Dollar Selloff in Danger of Becoming a Rout

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Markets push higher
Gold through 2K dollar weaker
Nikkei -0.20% Dax 0.75%
UST 10Y 0.67
Oil $43
Gold $2006/oz
BTCUSD $12244

Asia and the EU
No Data

North America Open
USD Building Permits

Equities were higher, the buck was lower and gold popped back above the $2000/oz level in quiet late-summer trade with no economic newsflow on the docket.

Markets were generally steady with risk on flows continuing to push equities higher as Nasdaq cleared the 11300 level adding 25 basis points in overnight trade. There was no economic news on the calendar in Europe while in North America the markets were only looking at housing data releases.

For now, the markets are simply content to push the trend flows in their long term direction with the weak dollar trade becoming more pronounced by the day. Both euro and cable were higher against the greenback with the former eyeing the psychologically key 1.2000 level this week.

The state of political disarray is clearly weighing on the buck as the failure to produce more fiscal stimulus, the clearly partisan skirmishing over mail-in voting that threaten to undermine the credibility of the election are all taking their toll on the dollar.

Nothing is expressing the weak dollar sentiment better than gold which is once again above the $2000 level mark. Although gold is certainly a real yield play, the last week or so saw US yields actually rise yet the yellow metal remains firmly bid as it is now acting as a store of value as the market loses faith in the leadership of the United States of America.

The longer the stalemate in DC remains in place the greater the danger that the dollar selloff can turn into a rout.

Boris Schlossberg
Managing Director

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