Has the US Dollar already began what will be a major fall in 2017?

By January 21, 2017Uncategorized

I think so because the way I am reading it Trump and Mnuchin told me so.

  1. Trump wants the USD lower to
    a) help American exporters export more (goods become cheaper for foreign buyers if the USD is worth less)
    b) help make American based businesses more competitive by raising imported good prices (goods imported become more expensive if the dollars to buy them are worth less)
  2. Mnuchin wants to work with Trump to get the USD lower
    a) Mnuchin said in his testimony the USD is very high and explained why
    b) Then hedged by saying in the long run a strong USD is in the US national interest (it’s the period between now and the long run that currency traders should be focused on)

The price action since Thursday 15:00GMT when Mnuchin started speaking so far slightly favors a weaker USD (despite the media’s spin that Mnuchin favors a stronger USD).
The zerohedge article tells the full story and to me Mnuchin is setting the stage for a “USD markdown”

http://www.zerohedge.com/news/2017-01-19/what-steve-mnuchin-thinks-about-strong-dollar

SHORT USDAs a trade I like being short the USD right now versus the five major pairs where the currencies have the upper hand since pre-Mnuchin confirmation; all except USD as of Friday’s close.

If the USD gets rolling to the downside the pre Trump election win levels are the “lines in the sand”; below that the USD could free fall.
The reason I see the potential for a free fall is the “new trading environment” of 2017 where the risk being taken are extraordinary but neatly “boxed up” as hedges, tranches, and
lots of other names; the power of these time bombs only becomes clear when detonated. One cannot argue that the flash crashes are becoming more frequent and nobody really
understands them.

FLEXIBLE
As a trader I accept that my timing could easily be off. Or maybe it’s not off but the exchange rates say it is off (what comes to mind is the movie “The Big Short”; it was crystal clear that the “big guys” inflated the value of the trades they had wrong until it suited them to “let it go” (or perhaps it simply became unsustainable). What the movie cleared pointed out also is how NOT EXPERT the experts are. My point is as a trader I cannot fight the entire market because my resouses (trading account) is way too small. So here is what I do:

POSITION MANAGEMENT

Stay long the GBPUSD with a stop loss just below 1.2299
Stay long the EURUSD with a stop just below 1.0591
Stay long the AUDUSD with a stop loss just below 0.7534
Stay long the NZDUSD with a stop loss just below 0.7148
Stay short USDJPY with a stop just above 115.50 ( Most of my bet is here; if Japanese stocks go down will help a lot and I thinks stocks are headed lower)
USDCAD I leave alone because it’s above pre Mnuchin
If we get a USD bullish day all of these trades / levels might possibly get taken out.
My strategy will be to try and get back in when and only when the pre Mnuchin “lines” are once again violated.
Big picture view I sell the USD down 10-20% in 2017
NOTE: NONE OF THIS IS INVESTMENT ADVICE; ITS A PERSONAL OPINION FOR INFORMATIONAL PURPOSES ONLY