Thursday, 13 February 2014

Dollar Notches 8th Decline for Worst Stumble in Nearly 6 Years

Dollar Notches 8th Decline for Worst Stumble in Nearly 6 Years
The Dollar keeps notching records…unflattering ones. With the Dow Jones FXCM Dollar Index (ticker = USDollar) closing down another 15 points just above the 16,000-level, the benchmark has extended its slide to an eighth straight trading session. This painful decline matches the worst performance for the benchmark since July of 2007. That said, of the only six times in the Index’s history that it has posted bear waves of this consistency, this is the ‘weakest’

Through this decline, the USDollar has shed only 102 points. This compliments the deceleration of global equity indexes as their ‘rebound’ hits levels that venture into the outright ‘bull trend’ category. There is a considerable difference between corrections and true trend – one of conviction, momentum and potential follow through. 
Risk trends are the immediate concern for the greenback as the pressure is palpable. Equity indexes across the globe have put in for flattering rebounds as the ‘risk premium’ fed into the volatility measures (like the VIX) were worked off. From traders, the ambitious speculative shorts disarmed while the aggressive bulls bought the biggest dip in months. 

Yet after the Nikkei 225 retraced 38 percent of its January declines, the FTSE 100 covering 65 percent of its tumble and S&P 500 winning back 78 percent; the ‘low hanging fruit’ was picked. To carry further, conviction needs to find a foothold. From the docket, there is little ahead that touts the kind of sway to inspire new risk positions or to force the deleveraging of existing exposure. 

The most media-friendly event - Fed Chair Janet Yellen’s scheduled testimony before the Senate Banking Committee - has been postponed due to expected inclement weather. For Data, the January retail sales figures on deck. However, these stats have limited scope when it comes to altering broader risk trends.

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