What a difference a year can make. The intensity of the U.S. dollar’s surge at this time last year caught many investors off guard, and contributed to a brutal sell-off across the commodity sector (though Gold held up reasonably well).
The situation with the greenback as the final quarter of 2015 unfolds is very different. As you can see on John’s 2-year weekly chart, a bearish descending triangle has formed in the U.S. Dollar Index which has met stiff resistance as expected between 96 and 97 over the last 2 months. Quite simply, the greenback continues to lose momentum and could easily correct more significantly over the next few months – particularly if there’s a collapse below the highlighted primary support band. RSI(14), which remained in overbought conditions for 7 months, has formed a bearish “M” and will likely test lower support levels in the weeks ahead. In addition, the 200-day moving average (SMA) will reverse to the downside prior to year-end if the Dollar Index can’t overcome the 96–97 resistance band and the descending triangle.
Dollar bulls were aided last year and early this year by the repeated promises of Fed officials to finally start an interest rate tightening cycle. However, weakening global growth led by problems in China, deflationary concerns, and a U.S. economy that just can’t seem to gain traction (hurt, ironically, by the dollar’s record-setting rise) are all combining to make the Fed look confused and foolish. Friday’s much weaker than expected jobs report did not help. Astute traders are not betting on a rate hike now until March 2016 at the earliest, based on fed funds futures.
In short, the still-crowded dollar trade has the potential to turn into a rush for the exits which would have positive implications for Gold, Oil and the Venture.
Big bid on GGI this morning.
Comment by Dan — October 5, 2015 @ 5:43 am
Big bid pulled just after I submitted the post.
Comment by Dan — October 5, 2015 @ 5:44 am
GGI on the rise. Broke that 10 cent resistance.
Comment by Dan — October 5, 2015 @ 5:59 am
GGI: Looks like someone out there took BMR’s trade advice. 😉
Comment by Treb — October 5, 2015 @ 6:04 am
GGI and GBB on the move Northwards. Hopefully pre-empting news for both. Frank has said they are working on a NR and Garibaldi could have news from Mexico and/or Grizzly. Hopefully the drills will be turning very soon.
Comment by Tom UK — October 5, 2015 @ 6:06 am
GGI closes above .10, then that should be new support. I am starting to see the shift in EQT. Normal red the first hour. If you see cibc start buying, that is the short fund, we are off to the races.
Comment by dave — October 5, 2015 @ 6:41 am
GGI- Jon you know if the drilling contract has been given? it is with the Tahltan driller ?
Comment by Guy Delisle — October 5, 2015 @ 6:54 am
Guy, there are Tahltan-owned drill rigs available, and I can’t imagine either GGI or DBV not using them…importantly, they also have the experience in the area, the knowledge of the rocks…getting the right driller, the right crew, is always critical…there are Tahltan who are exceptionally skilled in this craft…
Comment by Jon - BMR — October 5, 2015 @ 7:11 am
These where People in the knows at the Open this morning, something big is comming this week, any spéculation Jon?
Comment by Martin — October 5, 2015 @ 7:59 am
Martin, look very closely at the map this morning (Morning Musings, shortly) and think about that map and the fertile Kaketsa pluton and Grizzly Central, under overburden, just off to the east…the mask is about to come off Grizzly Central and if that reveals a 3rd district discovery, which I suspect it will, watch out…
Comment by Jon - BMR — October 5, 2015 @ 8:25 am