All the Macro Tourists are talking about the US Dollar now. It took long enough! The U.S. Dollar index just hit a 3-year low today.
- Financial Times: Mnuchin backs weaker dollar in break with tradition
- CNBC: A weaker dollar is good for the US, Treasury Secretary Mnuchin says
- Bloomberg: Trump Team at Davos Backs Weaker Dollar, Sharpens Trade War Talk
If you only read half of what Treasury Secretary Mnuchin said at the World Economic Forum in Davos, then you'd look at a US Dollar chart, and say it’s the end of the Dollar.
"Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos. The currency’s short term value is "not a concern of ours at all,” he said.
But if you read the other half you might believe he doesn’t want the USD to crash and burn.
"Longer term, the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency," he said.
Remember, the U.S. Dollar is not a new Bearish TREND @Hedgeye. It's been bearish since April 2017.
A Davos History Lesson
Don't forget that this time last year at Davos everybody was talking about a "crashing" British Pound. It was the end of the currency due to Brexit, they said. If you look at a chart of the British Pound that was literally at the lows.
What's Next for the U.S. Dollar
You've got to be careful and measure and map the data to spot capitulation points. The U.S. dollar is still signaling lower highs and lower-lows. In other words, the dollar is not yet signaling immediate-term #oversold.
I'll let subs know when it is and wait for the bottoming process to occur.