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The US Dollar Index Review Mar 10

Hi Koalas,

it has been some time since we did a US Dollar Index review and i think it is time to do one now.

These days with all the apparent optimism with regards to the American economy, we must ask ourselves. Are we really there?

Is the recovery sustainable?


Source: Bloomberg

I always love to zoom out for a better perspective and this is what the chart is telling me. As much as the Uncle Sam fans are celebrating an apparent recovery, the US Dollar Index faces a tough resistance for now.

For the month of June and July in 2009, the US Dollar index attempted to go beyond the early 80s level and failed. Fast forward to today, we are seeing similar conditions and with Friday’s close, we are pointing down.

This is not surprising as the US economy is really not out of the mess yet.

  • Budget Deficit remains high. Latest value from TreasuryDirect.gov $12,575,479,490,348.47
  • Unemployment Rate in US is at 9.7%
  • Foreclosures remain high. Reported that February represents the 12th consecutive month with more than 300,000 foreclosure filings. This remains a drag on Home Sales and it’s positive effect on the economy
  • Bank closures continue! Reuters report that regulators on Thursday seized a small New York bank, bringing the number of U.S. bank failures this year to 27

We can go on with the various aspects of the economy but i think the above points are sufficient for now. The US economy is simply not there yet and the apparent optimism now may be a facade.

Lose the emotions and trade the facts! Monitor the developments and be ready to adjust.

Trade Safely.

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