The U.S. dollar rose 0.8 percent on Friday. That is one of the few days that the dollar closed in green since March of this year. However, what the dollar does from here is critical for all markets due to the intermarket dynamics.
The key point in all this is that the dollar arrived at secular support. As seen on the chart (purple bar) the current price level is support going back to 2015. A two-year support level is a significant thing, the likelihood of this being broken to the downside is rather small.
From that perspective it is really important to see what the dollar does in the coming weeks. If King dollar respects the 92 to 93 level there is a fair chance that it will impact other markets globally:
- gold is likely to get pushback which is very unfortunate for gold bulls given silver miners officially broke down this week (so it will be the ultimate confirmation of a continuation of gold’s bear market for the remainder of 2017);
- several commodities should become weaker, and base metals could weaken as well (in line with our base metals forecast 2017);
- interest rates should continue their rise which is great for financial stocks and bad for Treasuries;
- implications for stock markets in the U.S., Europe and emerging markets are hard to predict though.
“Smart investors are very closely watching how the U.S. dollar moves in the coming weeks, especially around the 92 to 93 level”, says InvestingHaven’s research team.