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I've had some followers ask me to take a look at the recent selloff in the dollar, and so that's what this post is all about. I think a couple of things are important to understand when looking at currencies.
Firstly, while the recent movement seems drastic and violent, it's actually rather tame compared to moves from years past. We are still trading within the range we entered in 2015, and understood from that perspective it's easier to analyze rationally. I've seen a couple posts claiming that "the end of the dollar is neigh if 'x' trend line gets crossed", but hysteria like that isn't helpful at all.
Secondly, from an investment point of view, I generally want to be long U.S. Dollars. The U.S. has favorable demographic dynamics compared to basically every other developed nation, and the dollar remains the world's reserve currency. The recent price weakness is a continuation of inflationary expectations on the part of the market in reaction to the recent federal reserve stimulus actions, but in the past these actions haven't caused an uptick in velocity of money, and thus any selloff represents, to me, a buying opportunity.
That said, I'll be waiting for the selling to abate, and I'll only be looking to buy once the bid is back behind me. Now does not appear to be that time. However, I'm still bullish long term and that's the framework I'm working from.
Firstly, while the recent movement seems drastic and violent, it's actually rather tame compared to moves from years past. We are still trading within the range we entered in 2015, and understood from that perspective it's easier to analyze rationally. I've seen a couple posts claiming that "the end of the dollar is neigh if 'x' trend line gets crossed", but hysteria like that isn't helpful at all.
Secondly, from an investment point of view, I generally want to be long U.S. Dollars. The U.S. has favorable demographic dynamics compared to basically every other developed nation, and the dollar remains the world's reserve currency. The recent price weakness is a continuation of inflationary expectations on the part of the market in reaction to the recent federal reserve stimulus actions, but in the past these actions haven't caused an uptick in velocity of money, and thus any selloff represents, to me, a buying opportunity.
That said, I'll be waiting for the selling to abate, and I'll only be looking to buy once the bid is back behind me. Now does not appear to be that time. However, I'm still bullish long term and that's the framework I'm working from.
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