So what has sparked off the Dollar rise again? Just when the Dollar longs were about to close positions the Fed insert a tiny little statement into their minutes that ignites Dollar longs - that being that a softness in the Dollar could also lead to a rate hike as commodity prices spiral and hit inflation. Currently headline inflation is running at 0%, which is as about benign as it could ever possibly get. Core inflation is holding at about 1.7% though which is very close to the Fed target of 2%. So we have high Dollar value hand in hand with benign inflation and that spells investment glee for bond investors. Thus when 2 weeks ago theUSD was beginning to lose steam with the NFP data, along comes the Fed minutes to reverse the USD and send it marching straight back up against the basket of major currencies. Another over-looked aspect is the overall colossal Dollar debt markets. That is the actual amount of long term US government debt and US corporate borrowings which is not really being considered but short term FX traders.. All debt has to be repaid to bond holders. That debt will be repaid in USD. Therefore the USD has to be strong bid in the years to come and that has got to equate to long term inflationary pressure and a cycle of even more attraction for Dollar debt as higher interest rates draws more investors seeking higher returns.
Read on Bloomberg today's article on US inflation with fresh concerns that interest rakes may still be on the table mid way this year in spite of a sign of economic slowdown for the moment -
Meantime crude is mounting a serious challenge to break above 55 because come Q3 the logistics pile up ought to clear and demand pick up for fresh deliveries. So crude markets are firming on the basis of equilibrium finding itself once again between demand and supply. Bullion marches back up too on the worry that core inflation in USA could hit the 2% mark this year.
Read on Bloomberg an article on the shale boom ending. at the end of the day commodity price movement may push and shove with investor speculation but simple economic balance between demand and supply has to restore itself in the long run and the truth is the entire world is in a purposeful mode of crude over production locked in a global price war and he who blinks first will crack and with US cost or production at 70 Dollars in some cases vs Saudi costs at 30 Dollars, the current level of US shale production is completely unsustainable.
Read on Bloomberg -
Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.
99.324 -0.186 -0.24%
Support 99.016 Resistance 100.646
EUR
1.057205 -0.001515 -0.14%
Support 1.04793 Resistance 1.06773
Crude Oil
54.06 +0.32 +0.60%
Support 52.47 Resistance 55.43
Gold1198.935 -8.535 -0.71%
Support 1,188.4 Resistance 1,214.8
Pieter Bergli - DeLoren Trust Holdings
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