October 26: Dollar Rally Finally at Hand?

Ok.  We lied.  We have a small bit of time for a quick update.

As readers know, though we're in the inflation camp generally, it must be expected that the dollar should have small rallies, and occasional strong and sharp rallies. 


We believe we are at the point of facing at least a small rally toward the 50 day moving average for the dollar.  Thus far, the 75.00 line (which is within the range of error of the 75.83-76 support line) has held.  Today, the dollar is rebounding strongly and moving back toward the 76 line.

While we don't believe it will last long, it may be long enough to create short term buying opportunities in our favorite sectors: precious metals, energy, agriculture, and select technology companies.  The key factor on this rally will be watching the 50 day moving average for the dollar, which has served as resistance all year.  We anticipate that the dollar will fail at that level, but on the off chance that it exceed that level, this small rally will become a big rally.

Until Thursday, readers...  This week is important, so keep an eye out on the TED spread, Treasury yield curves, the US dollar, and the commodity indices...