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BK: Putting the Dollar “Dive” in Perspective

By - - Market Sentiment on May 17, 2017 9:16 AM Follow-Ups images
Plenty of angst and ink spilled this morning on the US Dollar “diving” on Trump political chaos. Typically when everyone starts worrying about the same thing, everyone is wrong. In an effort to make some of us “not wrong”, BK thought he would give some perspective to the so-called “dive” in the dollar.
It appears that most people have their knickers in a twist over the fact the dollar has broken a long term up trend line.
US Dollar Breaks Uptrend Chart here:
screen-shot-2017-05-17-at-8-14-15-am
As you can see from the chart, it is true that a trend-line is broken, but there appears to be plenty of support.  Moreover, the dollar broke an uptrend line in 2016 only to rally once again.  Additionally, since the 2011 lows the US Dollar is up +31.5%; this most recent “dive” represents an -8% decline from the recent peak. Until proven otherwise, this appears to simply be a correction in a longer term bull market.
While political chaos may indeed dent the armor of the dollar, it is not giving up the throne as the reserve currency overnight.  To BK’s mind, the dollar should benefit from both positive and negative events.  If the political chaos is quieted and the economy gets on track then the dollar should rally.  On the other hand, if a political crisis in the US is not contained, then during periods of global financial stress the dollar tends to rise.
As of now, BK is not long the dollar but we all know he likes to run away from the crowd.

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Dan: Remember what you are celebrating – $SPX

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