Since my last post USDCAD has set a higher high and this made a second touch on the declining trend-line. Coupled with the big rejection (wick to the upside) this further confirms my expectation for USDCAD .
On the 15 minute timescale, I count a small 5 wave downward correction from the high set yesterday. A good entry point (if I wasn't already short) would be on a break below after a lower high is set sometime next week.
Let's see. Protect those funds everyone
Why? I am not going to outline the full case but summarise it to 2 factors:
1. The vast increase (almost 300%) in currency supply post-2009 crisis (this may at some point tip into hyper-inflation) and seeming inability to slow the "printing presses" (most new currency is not physical) points to the possibility that the monetary policies used over the past 10 years are not working and are also irreversible.
2. The USD as the foundation of most other fiat currencies is backed up by 2 things;
i. The ability of the US government to pay its debts in full and on time,
ii. If unable to pay, the US government has the ability to tax its citizens more to make up the short-fall. In effect the fiat currencies of the world are guaranteed by the ability of the government to tax its citizens and businesses in the future. If you look at US politics presently and come to the conclusion that it would be possible for the government to raise taxes on the population then you believe the foundation of the fiat currency system. Personally, I doubt their ability or political will to work together to raise taxes. I also doubt the intention of the US to make good on its debts - there has only been one time the the history of the USA that they paid off their debts without resorting to inflation to shrink the size of that debt - that was post-WW2 when a growing young population (almost without international competition) were able to generate a significant surplus. Today the picture is different.
Rant over :)
If I could add to point ii; There is a growing awareness internationally that there is no amount of tax increase that would enable the US government to pay off the interest and principal of their debts.
The estimated income of the federal government is $3.6 trillion https://www.thebalance.com/current-u-s-f... versus a national debt of 22 trillion (and accelerating https://www.npr.org/2019/02/13/694199256...). Annual Government income is 6.1% the value of all debts. Where is the surplus to pay for the infrastructure and services that a first world economy expects as well as to service the interest as well as to pay down the principal? I don't think that it is there and that all that can be expected is for the government to pay the interest and roll the debt over once due. All this plus the accelerating deficit spending has me genuinely concerned.