US dollar storms higher
I'm not a big fan of the US dollar index but you can't ignore the chart. Today it broke a major double top and hit the highest since June 2017.
Why is the US dollar so strong?
It's all about the economy. The market was deeply worried about Q1 earnings and it's still early but commentary so far has been upbeat. A number of firms have even raised their guidance. Expectations were low but earnings have been good.
The market is still pricing in a 56% chance of a Fed cut before year-end but I expect that will be falling in short order. Economic data isn't strong but it's not flashing any warning signals either. If anything, other countries will cut before the FOMC.
This week's signal about less stimulus from China is a concern but it's clearly not worrying the market.
