Since Trump's election, US dollar has eroded badly

Trump has been bragging about the stock market's gains, but what we don't hear about is the fact that the US dollar has eroded badly. Since his election the dollar has fallen to a 3-year low.

Trump is destroying the US dollar.

I called this at the time of the election and I said it was based, at the time, on two things. 1) Trump's  proposed expansion of fiscal stimulus. (More spending and tax cuts.) And, 2) the ongoing rate hike campaign of the Fed, which is inflationary and therefore NOT bullish for the dollar contrary to what most people believe.

Since then a new and far more corrosive element has entered the picture and that is the Trump Administration's aggressive use of sanctions. This is what I have called the "weaponization" of the US dollar.

This has set in motion an irreversible trend of "de-dollarization." The Rest of the World has no other choice. The USA's use of sanctions designed to limit or completely shut entities or entire nations out of the global, dollar-based transaction and clearing system is too great a risk. Even US allies can be indirectly affected by the sanctions' policy.

Alternatives will be sought. We see this in the rise of new, bilateral trade and clearing arrangements (Russia-China, China oil trading in yuan, etc.) We also see this in rise of Bitcoin and other cryptocurrencies, which I believe, reflects this trend toward de-dollarization and it will continue.

Trump will go down as having presided over the greatest period of dollar depreciation in history. Watch.

Is Saudi riyal about to blow? Are you short?

There was a story posted on Zerohedge and Tom Hickey posted it here about how Saudi Arabia is now either contemplating or starting to pay contractors with IOU's.

Either or, it's a sign that there could be a full blown dollar liquidity crisis brewing there.

As you know the Saudi's peg their currency--the riyal--to the dollar at $3.75. That costs reserves and while they have quite a lot of reserves they also need that for servicing dollar denominated debt, which has skyrocketed in the past two years.

And we all know that oil prices are way low.

So the question is, will this put pressure on the Saudi's to abandon the dollar peg? If so, the riyal will collapse.

I am short a small riyal position and I have been for a while. You can short it on Oanda and it just so happens that I teach my Forex course on Oanda.

So, if you are interested in making a bet on what could be a massivfe trade and you do not yet trade Forex, get the skills. Buy my video course. It's $250 for 25 hours of instruction, plus MMT, plus Mental Game, plus Market Composition.

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I need to "trade out" of my long, USDJPY position

Yesterday I posted here how that early morning 300 point collapse in USDJPY was ridiculous.

It came about as a result of the BOJ standing pat on rates. "That's how people trade?" I asked.

Well apparently.

As if a greater degree of negative rates was somehow a "stimulus." The whole thing was absurdity to the extreme and completely out of paradigm with the current reality so what was I supposed to do? I simply HAD TO go long USDJPY and I did.

That trade was actually in the money for about 2-3 hours, but then it turned around and we're about 100 pips lower than where I bought in.

Then what did I do? Did I panic? Did I beat myself up? Did I frantically PAY the market to get out and take a loss?

No. That is not the proper mental game and not the proper strategy.

While I believe my reasoning for buying USDJPY was correct (although in the backdrop there is a serious, bearish dollar environment developing now), it is not working out.

What I teach in my Forex course is that we trade according to the principles of MMT. This trade was. (Japan enacting a nearly, $200 billion FISCAL stimulus for the economy and earthquake cleanup and reconstruction. That's bearish for the yen all things equal.)

However, when MMT trades do not work and we are caught with losses (it can happen because sentiment, too, drives markets and when clueless idiots believe something they can push the market like a stampeding herd) my course teaches you the SKILLS to trade out of what is not working.

The best offense is a good defense!

So, that's what I am about to do...trade out of this position that is not working. I am adding another unit of long, USDJPY at 106.89 to lower my average.

Stay tuned...

And by the way, if you haven't already, BUY MY FOREX COURSE. 25 hours of instruction for $250 bucks. ($10 an hour for those of you who are math-challenged.)

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The yen rally this morning is ridiculous

Huh???

As you know I have been bullish on the yen for a while and it has rallied for the past three months, but two weeks ago I said to sell it and we caught a nice, 400 pip profit going short.

This was all based on strategic, calm, trading and an MMT understanding of what was happening.

However, we just saw something earlier today that shows you why people lose money. The yen surged because the BOJ decided to keep monetary policy unchanged. So?

That unleashed a massive 300 point move down in USDJPY.

People trade like this?

Yup. And that's why you can make so much money, trading against emotional, clueless, fools.

The lack of action by the Bank of Japan does not change the fact that Japan is putting through a major fiscal stimulus. They "front loaded" all their public works' spending ot the first half of their 2016 fiscal year (Apr-Sep, basically). It's about a $110b equivalent of spending. And they are probably going to pass a supplemental budget to deal with the recent earthquake.

What does this mean? It probably means USDJPY goes back up again and the fools who sold this pair this morning, on nothing, will get their money taken from them. That's as it should be.

A guy just earned 200 pips in Forex today following the strategies I teach in my course!

Another great, real, testimonial!

Great to see!

@mikenorman Mike, jut earned 200 pips profit thanks to your system.  Up 12% over the last six days.

— Ben Johannson (@BenJohannson) March 16, 2016

Today is the last day to sign up for my Forex class

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nsnbc — Venezuelan Govt to Hand Domestic Industry up to US$7 Billion in Forex

The Venezuelan government announced Thursday the creation of a new bank to help small businesses obtain raw materials and basic goods, while vowing to provide local industry with billions of dollars of new foreign currency supplies.

nsnbc international
Venezuelan Govt to Hand Domestic Industry up to US$7 Billion in Forex

According to Vice-President for Economy Miguel Perez Abad, the government will consolidate its 6 and 13 bolivar exchange rates into a new protected rate of 10 bolivars per dollar, which will be made available for vital imports such as food, medicine, raw materials for production, as well as pensions for Venezuelans living abroad.
The new rate, known as DIPRO, will also be used for payments in the state sectors of healthcare, culture, sports, scientific investigations, and in other cases of special urgency.

Venezuela Revamps Currency Exchange System

My Mar 15-17 Forex class will put you on the fast track to profitable Forex trading. I guarantee it or a full refund.

I will be giving an intensive 3-day Forex class March 15-17.

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I have made changes to the approach that I believe have made a huge difference. It's more robust now. It can whether nearly every type of market environment, even when central banks are active in the market with all the potential catastrophic risk they can wield.

There will also be heavy emphasis on "Mental Game" as I call it or, the psychology of trading. This is extremely important.

I believe strongly in this methodology. Over the past four months I have made 50 trades using this approach without a single loss and with significant gains.

The course date is March 15-17, 8am-4pm NY time. It will be held online using the Webex meeting platform and taught on Oanda Forex.

The course fee is $2495, however, I am so confident that it will make you a successful trader that I am offering a full refund to anyone who does not come out of the class and see success right away.

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I'm giving an intensive 3-day Forex trading course March 15-17

This course will be solely focused on live trading. Three days of intensive training that will cover my highly successful Forex trading approach.

I am eliminating the two days of Forex theory and MMT that I used to include in my prior courses, however, these concepts will be woven in as we trade.

This course is designed to "fast track" you to consistently profitable trading. If not, I will refund your money.

I have made some very significant changes to the trading approach that increases profitability and consistency while decreasing risk. It is far more robust than before.

The course date is March 15-17.

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Back on track. Forex: 4 months, 50 trades, ZERO losses.

I am back on track. My Forex trading over the past four months has seen 50 trades with zero losses. It's all technique. It's all in my trading appoach that I teach in my course (with some new adjustments).

It's all about "gaming." (That's technique plus the mental aspect.) That MMT stuff has been either reduced or, applied in the correct way now. (Hint: it wasn't the case before.)

I've made some adjustments and I think the results speak for themselves.

Four months, 50 trades, ZERO losses.

New, "live" online course coming soon. Stay tuned.

-Mike Norman

Keep buying the dips. Spending really accelerating now.

Federal Government spending is really accelerating now. We are $45 billion over last year and last year was the biggest increase in six years. There will NOT be a recession. You can look at the deficit all you want; you're wasting your time. The Fed will raise rates at least two more time this year.

The stock market is giving everyone easy opportunities to get in. There's been plenty of good, back and forth action. That won't always be the case. We'll go parabolic at some point.

Forex is also presenting great opportunities. If you don't trade forex, get my course.

Xinhua — China's forex moves to increase volatility, trading volume: analysis

The latest changes to China's forex market management will increase yuan volatility and boost trading volumes, according to a leading Chinese investment firm.

From Jan. 4, closing time for China's interbank foreign exchange market will be extended from 4:30 p.m. to 11:30 p.m. Beijing time, the People's Bank of China announced last week, adding foreign institutions' access to the market will also be expanded.

The yuan exchange rate may become slightly more volatile, China International Capital Corp. (CICC) said in an analysis note.

By overlapping the trading hours with those of London, the spread between onshore and offshore yuan exchange rates will be narrowed, bringing down the technical difficulty for RMB users to hedge forex risk, it said.

After the changes, China's forex market is set to grow, especially in terms of trading volume, which represents a major opportunity for financial institutions with forex expertise and cross-border capacity, the CICC predicted.

China.org.cn
China's forex moves to increase volatility, trading volume: analysis

Xinhua

Ecns.cn China opens up interbank forex market

China has opened its interbank foreign exchange (FX) market to foreign central banks and similar institutions, the People's Bank of China (PBOC) announced on Wednesday.
Foreign central banks and other monetary authorities, international financial institutions, and sovereign wealth funds are now allowed to trade all FX products directly -- including spots, forwards, swaps and options -- in China's interbank market without any quota restrictions.

They can enter the market through three channels: entrusting the PBOC as their agent, using interbank FX market members as their agent(s), or becoming a foreign member.

Ecns.cn
China opens up interbank forex market

Stratfor — How China's Currency Policies Will Change the World

Analysis
There were several reasons behind China's decision, but it nevertheless came as a surprise to many. In search of stability, China has tied its currency to the U.S. dollar since 1994, usually at a low value relative to the dollar. During the 2000s, the connection helped China keep its exports competitive, with the developed world consuming its output. The West's economic collapse in 2008 meant that this model could no longer function, and China began trying to grow consumption levels so that the domestic consumer might come to fill the hole left by the faded international market. 

Changing China

Transforming from an export-led economic model to a consumption-led one could be described as changing from being like Germany to being like the United States, and China has tried to reproduce some of the advantages that the United States has created for itself in the same role. One of those advantages is the dominant position of the U.S. dollar in world trade, which means U.S. consumers can go deeply into debt and global demand for dollars will delay the moment at which this comes to a head by those debts being catastrophically called in. Thus China sought to grow international usage of the yuan, making strides in its attempts to do so. The next step would be for the yuan to be accepted into the International Monetary Fund's "currency," the Special Drawing Right. However, the IMF has said that China would need to liberalize its currency before such a step could take place. The IMF makes the decision every five years, with one originally set for November this year, but the institution recently pushed it back to October 2016.….

Neoliberal-think. All about interest rates, exchange rates, and central banking.

Stratfor
How China's Currency Policies Will Change the World

China devaluation and how I am playing it in the Forex market now

Last week's news that China had devalued its currency by 3.0% whipped the markets around. I am speaking of the Forex market now. The dollar initially rallied, then declined. As of late last week it started to recover and we see more dollar strength today.

Matt Franko has been posting up some good info about price cuts (here and here) or further price deterioration in Europe. This was my take as well: that the Chinese move would put pressure on German and Japanese exporters and that would similarly put pressure on the euro and the yen.

It all makes sense except for one thing: that's the fact that U.S. Federal government spending is experiencing a slowdown in momentum. It's subtle, but it's happening and it has been happening since, depending on where you start measuring it, either early April or early May.

Overall spending is up year-over-year and that's good, but the slowdown in momentum suggests that we may see more surprises on the downside with respect to the economic data and that will cause Forex traders to sell.

My strategy right now is basically to "range trade," but I have a bias for selling rallies in the dollar.

Classic: Greece got its deal and the euro tanks

This is classic, "buy the rumor sell the news" trading.

They took the euro up mid to late last week on hopes of a deal, they get the deal and--BAM!--the euro tanks.

Matt Franko has been pointing out that many German export firms are still feeling soft demand and thus, there will be the need to cut prices. Certainly the new austerity measures in Greece will add to overall Eurozone weakness over time.

Euro looks to go lower, however, a good dose of patience is requied.

Dollar/yen getting slammed. I'm short, which is nice, but wondering whether or not this has something to do with Greece?

Dollar/Yen getting slammed in the last hour. I am short thanks to my trading strategies and other analyses, but wondering if this has something to do with growing angst over Greece?

Janet Yellen gives Forex traders green light to take the dollar lower

Janet Yellen just gave Forex traders the green light to take the greenback lower. In her comments to the media yesterday she said this:

“I think we have seen that it’s had a negative effect on net exports and so served as a something of a drag on the economy, and probably that drag is going to continue for some time to come,” 

I am betting that the markets take this as a sign to push the dollar lower. We are already seeing it this morning, with dollar weakness across the board.

This is easy money for Forex traders.

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GM cuts vehicle prices on 4 models in China: USD implications

As Matt has been pointing out here for about the last year, in every market there is a price setter. It could be the government/central bank in the case of interest rate setting or large exporters in the case of exchange rates (central banks have largely gotten out of this game).

So now we see GM cutting prices of vehicles in China.

DETROIT (Reuters) - General Motors Co (GM.N) has cut vehicle prices in China after sales fell last month in the world's largest automotive market.

The No. 1 U.S. car maker's joint venture with SAIC Motor Corp set price reductions of as much as 53,900 yuan ($8,681) on 40 models across its Buick, Chevrolet and Cadillac brands, according to a statement on Tuesday on Shanghai GM's website. Read here.

Will other US exporters do the same? Will they do it in other markets? (Europe? Japan?)  It has implications for the dollar. Bearish implications.

Matt Franko, chime in here, please.

On the other hand...just made 60% return on my Sterling position in, like, 20 mins

Just logged a nice 60% profit (on my margin at risk) on my long, British Pound position. Got help from the elections it seems, however, my trading methods got me long. Not bad.

Learn to trade Forex, folks. #BestMarkets.

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