The Dollar’s Decline Is Only Just Getting Started – Ep. 250

The Dollar’s Decline Is Only Just Getting Started – Ep. 250

Summary: The dollar's decline really started with the Fed's too-little-too late rate hikes. The rally of 2014 - 2015 was fueled by expectations of more aggressive Fed monetary policy that did not materialize. We've been trending sideways since then with the exception of an upward spike after the Trump victory. Now, as much of the hype surrounding Trump's election is losing its momentum, support for the dollar is waning. This is not a case of "buy the rumor, sell the fact". This is going to be a situation where the fact does not live up to the rumor.

* The dollar continued its losing streak today. The dollar index was down for the 8th time in 9 days
* The 9 day decline is about 2-1/2 percent
* The dollar index actually traded below 97 today for the first time since Donald Trump was elected President
* So we have wiped out 100% of the ill-gotten dollar gains that were racked up in the wake of that victory
* If you remember, when the dollar was rallying as a result of the trump victory, I said it was a sucker's rally and sure enough, that's exactly what it was
* The dollar's decline is only just getting started
* I think the dollar would have begun its decline a while ago had Hillary Clinton been elected
* But because of Trump's unexpected victory and the prospects of faster economic growth,
* Trump-flation (as if inflation were even good for the dollar) but to the extent that it made the Fed raise interest rates
* That's what created the rally and it was a great selling opportunity for people who understood what really was going on
* But all we've done thus far is get rid of gains that never should have been racked up
* The dollar hasn't really even begun its decline, but I think that decline is going to begin in earnest
* In fact, my next target for the dollar index is going to be around 92, which is about 5% below current levels
* But if we get below 92, that will be the dollar's lowest level since January 2015, so about a 2-1/2 year low, assuming we get there in the next couple of months, depending how long it takes to trade down
* But what really gets interesting once the dollar index gets below 92
* If you look at a chart, there's nothing but air between 92 and 80
* Because the dollar index rose in 2014
* The dollar had a huge rally anticipating the Fed's tightening monetary policy
* Tapering and all the talk about rate hikes
* That was probably the best year for the dollar
* And that momentum continued into 2015
* The dollar didn't lose its momentum until the Fed started hiking rates
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SchiffRadio Podcast Episode 8

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SchiffRadio Podcast Episode 7

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SchiffRadio Podcast Episode 6

SchiffRadio Podcast Episode 6

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SchiffRadio Podcast Episode 5

SchiffRadio Podcast Episode 5

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SchiffRadio Podcast Episode 4

SchiffRadio Podcast Episode 4

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