We are floating in the midst of the summer doldrums and I don’t really see anything salient I haven’t covered over the recent past. The greenback continues to get hammered and as our collective purchasing power is sinking steadily it implicitly lifts the relative value of Dollar denominated assets since holding cash exposes you to the receiving end of Yellen’s fiat currency death stick.
There doesn’t seem to be any bottom for the Dollar right now. Suffice it to say that I am not amused and the way this is going I’ll have to raise my Gold subscriptions from $49 to $49,000 by the end of the summer. Better lock in that low rate before we hit hyperinflation and wind up shopping with wheelbarrows full of credit cards! Anyway, if you’re elated about your long positions in pretty much anything but Dollar denominated FX pairs right now then think again, because all you’re really doing is to offset what you are rapidly losing in purchasing power.
The ECB is scheduled to meet on Thursday, however it’s only an internal meeting and no new economic staff projections (ESPs) are expected. Bond investors in particular are looking for Draghi’s press conference for clues as to what interest rate policy to expect for the third and fourth quarters of this year. But given that the EUR/USD is now heading toward 1.15 I have an inkling that Mr. Draghi will choose his words very cautiously as he is now walking a precarious economic tightrope.
Things are still looking quite dicey across the board, i.e. volatile and mostly sideways. Which means we’ll have to remain extra cautious with our exposure and keep an objective mindset until we see more directional tape again. So this will be a quick Monday morning warm up with some general perspectives and ideas as to what symbols to watch:
The wave wankers amongst us would probably label the current formation a 1-2-1-2 pattern and I simply call it a corrective inflection point after a major advance in equities. What I mean by that is that the odds are roughly equally balanced right now pointing in both the bullish as well as bearish direction. Relatively small [...]