Add Saudi Arabia to the growing list (one that already includes Jay-Z and Giselle Bundchen) of those wary of the dollar. OPEC ministers are clearly wary of the dollar’s decline — which continues today — and as oil producers struggle to deal with the weak greenback (since oil is denominated in dollars), analysts say now is a time to be concerned. “While many commentators, analysts and media have wondered at which point the dollar’s decline is considered at a dangerous level, it is precisely when the influential group of oil producers begin mulling plans to receive payments in currencies other than US dollars for their oil,” says Ashraf Laidi, chief forex analyst at CMC Markets.
Here's a yearly chart that I used over the weekend.
This chart already says "sell me."
1.) The index is way below the 200 day SMA
2.) All the simple moving averages are moving lower.
3.) The shorter SMAs are below the longer SMAs
4.) Prices are below all the SMAs.
If OPEC dumps the dollar, we've in a terrible place.
1 comment:
Bonddad, if Saudi Arabia dumps the dollar in favor of the euro or a basket of currencies shouldn't we be prepared to start seeing inflation immediately jump into the clearly visible 10% range the Fed had been denying this past one to two years? Just making the currency switch alone would likely add 5% to our inflation rate. The Fed would be faced with the prospect of either slashing interest rates to try to keep the economy afloat (a la Nixon's crew in the 1970s) or fighting the inflation and biting the bullet on the economic downturn. Is it time to bring the "misery index" back into vogue?
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