Brad Zigler from hardassetsinvestor.com writes “The U.S. dollar is the most widely held reserve currency, representing about two-thirds (10-year weighted average: 65.9%) of central bank foreign exchange holdings. The hegemony enjoyed by the greenback makes it easier for the U.S. to run and maintain high trade deficits, a consequence of the nation’s debt-financed consumerism and low savings rate. The greenback’s preeminence is eroding, though. Its allocation in central bank reserves has been chipped away at a rate of 70 basis points (0.7%) a year over the past decade.”
Brad Zigler goes on to say that “China became the most vocal advocate for a global move away from the dollar this spring. There’s plenty of reason for the Chinese to fret. Years of U.S. Treasury purchases and export trade by Beijing have produced a $2 trillion pile of greenback assets. If Washington’s burgeoning budget deficit can’t be reined in, any consequential weakening of Yankee paper could leave the Chinese holding the bag.”
“And, ahead of the recent G8 summit, Russian finance minister Alexei Kudrin chimed in by saying there was “no alternative” to the greenback as a reserve currency. Adding yet one more opinion to the mix, Kudrin said he felt confident that dollar was in good shape,” Brad Zigler reports.
A great way to trade the US Dollar is by using ETF’s. If you are bullish on the US Dollar, one way is through the PowerShares DB US Dollar Index Bullish (UUP) and if you are bearish the PowerShares DB US Dollar Index Bearish (UDN).
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Smart Scan Chart Analysis is showing some near term weakness. However, this market remains in the confines of a longer term uptrend Uptrend with tight money management stops.
Based on a pre-defined weighted trend formula for chart analysis, UUP scored +70 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
|+10||Last Hour Close Above 5 Hour Moving Average|
|+15||New 3 Day High on Monday|
|+20||Last Price Above 20 Day Moving Average|
|+25||New 3 Week High, Week Ending June 20th|
|-30||New 3 Month Low in June|
POWERSHARES DB USD BEAR (PACF:UDN)
Smart Scan Chart Analysis indicates a counter trend rally is underway. It also indicates that the current down trend could be changing and moving into a trading range Sidelines Mode.
Based on a pre-defined weighted trend formula for chart analysis, UDN scored -55 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
|-10||Last Hour Close Below 5 hour Moving Average|
|+15||New 3 Day High on Thursday|
|-20||Last Price Below 20 Day Moving Average|
|-25||New 3 Week Low, Week Ending June 20th|
|+30||New 3 Month High in June|