US $: It ain’t over till it’s over.

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Quotable

“It is in the nature of the human being to seek a justification for his actions.”

― Aleksandr Solzhenitsyn

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US $: It ain’t over till it’s over.

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Despite the rising probability, along with increasing sentiment and real positioning, suggesting the US dollar cyclical bull market rally is over (ending with the peak in early January 2017 labeled 5 of III below), the jury is still out.  Why do I say that?  Well, below are some rationales to consider:

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Mr. Market, what are you telling us about the dollar?

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Quotable

“Be ready to change your strategy with the environment. (The environment, not your strategy, is the data).”

__Mark Weinstein

 Commentary & Analysis

Mr. Market, what are you telling us about the dollar?

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Watching the currency market over the past couple of days has been akin to watching paint dry.  In my case the paint drying analogy is probably because I have a few different scenarios in my mind and find all of them plausible (see, Orwell’s Doublethink lives in the minds of traders).  My continuous question as I watch currency price action: Mr. Market, what are you telling us about the dollar? 

Three simple scenarios now rattling in my head....READ MORE

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The Fabulous Shrinking Renminbi…

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Quotable

“Such a power [of issuing paper currency], in whomsoever vested, is an intolerable evil. All variations in the value of the circulating medium are mischievous: they disturb existing contracts and expectations, and the liability to such changes renders every pecuniary engagement of long date entirely precarious…Not to add, that issuers may have, and in the case of a government paper, always have, a direct interest in lowering the value of the currency, because it is the medium in which their own debts are computed.”

__John Stuart Mill

 Commentary & Analysis

The Fabulous Shrinking Renminbi…

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Over the last several years, many writers and assorted cranks, those with little understanding of the global financial system in its current form, have warned “soon [whatever nebulous time-frame that may be] the Chinese currency will replace the US dollar.”  Back in early 2000’s we considered such a warning as either total hogwash, or at the least a bit of hyperbole.  In fact, back in late 2010 we penned a report for our subscribers titled: “The Chinese yuan will soon replace the US dollar as world reserve currency: Not in this lifetime!”  More on that shortly. 

I would like to first summarize a recent article in the International Economy magazine, Summer 2017 edition, titled: “Bye, Bye Renminbi,” written by Benn Steil and Emma Smith.  It is enlightening for those still concerned the Chinese currency will “soon” replace the US dollar as the world reserve currency...READ MORE

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Three scenarios in front of the Fed and horses to ride…

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Quotable

“There is no danger of the public ever finding any key to the secrets of winning.  The crazy gambling urge and speculative hysteria makes that a certainty.  But if the public play ever did get wise to the facts of life, the principle of ever-changing cycles would move the form away from the public immediately.”

--Robert Bacon, Secrets of Professional Turf Betting

 Commentary & Analysis

Three scenarios in front of the Fed and horses to ride…

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As I sit in my office here in southeast Florida, I wait impatiently for the arrival of two pending storms—hurricane Maria (hoping the forecasts are correct this time) and Janet (aka the Federal Open Market Committee interest rate decision tomorrow).  Below are our three best guesses of what the Fed will do (couched as plausible scenarios) and associated currency trade ideas.  READ MORE...  

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Copper Leading the Australian Dollar?

We are long AUD/USD and looking forward to the pair playing some catchup with copper prices.  The chart below compares weekly copper futures prices to the AUD/USD spot price.  Copper has moved above a key intermediate-term swing resistance level; Aussie has not.  The bottom pane of the chart shows the 10-year benchmark spread between Australia and the United States.  The down trend line going back to 2010 has been broken. 

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