It's Do or Die for Dollar Strength 7/25/2020
Dollar strength at the weekly view. The green lines is the final uptrend support. The blue lines are the long-term supports.
I found out that the dollar was shorted by Goldman Sachs back in June and more FOREX traders are shorting the dollar. The dollar tanking like this is great for commodities and equities in the short-term. The inflation increases their prices. Also, with cash being less valuable, equity and commodity traders are less willing to sell.
The long-term effects are more devastating. If the dollar keeps tanking like this, then any imported good would cost more in the US. Inflation in the US grows on an average of 3.22%. Wages growth averages between 2-3%. So, we already have a gap here and multiply it for 50 years. If the dollar keeps tanking, the profits that equity and commodity traders would be cancelled out.
Think about it.
If you gain 7% from silver or gold, but the dollar tanks 10%, then inflation may cancel your actual purchasing power when you do sell gold or silver. Your best case scenario is that the dollar just pullback, you sell the commodity when the dollar is weak, then the dollar bounces hard which strengthens your cash profits.
The dollar needs to bounce HARD to get the pullback we need in indices and commodities. We need some healthy fear and correction to bring back volatility.
To an investor, volatility is a nightmare. To a trader, volatility IS opportunity.
I found out that the dollar was shorted by Goldman Sachs back in June and more FOREX traders are shorting the dollar. The dollar tanking like this is great for commodities and equities in the short-term. The inflation increases their prices. Also, with cash being less valuable, equity and commodity traders are less willing to sell.
The long-term effects are more devastating. If the dollar keeps tanking like this, then any imported good would cost more in the US. Inflation in the US grows on an average of 3.22%. Wages growth averages between 2-3%. So, we already have a gap here and multiply it for 50 years. If the dollar keeps tanking, the profits that equity and commodity traders would be cancelled out.
Think about it.
If you gain 7% from silver or gold, but the dollar tanks 10%, then inflation may cancel your actual purchasing power when you do sell gold or silver. Your best case scenario is that the dollar just pullback, you sell the commodity when the dollar is weak, then the dollar bounces hard which strengthens your cash profits.
The dollar needs to bounce HARD to get the pullback we need in indices and commodities. We need some healthy fear and correction to bring back volatility.
To an investor, volatility is a nightmare. To a trader, volatility IS opportunity.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.