In the face of massive U.S. debt sales that seem to be flying under the dollar radar at the moment, and on days that equities are sold and Treasury notes bought, the dollar is holding ground well in regard to fair market value it seems. The economics are poor, but no worse than elsewhere, the outlook is benign, but where is there a strong economic outlook, and the markets are absorbing massive amounts of debt in the form of new Treasury notes; and yet the Usd is still holding onto support at 84.00 on the dollar index.
The pound, aussie and cad tried hard to break the dollar buyer’s resolve, but seemed to be impeded by the oil markets moves lower on the NYMEX, and equities leaking points on Wall Street. The Swiss franc and euro came under fire initially, and the Japanese yen came out as the clear winner on a day of mixed trading moves.
In reality the only currency that could withstand the fundamental pressure to de-value is the dollar, and it is testimony to the resolve of the most widely used reserve currency that it can hold current levels. That may all change however once the next round of equity buying starts; the dollar index is sitting on support at 84.00, but if it fails the 82.00 areas looks to come into view very quickly. The mighty dollar needs to hold, and then move higher if it is not to suffer a technical drop lower that may be hard to recover from with the Fed doing all that it can to get the greenback de-valued.
Asian markets may hold the key for initial break-out areas, one way or the other, and the fact that European markets held in the green may just nudge things down to test near-term support.