The Dollar Index: Make Or Break?

Aibek Burabayev - INO.com Contributor - Metals


In this post, I would like to offer a global outlook for the gauge of the most financial assets, for the US dollar via its index DXY.

It is important to understand the global trend for the dollar to plan our precious metals strategy. I've included four charts below with different periods of observations and you can judge for yourself what you are after.

Chart 1. Dollar Index Monthly (1985-2016): Looks Bad!

Dollar Index Monthly
Chart courtesy of tradingview.com

On the monthly chart above, we see that the dollar dropped from the 125+ levels, then made a correction to the blue A point at the 121 level. After that, from 2001, we saw another massive sell-off of 51 points down to the 70 level in he notorious 2008. Continue reading "The Dollar Index: Make Or Break?"

China's Policy About To Hit The Dollar?

Lior Alkalay - INO.com Contributor - Forex


China has resorted to its old habit of stimulating the economy by allowing the Yuan weaken. But while the "remedy" has yet to work its wonders. The side effects, are already emerging—inflation is on the rise.

The People's Bank of China, China's central bank, ought to decide - support China's manufacturing or curb inflation.

What will the Chinese central bank do? And equally important, how will the dollar respond?

China's Central Bank: The Logic

In order for us to try and gauge the next move by China's central bank, we must delve first into the logic. In other words, what is the central bank considering? Now, that's not an easy undertaking, by any stretch of the imagination. Nevertheless, the task has turned a tiny bit simpler. Last month, in an interview with the Caixin Weekly, the Governor of the People's Bank of China, Zhou Xiaochuan, outlined the central bank's policy.

Here are the points to focus on: Continue reading "China's Policy About To Hit The Dollar?"

Dollar Takes A Plunge; Where Will It Land?

Lior Alkalay - INO.com Contributor - Forex


Undoubtedly, this February will be remembered as painful for the dollar. Investors have long awaited the opportunity to short the greenback after a prolonged period of steep gains. When US growth came out surprisingly weak, FX traders pounced, taking the dollar on a brutal roller coaster ride.

Then we had Janet Yellen’s testimony, which suggested banks should be prepared for negative interest rates. Many considered that a hit below the belt as investors were betting on more rate hikes. So now, they’ve got to get ready for negative interest rates? No one was prepared for that remark, despite Yellen’s suggestion that it was only a remote possibility. Of course, now, the million dollar question is, how low can the dollar go?

Short Term Dollar Outlook

As with all corrections, the first catalyst is always about momentum. The question of whether that will lead to a wider correction is fundamental. But what about the imminent target? That’s driven by technical momentum. So what do the technicals say?

Daily Chart of the U.S. Dollar Index
Chart courtesy of Netdania.com

As seen in the Dollar index chart above there are two key levels in this correction. The first is our resistance level at 100. The Dollar index has been attempting to break this level for a while now, though without success. When the Dollar index failed, it was really only a matter of time before the correction would come. And so as it did. Continue reading "Dollar Takes A Plunge; Where Will It Land?"

Bank Earnings To Impact Dollar Sentiment

Lior Alkalay - INO.com Contributor - Forex


Generally, Wall Street earnings have no direct impact on how we view the dollar outlook. Yet, there are exceptions and this week is one such notable example. What types of earnings are significant enough to shed light on the dollar’s future; you might wonder. The simple answer is this: Bank earnings, which are abundant this week.

Why do Bank Earnings Matter?

As we all know, the Federal Reserve has the greatest impact on the dollar. Outside of the Fed, bank earnings impact the dollar’s outlook because they reveal the credit supply. Of course, the supply of credit in the US economy affects the American consumer. In turn, the American consumer impacts inflation. And that brings us full circle since the inflation outlook typically helps shape Fed policy. Continue reading "Bank Earnings To Impact Dollar Sentiment"

Year To Date Dynamics: Metals Versus Top Assets

Aibek Burabayev - INO.com Contributor - Metals


Today I prepared for you the year-to-date comparative dynamics of the metals versus the top financial instruments including the Dollar Index, crude oil and the S&P 500 index.

Gold Comparison Chart
Chart courtesy of TradingView.com

As seen in the above graph, half of the instruments started the year on an upbeat tune, lead by Silver and followed by Gold, Platinum and the Dollar Index. The other half started with a nose-diving fall, especially crude oil followed by Copper, Palladium and the S&P 500 bringing up the rear. Continue reading "Year To Date Dynamics: Metals Versus Top Assets"