Forex & commodities on April 25, 2018: outlook


Here are my discretionary thoughts on forex and commodities. I only trade the stock market.
Go to the homepage for my latest thoughts on forex and commodities.

Thoughts

  1. The U.S. dollar is starting to have a positive correlation with interest rates
  2. Whether interest rates breakout or not depends on oil.

1 am: the USD is starting to have a positive correlation with interest rates
The USD Index did not have a positive correlation with interest rates in Q1 2018. This surprised many people (myself included), who thought that the USD would rise along with interest rates.
This is starting to change. The USD Index is starting to go higher with interest rates. The 2 markets are now positively correlated.

A 10 year yield breakout above 3% would = a medium term breakout from its consolidation range.

1 am: Whether interest rates breakout or not depends on oil.
Interest rates are rising because inflation is rising. Inflation is rising primarily because oil is rising. In order for rates to meaningfully breakout above 3%, oil has to continue going up.
Oil’s main resistance zone is at $75-$80, which means that oil still has some room to rally in the short term. But this room is limited, which suggests that the rally in interest rates will be limited as well.

Read Forex & commodities on April 24, 2018: outlook

Bottom line

I only trade stocks. These are just my thoughts/outlook on other markets.

  1. Gold and silver are in bull markets.
  2. I’ve decided to buy some gold and silver as long term investments.
  3. The U.S. Dollar is in a bear market.

3 comments add yours

  1. troy- dont u thinkt that the reason why we saw weak usd – when interest rates went higher was
    1. higher oil prices – more usd selling linked to that.
    2. higher interest rates – more usd due to selling of us T-bonds
    3. i posted a long term chart eurusd on the FB page – im very bullish Usd at these levels….

    • I’m not so sure. I don’t think so. Oil and rates have been going up for quite a while right now. Don’t see why the USD would be reacting to this now and not earlier.

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