary I would pay close attention to!

Fundamental Driver For the U.S. Dollar's Downfall? :: The Market ...

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