The “Doomsday Dollar”,( important for commodity traders). AG Bisset Associates, a long time currency trading group has observed that the US dollar works in fifteen year cycles. The most recent strong cycle ended on January of 2017.In the past three cycles, the dollar fell for an average of eight years and its declines averaged 53% against the Euro. That is equal to the Euro rising 114% against the dollar. Rising from 1.07 in January of 2017, we could reach 2.00 by 2024. The yen as well can be included in this cycle behavior, as can other emerging market currencies. Trends in commodity and oil prices have correlated strongly with trends in the Euro against the dollar in the last 45 years. One factor that could contribute to the fall in the dollar is the value of stocks in the US. They are the second most expensive in the last 150 years. We have also noted in past facts how the use of the US dollar by the Trump administration as leverage against other countries. (Iran for example, but also North Korea, Russia and China) will end up forcing these countries and others that might fear eventual retaliation in a possible trade altercation, to find another currency to base your international payments on. This diversification of US risk has already been occurring though, even before Trump arrived. Back in 2000, some 179 companies of the Fortune 500 were headquartered in the United States. Now only 121 are. China is up to 119.
If the US dollar were to decline, then most likely bond yields would have to rise in order to compensate for the falling dollar demand. If that comes to pass, then the expanding US government and corporate debt would then become a liability and therefore put more pressure in stocks and the US dollar.
So far this cycle analysis has not played out in a linear fashion. The Euro did rally, beginning in January, but the Brexit debacle has weighed on sentiment and the Euro has given up a large part of its gains. If a Brexit deal can be hammered out, or better yet the English due a new referendum and give up on Brexit, we will see a recovery. Then again the upcoming challenge against President Trump and/or the election of a new President could cause the cycle turn to gather strength. Commodity interest is at a low ebb. Perhaps it is time for a change.