Leveling Off?

The US Dollar has been hit hard lately by currencies from around the globe, but today saw a bit of a leveling from the past three days of relentless beatings. While news is a bit light this week, it is interesting to note the huge discrepancy between the currency markets and the US-based stock market. The US dollar is pushing record lows – witness its 15-year nadir against the British Pound – while the Dow Jones Index is pursuing record highs. The overall different view between the two markets offers a possible explanation for this discrepancy. For the US-based stock market, inflation is viewed as low with a possible soft landing in sight, which might produce further gains. Meanwhile, the currency markets are pitted against the world economy, while the US economy is down and having a hard time fighting back. Which outlook will ultimately prevail is a tough call. Most likely, neither will fully win out, and a softening of both extremes might occur. Looking at price action in the majors, the EUR/USD is holding at 1.3589, the Japanese Yen is on a slight uptick for the first time in two days at 118.69, and the ever-popular GBP/USD duo is closing out the American session at 2.0066. XPRESSTRADE Analyst David Hilgeman