Dennis Gartman: U.S. Dollar Trade In 'Only The 4th Or 5th Inning'
In his latest issue of The Gartman Letter, Dennis Gartman discusses the recent FOMC statement and the continuing strength of the U.S. dollar. According to Gartman, the dollar still has plenty of upside remaining.
Gartman points out that, as predicted, the Federal Reserve’s statement “said and did nothing.”
Despite speculation that Janet Yellen might include some more positive language in this statement that would hint at a September rate hike, Gartman notes that much of this month’s statement was identical to last month’s statement. Even the few changes that were made were “modest, if not minor” in Gartman’s eyes.
Gartman speculates that, since many of the changes in wording did not convey any changes in meaning, the re-wording could have been done intentionally to spite high-speed traders using word-counting software to gain a trading edge.
“By transposing sentences, the Fed may have caused some of those HFT operations to make ill-advised trading decisions. But again this is conjecture,” he adds.
Gartman points out that the slight strength in oil prices this week has been driven by WTI prices, resulting in a reduction of the Brent/WTI spread to below $5.00 in recent trading. However, before oil bulls get too excited about the recent “surprisingly large tumble” in crude oil inventories, Gartman points out that inventories are still “massively higher than last year and are about 100 million barrels more than that of the five year average.”
Finally, Gartman reiterates his position that the U.S. dollar remains in a bullish trading pattern and that he sees no evidence of a change coming any time soon.
He believes that the dollar is only in the “4th or 5th inning of a proverbial 9 inning ‘ball game’” in terms of its out-performance.
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