Yesterday when I started writing a story about the impact of the Canadian dollar’s rise on ag commodity markets, the Loonie was at 97 cents. Now, one day later, it’s at 95.3.
This is annoying for a reporter for a weekly paper that goes to press on Monday afternoons but doesn’t hit farmers’ mailboxes until Thursday morning. Currencies move so fast, and so unpredictably, that whatever you’re writing Monday is almost certainly dated and the dollar level you describe quite different by the time the farmer reads it. That’s one of the reasons we don’t do stories announcing things like “Dollar Hits 97 Cents,” but instead look at what the impact the rise of the dollar has had to this point and what it likely means for the next weeks and months to come. Those are more useful stories, anyway. Still, it’d be nice for the numbers in the market to stick for longer than it takes to write and file a story.
But this situation reveals just how tempestuous currency exchange rates can be, and a bit about how twitchy the whole commodity complex is. Everything is changing very fast. The drop of the dollar this week is occurring as the price of oil declines, and this coincidence is generally considered to be causal in nature, meaning that the dollar follows the price of oil like my dogs follow me when I’m carrying raw steak. Check out the two graphs below. Look sorta the same?
The dollar has recently broken above the 93-cent level that many traders have been watching, one that has held since mid-summer. Its rise to 97 seemed to kill it off, and this return to 95 cents (for the next 15 minutes or so) won’t likely re-establish it. But where it goes from here is anyone’s guess, and everyone’s busy making that guess right now.
As with the Dow Jones Industrial Average. Since breaking 10,000 everyone in the world of market babblers is wondering where that one’s going to go. People in Prognosticationland seem to be getting more and more bullish the higher the DJIA rises. Two analysts that Pimm Fox had on his Bloomberg TV show yesterday afternoon were bullish the market and recommending investing now. Each said the market seems set to rise, at least a bit further. (Doesn’t necessarily take a lot of guts to suggest a present trend is going to continue for a little longer, of course.) One suggested there were no technical resistance levels below 11,000, so not too much reason to fear the market. The other suggested buying the dips on any small correction that comes. Don’t wait for a 10 percent correction, but jump in earlier, was some of the advice. And also that a correction might be just 2, 3 or 4 percent. Neither one of these fellows was a crazy bull, but as momentum traders they sense the momentum is clearly to the upside and that’s where they’re placing their investing bets. (It’s hard for civilians like most of us to copy their trading strategies because they almost always hedge their exposure with stops and options and by always paying attention so they can get out when things start to go sideways.)
Read Also
Topsy-turvy precipitation this year challenges crop predictions
Rainfall can vary dramatically over a short distance. Precipitation maps can’t catch all the deviations, but they do provide a broad perspective.
I must admit I find it quite odd that all the correction talk pre-September has almost evaporated as the equity markets have risen higher and higher. It’s not that a correction occurred and got that bit of necessary bloodletting out of the way. That hasn’t happened. But as the usually brutal months of September and October have been passing, the fears of a set-back have subsided and now almost no one seems to be projecting a 10 or 20 percent drop, which was a common call just two months ago.
Odd how a market that has risen even higher than levels folks found scary a few weeks ago seems less frightening to most, but that’s the situation with prognosticators. Now we’re on to looking for Dow 11,000.
Even the talk about whether this is a bear market rally or a new bull market has quietened. Lots of folks believe the equity markets going forward will be weak for years to come, but almost everyone seems to feel that March’s low was unquestionably the lowest point of the bear market.
So it’s a cheery October so far, free of those dark thoughts that tend to haunt the markets as the green days of summer die and lay a grey bed for the blessed whiteness of winter to lie upon. If we can get through to Christmas with this much complacency, we will truly have been lucky.
