Now here’s a winning stat for you. Based on the net speculative positions in the USD there is a 100% chance (based on past occurrences) that the dollar will rally from here. According to a report today from Credit Suisse the US dollar has rallied 100% of the time from these levels on a 3 month basis. On a 1, 2 and 6 month basis it has rallied 80% of the time:
QE has been fully priced into the dollar and then some. I believe the decline in the dollar has contributed substantially to the rally in risk assets in recent weeks. If we see a reversion towards a more disinflationary outlook the dollar will serve as a substantial impediment to equities and commodities.
Source: Credit Suisse
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.