USD is Tiring; Bananas for All?

The US Dollar index is slipping further below the 200 day average (orange) and associated resistance. The forces of reflation take the upper hand again today as the stock market’s sentiment event * forges onward. The country may be falling apart but asset owners will have their profits. It’s a divine right if policy makers have their way, which would be the way of a Banana Republic.

This is the only trick in Trump’s (fiscal) book and the Fed’s (monetary) book too. Weaken the currency at all costs (key word there). Stocks and other assets are denominated in paper currencies and USD has global primacy in that tramped out arena. The world still settles in USD. It is fading as if it knows it has to deal with that lower low marker from early March.

If on the other hand it starts to rebel and re-bull, people might consider backing away from the punch. There’d be a turd in there!

dxy, us dollar index

* Throughout the second half of 2019 the stock market used the negative sentiment associated with the Trade War to reset over bullish sentiment in little micro bursts all the way up. Of course, we soon found out in 2020 what happens to a market running on such sentiment adjustments when something comes along to prick the bubble. Mass rioting, hatred and anger are not gonna git ‘er done. Bears who take that bait beware.

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