The USD has staged a multi-week recovery to 94.10, a more than 300pt rally off of its September lows and for good reason.  With 3.1% headline GDP for Q3, and on pace for 2.5% for the year, the Fed has recently put a December interest rate hike back on the table which has probably been the main catalyst for the USD. The 10-yr yield has climbed more than 30bps in the past month in light of the FEDs hawkish tilt, and the dollar has been in full pursuit. Furthermore, we’ve seen an epic climb in US stocks to all-time highs on the President’s tax reform policy. At the moment, there’s no end in sight to the bullish catalysts for the USD. Conversely, the Euro has struggled with sluggish growth and inflation data. We’re keeping a close watch on the most recent developments surrounding Catalonia’s quest for independence from Spain. Catalonian economic activity makes up 25% of Spanish GDP, hardly small potatoes. Taking all of this into account, and barring any unforeseen changes to the growth picture and tax reform policy, the dollar looks to retake control into year end.   


Dollar Index Weekly Chart

Dollar Index Weekly Chart

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John Caruso

Senior Market Strategist

Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.

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