Well, we knew it had to happen soon — just not this quick.
President-elect Donald Trump came out to beat down the strong dollar. In an interview with the Wall Street Journal, Trump called out China as a currency manipulator by only giving the yuan token support.
I have written about this since last month, when I said that the strong dollar was going to take the knees out of Trump’s plan to move jobs back to the US.
Now why should we care so much about the machinations going on in the currency trading pits?
As the value of the dollar falls 1.0% this morning — on the back of Trump’s comments — the Dow futures are down 100 points and the price of gold is up $20. Crude futures also rise on a weaker greenback.
So as I have often told you the biggest market mover is the dollar. As it has strengthened 4% since the election, equity markets have followed the same trajectory while commodities have lost ground.
The battle of the strong dollar is going to be the major meme of 2017, as central banks — struggling under massive debt by issuing bonds to create “wealth” for banks to bolster their balance sheets — cannot fight a currency war. The central bankers need a stable currency market for their inflation plan to have any chance to work.
Jim Rickards’ book “Currency Wars” can give you insight into what will unfold over 2017.