Trade Data Suggests A Stronger Greenback
April 25, 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 and Canadian dollar are stronger as the new trading week begins, and they are materially so relative to the Japanese Yen with the Yen/dollar trading nicely above 111.00 as we write; however, we should note that at one point on Friday, following the changed policy announced by the Bank of Japan where the monetary authorities are quite literally forcing banks to lend to borrowers for infrastructure programs despite deepening negative interest rates, the dollar traded very nearly to 112.00. It has fallen back from those high levels but we note that the volumes of trade seem to be waning as the dollar weakens and that, we suggest, means that a stronger dollar… a weaker Yen… is the most likely course of events. If we see the Yen/dollar trade down to 110.70-110.90 during the trading session in Europe and/or North America, our propensity to be a buyer of dollars shall rise a pace. At the same time, we continue to pay a great deal of heed to the “reversals” to the downside forged by the EUR in daily terms and in weekly terms two weeks ago. Resistance to the EUR’s strength beyond 1.1400-1.1425 seems material in nature, and on the hourly charts since mid-March there does seem to be a sort of rounded, important top having been formed there.