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The Dollar Adds to Its Gains on Poor Data, Crashing Commodities


Will deflation help the “strong” consumer?

Christopher-LemieuxSMBullion.Directory precious metals analysis 13 November, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Twitter @Lemieux_26

Consumers failed to show signs of life in today’s retail sales data, missing expectations across the board. Core retail sales came in at .2 percent, while economists were expecting .4 percent. Last month’s print was revised lower a tenth-percent.

The producer price index (PPI) contracted .4 percent, following last month’s .5 percent contraction. This annual PPI drops most on record, adding to the Federal Reserve’s deflationary worries. If the Fed thought the strong dollar was a headwind in 2014, marching back to 2014’s highs will not help the case of a rate hike, which stands at 66 percent.

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Buyers helped support the dollar, following poor economic data and crashing commodities. Base metals, including silver, are seeing enormous pressure. Silver stands a mere two dimes away from seeing a new 52-week low, while copper and aluminum prices are near capitulation. The Bloomberg Commodity Index reached 16-year lows earlier today. Gold is level on the day at $1,081 per toz.

Equities have seen better days as the Nikkei, DAX and S&P 500 sink on a bevy of concerns. Last Thursday, I pointed out impending weakness in the SPDR S&P 500 (SPY), which is a proxy exchange-trade fund (ETF) for the S&P 500 here. This was in-part due to junk bonds rolling over (I pointed that out, too!).

If volatility continues to elevate, and poor data fails to alleviate traders’ concerns, the Fed could get vocal leading into December’s FOMC meeting, just over a month away.

The Fed may have to “do whatever it takes” to keep the dollar from climbing higher.

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