The Outlook for the U.S. Dollar (updated 01/24/2010)
(Updated 1/24/2010) On Friday, December 4, 2009, the U.S. Dollar rallied strongly
and broke above it's 50-day moving average. Since then it has shot up
through target resistance levels, and momentum has accelerated.
The short term outlook is bullish; however, intermediate to longer term the
outlook is cloudy. Click on the following chart for an up-to-date
view: http://quotes.ino.com/chart/?s=NYBOT_DX.
Our expertise is in the area of developing short term trading systems,
not in fundamental analysis. For that reason, we won't render
an opinion; however, we will show you both fundamental perspectives and a technical view.
The case for the dollar: Lou Basanese is a contrarian investor and Senior Research Analyst for The Oxford Club, an investment advisory service. His video presentation can be seen at this link: http://oxfordclub.com/media/Video/20100121videolanding-CCR.html
The case against the dollar: Chuck Butler is President of EverBank World
Markets. He publishes a daily newsletter on currencies called the Daily Pfennig. In the
December 21st Daily Pfennig, he said:
"The year end dollar rally has been fueled by profit taking and the
squaring of positions, and not fundamentals. Bernanke's Fed won't put the
recovery at risk by raising rates too early. There are also many who
believe the US is headed for a double dip as commercial real estate drags our
economy back down. With rates remaining low here in the US, the carry
trade could weigh heavily on the US$. Investors will continue to finance
their leveraged moves into higher yielding currencies with US$, putting
continued pressure on the dollar. So I expect this year end dollar rally
to reverse in the beginning of 2010, and dollar will likely return to its long
steady decline".
A technical perspective: Peter Worden is one of
the principals of www.Worden.com. Worden sells a very popular technical analysis and charting software package
called TeleChart. Telechart offers daily commentary on hundreds
of securities. Peter gave a more in depth technical analysis perspective
in a video presentation he did on December 4th, 2009: http://www.worden.com/videonotes/pw120409
AccuFundTrader has several model portfolios that actively trade the long
and short U.S. Dollar funds at ProFunds and Rydex. We are consistently ranked as
one of the top performing market timing services by Theta
Investment Research.
Mutual Funds that track the U.S. Dollar long and short are available at ProFunds, Rydex and Direxion.
These funds can be traded directly at the fund companies, or at Schwab with NO short term redemption or transaction fees. I understand the same is true with Scottrade.
Bullish U.S. Dollar Mutual Funds:
Here are the
U.S. Dollar funds you want to consider if you believe the outlook is
bullish.
- ProFunds Rising U.S. Dollar Fund (1x leverage) -
RDPIX
- Rydex Strengthening Dollar 2x Strategy (2x leverage)
- RYSBX
- Direxion Dollar Bull 2x Fund (2x leverage) - DXDBX
Given the dollar's historic inverse relationship with commodities, you may
also want to lighten your holdings, or move to inverse funds. Take a look
at:
- ProFunds Short Precious Metals (1.5x leverage) - SPPIX
Bearish U.S. Dollar Mutual
Funds:
Here are the U.S. Dollar funds you want to consider, if you believe the
outlook is bearish.
- ProFunds Falling U.S. Dollar Fund (1x leverage) - FDPIX
- Rydex Weakening Dollar 2x Strategy (2x leverage) - RYWBX
- Direxion Dollar Bear 2x Fund (2x leverage) - DXDDX
Given the
dollar's historic inverse relationship with commodities, you may also want to increase your exposure
to:
- ProFunds Precious Metals (1.5x leverage) - PMPIX
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