What happened to $?

by Eva Zaleski

Hmm. I think it’s not a surprise what is happening to $. You can read The Wall Street Journal, watch CNBC, Bloomberg – a lot of information about our deficit, easy money etc.

I look at the chart of UUP and ask myself: “are we there yet?” It’s getting closer, just for a bounce.

Nobody likes the $. Look at 5 year weekly charts of FXY, FXE, FXF and even FXB. Look at emotions in charts of SLV (parabolic), GLD (looks a bit like rising wedge).

TLT looks like it was following the pattern of UUP until just couple months ago. What does it mean? $ dropping but TLT bouncing. Does it mean that it’s just us, our pensions, and our mutual funds buying our own bonds recently?

TIPs are doing just fine (check the 5 year weekly chart of TIP). They are inflation protected. This is very telling.

I live in the Phoenix area and watch the real estate market here, flooded with homes from foreclosures and short sales. It’s very interesting to see the recent changes in the inventory of the houses for sale. It is drying out. It may not be a permanent change in trend, but it is a good sign. 

You may ask who is buying all these houses. The market is getting a lot of cash buyers from Canada, France, Japan and other international investors. So the low dollar is attracting a lot of money from outside the US; but not enough to push the $ up.

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