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Dollar Uptrend Intact but Short-Term more Tricky

Posted by WorldWideMarkets . on Aug 9, 2013 3:31:00 AM
The dollar has struggled in recent trading with the dollar index down 1 percent this week, 0.5 percent for the month and 2.5 percent for the quarter but the long term uptrend on strengthening fundamentals remains in place,  the dollar index is still up 1.7 percent for the year. Nearer term though, the dollar is going to struggle. The debate over tapering and the date it will start has some questioning when to buy given no clear trigger for a rally? And while the U.S. economy is stirring faster than anywhere else there are still a lot of unemployed consumers. The recovery has not created jobs at the same rate as that of other recessions which indicates the recovery is not so robust and that there will be fewer consumers to accelerate its pace. The price of gold seems to have steadied in recent weeks which is also not a good sign for the dollar. Gold tends to fall in price when investors are comfortable with dollars and other financial assets. And perhaps key is that there are also signs of life in the euro zone, the UK in particular as well as Asia and Japan. The U.S. was considered just a few months ago as the only place to invest. Now it seems there are alternatives and if there are alternatives, there are less reasons to buy dollars. The long term fundamental argument remains positive for the dollar but in the next weeks to months there are some rising and significant head winds. dollar trading
 

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