Excerpt from Today’s Letter – whole letter HERE
Did you get that? The point is: the Fed’s telegraphed position does not bode well for the US dollar.
There is the obvious poor performance of the US dollar telling the story; but there’s a little more to watch … like the performance of gold. A very broad, long-term theme we still hold to by a few threads is one where the US dollar rallies on major risk aversion. More than likely such an environment will again be sparked by trouble first out of the Eurozone and then less confidence in China.
Gold is taking a bite out of that theme, as the risk-averse dynamics seem to favor gold over the dollar lately.
Larger chart HERE
Perhaps it’s not even being debated, but gold’s move is an absolute safe-haven play that’s capitalizing on investors’ distaste for, or rather their negative perception of, major fiat currencies; nothing more. And the fact that the S&P 500 price action in the wake of yesterday’s Fed move is not sending its own signal of risk appetite (while risk currencies are stronger and US Treasuries are stronger) underscores investors’ distaste for dollars. It may take a Halloween sugar-high to get the dollar moving up again. Unfortunately for the buck, that scary day is more than a month away.
Key Point that Could Change this Quickly: China. It seems US-Chinese relations are getting worse. The saving grace for the buck would be a risk bid. We can’t guess or forecast that … but we have to keep that in mind.
…..read Jack’s whole letter on the Dollar, Euro & Gold HERE