The charts that matter: the US dollar keeps on strengthening
The US dollar saw further rises this week as gold and cryptocurrencies sold off. Here’s how that has affected the charts that matter most to the global economy.
Welcome back.
On this week’s cover we’ve got Boris Johnson as the Fat Controller of Britain’s railways – and HS2 in particular – as the always-in-doubt high-speed link to Leeds gets binned and replaced with empty promises of “levelling up” rail in the north. Simon Wilson looks at the controversial project and asks if cancelling a big chunk of it is a mistake and if the government will end up doing a U-turn on its U-turn.
Our main investment feature this week is on digital healthcare. The sector has been “a compelling investment theme” for years, says Stephen Connolly, but the Covid pandemic has provided huge impetus to the industry and we are now at “the start of a long-term growth trend”. Stephen looks at the key areas, and picks some of the best stocks and funds to buy now.
Elsewhere, Philip Pilkington explains what to buy when markets inevitably crack under the weight of inflation; David Stevenson picks some of the latest ETFs on offer; and Cris Sholto Heaton looks at inflation linked-bonds and explains why, at current prices, you may end up “locking in a loss”.
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Podcast fans are in for a treat this week as we have not one but two episodes for you. First, Merryn talked to Tim Hayes of Ned Davis Research who, in contrast to many of our recent guests, is bullish on the US and European equities, but not too fond of UK stocks. Find out what he has to say here.
Merryn’s second guest this week is Vivek Ramaswamy who takes aim at what he calls the “woke industrial complex” and explains why he thinks big fund managers are using ESG investing to undermine the foundations of democracy. This one has already had some rave reviews on Twitter, with one reader calling it “one of the best podcast guests I’ve ever heard.” Listen to Vivek here.
Here are the links for this week’s editions of Money Morning and other web articles you may have missed:
- Monday Money Morning: What will long-term mortgages mean for the UK housing market?
- Tuesday Money Morning: Why Britons are much wealthier than we think
- Merryn’s blog: The power of passive investing – for good and bad
- Wednesday Money Morning: What do Turkey’s tumbling lira and America’s oil raid have in common?
- Thursday Money Morning: Now might be a good time to stock up on platinum – while nobody cares about it
- Web article: What Europe’s fourth wave of Covid means for investors
- Web article: What Bulb Energy’s collapse means for you
- Friday Money Morning: What would another lockdown mean for markets?
- Cryptocurrency roundup: Black Friday crypto crash
Now for the charts of the week (which unfortunately only go up to Wednesday this week due to America's Thanksgiving holidays).
The charts that matter
Gold gave up most of its recent gains though it rebounded towards the end of the week, particularly as markets took fright at the latest Covid outbreak.
The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) meanwhile, continued its rise.
But the dollar’s strength failed to have much effect on the Chinese yuan (or renminbi) which firmed up against it (when the red line is rising, the dollar is strengthening while the yuan is weakening).
The yield on the ten-year US government bond dipped a little after further rises.
The yield on the Japanese ten-year bond rose.
And the yield on the ten-year German Bund bounced.
Copper continued its volatile march sideways.
And the closely related Aussie dollar fell further against the US dollar.
Bitcoin continued to slide along with the wider cryptocurrency sector.
US weekly initial jobless claims fell by 71,000 to 199,000 – its lowest level since 15 November 1969 (when it was 197,000). The four-week moving average fell by 21,000 to 252,250, its lowest since 14 March 2020.
The oil price recovered after its earlier dip.
Amazon's share price crept up slightly.
While Tesla paused its recovery.
Have a great weekend.