For weeks now commodities have been moving in lockstep, in inverse fashion to the dollar. The picture has grown more confusing today as gold slips back to the $1048 level, more than $20 bucks off yesterday’s intraday highs. Oil. however, is consolidating gains above the $77 level. Suddenly, we have to put on our thinking caps rather than robotically follow the leader…Which I had a thinking cap.
EUR/USD trades at 1.4915, dipping modestly after news that pressure is growing for EU officials to head to China to get them to loosen up CNY peg to the dollar.
The theory goes that if the dollar falls versus the CNY, it reduced pressure on the greenback to fall versus the EUR and other majors. It will also lessen the need for Chinese intervention, and intervention from other Asian central banks. In other words, It would be a very big deal, and be just the ticket to give the dollar the breather it desperately needs.
