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”.

If you’re not already a subscriber, sign up here and get your first six issues free

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:

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.

(Gold: three months)

(Gold: three months)

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.

(DXY: three months)

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). 

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond dipped a little after further rises.

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond rose.

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund bounced.

(Ten-year Bund yield: three months)

(Ten-year Bund yield: three months)

Copper continued its volatile march sideways. 

(Copper: nine months)

And the closely related Aussie dollar fell further against the US dollar. 

(Aussie dollar vs US dollar exchange rate: three months)

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin continued to slide along with the wider cryptocurrency sector.

(Bitcoin: three months)

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. 

(US initial jobless claims, four-week moving average: since Jan 2020)

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price recovered after its earlier dip.

(Brent crude oil: three months)

Amazon's share price crept up slightly.

(Amazon: three months)

While Tesla paused its recovery.

(Tesla: three months)

Have a great weekend.

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