IN THE HEART OF DXY
If I were a government bureaucrat, I'd be waking up in cold sweats at 3AM every night screaming 92 at the top of my lungs. Something is different in the markets right now, and DXY knows it.
Global uncertainty has had a pretty predictable cycle for a long time now:
As such, the DXY can - roughly - be considered a global report card on the actions of the US. If people like what is happening there, the money flows in. But that money quickly disappears the moment the US starts graffitiing the desks, again. With that context, the support we are seeing at 92 could best be described as a C- report.
Today, we got fresh news of a new vaccine trial with early reports of almost 95% efficacy, a monumental achievement for humanity. And yet the DXY dropped. As the world teeters on the edge of a vaccine, and a return to normal, the traditional cycle has yet to reach step 5. It's too early to be calling for the fall of Roman Empire, but maybe not too early to be stocking up on popcorn for the start of the show.
If I were a bureaucrat, I'd be worried and hoping the old adage comes true:
“You can always count on the Americans to do the right thing after they have tried everything else.”
If I were a government bureaucrat, I'd be waking up in cold sweats at 3AM every night screaming 92 at the top of my lungs. Something is different in the markets right now, and DXY knows it.
Global uncertainty has had a pretty predictable cycle for a long time now:
- Thing that people don't like happens
- Accumulate as much USD as humanly possible
- Watch on in horror as the US does something different to the rest of the world
- Trade as much of your USD for anything else. Rocks are good this time of year, right?
- The US recalibrates itself, and things start to get better
As such, the DXY can - roughly - be considered a global report card on the actions of the US. If people like what is happening there, the money flows in. But that money quickly disappears the moment the US starts graffitiing the desks, again. With that context, the support we are seeing at 92 could best be described as a C- report.
Today, we got fresh news of a new vaccine trial with early reports of almost 95% efficacy, a monumental achievement for humanity. And yet the DXY dropped. As the world teeters on the edge of a vaccine, and a return to normal, the traditional cycle has yet to reach step 5. It's too early to be calling for the fall of Roman Empire, but maybe not too early to be stocking up on popcorn for the start of the show.
If I were a bureaucrat, I'd be worried and hoping the old adage comes true:
“You can always count on the Americans to do the right thing after they have tried everything else.”
