What is happening with the Dollar?
After rising to 104, the Dollar index is correcting to 102. However, the market internals appear odd, to say the least. Let's delve deeper.
Large speculators began to flock to the Dollar as it rebounded from the strong support area between 101 and 102. Yet, the positioning is far from extreme.
The most notable observation is the continuous rise of SOFR spreads, even amidst the recent Dollar correction. Such a large divergence is unusual.
But that's not the only anomaly. Consider the gold/silver ratio. It has already turned up, even though the Dollar remained weak over the past few days. Furthermore, the ratio is breaking out!
These divergences will eventually resolve, but in which direction? We believe the chart below will ultimately determine the next direction for the Dollar and many commodities.
We will not venture into explanations here, as we already did so in detail at the beginning of this month when we notified you via our Twitter.
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