The buck was crushed this week, plunging -4.61% to 106.16, moving lower four days out of five. The bulk of the losses came after the Consumer Price Index release around 8:30 a.m. Eastern on Thursday, which showed a slightly lower rate (+0.44% m/m) than expected, and then on Friday, there were hints from the Chines Communist Party about relaxing some Covid restrictions (Source – SCMP). The buck fell further, while other commodities (crude, copper) gained. Taken all together, the drop in currency was very, very large.
Gold, the anti-dollar, shot higher this week, up 92.80 [+5.54%] to 1769.40. Gold broke above the 50 Moving Average on Tuesday (at around 10 a.m. Eastern), and just never looked back. Another big move was seen on Thursday after the CPI release. The swing low candle print was very bullish; this probably marks a medium-term low for the yellow metal. Note that gold/Euros actually moved higher too [+0.97%], but it was a much more modest move. Gold’s move this week was mostly – but not entirely – a currency effect.
Silver looked strong as well, rising 0.88 [+4.25%] to 21.67. Silver managed to close above that 200 MA line, which is a reasonably strong bullish signal. That said, silver did not outperform gold, which is not so bullish. In a metals bull market, silver outperforms gold. We are not there yet, it seems.
Some of the other “metals tea leaves” includes GDX/gold: +6.96% (bullish), GDXJ/GDX: -2.18% (bearish), silver/gold ratio: -1.22% (bearish). Roughly speaking, this seemed to be a relief rally/breakout week for the miners, and for gold as well, but there was no general bullish signal for the metals group overall.
The S&P 500 (SPX) rallied fairly strongly this week, up 5.90%. Big Money fleeing the U.S. dollar didn’t seem to affect equities one way or the other. Crappy debt also moved higher, with Junk (JNK) up 2.05%. Note that most of the equity market gains happened following the CPI release on Thursday. I guess inflation is just about gone now, right? Well, Wolf doesn’t agree: he’s got some interesting technical receipts: (Source – Wolf). The reduced CPI move was due to a monstrous 6% drop in the CPI for health insurance. (Did your premiums drop 6% this month? Mine sure didn’t.) This really looks smelly to me. But SPX didn’t care – it rallied anyway.
The currency everyone loves –
by cmartenson 
