Chris Kimble is getting bullish on Gold, those who are like him think the dollar has peaked.
There are only two risks to my thinking that the US dollar can only go higher. The first is an unexpected Fed pivot and the second is a G7 currency intervention to stem the USD's rise.
Ok, let's break it down.
Unexpected Fed pivot when inflation is still high and far from their 2% target? Even if inflation comes off slightly tomorrow, it is still likely to be north of 7.8% and while the dollar can take a hit, it is likely to be for a short while before resuming its northbound trajectory. Because the Fed won't pivot until they can see several quarters of sustained reduction in inflationary trends. It would still take awhile before we see that and the dollar can continue climbing.
The second risk being G7 currency intervention has an outside chance but Janet Yellen in a CNBC interview ruled that out, preferring a market based mechanism, aka she wants a higher dollar. A higher dollar is in US interest to reduce US inflation, never mind about the rest of the world.
So it is more likely the DXY would move into the peak region in Chris's chart. As I write, the DXY has risen further to 113.57 and it would not surprise me if more rumblings in UK bond market could well tilt the DXY to test 114 tonight. A break of its earlier highs would lead to another accelerated climb above 115. It is getting closer to my target of 118-120 and could even well surpass it.
Few can even contemplate buying the Euro, Yen or GBP over the USD at least over next 3-6 months , not at least people can see how Europe manages its winter with an energy crisis and how the Truss/Kwarteng fiscal mismanagement unfolds, and as for the Yen, well no one has bought 10 year Yen bond in the last 3 months. And to further validate dollar strength, we just learnt that the Fed wired $3.1B in currency swap to Swiss Bank to address dollar shortage and possible illiquidity situation.
Think what the dollar will do, and you can figure where the markets (equity, gold, commodities) go.
