USD - Rescued By Retail Sales - 7/15/2016
The moment we for forgot about all the problems market is dealing with and flung fed rate hike scenario from near future to 'not possible now', US Dollar Index ( DXY ) came roaring back today with stubbornly buoyant retail sales. As the adage goes, never underestimate the power of US consumer to spend, one should never forget that USA is totally credit based economy and when things are good people spend lot more compared to their earnings with good credit and when things are not good, they still live on credit! So until and unless things come crashing down like the subprime crisis of 2008, there is no way to deter US consumer. Even CEO of JPMorgon Chase, James Dimon warned recently about the bubbling auto sales that someone is going to hurt badly.
It is Friday afternoon and in this split personality syndrome infected market we are not going to argue against the USD strength and take a position. But it looks like there will be plenty of opportunities next week. At this point - 96.50, DXY ( US Dollar Index ) is at an inflection point. From here either we go to 98 / 100 again or will come crashing back to 94.
If market starts thinking about rate hike then equity market will not be able to sustain the heights but again it will be a chop-fest with rate equation pulling it down and strong consumer sentiment supporting it up. Then as usual, back to day to day scenario trading.
In Forex domain, if DXY don't stop then EUR/USD will get hurt the most. We are short EUR/USD and will likely add if DXY keeps the gain early next week. NZD/USD has risen a lot and it is natural for it to retrace a bit and trip back to 0.7000 is viable. So after a long time we would like to switch to short side there. Australian Dollar is rising but don't have that mojo in it so bounce toward 0.7650 should be sold in our opinion.
Individual components are telling that more gain are coming for the Dollar Index. Whatever the scenario is during the market open on Monday, USD/JPY should keep marching higher regardless of DXY support. So for USD/JPY, as the guy says in Dos Equis advertisement, 'stay thirsty my friend', we like to reiterate - stay long my friend ;)
It is Friday afternoon and in this split personality syndrome infected market we are not going to argue against the USD strength and take a position. But it looks like there will be plenty of opportunities next week. At this point - 96.50, DXY ( US Dollar Index ) is at an inflection point. From here either we go to 98 / 100 again or will come crashing back to 94.
If market starts thinking about rate hike then equity market will not be able to sustain the heights but again it will be a chop-fest with rate equation pulling it down and strong consumer sentiment supporting it up. Then as usual, back to day to day scenario trading.
In Forex domain, if DXY don't stop then EUR/USD will get hurt the most. We are short EUR/USD and will likely add if DXY keeps the gain early next week. NZD/USD has risen a lot and it is natural for it to retrace a bit and trip back to 0.7000 is viable. So after a long time we would like to switch to short side there. Australian Dollar is rising but don't have that mojo in it so bounce toward 0.7650 should be sold in our opinion.
Individual components are telling that more gain are coming for the Dollar Index. Whatever the scenario is during the market open on Monday, USD/JPY should keep marching higher regardless of DXY support. So for USD/JPY, as the guy says in Dos Equis advertisement, 'stay thirsty my friend', we like to reiterate - stay long my friend ;)
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