Announcements, announcements, announcements!
What a terrible way to die,
A terrible way to die,
A terrible way to be talked to death,
A terrible way to die.
Announcements, announcements, announcements,
On the doorstep of yet another much-heralded Fed announcement and in the wake of the BOJ’s tinkering last night, the US dollar sits fittingly at a crossroads: spring back to its stoic uptrend nearly 19 months dormant – or fall back through intermediate support just a few percent below. As circumstance would have it, today is also the last official day of summer, to which we say – get on with it. Bring on the Fed, bring on fall and bring on the fall in the US dollar.
While there’s certainly no shortage of bubble soothsayers these days, one that’s arguably on the precipice of deflating and which has followed the structure of exuberance – is the US dollar. And although we’ve written extensively of why, historically speaking, we believe the dollar is as extended as it became and remains (see Here, Here, Here, Here), it largely has been motivated by the Fed, or more precisely – the markets expectations with future policy.
Framing the dollar as a proxy of confidence in the golden age of central banks, where it discretely took flight as the Fed led policy makers in the wake of the financial crisis and soared to icarus heights on misplaced expectations with more contemporary tightening cycles – we’d argue the apparent indecisiveness in the dollar’s technical structure today aptly represents the unresolved tensions in the market that we believe will ultimately become unwound, as challenging economic conditions largely limit the reach of the Fed going forward.
This post was published at GoldSeek on 21 September 2016.