Is the dollar bull market now over?
I'm not yet convinced but my final dollar spike view is clearly under immense pressure. I've essentially been long since 2013 but now the price action is becoming concerning for that view 1/
I'm not yet convinced but my final dollar spike view is clearly under immense pressure. I've essentially been long since 2013 but now the price action is becoming concerning for that view 1/
The major uptrend is getting closer... 
But the Broad Trade Weighted Dollar Index currently is only re-testing its break out still and hasn't changed course yet. So, I need to suffer some more pain before before I get clarity on that...
Is the ECB small debt mutualization the thing that turns it? Are zero rates in the US the final nail in the coffin or the Fed?
My view remains that these are not going to solve the global $ debt issues but I didn't think Draghi's "Whatever it takes" was going to work either!
My view remains that these are not going to solve the global $ debt issues but I didn't think Draghi's "Whatever it takes" was going to work either!
Over the last few years I've paired my dollar longs with gold with the theory that both would rise together (which worked a treat) and that eventually gold (and bitcoin) would be the last currencies standing. Ive been long gold vs a basket of FX ex USD (+56% since 2016 entry)
The other bet is that bitcoin will likely beat gold too. The bitcoin/gold cross looks powerful but has yet to break out.
I've also had the offsetting portfolio effect of being VERY long bonds since 2018
And also I was long Eurodollar interest rate futures and 2 year notes for most of it too, which paid off very handsomely.
But bonds add incrementally less value to a portfolio these days and are now just a trade for even lower rates, really and hold no long-term opportunity.
The decision time on the dollar is rapidly approaching and I may well be proven wrong on my final dollar spike thesis.
The decision time on the dollar is rapidly approaching and I may well be proven wrong on my final dollar spike thesis.
But IF the dollar has finally turned, it will over time open up another BIG opportunity - to buy Emerging Markets for the next 10 years. EM has massively underperformed the S&P.
And eventually, this large consolidation will break to the upside...(this is MSCI EM Index)
But a sharp break lower in the dollar, should it occur, or even a final spike higher, would unstabilize markets for a while.
FX volatility tends to create all sorts of knock on effects as the dollar is the denominator for most assets and is the key input for asset allocation.
FX volatility tends to create all sorts of knock on effects as the dollar is the denominator for most assets and is the key input for asset allocation.
The next 6 months will be very interesting and as the dollar moves one way or the other, it sets up plenty of opportunities to construct a long-term portfolio.
Let's see how it plays out...
Let's see how it plays out...
