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Beware the Buck

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The Wall Street types were focused on the Greek debt situation this week, notably the schedule of payments and whether the Greeks could meet them. That was followed by more speculation about the impact of a Greek exit from the Euro. Some were calling for the euro to plunge in that event, with the dollar rising to 110. On Friday, focus shifted to new Chinese rules designed to curb stock market speculation. For some reason, that cause a sharp drop in the US stock market. Our main point is to see what the money is doing, and not what it is saying. The weekly continuation chart for the US dollar index has a freshly minted MACD sell signal to go with earlier RSI and stochastics sell signals. This suggests somebody wants out of long dollar positions, and the news flow is likely trying to get fresh money to come in long so the earlier long can get out.  This activity also has a bearish on ag commodities, since any weakness in the DX tends to inflate the price of commodities priced in dollars.

 

Alan Brugler



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