Bullish Dollar Boosts US. Markets

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

The Dollar ($UUP) is at levels we have not seen in over four years. The dollar future and ETF have surpassed the 2010 highs, which now is support for the buck. I know I will get emails about how the $UUP ETF has lagged behind the cash $USD, but the correlation between the two is basically the same.

The latest breakout in the $UUP simply confirms the bullish action in the $USD. Our view is that the dollar is still in the early stages of a major bull market that could potentially last for years.

This makes the case for stronger global money flows. The logic is that a stronger dollar will keep bearish pressure on commodities and precious metals. This also makes U.S. bonds and stocks more attractive for global investors. A strong buck implies a strong domestic economy.

The US has the most attractive interest rates, and anticipated to rise going forward. It is the largest macro-trend attracting increasing global capital in the US markets.

Have a great weekend and take some time this weekend to check out our seasonality charts.

See you next time at the Corner!