The dollar hasn’t been continuing
with its depreciation pattern since the start of 2016. Basically, all 2016 the
DXY has stay in the high nineties. There are many factors that may have contributed
to a high dollar. One of them is the Brexit.
When the British left the European
Economic Union, it created an exit of capital to a more secure heaven, in this
case the dollar with the FED increasing the overnight interest rate. This idea could
be one of the factors that may contribute to a high dollar.
Economists are still expecting
inflation, the FED wants inflation, and the US dollar is expected to depreciate.
This speculation is not set in stone. The dollar could not depreciate and
inflation may not pick up, but the probability of that is smaller than
inflation picking up, and the dollar depreciating. With this knowledge, it is
useful to trade accordingly.
Positions across the board are
being setting up. One example is the New Zealand Dollar against the United
States Dollar. The New Zealand Dollar has been in an up pattern since September
of 2015. In resents weeks, the New Zealand Dollar (NZD) has been depreciating against
the dollar. The NZDUSD pair is about to hit a stablish resistance around .70.
The pair could hit below .70 to .67 and be fluctuating around those prices.
This trend is really fissile if inflation is expected to go higher, and the
dollar depreciates.
Right now, it is advisable to stay
off the markets until the FED increases its overnight interest rate which is expected
in December. From there it is advisable to see whether the pattern of appreciation
of NZD continues or goes the other way. If the pattern continues then it could
be stablish that NZD may keep appreciated for a long time.
Among other currencies that may
have a good setup trade are: Australian Dollar against the United States
Dollar, the European Euro against the United States dollar, and the United
States Dollar against the Canadian Dollar.
