The Decline of the US Dollar

[wavepicker]

Re: The Death of the Dollar

wavepicker

Summary: The dollar is in its death throes. Any recovery will be short term (perhaps up to 12 months, but I suspect very much shorter) only.

Hello Red,

good to hear from you! Where have you been as have missed your posts?

Agreed the long term trend of the USD is down, never ever have I thought otherwise. But there will be retracements on the way down, perhaps some lasting longer than 1 year, that has been my argument(not with you) but others on this thread, but they are so fixated on the present, they forget to look at the big picture.

Just look at the USD Index since the USD was no longer backed by Gold since 1976. It has been in a downtrend, so why would I think it is about to get long term bullish? Well it won't But you will also notice that it's had even longer downtrends than the one we are in in the past and had sizeable rallies lasting a while before resuming bearishly. Historically the long term pattern has not gone straight down but been very very volatile, so when someone says this thing is gonna drop like a rock, then you gotta ask yourself the question, yeah perhaps in the long term but right now? Well maybe but then again maybe not, it might also do some fancy footwork for a while, confuse the hell out of everybody first and then ultimately head south as you say in the longer term. You will notice last time it broke lower in the early 1990's it "jammed back up". Could it be that history repeats itself?

Cheers

 

[Mofra]

Re: The Death of the Dollar

Back on the subject itself, go back and have a good read of rederob's excellent post. He is right on the ball and if you do not agree then in my humble opinion you have a lot yet to learn or you are just listening to the Wall Street spin doctors.

Where did I disagree with rederob? Or mention that I think the USD is poised for recovery? If anything the situation worse than some here expect because of the 2002-04 accumulation of US currency by Asian treasuries provided a false support that is not sustainable in the long term. Without Bernake's interest rate slaying sword the signs are poor for the USD.

 

[rederob]

Re: The Death of the Dollar

I am still of the opinion that EW was not wrong in the last correction, nor is it wrong now, the current leg is still part of the correction that started on the 16th July unless it’s invalidated and disproved which it has not just yet

Elliott Waves are never wrong.
They just revise the count pattern as more data emerges.
So wavepicker is on safe ground.

However, the thread is supposed to speculate on the death of the dollar, and in this regard some recent posts don't reveal too much on that front.
5 years ago I would have been willing to have an each way bet.
But today the weight of evidence suggests there is nothing short of a recession or similar traumatic event that will reinvigorate the US dollar.

From a personal perspective, where most of my investment dollars are long term and in commodities, it means that profits will be seriously eaten into by exchange rates. While metal producers have had a great run in recent years, in the present financial year they will need to do at least 15% better just to retain parity with 06/07 results (due to the US dollar denomination of their sales).
Bit by bit I am moving money from metals into energy where I anticipate greater percentage returns over the next few years. This is partly a reflection of my view that peak oil production will be achieved in the next year or so, and oil demand is progressing relentlessly higher. Note that oil is USD denominated, also. Which to me suggests that the weak greenback will see oil prices sitting well over $100 next year. In Australian dollar terms we should be insulated from some of the shock due to our stronger currency. Nevertheless, we will all become more "conservative" in our total energy footprint when $100 oil is hit, which in turn could reduce demand growth and give us a slightly longer buffer before hitting the slippery slope of Peak's downcurve.

 

[champ2003]

Re: The Death of the Dollar

Elliott Waves are never wrong.
They just revise the count pattern as more data emerges.
So wavepicker is on safe ground.

However, the thread is supposed to speculate on the death of the dollar, and in this regard some recent posts don't reveal too much on that front.
5 years ago I would have been willing to have an each way bet.
But today the weight of evidence suggests there is nothing short of a recession or similar traumatic event that will reinvigorate the US dollar.

From a personal perspective, where most of my investment dollars are long term and in commodities, it means that profits will be seriously eaten into by exchange rates. While metal producers have had a great run in recent years, in the present financial year they will need to do at least 15% better just to retain parity with 06/07 results (due to the US dollar denomination of their sales).
Bit by bit I am moving money from metals into energy where I anticipate greater percentage returns over the next few years. This is partly a reflection of my view that peak oil production will be achieved in the next year or so, and oil demand is progressing relentlessly higher. Note that oil is USD denominated, also. Which to me suggests that the weak greenback will see oil prices sitting well over $100 next year. In Australian dollar terms we should be insulated from some of the shock due to our stronger currency. Nevertheless, we will all become more "conservative" in our total energy footprint when $100 oil is hit, which in turn could reduce demand growth and give us a slightly longer buffer before hitting the slippery slope of Peak's downcurve.

And this all points to more conservation of Oil and alternatives to fight off climate change which of course will lead to an enormous flight into uranium! Funny how this is all tied in in some way or another. The dollar seems to be in peril and gold seems to be the immediate beneficiary.

 

[theasxgorilla]

Re: The Death of the Dollar

Let me refresh your memory then:


https://www.aussiestockforums.com/forums/showthread.php?t=4888&page=34

Your reply(post #678) to post #676(which was a continuation of posts #603,662,and 676.)

“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Maya Angelou.

You have an excellent memory.

I'm sorry if you thought I was laughing AT you. I wasn't. I found it amusing because Edwood had wondered the same thing at almost the same time ie. how you were measuring that there were 'way too many bulls in this market'. Consistent and tight Elliott Wave analysis followed by a seemingly subjective and sentiment based statement. Given that you yourself have stated that I seem not to have grasped EW fully I thought you'd be impressed that I can tell the difference. You ought to be flattered that people pay enough attention to your analysis to notice the difference .

I try not to take myself too seriously.

 

[wavepicker]

Re: The Death of the Dollar

“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Maya Angelou.

You have an excellent memory.

I'm sorry if you thought I was laughing AT you. I wasn't. I found it amusing because Edwood had wondered the same thing at almost the same time ie. how you were measuring that there were 'way too many bulls in this market'. Consistent and tight Elliott Wave analysis followed by a seemingly subjective and sentiment based statement. Given that you yourself have stated that I seem not to have grasped EW fully I thought you'd be impressed that I can tell the difference. You ought to be flattered that people pay enough attention to your analysis to notice the difference .

I try not to take myself too seriously.

Firstly I remembered because I don't read or post as many posts as you on these boards.

Secondly, EW and sentiment go hand in hand.

ASX, you have made numerous critcisms of EW in the past both in this forum and your blog.

It's good to hear you don't take yourself too seriously, but you do so more than me, being a mod and all.

For me this place is just for entertaiment value, but it can also become a distraction. Time spent better elsewhere such as studying the market.

BTW Good job on your blog

Cheers

 

[wayneL]

Re: The Death of the Dollar

Wayne,

Considering communism has done more to destroy the planet than any other political doctrine/system known, how is greed linked to such a system?

Well I don't think greed is confined to any one ideology; in any case, my comments were in no way directed at any particular political/economic system.

Those who own look after what they own.
Those who don't own abuse to the fullest extent what they don't own.
Russia is a good casestudy.

No straws intended

Cheers...

It is true that owners will look after their own. But greedy owners will:

* happily rape and pillage someone else's plot. e.g. destruction of Indonesian & New Guinea rainforests for cheap hardwood. Destruction of Amazon rainforest for cheap grazing for Burger King pillage of fish stocks and ocean environment... and thats just for a start.

* Be energy gluttons. Buy SUVs far larger than their needs, build homes vastly larger and more energy hungry than necessary. Global Warming anyone? Peak Oil anyone?

* Invade sovereign nations for oil and splatter radioactive uranium-238 all over the place.

Owners just have NIMBY syndrome, but greed still destroys.



N.B. Does not imply that all owners are greedy, many are very responsible... and is still not comment on any political/economic system.

 

[It's Snake Pliskin]

Re: The Death of the Dollar

Considering communism has done more to destroy the planet than any other political doctrine/system known, how is greed linked to such a system?

Well I don't think greed is confined to any one ideology; in any case, my comments were in no way directed at any particular political/economic system.

Wayne, I was genuinely interested in an answer to this question from you or anyone else.

It is true that owners will look after their own. But greedy owners will:

* happily rape and pillage someone else's plot. e.g. destruction of Indonesian & New Guinea rainforests for cheap hardwood. Destruction of Amazon rainforest for cheap grazing for Burger King pillage of fish stocks and ocean environment... and thats just for a start.

* Be energy gluttons. Buy SUVs far larger than their needs, build homes vastly larger and more energy hungry than necessary. Global Warming anyone? Peak Oil anyone?

* Invade sovereign nations for oil and splatter radioactive uranium-238 all over the place.

Owners just have NIMBY syndrome, but greed still destroys.



N.B. Does not imply that all owners are greedy, many are very responsible... and is still not comment on any political/economic system.

Thanks for the comments.

What is NIMBY syndrome?

Global warming is happening but for anyone to say humans are causing it borders on charlatanism. (not attacking) Many people are prepared to talk about it which is good, but it is at this point unable to be disproved.

Russia has just taken the north pole. What awaits there?

 

[wayneL]

Re: The Death of the Dollar

What is NIMBY syndrome?

Not In My Back Yard

 

[It's Snake Pliskin]

Re: The Death of the Dollar

Not In My Back Yard

ah, got it.

 

[MARKETWAVES]

Re: The Death of the Dollar

Us Dollar
--------------
( Usd/Chf )
---------------------------------------------------------
Here is a probable Wave-count

( Longer-Term ) Daily Bars
------------------------------------------------
Only a Probability .............Not Cast in Stone !

 

[DTM]

Re: The Death of the Dollar

Hey......, welcome back stranger.

Good to see you again and look forward to your posts.

Daniel

PS I sent you a pm if you ever decided to clean out your inbox.

 

[wavepicker]

Re: The Death of the Dollar

Us Dollar
--------------
( Usd/Chf )
---------------------------------------------------------
Here is a probable Wave-count

( Longer-Term ) Daily Bars
------------------------------------------------
Only a Probability .............Not Cast in Stone !

I agree MW. For the last month now I have been saying here that the movement down in the USD will be limited from here. Perhaps some minor subdivisions lower to finish the pattern since early 2006. I would expect some sort of rally to start by early next year

All this is accompanied with sentiment that is hyper bearish against
USD. The last time this happened was Dec 2004 and then the dollar had a one year rally.

The move down since early 2006 appears to be highly corrective. IMO it would be difficult to count it anything else other than and abc(black labels) with black wave b being a contracting triangle which is the biggest clue the move that has followed is the last before a major upward rally since these contracting triangles always PRECEDE the last move in a sequence.


The chart is a long term (weekly EW count), sorry itg's hand drawn and a bit hard to read!!

Cheers

 

[rederob]

Re: The Death of the Dollar

I agree MW. For the last month now I have been saying here that the movement down in the USD will be limited from here. Perhaps some minor subdivisions lower to finish the pattern since early 2006. I would expect some sort of rally to start by early next year

All this is accompanied with sentiment that is hyper bearish against
USD. The last time this happened was Dec 2004 and then the dollar had a one year rally.

The move down since early 2006 appears to be highly corrective. IMO it would be difficult to count it anything else other than and abc(black labels) with black wave b being a contracting triangle which is the biggest clue the move that has followed is the last before a major upward rally since these contracting triangles always PRECEDE the last move in a sequence.


The chart is a long term (weekly EW count), sorry itg's hand drawn and a bit hard to read!!

Cheers

wavepicker
I think we need to see 75cents before you get any bounce.
I am not optimistic of a bounce greater than 6 months, and actually favour a continuation to 72 cents.
When the USD fell through support in early September it also broke through the otherwise long term "bullish" falling wedge.
This suggests a greater likelihood of continuing weakness.
The Fed is in a catch 22 dilemma.
To curb the inflationary impact of a falling dollar it needs to raise interest rates, which in turn will exacerbate the current housing crisis.
Unfortunately the housing crisis has embedded itself in the broader financial sector through credit instruments that remain largely hidden until until financial institutions themselves expose themselves - and their probable risk.
I think it is more likely the Fed will reduce interest rates further to lessen mortgage defaults, much of which has yet to flow through US housing markets as interest rate resets (the "honeymoon is over" syndrome) trigger significantly more instability.

 

[wavepicker]

Re: The Death of the Dollar

When the USD fell through support in early September it also broke through the otherwise long term "bullish" falling wedge.

Hello Rederob, Yes it broked through support, but I don't subscribe to this old Wall St axiom of selling breakdowns of for that matter buying breakouts. This is a very poor strategy IMO and this current move can just as easily be a false break. Fast moves in the opposite direction start from false breaks and present some of the best trading opportinities IMO.
As for the falling bullish wedge or Ending Diagonal scenario it's still alive and HAS NOT been invalidated yet.
Throughout it's history since 1972 the USD has been been in a long term downtrend. I am not and never have disputed to the contrary, irrespective of what some people on this thread think. My point is that the USD has broken through support at othe major long term junctures through it's history only jam back up again just to confuse the masses. I would be surprised if this is an exception. You and other have very valid long term fundemental points regarding the USD demise. I totally agree with you here, but IMO it just ain't gonna happen that fast.

This suggests a greater likelihood of continuing weakness.

Don't disagree but I think it will limited as USD tends to be seasonally stronger later between December to February


Have a great weekend!!

 

[MARKETWAVES]

Re: The Death of the Dollar

Hi Wavepicker ,

This is a Short-term view of the US Dollar that I just worked out
--------------------------------------------------------------------
I think that price is contained in the gap-up spike from this past friday's NFP report .
-------------------------------------------------------------------
The low end of the range of wick of the bar is now looking like the end of a wave 4
buying opportunity . So now it all about controlling the Risk if you decide to go long .
Keep those stops tight !

Another point to make here is that the NFP report happened at I think it was
(9:00 am New York Time ) which means that Asia was asleep at the time , when
they wake up the Us markets will be closed .....
So I guess Sunday and Monday will be the time for them to react to those NFP numbers .

A close above 1822 (30 min bars) could start to get a whole lot of people excited........

--------------------------------------------------------------------------
( See chart below )

 

[MARKETWAVES]

Re: The Death of the Dollar

Usd/Chf
Heres a closer look .........
///////////////////////////////////

 

[MARKETWAVES]

Re: The Death of the Dollar

Now that friday's NFP Fiascso is over -

Here is a probable wave-count scenario ............
-------------------------------------------------------
Only a Probabilty! ........ Not cast in stone !

Looks like we go that strong break-out after all
( Price is now moving towards intended targets )......

 

[Uncle Festivus]

Re: The Death of the Dollar

Japan and China lead flight from the dollar

http://www.telegraph.co.uk/money/ma...7/10/16/bcnchina116.xml&CMP=ILC-mostviewedbox


Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.

The US requires $70bn a month in capital inflows to cover its current account deficit

Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. "These numbers are absolutely stunning," said Marc Ostwald, an economist at Insinger de Beaufort.

Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.
Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said.
The release comes a day after the IMF warned that the dollar was still overvalued and likely to face "some depreciation in the medium term".

 

[rederob]

Re: The Death of the Dollar

Looks like we go that strong break-out after all
( Price is now moving towards intended targets )......

That was 9 October.
What do we now have?
And what is the actual target we need to keep an eye out for - so I can focus?
By the way, I think the decline of the greenback is hastening as weeks pass.
And I prefer the EUR/USD as a measure, especially given the recent decline of the Swissie against stronger currencies (including AUD and CAD).