It's the 2023 inaugural weekly currency edition of What the FICC?

And we're kicking it off with the US Dollar Index $DXY!

Check it out!

From the Desk of Ian Culley @IanCulley

I’m not big into seasonality.

I pay attention to it, of course. But it’s not in my top three data points after price. 

Don’t get me wrong, seasonality brings context and enhances awareness of any given market – which should be a priority for any trader or investor.

I have multiple almanacs on my desk, including the Stock Trader’s Almanac by Jeff Hirsch and Christopher Mistal and the Spectra Markets Trader Handbook and Almanac by Brent Donnelly and Justin Ross.

...

Was 2022 such a hard year in the market like the media keeps telling you?

Or was it just a normal year that was hard, because every year is hard?

I think about this a lot.

From the Desk of Ian Culley @IanCulley

What a year for currency markets!

The USD/JPY tested its 1998 highs marked by the Asian Financial Crisis. The British pound revisited its all-time lows. And the euro fell below parity versus the US dollar for the first time in twenty years.

But where does that leave the King Dollar heading into Q1 2023 now that it has fallen almost 10% off its September peak and many global currencies have reclaimed key levels?

Let’s turn to the charts for some answers…

First, take a look at the US dollar index $DXY:

The dollar index is reaching a crucial level marked by the 2016 and 2020 highs – a logical spot for it to bounce. Honestly, I’d be surprised if it doesn’t! 

Yet, the DXY seems stuck in the mud. That’s information.

Here’s a look at the daily chart:

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You go on the twitter and all you see are people complaining about what a bad year this is for stocks, how bad the stock market is, recessions, bear markets, the Fed, blah blah blah.

I don't understand. What's everyone so angry about?

Stocks continue to do well. In fact, the back half of this year has been one of the better ones that we've ever seen.

Look how well most sectors have done since the market bottomed in June:

We tend to think in US Dollars.

And this is for good reason, don't get me wrong.

The US Dollar is the world's dominant reserve currency.

But what if we treated Gold like another currency instead of a commodity?

It certainly acts more like a currency. Just look at the recent moves in Commodities, both up and down. Gold hasn't exactly followed along....

So if Gold wants to behave like a currency, maybe we should treat it like one.

Here's Gold priced in some very important currencies. In other words, this is what Gold looks like if you remove your US Dollar bias:

On Christmas or on any other day of the year, the goal is to sell things at higher prices than where we buy them.

And as great as Stocks have been performing, precious metals have done even better!

That relative strength is something we like to see in assets we own.

Now, when you zoom out in Gold, doesn't this time remind you of that time 20 years ago?

From the desk of Steve Strazza @Sstrazza

Tuesday night we held our December Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each

Let’s get right into it!

I don't know how many times I've said it this year. Someone go back and count.

But the catalyst IS THE WEAKER DOLLAR.

It's not the fed, or the election, or yield curves, or wars, or Santa Claus or any of the other random arguments that we've all heard along the way.

It's the US Dollar.

Period.

It's the weekly currency edition of What the FICC?

So far this week, the Japanese yen has stolen the show. But where does that leave the USD/JPY heading into 2023?

Check it out!

From the Desk of Ian Culley @IanCulley

What do you do when the party gets out of hand?

You raise the roof!

That’s what the Bank of Japan (BoJ) did yesterday as its former yield curve control policies became untenable. After intervening to keep its 10-year yield below 0.25%, it shifted the ceiling to 0.50%. 

Naturally, the yen responded in earnest. It posted an explosive rally following the BoJ policy shift, gaining more than 500 pips against the dollar. 

But where does that leave the USD/JPY heading into 2023?