19 January 2018: Why is the dollar going down?

The US dollar is at the lowest level against the Euro since the election of Donald Trump. Some time ago, most analysts did not find it odd that the dollar was going down, because of the election of the Donald as the President of the United States. But in the last couple of months things have changed. Circumstances have become more favorable for the greenback. It is now undisputed that the Fed is going to raise interest rates this year. Reports have been published that the US economy is doing pretty well. And that it will get an additional boost from the tax plans that have been recently approved by US Congress.
So, why is the US dollar steadily declining against other currencies? It is quite puzzling. Are other economies doing much better than the US economy? (No.) Is there more uncertainty surrounding the US than other parts of the world? (No.) Are other central banks going to raise their interest rates more than the Fed? (No.) Is this decline of the US dollar against other major currencies unsustainable? (Yes.) Expect the US dollar to rebound over the course of this calendar year. Reality will kick in with forex traders, it is inevitable.

white-chapel-logo-smallThe major US  indices closed lower on Thursday, as investors turned cautious amid concerns over a potential government shutdown. However, they are still hovering near record levels. The S&P 500 fell 0.16%, the Dow lost 0.37% and the NASDAQ closed slightly lower (-0.03%). Volatility was mainly directionless for most of the session, but the VIX managed to close more than 2% higher in the end. The fear index closed above 12 points for the first time in two months. UVXY ETFs gained almost 1%, whereas XIV ETNs were virtually unchanged (+0.02%).
Danny Daredevil was today’s winner among our models. His RSS improved to -6%. Adventurous Anny´s RSS remained unchanged at 23%, as she is still holding a cash position. Solid Suzy and Lazy Larry saw their RSS close marginally lower. It remained at 111%.
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

-5.80%

-7.64%

-7.64%

-3%

Adventurous Anny Cash 6 March 2017

22.91%

0.00%

0.00%

27%

Solid Suzy XIV 6 March 2017

111.10%

4.70%

4.70%

135%

Lazy Larry
XIV 6 March 2017

111.10%

4.70%

4.70%

135%

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

 

RS_v05-smallRené’s Reflections @ Friday: Friederike

Yesterday, our country was battered by one of the most severe storms to reach Europe in recent decades. It was called Friederike and it killed eight people in northern Europe. The wise thing to do was to stay indoors and wait for the storm to pass. Which I did.
Today, a look at the weather forecast for the next few days shows the wind has gone, but the sun will not return any time soon. An ideal opportunity to jump on my bike and pedal away out in the forest. Something tells me that might be the wise thing to do today. After all, if the sun doesn’t come to you…
I wish you a nice, calm & relaxing weekend, and hope to see you again next week!