Thursday, February 16, 2017

So Much For the Dollar's Consecutive Day Winning Streak

Following up on yesterday's Yellen Helps the Dollar Extend Streak.
Our one-line comment was "The run is getting a little long in the tooth (consecutive days anyway)."

Later in the day, ZH was more interested in exactitude and dug up the numbers:
...This is the longest USD win streak since May 2012.
  • July 1975 - 11 days in a row
  • Sept 1975 - 11 days in a row
  • May 2012 - 14 days in a row
  • Feb 2017 - 11 days in a row
And notably, if extends to 12 days tomorrow, will be the second longest winning streak in dollar history....
Anyhoo, "...For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives, and the dream shall never die."*

Here's the latest from Marc to Market:

Several trend moves of the past couple of weeks are correcting. Signs of the correction began yesterday in North America.  The dollar was unable to sustain gains despite a string of stronger than expected data, including January CPI, retail sales, industrial output, and the Empire State manufacturing survey for February.  

There does not appear to be a fundamental trigger.  Market expectations for more Fed hikes this year than the last two combined solidified.  This is evident in the Fed funds futures strip, and the US 2-year premium over Germany edged closer to 2.05% multi-year high set at the end of last year.  Comments from NY Fed President Dudley, on the back of Yellen's testimony to Congress, also suggested the strengthening of the Fed's conviction by acknowledging that the balance of risks is shifting to more growth than expected rather than less.  

The Dollar Index had moved higher for ten consecutive sessions before reversing yesterday's gains to close lower.  Yesterday and today's losses have seen the Dollar Index retrace 38.2% of the advance since February 2.  That retracement objective was near 100.80.  The 50% retracement is found near 100.50 and the 61.8% retracement by 100.20.
The euro recorded a reversal pattern yesterday--a hammer candlestick--, and there has been following through euro gains today.  It had been sold to almost $1.0520 yesterday before the short-covering bounce lifted it to new session highs in late turnover, and managed to finish the North American session at $1.06.   Short covering today lifted the single currency to $1.0640, which is the 38.2% retracement objective, but it does not appear over.  The 50% retracement is seen near $1.0675 and the 61.8% retracement is $1.0710.  

Softer US yields, weaker Japanese stocks, and the corrective pressures have seen the dollar back away from yesterday's test on JPY115 to return to JPY113.50.  At JPY113.80, the greenback surrenders 38.2% of its recent gains.  The 50% mark is at JPY113.30, and the 61.8% retracement objective is found near JPY112.90.
Sterling is firmer, but cable appears to be being held back by the unwinding of long sterling cross positions.  It had dipped below $1.24 yesterday for the second time this month, and demand once again emerged.  Sterling is testing resistance in the $1.2530-$1.2540 area, and a move through there would set up a more important technical test in the $1.2570-$1.2585 band....MUCH MORE 
*Ted Kennedy when he lost the Dem. nomination to Carter in 1980.

That address to the Democratic National Convention was ranked as number 74 of the top 100 American speeches of the 20th century.
I last used it in Dec. 2016's "Pee Power: The Dream Is Dead", on the lies underlying the hype of the Nigerian-pee electrical generator.
Additionally the four-year, EU financed multidisciplinary ValueFromUrine Project wrapped up August 31 of '16.

DXY 100.65, down 0.52.