Friday was all about Fed Chair ‘s Jackson Hole Speech at 10 AM ET, however from a market perspective, we’d need to maintain an in depth watch on the response of the USD to what Powell says or doesn’t say. Why? Thursday’s energy within the Dollar reversed in a single day into this Friday’s pre-market session.
In our 15:30 time dialogue Thursday, I posited the next concerning the USD: ” The $64,000 question about Gold and the Gold Miners depends on the direction of the USD: Was the recent decline in DXY the start of a period of weakness or a completed correction?”
Given Friday morning’s weak point within the DXY, energy in EUR and CNH vs. the USD (see hooked up charts), the Dollar’s worth motion, sample formation, and momentum divergences counsel strongly that the Dollar is rolling over right into a interval of weak point.
In specific, the massively divergent relationship exhibited on the USD vx. Chinese Renminbi chart has my creativeness in fifth gear, as a result of it seems to be at an acute tipping level from a relentless USD upmove (a interval of acute Renminbi depreciation vs. the Dollar) right into a doubtlessly highly effective correction (interval of weak point within the USD).
Whether the “tipping point” displays a sudden decision to the US-Chinese commerce/tariff standoff, or the arrival of some type of FX market intervention to weaken the Dollar, I do not know.
Nonetheless, the BIG Picture chart work is warning us that one thing is rumbling under the floor that could acutely affect the route of the Dollar, and with it, tangential markets akin to commodities, U.S. exporters, and treasured steel miners.