I wrote on 8th May, 2012 about Dollar’s huge upside( Click to read: https://investmentacademy.wordpress.com/2012/05/12/dollar-ready-for-huge-rally/ ). Dollar has risen 3% since then.
The question is as always, what next?
I believe the Dollar can continue upside in foreseeable future. Dollar Index can go up 10% from current level of 81.
Almost all currencies of the world are still to fall more against dollar.
Sometimes, Market starts factoring out some possible fundamental shifts of near future and Events take place later.
So, the reasons of Dollar is going up and rest all currencies, bullion, metals and commodities going down could be
1. Smart money know that Greece will be thrown out of Euro zone. Greece’s exit will ruin many European banks. France will be worst off.
2. Chinese economic data have been sliding since last 2 quarters. May be, it is expected to fall more as has been expected by world’s most influential investors Mark Faber, Jim Rogers, Chanos, O Neil and many others for long time now. China’s slow down indicates World is slowing again. Central banks of Australia, China, India and other Asian nations have aggressively cut the interest rates and reserve requirement to prevent the growth(GDP) fall even amidst of inflation fears. Their actions are speaking much louder than their statements.
3. World economy may slip back into recession.
I am leaving this new letter half, will write in detail in next letter.