Dollar has resumed upside in last few days against all most all currencies of the world. On other side, Gold and Silver have been correcting similarly.
I expect Dollar to continue this rally. I expect it to be huge rally. You take any nation of Europe or Emerging markets or Commodity producing nations Australia, Canada and New Zealand or any emerging nation, all are ready to fall against Dollar. It is going to be a big time event in currency market.
Hence, if you are short on dollar and long on any other currency. Settle it now.
For Gold and Silver, Dollar’s rise will bring all out crash. Silver can easily fall back to $26 and Gold will hit back the previous level $1522. I strongly believe that correction would deepen this time.
If Silver fails to hold $26, level of $20 can be easily seen. If Gold fails to hold $1510 mark, it can easily fall to $1420 to $1310 and may be dipper.
Commodities have been sliding since last 2 months. Some have been sliding for last 6 months now. Definitely, Dollar’s rise would correct them more.
Interesting would be to watch its effects on world markets.
Dollar’s upside and its effects
Dollar’s rise will have different results in emerging and developed nations. Dollar’s upside will lead to declines in commodity prices as it is already visible. Crude will too correct to the level of $68 during this phase. And, lower commodity prices would be god sent opportunity for emerging nations.
For, India, it will be a great relief. Lower Crude and Gold prices will reduce the current account deficit to large extent. Low Current account deficit will stop the rupee depreciation. Domestic consumption will increase on the account of lower commodity prices and sustained and strong rupee will help to imports at lower cost.
Dollar’s upside would also benefit US at later stage to increase consumption.
Hence, My 2 messages earlier ( Indian Market may mark new highs in next few months and Dollar’s upside will lead to crash in rest all currencies of world, commodities and Bullions)which looked contradictory, may soon seem complimentary.