From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
The US Dollar remains at crucial inflection points versus both emerging and developed currencies.
In last week’s note, we pointed out the critical 19 level in the WisdomTree Emerging Currency Fund $CEW, along with the numerous tests of support in our custom USD vs. BRICS Currency Index.
Not only is the USD looking increasingly vulnerable against emerging and developed currencies, but we’re now starting to see some of the major Dollar crosses break down or resolve lower.
In many cases, these moves are confirming long-term reversal patterns with USD/CAD. For example, the Dollar just broke to fresh multi-year lows relative to the Canadian Dollar.
We reviewed the chart in this column a few weeks back, highlighting the possibility of an impending double top.
Check out this week’s Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.
Let’s jump right into it with some of the major takeaways from this week’s report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
We’ve recently pointed out the possible double tops in the Dollar index and the USD/CAD, along with our overall outlook for further weakness from king dollar.
But can we find other areas of the market that could provide further insight into the US Dollar’s direction?
After all, many market participants are fixated on the direction of the US Dollar right now as it approaches its key mutlti-year lows.
Why does the Dollar matter so much to investors?
Firs of all, USD and risk assets have had a very strong negative correlation over the last several years. The USD Index bottomed in early 2018 as stock markets around the world peaked. Conversely, the dollar topped during the Covid sell-off when stocks bottomed out at their March 2020 lows.
To gain a clearer picture of the USD, we need to go beyond the Dollar Index and developed currencies.
Check out this week’s Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.
Let’s jump right into it with some of the major takeaways from this week’s report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
One of the most frustrating questions plaguing investors at the moment is... "How long will this choppy environment last?"
And one question we’re asking internally is… “What is with all these mixed signals!?”
Once the latter clears itself up, we'll have our answer to the former... But not until then.
When the outlook becomes increasingly murky, the best action is to take a step back, let the smoke clear, and weigh each new piece of evidence as it becomes available.
For now, the most important evidence we have is our list of risk-on commodities and equity indexes testing critical levels of interest grows larger by the day.
There seems to be no end in sight. Complicating matters further, we’re actually seeing this kind of price action throughout the risk asset landscape. It's not isolated to a single asset class or region. We're seeing it in Stocks, Bonds, Commodities, and even Currency Markets... and not just in the US, but also abroad.
Welcome to our latest RPP Report, where we publish return tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
You can consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes as well as discuss the most important themes and developments taking place in markets all around the world.
While the weight of the evidence remains in the bull's favor, we continue to see more data arrive that suggests the environment could be shifting toward one that is less conducive to risk assets, at least over shorter timeframes.
Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. We can then put these near-term developments into the context of the big picture and glean insights into the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Is the US Dollar Index $DXY on the brink of completing a massive reversal pattern to the downside?
As more evidence comes into the picture, it's looking increasingly dire for the dollar. In fact, we're seeing it trend loweracross all timeframes against almost all of its peers.
And this action has only gained steam over the last week as DXY has plunged to fresh multi-month lows.
Dollar weakness has been a nice tailwind for risk assets since its peak in March of last year. Any additional downside pressure in the coming weeks, months, and even quarters would not surprise us... especially if this daunting double-top pattern breaks lower. If and when this happens, further weakness from both a tactical and structural standpoint is exactly the bet we'll be making.
This is a fun one. I got to sit down with Paul Ciana to talk about all things Fixed Income, Commodities and Currencies. Paul is now the Chief Global FICC Technical Strategist and Director of Research at Bank of America Merrill Lynch. But in the early days, him and I used to study for our CMTs together back in 2006.
What's nice about this is that in his current position, and for 10 years at Bloomberg prior to his 5 years at BofA, he's had the opportunity to speak to many of the largest portfolio managers in the world. I want to know what he's learned from all those conversations!
Paul always gives great perspective and as you know, the macro view carries a big weighting throughout our process. So this episode really hit home.
Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. We can then put these near-term developments into the context of the big picture and glean insights into the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
