Along with stock indexes, the US Dollar rally has faltered, and is quickly losing value against all major currencies again. The left chart of the Dollar Index futures shows the daily chart having reversed against the US Dollar over the past week, and the right chart shows today's intra-day 30-minute chart.This is very bad news for the American consumer, because if this downward trend for the Dollar continues, it is almost certain to reignite inflation. Further, if Congress allows populist sentiment to lead it to interfere in the futures markets, prices may back off temporarily, but will ultimately head much higher. One reason for this is that, according to CME records, market participants who take only long positions tend to be well capitalized (pension funds, PIMCO are examples) and take long-term positions, whereas people who take short positions in the market (like me and other traders) tend to be small, short-term traders, because we don't have huge sums to take long-term positions in the market. Small traders like me are a check on unbridled buying by larger market participants, because we will short the markets quickly when they are overbought, taking advantage of counter-trends and market inefficiencies. When this happens enough, prices fall. Therefore, by restricting trading or banning futures trading, Congress would hamper those of us who tend to short the markets, thus causing prices to move even higher. Large funds would only be affected marginally. What a way to shoot ourselves in the foot!
