Catch-22 For America

, with the EUR/USD falling to a new 22-month low at $1.2531, while the Dollar Index hit a 20-month high of 82.41 before settling at 82.35 (up 0.31% for the day). The WSJ quotes unnamed Tokyo dealers who note support for the euro at $1.2500, “but if that level is breached there is no major support seen on technical charts until $1.2000.”

Commodities continue to suffer as a result of the dollar gains -- Dan Norcini reports that the continuous commodity index (CCI) has fallen to its 50-month moving average and is moving closer to an important retracement level. Silver, platinum and palladium will continue to struggle as long as hedge funds and managed money generally remains gun shy of long-side exposure to commodities.

Gold continues to trade around $1,550, struggling to get much above this level but finding good buying support on dips toward $1,530. Reports that central banks continued to add to their gold reserves in April and May were constructive from a bulls’ perspective. According to IMF data, Mexico, Kazakhstan and Ukraine were big buyers last month, while the Philippines' central bank added more than one million troy ounces in March.

There was barely any growth in durable goods sales in America during April with just a 0.2% increase. Economists had forecast a 0.5% gain. Over at ShadowStats, John Williams’ latest commentary notes that real durable goods orders remain below 1999 levels -- emphasising the chimeras nature of the growth the U.S. enjoyed over the last decade.

New jobless claims numbers were better, though, coming in at 370,000 versus a consensus forecast of 371,000. But with year-on-year growth in nonfarm payrolls slowing significantly and unemployment still above 8% (including the underemployed, which bumps the figure up to 22%), it’s hard to remain anything other than pessimistic on the U.S. economy.

More money printing from Benny and the Fed will buy another artificial boost for the economy, but at the continued expense of the dollar’s health. Absent more money printing, the economy heads south quickly.

Catch 22 indeed.