This from the comments section, and some great points / questions raised by valued reader “Rob”.
Great trading man…I’m glad to hear you’ve been doing well.
You bet USD is most certainly the “current” world’s reserve currency, and yes “obviously” takes flows as other assets denominated in USD are sold (an incredible privilege for the U.S – but unfortunately one that is currently being “so abused”).
We don’t see it in a day-to-day sense but….the fact is – the rest of the planet has had enough of the U.S abuse of it’s reserve status, and is making considerable effort to “insulate itself” from further devaluation. USD will rise but ( in my view ) only as a product of these market mechanics and NOT because anyone in their right mind is outright “buying USD”.
With some 85% of global forex transaction “still” involving USD ( as being the worlds reserve we have to appreciate how many countries “must” hold USD as a means to buy commods ) the ship can’t turn on a dime. It’s a cruise liner – not a speedboat.
Don’t be fooled. The macro vision has USD going to zero…while the shorter term zigs n zags may very well suggest USD strength.
In my view IT’S BY DEFAULT – in that USD is “still” the reserve, and as risk comes off – assets denominated in USD are sold and cash is raised.
EU is a disaster, China looking to slow moving forward, and a complete and total joke of recovery in the U.S. No one “wants” to buy U.S dollars. It’s “relative strength” is a mere by-product of simple market mechanics.
As I see it anyway…..
Great stuff Rob….you’ve obviously got your head screwed on right. You can take my crap with a grain of salt, and even better with a nice shot of Tequila.