DOLLAR INDEX TREND CHANGES

We have undergone an extended period where the Dollar Index ($DXY) has fallen, and then risen some but not as high as the previous high, then fallen some more and risen again but not as high as the previous high.   This downward sine curve started last December, 2016, when the dollar index was above 102.  We went through five declining peaks and valleys until the bottom set at 91.32 on September 8, 2017.

The following rise went to 93.79, slightly higher (not lower) than the previous peak of 93.73, indicating that the declining trend in the dollar might be over.  The following valley only declined to 93.05, higher than the previous low of 91.32.  The dollar index closed Friday at 94.80, higher again than the previous high of 93.79 on October 6.

Click on figure to enlarge)


How high the dollar may go in this rising trend is anyone's guess, but the high of last December was substantially higher than now.  But the previous period prior to December 2016 had a horizontal trend of peaks close to 100 and troughs close to 92 in 2015.

Incidentally, in 2014 the $DXY hit a trough of 79.90 and the dollar has never gotten close to that in 2017.

At any rate, the rising dollar will have an macro economic effect, dampening U.S. export profits that doesn't sound good for multi-national companies at a time when the global economy is increasing nicely that does sound good for multi-national companies.  Will the two things balance out?

Watch this space.

DOLLAR INDEX (25 YRS)

Ever wondered what the dollar looks like over a long period of time.  Bar Chart provides a chart of the Dollar Index ($DXY) over a 25 yr period.*  The Dollar Index is how the dollar trades against a basket of currencies.  The Euro constitutes about half the index because of all the countries that used to be involved but now are in the Euro.

You will note that the Dollar Index today is just about what it was in the early 1990s.  The steep strengthening of the Dollar Index was during the latter 1990s, the Clinton years, of a greatly expanding economy.   The recent steep strengthening is during the Obama recovery years from the Great Recession.  Note the weakening of the Dollar Index mainly occurred before the Great Recession.

(Clik on figure to enlarge)

* http://www.barchart.com/chart.php?sym=$DXY&t=BAR&size=M&v=0&g=1&p=MO&d=X&qb=1&style=technical&template=