I have a hunch that the USD question (bounce turning into a real bear trap and rally or imminent failure?) may get some solid evidence tomorrow morning when July Payrolls data will be released by BLS. If I’m going to guess I’d say that the rise in yields this week along with USD are classic misdirection by the markets before a surprise Payrolls reading to the downside. Market signaling is such that bonds are sending yields up and the USD is rising in anticipation of a hot number. It feels like b/s.
With the buck halted for now at point #1, a soft payrolls number would probably send it back down with dovish Fed implications. A hot number could ram it upward. Again, my bones say payrolls will be soft. But what on earth do my bones really know?
If the number is soft or especially if it is a significant drop in employment, USD should resume its daily chart bear trend. In that case, the anti-USD stuff could resume/continue rallying. That would probably include the precious metals and gold stocks (GDX is above the sub-28 gap, after all despite the H&S potential noted in the earlier update) since they’ve been tethered anti-dollar as well.
If the number is somehow hotter than expected (estimate is +200,000 vs. previous 209,000) the markets could get hawked with USD breaking upward. So again, my guess? Softer than expected payrolls. But I do think USD is perched here at point #1 in anticipation and awaiting further instructions like I, and probably a good number of you are.
I don’t mind admitting that I am somewhat frustrated by having gotten the bounce in USD 100% correct before the bounce even started, but then still getting mentally whipsawed by it. I am not an algo or a generative AI, so the human stuff is going to happen on occasion. This too shall pass. I want direction, and I think it’s coming soon.
