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Is the Dollar About To Sit on U.S. Equities?


The "elephant in the room" in the financial markets lately-- and more intensively-- is the U.S. Dollar (DXY), that has climbed relentlessly from its May 2014 low at 78.91 to today's high at 98.60, which amounts to a 25% advance!

The upmove, especially recently, has put deflationary pressure on the commodity complex in general, and Gold prices in particular.

Spot Gold has declined from around $1400 last May to a Nov 2014 low at $1137, but remark- ably, since then, despite the skyrocketing DXY, has remained "stable."

Perhaps the deflationary pressures in other commodities-- oil, copper, and grains-- in an environment of depreciating non-dollar currencies has buoyed demand for Gold in foreign denominated paper?

Be that as it may, it would appear that while Dollar-induced deflationary pressure might be absorbed well by the Gold market, perhaps U.S. equities are starting to feel deflationary forces from the Greenback?

After all, U.S. equities represent the one asset class that has not experienced a bout of deflation since the advent of QE six year ago.

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