U.S. Dollar: The Technology Currency
Ashraf Laidi | Oct 27, 2021 02:15AM ET
by Adam Button
We often talk about commodity currencies and low-yielding currencies but the technology currency is rarely touted. In mid US session, AUD and CHF were the only gaining currencies vs USD, while JPY and EUR were the weakest. US new home sales shot up 14% in September, while the DAX and NASDAQ led indices. The 2nd Premium DAX long hit its final target for a total of +500 pts from the earlier trade.
The handful of mega-cap technology equities are in a class of their own. The 12% rise in Tesla (NASDAQ:TSLA) on Monday was one of the single largest market cap gains in any stock, ever. It's now larger than all other car companies combined. Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) are in a similar class.
What they all have in common is that they're American and act like magnets for capital, particularly when they began to run. We've talked about it before, but an underrated factor driving US dollar gains is financial flows into equities and derivatives. The stock market casino operates primarily in US dollars.
The NASDAQ is less than 2% away from breaking the August record highs and we're nearing the positive Nov-Dec seasonal period. It's tough for the dollar to make gains against commodity currencies and EM in a growth-positive environment, but it can continue to make gains against the euro and yen.
The rally in tech also points to the steadily improving mood. That's something that both reflects and will feedback into the real economy.
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