Mnuchin Disses The Dollar!

January 25, 2018  

* A Two day thumping of the dollar!

* Gold’s momentum is something to see! 

Good Day… And a Tub Thumpin’ Thursday to you ! It certainly is a Tub Thumpin’ Day for the currencies and metals, as they attempt to add to their gains yesterday. More on that and other things as we go through the last Pfennig of this week. I slept like a baby again last night… Up every couple of hours. UGH! Eddie Money greets me this morning with his song that the dollar is singing to Treasury Sec. Mnuchin this morning… Baby Hold On To Me…    

U.S. Treasury Sec. Mnuchin was in Davos for the “economic summit” that will be attended by the world’s elite economic and finance ministers, and other “elites”…  President Trump will make an appearance at the summit. So, Mnuchin was in Davos and decided to diss the dollar, by saying, “A weak dollar is good for the U.S. Trade”…  Currency traders heard that, and decided that the long standing joke about “a strong dollar is in the best interests of the U.S.” had ended. 

And the dollar got sold like funnel cakes at a State Fair once again yesterday. Tuesday was Trump announces tariffs on solar panels day for the currencies, and yesterday was Mnuchin disses the dollar day for the currencies.  The euro has gained 2-cents this week and trades with a 1.24 handle this morning. The Aussie dollar (A$) which worked so diligently to get to 80-cents, went through the 80-cent handle like a hot knife goes through butter, and now trades with a 81-cent handle. And the beat goes on for the rest of the currencies.  One currency that I look at each day and wonder how in the heck it gets so much love, pound sterling, is really moving higher and trades with a 1.43 handle this morning! 

Of course, I scratch my balding head every time I see Japanese yen drop another figure, which it did yesterday and trades this morning with a 1.08 handle…  But this is what happens when a currency trend is in place, and I’ve long called for the new weak dollar trend to have begun, and now it appears that it is going through the stage where it doesn’t matter what the fundamentals are of a foreign currency, it’s going to rally VS the dollar. 

In my weekly DTL letter ( I reminded the readers that I told them last June that the sentiment toward the dollar / euro had shifted and it appeared to me that a new weak dollar trend was beginning.. The euro at that time was 1.09… Don’t get upset, i told you dear Pfennig reader the same thing!  

Goldman Sachs, aka Lola, issued a statement calling for the euro to climb to 1.30 by year-end…  I think they’ll be going back and erasing that figure and changing it to something higher by year-end, but that’s just me, and my opinion, which could be wrong! 

The European Central Bank (ECB) is meeting while my fat fingers fly across the keyboard, but I doubt anything good comes out of the meeting…  And actually, I’m kind of scared of what ECB president, Mario Draghi, might say, as he likes to use these occasions as an opportunity to throw the euro under a bus, to put a halt to its rise…  Maybe, just maybe, he sees the weak dollar trend in place and decides to not fight city hall on this one…  I can send that thought telepathically to Draghi, so I’ll step away for a minute to do that… Be back in a Sec.! 

Ok, that telepathic transmission took a lot out of me, so I had better get going and head to the Big Finish!  But first, Gold sure had a great day yesterday, gaining $16.80 on the day to close at $1,357.70, and is already being bought this morning in the early trading, and is up to $1,363.70! The drop in the Dollar Index to 89.12 has a lot to with this most recent rise in the price of Gold, but add to that, the announcement by the World Gold Council (WGC) that Russia now has an equal amount of physical Gold as China.. (we all know that the WGC doesn’t have a clue as to how much physical Gold China really has, but we’ll leave this alone for now)  And there’s a story from Australia, who used to be the number one Gold producer in the world, before China put their efforts into mining the shiny metal, and the story talks about a merger between Australia and Indonesia for Gold products… 

All-in-all everything is coming up roses for Gold these past couple of days, and the momentum is beginning to get rolling for the shiny metal, as long as the “boys in the band” remain on the sidelines…  Remember how strong the momentum for Gold was in the early days of it’s move from around $260 to $1,000 and then on to its record high of $1,917? I do, and around $500 I realized what was going on, and began to buy…  I had been a buyer of Silver going back to the 80’s…  

The U.S. Data Cupboard had the Existing Home Sales yesterday for December, and the result wasn’t a good one, with home sales falling 3.6% from November.  I’m thinking that this is a sign that the prices of the existing homes for sale are too high, and that’s not a good thing, folks, as it’s what started the housing meltdown in 2007-08. I’m just saying…  

To recap…  It was a Wonderful Wednesday for the currencies and metals yesterday, as they added to their gains from Tuesday, after U.S. Treasury Sec. Mnuchin dissed the dollar in Davos. Currency traders took this as a new monetary policy, and continued to sell dollars like funnel cakes at a State Fair. And Gold is gaining momentum… I’m just saying…  The ECB is meeting right now… hopefully they leave the euro’s rise alone…  

Before we head to the Big Finish today…  Hey folks! I have some exciting news to share with you today… I’ve been nominated for the Best of FX Award given by FX Street… Now, not that I want to ring my own bell, or blow my own horn (my dad used to tell me there were times you needed to blow your own horn, otherwise it wouldn’t get heard) but I think it’s about time! So, here’s the deal… starting today, and don’t put this off or you’ll forget to do it later, you can go to this website

Then there are several categories just click “don’t know” if you don’t know these people. When you get down to Best Buy-side Contributor, then you’ll find my name, click on it, and continue to the end, and submit.

It’s important that each category has at least a “don’t know” or else they won’t count your vote. I’m up against some heavy hitters folks, so I know I can count on you, as you’ve always been there when I asked for something!

Let’s go vote! Wouldn’t that be something, IF my little letter from the Midwest, would be named best newsletter in FX?  That would be an upset to the proportions of the NY Giants VS the Patriots…    

For What it’s Worth…  My good friend, the Retirementor, Dennis Miller, interviewed yours truly for his latest letter… There are some thoughts there from me, from the Butler Patio, for sure! So, his new letter will be posted today, so if it’s not up when you click this link, just go back to it later…   

Or, here’s your snippet: “DENNIS: I’ve noticed a lot of ads encouraging people to refinance their homes while rates are still low, suggesting they can take some of the equity and pay off their credit cards. That only works if they cut up the damn credit cards. If millions of consumers refinance, basically taking equity out of their home, what impact will that have?

CHUCK: In 2005, I told my readers that consumers were using their houses like ATM machines, taking equity out of their homes to buy SUV’s, big screen TV’s, and fancy clothes. That was all fine until the house values began to fall, and now the consumers owed more on their house than it was worth.

Never in a million years would I have thought that we would again fall for that idea that house values will never fall, especially so soon after the last crisis and collapse. But here we are again…. And it’s all going to end up just like the last crisis, but this time, it will be worse, because we never cleaned out the excesses of the last boom period.” 

Chuck again… I really think that Dennis does a fabulous job of helping retirees or people who are thinking about retiring in the near future, so if that’s you, what are you waiting for? Sign up at his website before you forget… 

Currencies today 1/25/18… American Style: A$ .8105, kiwi .7377, C$ .8127, euro 1.2445, sterling 1.43,  Swiss $1.0623, …. European Style: rand 11.88, krone 7.7144, SEK 7.8864, forint 248.64, zloty 3.3293, koruna 20.3984, RUB 56.29, yen 108.88, sing 1.3053, HKD 7.8165, INR 63.40, China 6.3793, peso 18.48, BRL 3.2046, Dollar Index 89.12, Oil $66.09, 10-year 2.64%, Silver $17.55, Platinum $1,022.14, Palladium $1,103.77, and Gold… $1,363.70   

That’s it for today and tomorrow, recall I’m heading to the infusion center bright and early tomorrow, so no Pfennig on Friday…  Tomorrow is my youngest sister’s birthday… Happy Birthday Joanie! My beloved Missouri Tigers took one on the chin last night losing to the high flying Auburn team. I don’t like that we have to wait an extra week for the Super Bowl, not that I’ll make a Big Deal out of watching it this year any way, but still, two weeks? So, I hope you have things to do, people to see, and so on planned this weekend, I don’t! Oh, poor, poor, pitiful me, as Linda Ronstadt once sang…  Paul Young takes us to the finish line today with his song: Every Time You Go Away…  And with that I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow! And don’t forget to Be Good To Yourself!  

Chuck Butler