FX Thoughts : The USD Suicide Mission

Has anyone realised that the surest trade off anyone’s head this year is the USD strength trade ?

If you doubt me, just ask around your friends. It is easy. Folks are divided on stocks, bonds, commodities, real estate and gold but for the USD, it is the no brainer trade of the year.

It is so no-brainer that Citibank observed last week that a lot of players had the “right position” on which makes it a crowded trade for both real money and speculative money.

Yet it has not been a one way street for the USD in the early days of 2015, even after last week’s astounding employment numbers.

wcrs usd

And for the DXY Index, the weekly chart is starting to show signs of exhaustion.

dxy 5 year chart

As we noted in last week’s post, the USD trade is not as easy as it seems as the spec accounts note the over positioning and play around with the daily ranges, casting confusion in the marketplace. https://tradehaven.net/market/fx/fx-thoughts-as-easy-as-saying-penguin/

It is such that even my stock broker has become forex savvy with the temerity to suggest that an newspaper article which he was reading sounded insipid because oil has less to do with currencies than the USD strength.

And he is right because if we run correlations between oil prices and the various currencies out there, the link is quite unapparent as far as numbers are concerned.

To continue reading ……