International and domestic political upheaval should be creating undeniable safe haven flows into the dollar. The dollar’s action since 2008 can only be characterized as consolidation within the context of a downtrend despite the growing political risks. The display of weakness when strength is expected implies that a continuation of the downtrend is only a matter of time. A drop below the lower trading channel (magenta) will signal another round of aggressive devaluation.
U.S. Dollar Major Currencies Index
Leverage money flows reflect an understanding of this weakness.
U.S. Dollar Index and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest
Has the dollar lost its safe haven status? Yes, but this fact is not been a recent development. This designation was lost a long time ago. How do I know that? The once stable (flat) trend in the dollar has turned into a ski slope. Safe haven status trends are not characterized by parabolic ski slopes! Unfortunately, most investors and Americans will have to learn this lesson the hard way.
Purchasing Power of the USD
Headline: The Dollar: Safe Haven No More?
Has the dollar lost its safe-haven status? Not exactly, but the state of the U.S. economy is keeping traders wary. With economic indicators like new home sales, jobless claims and durable goods orders, all released today, pointing to a slow, uneven recovery with little job growth, traders don’t expect the Fed to raise interest rates any time soon. Since interest rates tend to propel currencies higher, investors are focusing on countries with stable outlooks and tighter-money policies, or at least some indication that they might raise rates.
Source: cnbc.com
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