It is fascinating to watch how the bias in people just ensures not just that a sucker is born every minute to replace the one that wises-up, but there are suckers who never learn from experience and cling to their ideas no matter how much it costs them. The U.S. dollar has been climbing against major currencies for several months, with the dollar index DXY trading up about 2.84% for the year. It is true that the dollar has strengthened since late 2015 as the Federal Reserve began raising interest rates against a background of steady economic growth, slowly rising inflation and the lowest U.S. unemployment rate since the 1960s. But the strength in the dollar is more than just interest rates. It is the prettiest of the three ugly sisters as they say – US – Europe – Asia.

The Fed has raised rates twice this year and is expected to raise rates a couple more times by year end which may attract more foreign into the U.S. dollar with monetary policy remaining loose to very insane in Europe and Japan. We have the ECM, which has destroyed the European bond market, frozen like a deal in headlights. It is trapped and it realizes that it has been buying the debt of member states who are now addicted to excessively low-interest rates. If the ECB actually stops buying, we are looking at a major debt crisis in Europe as interest rates explode exponentially. In Japan, there to they have wiped out the bond market. The government actually bragged that they bought 97% of the government debt auction. Hellow? That’s a good thing? The Bank of Japan has reduced debt purchases for a third time in June 2018, taking advantage of the recent stability in bond yields and the yen. At least Japan is reducing its purchases whereas the ECB talks a good game, but cannot actually do anything. The attempt to force austerity by the EU upon southern Europe is tearing the system apart.

The dollar bottomed in February 2018. It has yet to elect a Monthly Bullish Reversal. Trump has been unusually vocal about the dollar, unlike most Presidents, following more in the footsteps of Treasury officials. Trump has publicly been criticizing the dollar’s strength several times. He obviously thinks a lower dollar is better for trade. But the markets are going against Trump. You cannot “Make America Great Again” without also strengthening the dollar especially when we still have insanity in Europe economically and Japan still in never-never-land.