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The Dollar Impacts The Economy In Many Ways

Posted on August 24, 2016

The Dollar Impacts The Economy In Many Ways

Posted on August 24, 2016

The Dollar impacts the economy in many ways.  A rising Dollar makes US exports more expensive thus pressuring the earnings of companies that do so.  A rising Dollar makes commodities less expensive as that same Dollar buys more of a measured unit.  And a Dollar that pays off our national debt goes further when it's more valuable against the currency of our lenders.  These are big deals.  Thus knowing the direction of the Dollar can add or subtract confidence of many other investment vehicles.

Intermarket technical analysis can help but knowing which charts to look at can be tricky.  One might normally look at US interest rates as fundamentally our currency should largely follow the rate we pay on a supposedly riskless security, but putting IEF over UUP does not offer the tit-for-tat signal we'd like.  Putting the commodities index, DJP, over UUP doesn’t do it either nor does OIL.  The Yen sheds more light on the subject but even it does not give us that shadow effect that we're looking for.  That shadow effect illustrating that when one is NOT a direct reflection of the other, something is amiss and needs immediate attention for investment confidence factors.

But take a look at the Euro as represented by FXE.  Now we're talking.  Want to buy the Dollar, make sure the Euro is headed down.  Want to short the Dollar, consider buying the Euro.  We don't need to steer you any more than to have you study the chart of UUP/FXE and make sure you look at both before investing in either.  SellerySignals, here to help.