Mechelany Advisors’ Investment Ideas are here to make our readers make profitable investments over different time-horizons. Our value oriented investment management style and research focuses on cheap companies with great and solid businesses to be held as core holdings in portfolios. We provide individual Investment ideas based on our multi-layered screening and valuation process combining structural, top-down macro, sectoral analysis, bottom-up stock selection and valuation analysis. Our Investment Ideas may be included in our Model Portfolio while some may not be included if they do not fit the global risk profile and asset allocation chosen at the time of selection.
The euro rallied to the highest level in more than two years as a brighter outlook for the bloc combined with a floundering dollar to boost the common currency.
The euro climbed as much as 0.8% to $1.2020, breaking past the key $1.20-per-
dollar-mark and topping its high from September.
The greenback was also weighed down Tuesday — the first trading day of a new month — amid a broad increase in risk appetite that pushed up stock prices and Treasury yields.
Optimism over a Brexit trade deal, signs the coronavirus pandemic in Europe is peaking, and a joint-debt breakthrough have helped the euro gain around 9% over the past 12 months.
It’s also benefiting from the dollar’s decline, as the prospect of an extended
period of loose monetary policy from the Federal Reserve weighs on the
greenback.
A break of this nature usually implies the beginning of a new uptrend that could take the EUR to 1.25.
But the last time the euro was so strong, European Central Bank officials intervened verbally to help weaken the currency.
Any intervention could reverse the breakout and send the EUR tumbling and the US dollar rising.
Moreover, speculators are more short the US dollar than ever…
The deepening slide in the U.S. dollar has prompted asset managers to boost their bearish bets on the currency to record levels, according to data from the Commodity Futures Trading Commission going back to 2006.
Net dollar short positions held by institutional investors such as pension funds, insurers and mutual funds hit an all-time high last week, based on an aggregate of positioning in eight currencies.
The Bloomberg Dollar Spot Index slumped more than 2% in November as progress toward a number of coronavirus vaccines damped demand for the greenback as a haven.
It would take very little to reverse the technical positioning in the US currency.
We remain strategically bearish US dollar for 2021, but the probability of a sharp snapback has risen considerably.
We would not chase the EUR Higher here.
DISCLAIMER Mechelany Advisors FZ-LLC or www.mechelanyadvisors.com, is not a registered investment advisor, nor a capital management firm or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Mechelany Advisors FZ-LLC operates as a private advisory and research company where we provide consulting services to pension funds, investments funds and private clients. Our analyses and conclusions are ours and they only clarify and highlight the investment rationale behind our own investment decisions. The analysts and employees or affiliates of Company may - and usually do - hold positions in the stocks or industries discussed here. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. You understand and acknowledge that there is a very high degree of risk involved in trading securities. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns. The indicators, strategies, columns, articles and all other features of Company’s products are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company’s website are for educational purposes only. Such examples are not solicitations of any order to buy or sell securities, commodities, investment products or engage into any kind of trading activities. Accordingly, you should not rely solely on the Information provided in making any investment decision. Rather, you should use the Information provided only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment. By navigating on our website or remaining on our subscription lists, you accept our terms and conditions and discharge us irrevocably form all responsibility.
