The long US dollar trade is the most unloved trade of the year. Everybody and his brother is expecting the dollar to drop so it does not. Good news in the markets and economy, and strong growth ahead, occur in concert with a lower dollar but that is replaced with sketchy data and a geopolitical swamp of despair.
The world has changed a lot after a decade-plus of central banker intervention in markets. The Federal Reserve and other global central bankers have destroyed all price discovery and the business and economic cycles with their obscene Keynesian money-printing. The world is awash in liquidity (until the cracks shown in the repo market over the last week or so) and that money has been used to buy stocks, bonds, real estate, art, collectibles, antique cars, vineyards, etc..., creating bubbles across all asset classes.
The party continues as long as global investors remain confident that central bankers can always save the day. When confidence is lost in the Fed and other central bankers, it's over. It was surprising at the end of last year when Chairman Powell raised rates only to do a 180-degree turnaround at the start of this year taking a dovish stance. The Fed is obviously floundering but the market participants continue to believe in their power to print money.
President Trump is under siege with a new scandal as the corrupt crony capitalism system in America is on its last legs. It is interesting to watch crony capitalism crumble week after week. The two corrupt American political parties are being exposed in the Ukraine scandal. You do not want to hitch your wagon to either of the parties. The democrats and republicans are two sides of the same corrupt coin; demopublicans and republocrats.
In this Ukraine dust-up, King Donny allegedly was bribing the Ukraine president by withholding US military aid unless the new president conducted an investigation into democrat presidential candidate Joe Biden and his son Hunter Biden. Donny wanted dirt on Biden so he could easily defeat him in the election next year. On the flip side, when Biden was vice president under Emperor Obama, he withheld aid until a Ukrainian politician, that was investigating Biden's son, was fired, which occurred. Dirty politicians and filthy corruption is standard fare these days.
Humorously, Trump was making the case that he did something similar to Biden but claims his illegal acts were more pure. Crony capitalism destroyed the United States over the last five decades. The wealthy elite class raped the country for all its worth destroying the middle class so they could receive higher stock prices and more money. What greedy b*stards.
America will likely be a socialist-lite government in 10 or 20 years. The recession is upon us now and once that hits it will morph into a class war in the US. There will be lots of turmoil for a decade or two similar to the 1960's race riots. History often rhymes. So there is lots of fun to look forward to in the years ahead; collapse of crony capitalism, recession, class war, and ultimately a more socialist-style government.
President Trump plans to emphasize the destructive nature of socialism during his election campaign over the coming months. This is funny because if you ask they average American what socialism is they will look at you with blank stare; some will say it may have to do with social media. The huddled masses know they have been screwed since the Great Recession a decade ago while at the same time watching the rich become filthy wealthy courtesy of the central banks. Average folks want their share now and do not care if you call it socialism or any other term.
In truth, all government systems fail after 200 to 250 years, or sooner, since humans are corrupt and their acts are non-transparent. It's not rocket science. The corrupt politicians, investment bankers and corporate executives sold America down the river over the last few decades. The non-transparency in government policy and financial transactions and connections make it easy for the wealthy to steal effortlessly off of society.
For the new impeachment battle with the Ukraine scandals (both Trump's and Biden's dishonesty and perhaps illegal acts), if Teflon Don weathers the storm and overcomes the impeachment problem, the dollar would likely bounce strongly. Central bankers around the world continue to debase their currency, the race to the bottom is well underway a la the 1930's, and creates dollar buoyancy.
Comically, democrat presidential candidate Elizabeth Warren is the winner in all this drama. Plus, she wears a skirt. Women elect the leaders since they out vote the men by 60/40 or 55/45 (attendance at the polls). The ladies were likely ready for a woman president last time but could not vote for Hillary Clinton due to her corruption. Thus, the orange-headed bloviating carnival clown defeated the two-bit liar in a pants suit. The women may be ready to vote a woman in as president come November 2020 only about 13 months away.
All that geopolitical mumbo-jumbo and palace intrigue aside, the dollar pegged 99 this week at the upper trend line. The blue upward-sloping channel remains in play and price may want to relax back down to the lower rail in that 96-97 area. The red rising wedge pattern is ominous since the collapses from rising wedges can be quite dramatic. The red lines show negative divergence in play so the chart is very agreeable to a pullback in the weekly basis. However, as always, the daily news flow can send the dollar one way or the other depending on the Fed or Trump's comments and/or policy changes.
There is a potential M Top forming over the last couple months; it depends on if the right leg down occurs. Price has violated the upper standard deviation band so the middle band at 97.42 is in play. There are lots of dollar shorts in play and they were happy in May and June but once the dollar started to recover, a massive short covering rally rocket-launched price from a 95-handle to the 99-handle now.
The ADX shows that the downtrend in the dollar during 2017 into 2018 was a very strong trend but it petered out in April 2018. The dollar recovered from there to present but the ADX shows that the uptrend is not considered a strong trend. The ADX views it as sideways choppy action with an upward bias. Looking at the chart, despite the feeling that the dollar has been doing nothing but rising for many months, it has actually chopped around between 94 and 99 for 1-1/2 years.
During the May and June selloff this year, the Aroon did not perform a negative cross so the dollar recovered. Dollar bears need that negative cross before they can celebrate. Keystone does not have a position in the dollar currently.
The baby games with the Democrat and Republican Tribes continue as the huddled masses are ignored. The little democrats will tune in to CNN and MSNBC cable news today and cheer their tribe while the little repubs will tune in to Fox News to receive their talking points they can tout at the office water cooler. Isn't is all pathetic? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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