Currency is the stock of the nation
Stocks are slowly rising across the world. The volatility is at all time low but the real action is happening in currency market.
Action: The Dollar is crushing Euro and Japanese Yen at pretty alarming pace.
Here's the Dollar Index Chart
Just look at the magnitude and the pace of the rally. It looks like Dollar can rally to 89 - its 2009 panic high. There is fundamental reason what seems to be driving USD rally. In a relative world, US is looking good. The QE program in US is expected to end in October.
On other hand, Europe is looking weak and with Central Banks there promising more stimulus - the sell off in Euro was a natural reaction. Look at the Euro Daily Chart
Just see what happened, when Euro slipped below 200 dma and failed to recover above it twice.
The strength in Dollar also played a big role in dramatic depreciation of Japanese Yen
The move in Japanese Yen was a classic text book type. A breakout from a triangle (well publicized one) - pullback and then a sharp rally.
What does this all mean?
The strength in Dollar is already having its impact on commodities with major impact on Crude and Gold. The big question: Is the big move in USD done or will we see another big move to 89? What will that move do to Global equities? We are in for interesting times.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers