24 August 2017: The decline of the US dollar

It hasn’t sunk in with the majority of American stock investors, but Forex traders (people who buy and sell foreign currencies to make a profit) know it for sure: Donald Trump’s presidency will not be very good for the American economy. The US dollar has been steadily declining against the euro and other currencies since shortly after his election. From last December onward, the US dollar has lost more than 10 percent of its value. In the short run, this might not be harmful to the US economy, because consumers in other countries can now buy American goods and services at a much lower price. But in the long run, a weak dollar is not beneficial to the confidence people around the globe have in the greenback. The moment will come that stock investors cannot deny this continuous descent of the dollar.

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Investors were a bit anxious because of US President Trump’s remarks about his willingness to let a looming government shutdown happen in autumn. All major US indices closed lower. The Dow lost 0.40%, the NASDAQ was 0.30% lower and the S&P 500 shed 0.35%. Volatility showed a mixed picture. The VIX shot up at the opening of the trading session, went down to go up again and after that went down. In the last hour of the session the VIX went up again. The final result was that the fear index closed almost 8% higher. UVXY ETFs profited only partly: it gained 1.5%. XIV ETNs closed almost 1% lower.
For a change, Danny Daredevil was the winner of the day. His RSS rose to 83%. Adventurous Anny is holding cash: her RSS remained at 4%. Solid Suzy and Lazy Larry had to take a small step back. Their RSS closed at 23%.
None of our models gave a trading signal at the end of yesterday’s session.

Model  Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

83.42%

-54.50%

-57.86%

45%

Adventurous Anny Cash 6 March 2017

3.84%

3.84%

-25.11%

8%

Solid Suzy XIV 6 March 2017

22.51%

22.51%

-2.12%

54%

Lazy Larry
XIV 6 March 2017

22.51%

22.51%

-2.12%

54%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

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The skies over Breda.
In the series ‘Hollands licht’ (Dutch light).
As seen on Tuesday.
Picture shot at the edge of the Mastbos forest.