The dollar Swings Its Mighty Hammer…

And now… Today’s A Pfennig For Your Thoughts…

April 23, 2018

* Trade War talk softens…
* Gold gets whacked at $1.350, again!

Good Day… And a Marvelous Monday to you! Another good weekend for my beloved Cardinals, as they’ve proved one thing so far this early season, and that is that they can beat the Reds… The Mets come to town now with their great pitching staff…. A good test… I get to watch the games down here in S. Florida because I subscribe to the MLB package… We had a good meeting with our guy who will do some construction for us down here on Saturday… I got the old “price shock” but it is what it is… GULP! I’m still dealing with the side effects of the new chemo that has wiped out the tumor in my mouth. so some bad with the good… America greets me this morning with their song: Sandman… I used to play that one on my guitar, but that was a long time ago!

Well, when I left you on Thursday, the currencies were rebounding from their previous two-day selloff… But that didn’t last very long and soon the dollar was back on top of the heap, swinging its mighty hammer. And the overnight markets last night kept things going for the dollar. i’m really surprised and then I’m not surprised… I would have thought that all that’s going on that should be putting the dollar on the chopping block, the dollar would be getting sold… So, I’m surprised that it’s not… But I’m also not surprised because the Plunge Protection Team (PPT) exists, and they live for the times when the dollar is getting sold and looking iffy, for that’s when they come in with both guns blazing… I’m just saying…

So, the Dollar Index is one full point higher than it was Thursday morning, and trades this morning at 90.71. The Big Dog, euro, has seen its lofty level of 1.24 of last week go bye-bye, and the two big movers have been the Aussie dollar (A$) and kiwi… The A$ had briefly traded up to 78-cents last week, and it starts the week trading with a 76-cent handle… Same for kiwi, which had briefly touched 73-cents, is trading this morning with a 71-cent handle…

Even the Chinese renminbi, which had been on a mission to prove that Trump’s sanctions weren’t going to hurt them… You know the old, sticks and stone may break my bones but tariffs won’t hurt me! But that was last week, this week we saw the renminbi get priced at a much weaker level in last night’s fixing.

An update on the Honk Kong Monetary Authority’s (HKMA) attempt to stop the selling of the honker (Hong Kong dollar)… I read this weekend that the HKMA has spent $6.5 Billion intervening, and trying to turn the honker around. That’s $6.5 Billion with a capital B! Somebody is bound and determined to keep the honker weak, but imagine if the HKMA hadn’t spent $6.5 Billion keeping the honker from going into a real tailspin?

The talk of a Trade War have softened quite a bit, as the two main combatants, the U.S. and China, have stepped back to see what they nearly caused, and have had second thoughts about it… That’s a good thing, folks… And one of the reasons that the price of Gold has also stepped back…

The 10-year Treasury is seeing some selling so heavy that the yield on the 10-year is 2.98% this morning ahead of a week packed with economic data and new debt supply. The 3% level, which was last briefly touched in 2014, is seen as the end of the bond rally, if the level is met and holds… And holds is important, because 4 years go, we thought that bond yields were heading to the stars, only to find out that it was a false dawn.

The Eurozone saw a good economic print this morning, but so far it hasn’t helped the single unit fight off the dollar’s might hammer. The March PMI, (manufacturing index) rose to 55.3 from 55.1… I slight move higher, but a move higher nonetheless, and another sign to the European Central Bank (ECB) that they should be implementing plans to unwind their stimulus…

The price of Oil slid down from its lofty price of $69 on Thursday, and is trading this morning at $68… I read a report this weekend that hedge fund managers are forecasting an Oil price of $80 this year… WOW That would certainly help the Petrol Currencies, eh?

On Thursday morning I pointed out that Gold was trading right on top of the line in the sand $1,350… and wondered out loud when the “boys in the band” would show up to rectify that! And show up they did… And trading 270,000 contracts they got Gold to fall $10.10 on the day to close at $1,335.20… And now we have the aforementioned softening of Trade War talk going on, and it has pushed the price of Gold even lower to start the day today, with the shiny metal losing $5 to start the week.

I mentioned above that this week is packed with data like our own PMI, that we refer to as the ISM (manufacturing index), Consumer Confidence, Durable and Capital Goods Orders, and to round out the week we’ll get out first look at 1st QTR GDP… Look for it to have fallen from the 4th QTR’s final print of 2.9%… I’m thinking somewhere around 2%, which wouldn’t be very good, or be an indication that interest rates need to go higher, but then will the FED be paying close attention? I doubt it…

To recap… Well the currency rally that began on Thursday morning crumbled and the dollar was on top of the heap swinging its mighty hammer by the end of the day. And has continued to rule the roost in the overnight markets. We have a plethora of data this week to comb through, and I’m not of the opinion that any of it will help the dollar maintain this pressure. The 10-year is oh-so-close to 3%, which could be a line in the sand that indicates the bond rally is over for good, and Gold got whacked once again after trading to $1.350 on Friday..

For What It’s Worth… this is a quick and dirty article about China enlarging their footprint in Europe… and can be found here: https://www.bloomberg.com/graphics/2018-china-business-in-europe/?cmpid=BBD042318_MKT&utm_medium=email&utm_source=newsletter&utm_term=180423&utm_campaign=markets

Or, here’s your snippet: “For more than a decade, Chinese political and corporate leaders have been scouring the globe with seemingly bottomless wallets in hand. From Asia to Africa, the U.S. and Latin America, the results are hard to ignore as China has asserted itself as an emerging world power. Less well known is China’s diffuse but expanding footprint in Europe.

Bloomberg has crunched the numbers to compile the most comprehensive audit to date of China’s presence in Europe. It shows that China has bought or invested in assets amounting to at least $318 billion over the past 10 years. The continent saw roughly 45 percent more China-related activity than the U.S. during this period, in dollar terms, according to available data

The volume and nature of some of these investments, from critical infrastructure in eastern and southern Europe to high-tech companies in the west, have raised a red flag at the European Union level. Leaders that include German Chancellor Angela Merkel and French President Emmanuel Macron are pressing for a common strategy to handle China’s relentless advance into Europe, with some opposition from the EU’s periphery.:

Chuck Again.. Longtime readers will vouch for me when I say this.. You can’t say I haven’t been warning you about how the former sleeping Giant, China woke up and decided to run the world…

Currencies Today 4/23/18… American Style: A$ .7638, kiwi .7173, C$ .7817, euro 1.2232, sterling 1.3962, Swiss $1.0236, … European Style: rand 12.2362, krone 7.8682, SEK 8.4797, forint 254.63, zloty 3.4257, koruna 20.7743, RUB 61.35, yen 108.25, sing 1.3230, HKD 7.8436, INR 66.44, China 6.2950, peso 18.70, BRL 3.4131, Dollar Index 90.71, Oil $68, 10-year 2.98%, Silver 16.94, Platinum $922.89, Palladium $1,019.60, and Gold… $1,330

That’s it for today… Well, I’m having sleep issues again… I was up at least 5 times during the night, and our little place down here, is just that little, which means I can’t walk the floors… I go out walking, after midnight… – THE GREAT Patsy Cline! My old colleague at Mark Twain Bank, used to ask me to play that song whenever he got a good sale completed… We had morning rain yesterday, and then it turned to another beautiful day here, much better than those chilly days back home, where it has finally begun to warm up… Earth, Wind and Fire take us to the finish line today with their song: After The Loving Is Gone… I have a thought there that I had better keep to myself! I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

 

) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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