The U. S. dollar remains the most important financial instrument in the world. The dollar rally has been the single most decisive factor in determining economic growth (or weakness) and market direction since early 2014.
And – right now – that’s not a good thing.
Don’t listen to Alan Ruskin, the macro strategist from Deutsche Bank (need I say more?) who posits that the strengthening dollar is largely a positive, since it’s paired with an ‘improving labor market’ and a ‘lower misery index.’
He’s looking for misery in all the wrong places.
When the value of the dollar changes significantly against other currencies, it causes the value of these assets to change as well (which is what started to happen in June 2014). Right now we are in a period in which the U. S. Federal Reserve and other major central banks in Europe, Japan, and China are not coordinating their actions, which has enormous consequences for the dollar.
And in turn, what happens to the value of the dollar has enormous consequences for other financial assets.
A stronger dollar has a far-reaching, negative domino effect that pressures global markets in all directions.
And right now, that pressure is nearing the breaking point…
This post was published at Wall Street Examiner by Michael E. Lewitt ‘ March 8, 2016.
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