The charts that matter: the US dollar flexes its muscles

The US dollar continued to strengthen this week. Here’s how the charts that reflect what matters most to the global economy reacted.

Welcome back.

In this week’s magazine we take a quick look at the effects of the Suez Canal blockage on world trade. We also look at private equity –Max King picks some of the best investment trusts to buy, while Frederic Guirinec says you should also consider some of the listed fund managers too.

As promised last week, we’ve got a new video for you. Merryn talks to author, analyst and former presidential adviser Pippa Malmgren on a whole range of topics, including NFTs, the digital fad of the moment the global recovery from the Covid-19 pandemic and about Donald Trump’s bid to create a media empire in his own image, which she predicts will look something like “Game of Thrones – but with more nudity”. Watch the video here. It’s also available as a podcast for those who prefer that format –listen here, or wherever you normally get your podcasts.

And this week’s “Too Embarrassed To Ask” video explains what a “margin call” is –something that’s brought the huge family office called Archegos Capital Management to its knees. You can watch the video here.

Here are the links for this week’s editions of Money Morning and other web stories you may have missed.

Now for the charts of the week.

The charts that matter

Gold fell further, but then started to make up a bit of ground towards the end of the week. Don’t get too excited, says Dominic Frisby, who reckons it might not bottom out until June.

Gold price chart

(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) continued its climb higher, with a little dip towards the end of the week.

US dollar index chart

(DXY: three months)

Dollar strength showed itself against the Chinese yuan (or renminbi) –when the red line is rising, the dollar is strengthening while the yuan is weakening.

USD/CNY currency chart

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

The yield on the ten-year US government bond took a pause for breath towards the end of last week, but the trend remains higher.

US Treasury bond yield chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond perked back up significantly.

Japanese government bond yield chart

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

And the yield on the ten-year German Bund bounced back too, although it’s still in negative territory.

German Bunds yield chart

(Ten-year Bund yield: three months)

Copper’s drop accelerated somewhat.

Copper price chart

(Copper: nine months)

And the closely-related Aussie dollar attempted to rebound from its three-month low, but remains in the doldrums.

AUD/USD currency chart

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

Cryptocurrency bitcoin clawed back most of its recent losses to head on higher.

Bitcoin price chart

(Bitcoin: three months)

US weekly initial jobless claims rose by 61,000 to 719,000, compared to 658,000 last week (revised down from 684,000). The four-week moving average fell to 719,000, down 10,500 from 729,500 (which was revised down from 736,000) the week before. It’s the lowest level since March 2020, when it was just 225,500.

US weekly initial jobless claims chart

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

The oil price seems to be picking up a little, but remains quite volatile, torn between ongoing production caution on the behalf of Opec+, and concerns about European lockdowns delaying the global recovery further.

Brent crude oil price chart

(Brent crude oil: three months)

Amazon seems to have steadied and is trading in a range.

Amazon share price chart

(Amazon: three months)

And Tesla has come back from its recent dip, perhaps encouraged by Joe Biden’s infrastructure spending spree, of which electric vehicles should be at least one beneficiary.

Tesla share price chart

(Tesla: three months)

Have a great weekend.

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