Dollar On Thanksgiving Break
November 22, 2016
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
The US dollar is “resting” after the last few weeks of strength and this is to be expected; certain it is not “un”-expected. The Canadian dollar, however, is stronger and rather sharply so and this we find quite reasonable. The EUR and the Yen are “consolidating” their recent material losses and really no one should be surprised by that fact, with the focus upon an appearance by Fed Vice Chairman Fischer later today in New York of some interest. However, the general consensus… and by general we mean it to be almost universal… is that the impending December FOMC meeting shall result, finally, in the overnight Fed Funds rate being moved 25 bps higher… a change that is long overdue and likely not to be market moving when it is finally announced.
The markets are still trying to come to grips with the fact that we shall be dealing with a Trump rather than a Clinton Administration after the turn of the year, with Mr. Trump actually acting surprisingly “Presidential” over the weekend when compared to his unwieldy campaign persona, reaching out to “insiders” and “outsiders”… to friends and to foes… within and without the Republican Party for Cabinet posts. This is indeed laudable!
As for gold, it is far too early to become excited about gold’s prospects but we do get the sense that the bearish storm has been broken and that some support has been found. There has been support for “dollar” gold at or near $1205-1210, but only time shall tell if that shall be a more permanent support level. There has been better support for Gold/EUR at €1138-€1142/oz. and for Gold/Yen however at the ¥130,000/oz. level but even that support is tenuous. Certainly, however, it has been far wiser to be long of gold in non-US dollar terms of late than it has been to have been long of gold in US dollar terms given the weakness of the EUR and of the Yen. Again, we are of the mind only to be long of gold in the currencies we think shall fall relative to the dollar, for to use “devaluing” dollars to buy gold when one can use “devaluing” EURs and/or Yen is illogical on its face.