It is quite entertaining reading the barrage of emails that regularly hit my inbox detailing over and over and over, the certain demise of the US Dollar. More often than not, it is the usual gold bug chatter about China buying up all the world's gold to make the yuan the new global reserve currency. If not that, it is the regional trading agreements bypassing the Dollar which are going to certainly knock the greenback from its throne.
Such things may or may not happen but the point is we have a huge throng of perma gold bulls who continue hanging on to their gold as they have been told that "any day now it is going to launch higher and one does not want to miss the bull move by not having a position". "Once the Dollar goes", so the chatter states, "gold is going to skyrocket".
Based on today's surprisingly strong jobs report, that day is going to be postponed for a while longer.
Here is a look at the chart of the US Dollar.
Note it has run to the resistance zone I have drawn in on the chart. It is already well past any remaining Fibonacci retracement levels drawn off the June 2010 peak meaning that it is on track for a test of that level up near 89 if it can convincingly clear the 87 level.
We'll see if it can manage that but for now, those who have wrongly bet against the Dollar are not looking especially wise at the moment. I wonder what happened to "Mr. Massive Gold buying is taking place". He is especially looking more and more comical with the passing of each week.
Please understand those charlatans who keep up with their nonsense have opened themselves up to the scorn that they rightfully deserve among fair-minded and objective people who are trying to read and decipher today's very challenging financial markets. It is one thing to misread a market. We all do that including yours truly as we are all mere mortals at best. However, to persist day after day, week after week, month after month, year after year, with the same utterly discredited rubbish and unverifiable reckless claims, misleading many innocent and sincere people, is simply inexcusable. There comes a time to admit one has been wrong, apologize to those who have been misled and simply go away or close down the various propaganda sites. Maybe then their victims can get on with their lives and try to recoup their losses having learned a valuable, but extremely expensive lesson that they will never forget as long as they live here on this globe.
There is an old traders' adage that goes something like this: "The first loss is the best loss". What it means is that once you realize that a trade or an investment has gone sour, you get out - the sooner the better. That first loss, taken early rather than later, leaves a welt but it does not end up obliterating you. Oh that some had learned this lesson and ignored all the "opinions" from the many self-proclaimed experts.
Shifting back briefly to the currency front for a moment - it all goes back to interest rate differentials. The strong jobs number has lent further credence to those who are expecting the Fed to move on the interest rate front sometime next year. Yesterday we heard from the ECB and Mr. Draghi that interest rates in the Eurozone are not going anywhere ( except maybe even lower if that is possible) anytime soon. By the way, the notion that the Euro would be higher were it not for the sanctions imposed on Russia is a canard dreamed up by those who cannot read a price chart nor have apparently been listening to Mr. Draghi who has been making it abundantly clear for some time now that Europe wanted a lower currency.
Here is the Euro chart. It is falling through chart support levels like a hot knife through butter at this point. There looks to be some mild psychological support near the 1.240 level but more serious support does not materialize until closer to 1.2273 or so. If it goes through that, it is going to 1.2000.
more later... busy morning...
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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