Another day of short selling, when does this end?

Good Day... And a Wonderful Day to you! Well, if you don't get my friend Dennis Miller's weekly letter, you should sign up just so you can read what he wrote about this week.... It's about being over medicated... And I know I am a prime candidate for that! So, if you are of the older set of people you could find out that you too are overmedicated! I couldn't stay up for my beloved Cardinals game last night, but checked the score when I woke up in the middle of the night... and they had beaten the mighty Dodgers 13-6! The bats came alive! But now they have to face two of the best pitchers in the game for the next 2 games... UGH! The great Al Stewart greets me this morning with his song: Song on the Radio... 

Well, the odds for a rate hike went higher yesterday, and ended the day at .68%... The dollar finally moved on the day, and the BBDXY gained 2 index points to 1,198... The odds had reached as high as 72% but calmed back down at the close. 

So, according to the odds makers, the rate hike is in the cards for this month, (not yet in my mind) but in their simple minds the believe it to be true, so I won't stop them from believing it! And all those bad things I talked about that come with a rate hike will take place, maybe not immediately, but eventually we'll see them creep up and take over the economy. Especially if the FOMC follows that Sept rate hike with another one at their next meeting 6 weeks later...

I'm beating around the bush talking about Gold/Silver this morning because the SPTs had a field day selling them short... Gold lost $124 and lost another figure on its price to close at $4,325... Silver lost $2.40 on the day to close at $64.24... They did it! The successfully got the short sales to negate any attempt to physically buy Gold/Silver back into the game... It's a real shame... But what's a mother to do?

The price of Oil continues its march to higher levels with a $6 gain yesterday, with $3 coming after the early morning gain of $3, and closing with a $90 handle... And the 10-year Treasury also continued to rise ending the day with a 4.80%... You don't think that the 10-year would rise past 5% do you?  I wouldn't put it past bond traders to match the FOMC's rate hikes... The bond boys have been trying to get the Fed Heads off of their duffs and do something, and now that it appears to the odds makers that the Fed Heads will finally do something, the shackles have been removed from the bond boys and they can finally get bond yield where they feel they need to be... 

In The overnight markets last night... There wasn't much movement in any asset class overnight. The dollar remained at 1,198 in the BBDXY, the 10-year is still 4.80%, Oil is trading with an $89 handle, and Gold and Silver are pretty much flat so far, with them leaning toward positive gains today... Besides a rate hike by the RBNZ, last night was what I would call a "nothing burger"... 

Remember a couple of months ago when I would complain that there was nothing but Strait of Hormuz news to be found? Well, now, its moved on to the odds of a rate hike... But soon, it will change once again to the fighting between the U.S. and Iran... As they both took time off from lobbying missiles at each other, so that they could refurbish their supplies... And now the fighting starts again... 

I don't know if you've noticed or not but the Aussie dollar (A$) has shaken of the disappointment of a Reserve Bank of Australia (RBA) leaving rates unchanged at their last meeting, when I signs pointed to a rate hike coming, and has rallied nicely VS the dollar and its kissin' cousin across the Tasman, kiwi... So, if the A$ rallied on disappointment, what's it going to do when the RBA does get off their duffs and hikes rates? I can only imagine... 

My friends at FXSTREET.com posted this about Australia: "Australia’s Gross Domestic Product (GDP) rose 0.4% QoQ in the second quarter (Q2) of 2026 compared with the 0.3% growth in the first quarter, the Australian Bureau of Statistics (ABS) showed on Wednesday. This reading came in stronger than the expectations of 0.3% expansion."  

Chuck again... So, Australia's economy is growing again, and if it picks up momentum then they'll be right as rain... 

And looky there The Reserve Bank of New Zealand (RBNZ) hiked their OCR (official cash rate) 25 Basis Points last night (Wednesday already for them) to 2.75%... Man, are they behind Australia there... 

I can tell you that one currency has not reacted favorably to the price of Oil rising again... And it's a Petrol Currency! The Russian ruble is going the opposite way that you would think they would go when the price of Oil rises about $10 in the last month! They've tried to hike rates to the highest around, and they have Oil going their way, but they still can't get past the war with Ukraine.... 

So, I would ask currency traders where they place the line of demarcation here... I mean the U.S. is in a war and yet the dollar gets bought, while the ruble gets sold.... 

The Petrol Currencies sans the ruble, are holding their ground VS the dollar, as the price of Oil rises again. The new leader of the pack (Shangra Las) is the Norwegian krone... Sorry ruble, but you're in no condition to be the leader of the Petrol Currencies... Long ago in a galaxy far away, the U.S. sterling was the leader, but then that was lost to the ruble, who has now lost the title to Norway... 

Well, the Japanese yen was back in the news column yesterday, when U.S. Treasury Sec. Bessent, said "neener, neener, neener, I know something that the markets don't know" (ok I made up the first part, but he was boasting that he knew something the markets didn't, and that is that the Bank of Japan is working on saving the yen... Well, in my opinion they can do anything they want to do, raise interest rates, allow Gov't bonds to rise in yield (The 10-year JGB rose to 3% yesterday after this little ditty by Bessent, the first time since 1996!) and anything else they think of but... They can't sell Treasuries to buy yen... I think that was agreement made between the U.S. and Japan when the U.S. intervened on their behalf in late July... 

The games people play, every night and every day, never saying what they mean, never meaning what they say now... (Joe South) That's the U.S. Gov't in a nutshell, and has been the same going all the way back as far as can remember...  

The U.S. Data Cupboard yesterday saw Job Opening remain at 7.3 Million in August from July... Today, we'll see the color of the ADP Employment Report for August... The forecasts are calling for just 47,000 jobs created last month... That's not a good number... I'm just saying...  And the U.S. ISM (manufacturing stayed strong, but there was a disturbance in the force as New Orders and Employment came in weak... So, how did the report stay strong? You got me on that one1

To recap... The dollar finally moved on the news that the odds of a rate hike in September had moved higher to .68%... Gold / Silver saw the SPTs in force show who's the boss as they sold Gold/Silver short. Gold lost $124 and Silver lost $2.40... It's gotten really bad, when will this short selling stop? And the Aussie economy is growing... And the RBNZ hiked rates 25 Basis points (1/4%) last night... \

For What It's Worth... OK, this is the 4^th in the series that Frank Trotter titled: What’s on the Other Side of Every Trade? A Serious Look at Currency Investing

"What Actually Drives Relative Currency Values.

Currency prediction has a deserved reputation for difficulty over short horizons. Over multiyear horizons, relative valuations generally respond to identifiable forces, and the investor’s job is to weigh them together rather than fixate on any one factor. And yes, I’ll use the word “relative” often since that’s the key element.

Relative inflation. Purchasing power parity is a poor timing tool and a good anchor. Persistent inflation differentials eventually pull exchange rates toward lower inflation. A currency whose domestic purchasing power erodes at 4% annually while another erodes at 1% fights a three-percentage-point headwind every year until the differential closes.

The relative fiscal situation. Deficits matter as a percentage of GDP, and they matter more when they’re structural rather than cyclical. A government borrowing 6% to 7% of GDP at full employment, as the United States has been doing and is forecast to do, is signaling that the gap will be closed by growth it cannot manufacture, austerity it will not choose or monetary accommodation it will eventually demand. Markets price that third possibility into the currency. Much of the dollar’s 2025 slide traces to exactly this reassessment of American fiscal credibility.

The relative national debt position. Flow is the deficit; stock is the debt. Gross debt above 100% of GDP does not doom a currency immediately, as Japan long demonstrated, but it removes room for error and raises the temptation toward financial repression, where rates are held below inflation to erode the debt quietly at the expense of anyone holding the currency. Countries with low debt ratios retain policy freedom, and policy freedom is what a currency holder is ultimately buying.

The global view of risk and credit standing. Currencies carry reputations. The franc and yen have historically attracted crisis capital; the dollar did, too, until recently. That reputation is now shifting under the dollar’s feet. In early 2026, Deutsche Bank’s head of FX research went so far as to call the dollar’s safe-haven status a myth, observing that the dollar has decorrelated from equity sell-offs. The freezing of Russian central bank reserves in 2022 taught every reserve manager on earth that access to dollar assets is conditional on political alignment, and the resulting migration into gold and alternative reserves is a slow-moving repricing of American credit standing with years left to run.

Total float and share of global economic activity. Liquidity is a value in itself. The dollar and euro dominate global payments and reserves, which grants them a durability premium and their holders an exit door in any crisis. Smaller floats like the krone swing more widely precisely because the pool is shallow. One possible strategy is to hold the deep currencies for stability and the shallow, well-governed ones for value and size positions accordingly.

Interest rate differentials. In the short run, this is often the dominant driver. Capital flows toward yield, and a currency where local rates are relatively higher, combined with sober fiscal and other financial management, tends to appreciate against a currency backed by a low-rate environment. Following the Federal Reserve’s 2025 cuts, Norway emerged as the highest-yielding G10 currency, a fact State Street cited in maintaining its positive stance on the krone. But rate differentials are the weather, while the fundamentals above are the climate. Chasing carry into a deteriorating currency is how investors get paid in pennies and charged in dollars.

Where We Have Felt Confident: Commodity Producers and Fiscal Adults.

Applying the above filters over the years has repeatedly led us to the same short list: currencies of countries that produce real things the world must buy and countries that run their public finances like adults. Sometimes the same country checks both boxes.

The Norwegian krone. Norway is the developed world’s cleanest expression of fiscal responsibility paired with good fortune in terms of natural resources. Its sovereign wealth fund, built from oil and gas revenue, exceeds $1.7 trillion for a nation of 5.5 million people. The state is, in net terms, a creditor of historic proportions. The krone spent much of the past decade undervalued and out of favor, then gained about 13% against the dollar in 2025 as energy revenues, top-of-class G10 yields and the dollar’s troubles converged. A shallow float means volatility, but the underlying balance sheet is the strongest in the developed world.

The Australian dollar. Australia exports iron ore, natural gas, coal, gold and food into Asia’s growth, and its public debt ratio remains modest by G7 standards. The Aussie is a classic commodity currency, rising with global risk appetite and resource demand. It lagged the European currencies in 2025, gaining mid-single digits, then extended toward the 0.70 to 0.71 range in early 2026 as the Reserve Bank of Australia held a firmer line than the Fed and commodity prices stayed elevated.

The euro against the U.S. dollar. The euro is nobody’s idea of a perfect currency, and skeptics like Doug Casey dismiss it outright as a committee construction of bankrupt welfare states. But currency investing is relative, and the relevant question is not whether the euro is sound in the abstract but whether the eurozone’s aggregate fiscal position, external balance and monetary conduct compare favorably with America’s right now.

On deficits, the comparison currently favors Europe. The euro’s 13.1% gain in 2025, carrying it to an all-time high in trade-weighted terms, reflected that relative judgment, along with the sheer depth of euro markets as the only alternative parking lot for reserve-scale capital.

The Swiss franc. Switzerland pairs perpetual current account surpluses with low public debt, low inflation and an institutional culture that treats debasement as a moral failing. The franc gained over 14% against the dollar in 2025, extending a century-long record of relative appreciation. Counter to the interest rate differential argument, the cost of that virtue is near-zero yield and a central bank that periodically resists further strength. What the franc pays is preservation, and over long stretches, preservation against the dollar has been worth several percent a year all by itself."

Chuck Again... Tomorrow, we'll pick it with kiwi... hasn't this been a real eye-opener for you regarding currencies?  

Market Prices 9/2/2026: American Style: A$ .7139, kiwi .5821, C$ .7180, euro 1.1580, sterling 1.3485, Swiss $1.2278, European Style: rand 16.0913, krone 9.3332, SEK 9.6823, forint 317.66, zloty 3.7368, koruna 20.8949, RUB 86.96, yen 159.76, sing 1.2733,  HKD 7.8426, INR 94.97, China 6.7222, peso 16.99, BRL 5.1536, BBDXY 1,198, Dollar Index 99.79, Oil $89.63, 10-year 4.80%, Silver $64.36, Platinum $1,739.00, Palladium $1,341.00, Copper $660, and Gold... $4,327.

That's it for today... Well, I learned a bit more about the cancerous spot on my head yesterday. Soon I'll be going to have a Mohs surgery on it... Not a biggie, no worries on my part, my head has had so many cuts and wounds on it, with the first one being a fence wire stuck in my head when I was about 10... and the list goes on... Hey! Maybe that iron fence wire is the cause of the way I reason things out and think? HA! I kept that to myself all these years, thinking that someone would think that's why I am what I am!  I didn't get any stitches; my mom just cleaned it out and put a bandage on it... but it was in my head quite a bit! Sorry, didn't mean to freak you out there... 10CC Takes us to the Finish Line today with their song: I'm Not In Love... I hope you have a wonderful Wednesday, no matter what the SPTs have going on today, and Please Be Good To Yourself!