Quotable
“Every parting gives a foretaste of death, every reunion a hint of the resurrection.” – Arthur Schopenhauer
Commentary & Analysis
The “Three Calm C’s” suggest the dollar likely ranges for a while still.
If you’re a longer term trend follower, and you trade the US dollar index using an exchange traded fund, or the listed futures contract, you may not be a happy camper. The dollar index peaked at 99.21 back on the 13th of March 2015, just over a year ago. Since then, the index has been ensconced in a maddening range. From a wave perspective, it appears price action is tracing out some type of corrective wedge pattern. Once completed, it will set the stage for another trend move. My guess is the bull move will resume once this wedge is complete …
…but this maddening range could be with us for a while.
Why? Because of the “Three Calm C’s” so well described by Joachim Fels, global strategist for PIMCO, and for many years prior toiled away at Morgan Stanley. I always liked him. He seems grounded in reality; and has an excellent grasp of global macro IMHO.
[Note: Though Mr. Fels is better positioned than I am to make such a determination, I disagree with his contention there was some implicit agreement at the G-20 to stabilize the US dollar.As I said to our subscribers in a recent note—the G-20 can’t even agree on the type of wine and cheese they want on the hors d’oeuvre menu.]
Mr. Fels “Three Calm C’s” make a lot of sense to me; maybe because it dovetails nicely on my current intermediate-term outlook, much of which I have been sharing here lately. The three C’s are:
Unlike some other commentators who seem to believe China crisis is inevitable, I don’t. For the reasons enumerated in Currency Currents on March 13th; Lurching from nirvana to crisis; our dogma is barking?
So, if crisis is avoided at least for a while, then it’s unlikely we will see a major risk-bid into the US dollar (which will likely at some point be one of the drivers for the next trend move once this maddening range is complete).
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