U.S. dollar futures gapped lower overnight, breaching critical support at the 97 level. The sell-off follows Thursday’s news that the Federal Reserve will be buying over $300 billion worth of financial assets between today and mid-January. This short-term loan program serves to inject much needed liquidity into the U.S. economy, weakening the dollar and elevating foreign currencies by default. Many times, futures markets fill gaps on the chart, so a correction higher is entirely possible. However, if the dollar index closes below the 97-pivot point on Friday, it will likely cause additional sell-offs through the course of this repo operation. Compounding the selling pressure in the USD is the reelection of Britain’s prime minister, Boris Johnson. This triggered widespread buying in the pound, up 1.5% Friday morning. Expect to see the dollar put up a fight, but I believe the days of “King Dollar” are coming to an end, which will trigger a paradigm shift as to where institutional money is flowing.

Ian Bannon

Ian’s interest in trading began with the stock market after graduating from Purdue University with a degree in Economics and a focus in international business. A natural strength for numbers, trends, and pattern recognition, in conjunction with a curiosity to understand the big picture has enabled a desire to understand market behavior. Ian managed his own stock account before moving into the futures arena because of the wide scope of trade-able sectors and the ample amount of fundamental support behind these larger-scope markets.