Here is an excerpt from brushTurkey (Clifford Bennett's newsletter) today:
My emphasis added:
My mention yesterday of watching for the Euro to have a renewed period of strength remains valid and endorsed. It is always a little difficult choosing short term entry into a macro scenario, and in this case the simple logic of buy the US dollar on the basis of strong US data, will win out for a period. It is when we reach the point of everyone who wants to buy the dollar having done so, combined with fresh foreign investment waves out of the US, that the US dollar will decline to a significant degree yet again.
The overall down move in the value of the US dollar is of course supported by the “strong dollar policy” being in fact the "orderly decline of the dollar policy”, continuing trade and fiscal deficits, and near zero yield on holding the currency. It is true that the strong rest of world economy will be feeding significant revenue streams into US corporates, but the math still favours a lower US dollar I believe. Post the initial buy USD on good US data period of course.
Even though Clifford is an economist, I like the guy's thinking. He is refreshingly happy to be a maverick who does his own thinking and he regularly lampoons as mindless gibberish the outdated and disconnected ideas sprouted by his colleagues. I guess, like me, that makes him an inside outsider.
Anyway, I happen to agree with his analysis of the USD. Up for a while on the increasingly positive "surprises" in US data and then down in a gradual but significant way as US smart money goes overseas to make greater returns (and, oddly enough, to find greater safety).
Just remember that while it's fine, even helpful actually, to have an informed and reasoned view of fundamentals, you may invest
on that basis but you cannot effectively trade
on just the fundamentals.