What the Heck is Going on With the Dollar and “Fear?”…“Speculators are losing faith.”

Sunday, May 1, 2016
By Paul Martin

by Wolf Richter
WolfStreet.com
May 1, 2016

Gold jumped 2.2% on Friday to $1,294.90 an ounce. It’s up nearly 5% for the week and hit the highest price since January 2015.

Silver rose 1.7% on Friday to $17.80 an ounce. During the day, it kissed the highest price since January 2015. It has jumped 15% in April.

The yen, which the Bank of Japan successfully crushed for a while, has re-soared, from ¥126 to the dollar in June last year to ¥112 by last Wednesday morning in Tokyo. At that point, the BOJ announced that it would keep its scorched-earth campaign of negative interest rates and money printing unchanged, rather than adding to it. This disappointed the hedge fund community that had been cocksure that the BOJ would throw more fodder their way. So Japanese stocks plunged and the yen soared to hit ¥106.5 to the dollar on Friday, up 5% in three days, and the highest level since October 2014.

The euro, which the ECB is trying to crush with all its might, has re-soared 9% since early December to $1.145 by Friday.

Seen the other way around, the dollar is losing its value against all of them. The NBF Economics and Strategy team in a note to clients:

After hitting a 13-year high in January, the trade-weighted US dollar has subsequently lost steam, hammered by soft US economic data and hence diminished odds of Fed rate hikes. Speculators have reinforced the greenback’s decline by taking their net long positions to the lowest since 2014.

The Rest…HERE

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