Moroccan Dirham at new all time highs against U.S. Dollar

euro0312.pngYes it’s true, the Morocaan Dirham is at the highest level ever against the U.S. Dollar, as is the Croatian Kuna, Estonian Kroon, Tonga Pa’anga. The Vientam Dong is at a new recent high, although not an all-time high. I’m sure it will be soon. The the size and scale of the U.S. economy, even with a reckless Fed and administration that says it is “interested in a strong dollar policy” but doesn’t back it up, it is amazing how many small economies have currencies that are gaining on the once mighty buck. The chart to the right is of the Euro-Currency, but the other charts look similar. I had thought the dollar was very oversold and ready for a reversal, as all the bad news seemed to be already in the deeply oversold price. But new information entered the market to extend the trend. We now have evidence of a Fed that is willing to completely destroy the value of the currency in a futile attempt to hold off a recession. What is so wrong with having a recession? Why not just let natural economic forces play out. Would someone want to stop the tides from coming in and out? Would someone want to stop the rotation of the Earth so we could have sunshine all day long (on half the planet anyway)? Would someone try to avoid sleep by staying constantly on stimulants? Wouldn’t it be better to just get a good nights sleep? Recessions have been a natural part of the economic cycle for as long as there have been economies. You can only hold them back temporarily. Any attempt at preventing them will cause many other long lasting problems that will ultimately be worse than the problem you are trying to prevent. I know there are those who argue that a cheap dollar is good for the economy because it makes out exports cheaper. I don’t buy it. I don’t think there’s much evidence of any economy being helped long term by destruction of its currency, especially when you rely on foreign investment to finance debt. A good dose of recession would go a long way to cleaning out the excesses and popping the bubbles that threaten to harm the economy further. A recession would be mildly painful, but less so than what we’ll face if we stay on the course we are on.
I have no technical evidence that the trend is about to end, other than the ECB is starting to worry about the dollar vs Euro at these levels. I guess they are not worried enough to intervene or change their interest rate policy. The CCI in the lower sub-graph is bumping along the plus 200 level, which usually indicates a market vulnerable to a change, although that indicator can stay there for an extended period during a strong trend, so it isn’t really much help until some sort of divergence pattern sets in. I’m watching closely. I am holding myself back from shorting this market until there is a technical reason to do so.
Stock indexes had nice follow-through to the big up day yesterday, but later in the session the rally faded and stock went negative. Although momentum remains pointing up. Trends remain firmly down, so rally attempts seem to be like jumping in a raging river and trying to swim against the current. You have to swim hard to just keep even, and if you stop for a second you give up ground (or in this case water). It will be interesting to see if the rally can try again tomorrow. There is still hope. Volume contracted slightly on the down-move today.