How will the U.S. economy, particularly exports, cope with a rising dollar? Pretty well, we should expect. Even though a strong dollar will create drag for U.S. companies geared to selling abroad, there are reasons to doubt that it will slow the steady trek higher this summer that I’ve projected for U.S. stocks. For one, investors have been discounting a strengthening dollar all along, and it is already baked in the cake. And for two, it will rev up domestic consumption of imports. Granted, the lion’s share of the proceeds will go back to Canada, Europe and Asia. But U.S. vendors — of everything from cars to anchovies — will take their cut, and that should be sufficient to provide a net boost to an economy that has continued to chug along. Incidentally, my target projection for the Dollar Index, currently trading for around 94.04, is 96.43 — a pretty big move percentage-wise. This is corroborated by a technical pattern I’ve flagged to subscribers on the Rick’s Picks home page tonight. There is an unusually good trading opportunity in the offing, but without going into the details, it makes me even more confident about the dollar’s continued rise.
Rick’s Picks trading ‘touts’ are for educational purposes only. Past performance is no guarantee of future performance. (See full disclaimer at https://www.rickackerman.com/)
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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