Dennis Gartman: Shorting Dollar Would Be Bad Decision

Commodities marched higher on Wednesday after the dollar made another sharp move lower.

Considering all the financial woes across Europe, and a growing belief that the S&P negative outlook will generate political will to wrestle with the deficit, why is the dollar continuing to decline?

For insights we turned to strategic investor Dennis Gartman, author of the Gartman Letter.

”All things being equal – money goes to the country where the central bank seems to be the most austere. We are the least austere. Everybody else is far more austere. The dollar is under pressure,” he explains.

So why aren't we more austere?

Because the US Fed has two mandates. "Our Fed has to keep the unemployment rate low and it has to flight inflation. Every other major central bank only has to fight inflation. So they’re tending to tighten.”

Sounds like a good reason to short the US dollar, but Gartman says establishing a short position here, “would be a very, very bad decision.”

He thinks market sentiment is far too bearish, already. “To take a net short position now would be illogical. The boat is extremely crowded," he says. "Everybody is bearish the dollar. If Congress and the President make some kind of agreement on spending cuts the dollar could go 100 index points higher.”

Trader Steve Cortes largely agrees. "BofA Merrill recently did a client survey and got a single digit bull percentage response on the dollar - only 6% were bullish." He takes that as a sign the market is leaning too heavily against the dollar.

"I’m looking to get long dollars,” he says. “I’m constructive on the dollar and commodity negative.”

Brian Kelly is on the other side of the trade. “Don’t fight the Fed,” he says. “Ben Bernanke wants the dollar to go lower. And he holds the purse strings. I'm looking to go short, here.”

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CALL OF THE DAY: CRUDE TO $140

The traders are keeping a close eye on the movement in US crude , after Bank of America made a bold call; they think the price of Brent surges to $140 within 3 months.

“The time is not yet ripe for oil demand destruction, and we maintain our view that Brent oil will average $122 a barrel this quarter, with prices temporarily breaking through $140 a barrel in the next three months," said the report dated April 19 by Bank of America Merrill Lynch analysts, including Francisco Blanch.

The call flies in the face of a prediction out of Goldman Sachs last week, which said too much premium was already factored into the price of oil. Goldman forecast the price of Brent would fall about $20.

How should you position now?

Trader Brian Kelly sides with BofA. He thinks Mideast unrest will drive crude prices even higher.

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Trader disclosure: On April 20, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Cortes Owns (SDY); Cortes Owns (EXC); Cortes Owns (RIMM); Cortes Owns (GS); Cortes Is Short (BAC); Cortes Is Short (F); Cortes Is Short EUR/CHF; Kinahan Owns (C); Kinahan Owns (MSFT), Is Short (MSFT) Calls; Kinahan Is Short (SLV) Call Spreads; Kinahan Is Short (WFC) Call Spreads; Kinahan Is Short (YHOO) Puts; Kinahan Is Short (SPY) Through Option Positions; Kinahan Is Short (FCX) Through Options Positions

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (DIA)
Accounts Managed By Brian Kelly Capital Own (GLD)
Accounts Managed By Brian Kelly Capital Own (SLV)
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Accounts Managed By Brian Kelly Capital Own (CNQ)
Accounts Managed By Brian Kelly Capital Own (RDC)
Accounts Managed By Brian Kelly Capital Own (EWP)
Accounts Managed By Brian Kelly Capital Own (CAF)
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Accounts Managed By Brian Kelly Capital Own (MON)
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Accounts Managed By Brian Kelly Capital Are Long Gold Futures
Accounts Managed By Brian Kelly Capital Are Long Silver Futures

For Patty Edwards
Edwards Owns (AAPL) For Clients
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For Dennis Gartman
Funds Managed By Dennis Gartman Are Long Canadian Dollars
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Funds Managed By Dennis Gartman Are Short WTI
Funds Managed By Dennis Gartman Are Long Corn, Soybeans, Sugar
Funds Managed By Dennis Gartman Are Short Yen
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