USDX hit and closed above the 100 mark in a milestone trading week and that frightened the living daylights out of US equities as the Dow dropped 145.91 points,
or 0.8 percent on friday to 17,749.31. The USD is now the darling desire for traders looking for Dollar yields but could this be a 2 edged sword? Could the desire for Dollars ultimately turn back upon the US economy and end up in poorer economic growth? USDX is spooking equity traders now were on the 100 mark already and EUR parity only a few steps away. There are 2 issues which came into play this week 1. The focus upon the bond market differentials as the US currency values increased providing investor demand for US fixed income products 2. And then a shock report from the Paris-based International Energy Agency that came in yesterday really knocked the stuffing out of the crude oil market and caught traders by surprise, and also sent the US Dollar up by a leap and pegged the EUR down at 104. According to the I.E.A the US has no more spare capacity in the storage market. But worse, the implication of the report was that oil pushed down to 6 year lows was nowhere stopping US shale production and given maximum output and no storage that can only mean one thing - prices must fall and when crude prices fall most usually the USD will gain in strength. Oil prices had stopped falling at the 44 mark and for the last 3 weeks everything appeared to have stabilized with traders eve looking for a sustained rebound over the 50 mark. But the shock report on US shale production and storage will mean that economic reality has not even begun to set in yet and the fresh longs initiated the last 2 weeks could be in for a horror reversal as crude oil sinks to test the 44 mark once again. If the IEA report can be taken as a basis for US fundamentals then the worlds biggest economy is about to weigh in heavily on prices to come in lower; which will mean fresh impetus for the US Dollar. Read on Bloomberg why is the oil production not showing any signs of curtailment?
http://www.bloomberg.com/news/articles/2015-03-05/the-price-of-oil-is-down-so-why-is-production-still-going-up-US DX
100.190 +0.918 +1.18%
Support 98.278 Resistance 101.408
EUR 1.048500 -0.012770 -1.20%
Support 1.04140 Resistance 1.07940
Crude Oil 47.30 -1.83 -3.73%
Support 45.66 Resistance 49.46
Gold
1155.295 -3.075 -0.27%
Support 1,136.8 Resistance 1,173.2
Pieter Bergli - DeLoren Trust Holdings
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