Let’s be clear, I’ve been a dollar bull for the last few years and have been waiting for the US to recover. I’m not so keen at these price levels but my main fundamental driver is that the Fed will be raising interest rates next year. That’s not my guess, that is what is coming out from the Fed itself, and that’s my bias until they say otherwise.

Fundamentals play a big part in my trading and the US is seemingly moving along nicely. It was never going to be back to the boom times but coming out of the GFC to its current shape shows that the yanks are doing ok. Or are they?

The US jobs market is strong and has been for a while yet we’re not seeing any wage growth. The consumer is still not spending and the timeline between the job gains and when we should see some of that spending showing in the data is lengthening. Much like everywhere else, a lot is being made about the fall in oil prices putting money in consumers pockets. As I mentioned earlier, this will be a big test to see if there is an underlying problem still with spending. If we don’t see decent gains then that’s going to flag some big issues. The retail sales today may have been decent, against what it has been, but it could and perhaps should have been much better.

Manufacturing is also another sector that is still not quite out of the woods. We’ve had up and down months all year but nothing that constitutes a decent strengthening trend. It’s not in a bad place but it’s not in a great place either. The US machine needs to get firing on all cylinders to help sustain the recovery. Much like the UK needs Europe to help it take the next step, the US needs its manufacturing sector to do the same.

And so here we have the continuing internal battle between what we see in the data we trade and what we see on the ground.

As far as the market is concerned everything is tickety boo and that’s what we have to trade, irrespective of what we feel is going on under the surface. Sometimes that’s hard when you see the problems but we have to remove a big part of ourselves from that as otherwise we’ll be trading against the grain. If there are underlying issues, like that mentioned by Richard in the comments then they will show up eventually. Until then we go with the flow.

Do I want to go long the buck at these levels? Not really but I don’t want to short it either. The US is approaching the end of the first leg of the recovery, much like the UK did, and it will need to take that next big step in 2015.

The question is can it and will it?