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Monday, December 08, 2014 2:39 AM

"You Missed Your Chance"

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Check out this Bloomberg silliness by writers Andrea Wong and Liz Capo McCormick: You Missed the Chance to Buy the Dollar.

Anyone who was waiting until after today’s U.S. employment report to get in cheaply on the dollar rally probably blew that chance.

Trading patterns were showing as recently as three days ago that the five-month rally that has taken the greenback to multiyear highs against many of its counterparts was losing momentum and strategists were saying gains would slow with the absence of any additional catalysts before year-end. Those same measures are now suggesting that the dollar’s ascension into 2015 is looking unchallenged.

“People had thought we’ll get some pullbacks in the dollar and we’d get some better levels to buy,” Niall O’Connor, a technical analyst at JPMorgan Chase & Co. in New York, said by phone. “The price actions today have been impressive. We see a higher risk we can extend” through further levels.

“The technical breakdown we saw this week in the euro effectively says the currency has resumed its downtrend,” said MacNeil Curry, Bank of America’s head of technical strategy. “We expect further weakness in the euro and dollar gains to persist. Another dollar correction may happen down the road or in 2015, but at this state in the game the trend is still pretty sizable” for dollar appreciation.

“You have the interest rate support, there’s a lot of underlying foundation in this move,” Brad Bechtel, managing director of Faros Trading in Stamford, Connecticut, said in a phone interview Dec. 3.

Goldman Sachs forecast last month the dollar will rally 7.1 percent to 130 yen in 12 months and 6.5 percent to $1.15 per euro, eventually to parity in 2017. Morgan Stanley estimated the U.S. currency will rise to 127 yen and $1.12 per euro by the end of next year.
Too Late!

That article reminds me of the nonsensical announcement "It's Too Late".

Rah Rah Sis Boom Bah

At first glance, the headline is not all that ridiculous. After all, many bears have been pronouncing the death of the dollar for what now seems like forever. I took the other side of the coin.

When hyperinflationists predicted the dollar would go to zero, I took the other side of the debate and said buy the dollar.

Hyperinflation is still preposterous of course, but the time to buy the dollar was long ago, not on some imperceptible dip a few days before the payroll report.

Chance to Sell

Goldman Sachs sees a "7.1% rally". Bank of America sees "pretty sizable dollar appreciation", etc., etc.

Such one-sided bullishness is the overwhelming consensus. I believe the reversal will be spectacular not only in the dollar, but in dollar-related equities.

So, if indeed you "missed your chance to buy", and you did (not a few days ago but months ago), what about the opportunity to sell (short)?

Mike "Mish" Shedlock

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