From the desk of Ian Culley @IanCulley
In almost every market environment, there are assets we want to buy and assets we want to sell. That holds even when we think the only option is to sell.
Recently, the strong buys have been in commodities and cyclical areas of the market, while bonds and the major stock indexes have sold off. That’s dramatically changed in recent weeks, though.
Now, all the major asset classes – bonds, stocks, and commodities – are under pressure, as bears come for the leadership groups. It seems nothing is immune to bearish price action these days.
Despite the broad selling pressure, there’s still an asset we want to buy: the US dollar. That’s right, the good old greenback! It’s one thing the bears can’t seem to crack.
If we think about it from an intermarket perspective, a defensive bid for dollars makes sense given the downside pressure on risk assets across the board. We don’t think it’s a coincidence.
Regardless, the USD is strong and shows no signs of changing anytime soon.
Last week, we outlined bases in the USD/NOK and the USD/SEK crosses. This week, we’ll highlight the Singapore dollar.