Dollar Struggling
12/01/10 09:08
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Dollar Struggling
After the first full week of the new year, the dollar finds itself once again on its heels. The dollar has started the year weaker against most of the G10 currencies and several of the better performers from 2009 find themselves leading the pack again, namely AUD, NOK and NZD. The US labor data on the whole appeared constructive but it did not do the dollar that many favors. The beginning of earnings season is the next litmus test for what the dollar could face ahead in 2010.
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USD Soft as FX Remains in Balance
14/12/09 22:30
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USD Soft as FX remains in balance
My apologies to Pro Traders Club members that the recordings have not included live trades. Last week was busy and I could not accommodate it. I spent another weekend working on a additional modules and strategies for the Complete Course as well as a remarkable Scalping Course, to be released soon.
Most global central banks will wait for the Fed to shift policy first, largely to avoid attracting capital inflows that would pressure their currencies higher. The Fed will not want to move aggressively until it feels that credit growth and real growth are sustainable, but FOMC officials admit that rates may need rise preemptively in order to pop asset bubbles or ward off inflation, even under difficult economic circumstances. We look at the Fed's priorities ahead of Wednesday's decision. Read More...
USD fell heavily overnight
08/09/09 16:07
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The USD fell heavily overnight against every other G10 currency pressured, at least in part, by the continued advance of equity markets both in Europe and in Asia. The EURUSD-equities relationship had appeared to weaken over recent weeks, but has now firmly re-established itself. In the short term the dollar faces significant downside risks inspired by funding ccy attraction as indicated in this Bloomberg article.
Resurgent equities continue to defy expectations of their imminent decline. Overnight, ECB Executive Board Member Gonzalez Paramo felt compelled to caution that markets might be reacting over-optimistically to improved economic data, and pointed out that recent economic growth is not necessarily sustainable. I feel the market is grasping at hope and almost willing equities higher to deny previous errors and omissions they must face on some dark day. They must also hope that the CB's continue to cover the trillions of dollars on "at risk" derivatives set to implode. They can cover their sins for months and years, so we will work to remain connected to current sentiment.
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LA Nov 13-15
This workshop is contingent upon interest before Oct 4 deadline, see details
The USD fell heavily overnight against every other G10 currency pressured, at least in part, by the continued advance of equity markets both in Europe and in Asia. The EURUSD-equities relationship had appeared to weaken over recent weeks, but has now firmly re-established itself. In the short term the dollar faces significant downside risks inspired by funding ccy attraction as indicated in this Bloomberg article.
Resurgent equities continue to defy expectations of their imminent decline. Overnight, ECB Executive Board Member Gonzalez Paramo felt compelled to caution that markets might be reacting over-optimistically to improved economic data, and pointed out that recent economic growth is not necessarily sustainable. I feel the market is grasping at hope and almost willing equities higher to deny previous errors and omissions they must face on some dark day. They must also hope that the CB's continue to cover the trillions of dollars on "at risk" derivatives set to implode. They can cover their sins for months and years, so we will work to remain connected to current sentiment.
Read More...
Dollar Bears May Want to Ease Off
25/08/09 22:08
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UBS economists wrote that the White House lowered its FY09 deficit forecast to $1.580 trillion (11.2% of GDP) from $1.841 trillion (12.9%). However, longer-term deficit projections were revised up by roughly $2 trillion over the next ten years. The US deficit remains a longer-term concern for the dollar, though we think it is better for dollar bears to wait until later in the year.
The bulk of the downward revision to the Office of Management and Budget (OMB) FY09 deficit forecast reflected the removal of a $250 billion placeholder for further TARP-type legislation that was included in its earlier projections. As noted, the OMB significantly raised its out-year deficits. According to the OMB, the changes to the longer-term deficit are primarily driven by changes in its economic assumptions. Read More...
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UBS economists wrote that the White House lowered its FY09 deficit forecast to $1.580 trillion (11.2% of GDP) from $1.841 trillion (12.9%). However, longer-term deficit projections were revised up by roughly $2 trillion over the next ten years. The US deficit remains a longer-term concern for the dollar, though we think it is better for dollar bears to wait until later in the year.
The bulk of the downward revision to the Office of Management and Budget (OMB) FY09 deficit forecast reflected the removal of a $250 billion placeholder for further TARP-type legislation that was included in its earlier projections. As noted, the OMB significantly raised its out-year deficits. According to the OMB, the changes to the longer-term deficit are primarily driven by changes in its economic assumptions. Read More...
USD bears should be wary of selling
10/06/09 15:00
G3: on a long term basis the EUR continues to look overvalued against both the USD and JPY. Its recent overshooting against both currencies has been driven by the rebound in risk assets since March and concerns over America's credit ratings. But Euro zone officials again voiced concern over the level of the EUR last week above 1.40 while the deteriorating fiscal picture in Latvia has raised the risks of devaluations in Eastern Europe. The key data releases to watch this week will be US retail sales and Euro zone inflation data. We think the EUR will struggle at its current elevated levels following last week's US payrolls data and European warnings on exchange rates. In addition, the upcoming G8 finance ministers meeting in Lecce, Italy on June 12-13 may give further opportunities for official comments on currencies.
Europe: Sterling has been hurt by UK political uncertainty. PM Brown's position remains tenuous following the weekend European election results. This will keep dragging on the GBP now. Elsewhere in Europe, the SEK is also likely to stay under pressure given devaluation concerns in Latvia while the CHF faces the risk that the SNB surprises the market again at its board meeting next week on June 18. The NOK however should benefit against the SEK and GBP if this week's inflation data in Norway doesn't disappoint the market
Commodity Bloc: The commodity currencies were all hit last week by the rebound in the USD. This week RBNZ meets and our economists are in a minority expecting a 25bps cut. This would support the AUDNZD cross further. We also still prefer AUDCAD to trade higher after the Bank of Canada noted CAD strength as a risk to its outlook last week but 0.90 will be important resistance.
USD Selling May Ease into Late Week Data
02/06/09 19:27
Hello Traders,
As a notice, Chris Lori CTA, will be speaking on "Psychology and Risk" at the Las Vegas Money Show Aug 4 at 10am. Chris will address the hard facts of FX trading, Funds Management, Psychology and Risk Management in hard nosed presentation.
The Fed said they would announce during the week of June 8 a list of US banks that have been approved to pay back TARP funds. Government officials said banks must first show the ability to raise money from private investors without FDIC guarantees as one of the conditions for being allowed to repay TARP funds. Several financial institutions have apparently heeded the government's guidance by announcing unexpected plans to sell equity. As expected, a major General Motors went into bankruptcy. However, behind-the-scenes negotiations regarding the terms have been taking place for sometime now and proceedings are expected to be completed relatively quickly. As such, this is not expected to have as great an impact on market sentiment as when worries first emerged. In other news, the upcoming June 16 BRIC summit is garnering more attention. The press reported that the Kremlin said they may discuss the idea of a supra-national world currency at the summit and this report comes on the back of a similar comment from a Brazilian official. Read More...
As a notice, Chris Lori CTA, will be speaking on "Psychology and Risk" at the Las Vegas Money Show Aug 4 at 10am. Chris will address the hard facts of FX trading, Funds Management, Psychology and Risk Management in hard nosed presentation.
The Fed said they would announce during the week of June 8 a list of US banks that have been approved to pay back TARP funds. Government officials said banks must first show the ability to raise money from private investors without FDIC guarantees as one of the conditions for being allowed to repay TARP funds. Several financial institutions have apparently heeded the government's guidance by announcing unexpected plans to sell equity. As expected, a major General Motors went into bankruptcy. However, behind-the-scenes negotiations regarding the terms have been taking place for sometime now and proceedings are expected to be completed relatively quickly. As such, this is not expected to have as great an impact on market sentiment as when worries first emerged. In other news, the upcoming June 16 BRIC summit is garnering more attention. The press reported that the Kremlin said they may discuss the idea of a supra-national world currency at the summit and this report comes on the back of a similar comment from a Brazilian official. Read More...
Federal Reserve's surprise move hurts dollar
19/03/09 15:06
The dollar was hurt overnight as the market continued
to react to yesterday's surprise move by the Federal
Reserve, forcing adjustments in positioning. Debate
on the precise nature of the Fed's actions will rage
on but the immediate perception of balance sheet
expansion and quantitative easing in a broader sense
is forcing the greenback lower for the time being.
Risk sentiment overnight was quite buoyant, as major
European indices are higher, clearly boosted by Wall
Street's strong gains. The dollar was under pressure
throughout the session, trading in a 1.3416-1.3535
range against the euro, and USDJPY traded in the
range 95.27-96.62.
Read More...
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USD Weakened On Rumors
08/03/09 21:59
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The US dollar weakened on Friday against the euro, gbp and other majors on rumors that non farm payrolls would be close to 1M! We have no clue who starts these types of rumors, and more, who believes in them to the point of driving price to material change. Albeit, liquidity was thin at the time which can cause for easy shift of flows for those dealing for commercial purposes. The rise in long-term yields is curious as it has occurred against a backdrop of falling long-term inflation expectations, suggesting either a rise in real yields or a rise in the risk premium on US Treasury bonds. This can be interpreted as a hint for inflation in the distant future, which is less likely. Read More...
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The US dollar weakened on Friday against the euro, gbp and other majors on rumors that non farm payrolls would be close to 1M! We have no clue who starts these types of rumors, and more, who believes in them to the point of driving price to material change. Albeit, liquidity was thin at the time which can cause for easy shift of flows for those dealing for commercial purposes. The rise in long-term yields is curious as it has occurred against a backdrop of falling long-term inflation expectations, suggesting either a rise in real yields or a rise in the risk premium on US Treasury bonds. This can be interpreted as a hint for inflation in the distant future, which is less likely. Read More...
Investors could fade the latest rally in risk sentiment
23/02/09 21:21
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Next Batter, Ben Bernanke!
Ref: UBS, Bloomberg
The US dollar rallied and equity markets fell as risk aversion rose again on bank nationalization fears. The US Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement stating that the stress test on the banking system will begin on Feb 25 and indicated that they would prefer not to have to nationalize banks. Should the stress test not have been done five years ago, or more? Fed Chairman Bernanke is scheduled to deliver his semi-annual monetary policy report testimony before the Senate Banking Committee in the US session. We anticipate that he will indicate rates will remain low & for some time." He will probably be challenged for a comment on the government nationalizing U.S. banks, as well as any specific details on the "stress tests" that some U.S. banks will soon undergo. The market will likely react to any unsettling verbiage from the masters who created the mess. Probability weighs in favor of further negative news on the state of the economy, which will continue to jack up the world reserve currency.
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Charlotte, NC
May 1-3
London, UK
May 15-17
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Next Batter, Ben Bernanke!
Ref: UBS, Bloomberg
The US dollar rallied and equity markets fell as risk aversion rose again on bank nationalization fears. The US Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement stating that the stress test on the banking system will begin on Feb 25 and indicated that they would prefer not to have to nationalize banks. Should the stress test not have been done five years ago, or more? Fed Chairman Bernanke is scheduled to deliver his semi-annual monetary policy report testimony before the Senate Banking Committee in the US session. We anticipate that he will indicate rates will remain low & for some time." He will probably be challenged for a comment on the government nationalizing U.S. banks, as well as any specific details on the "stress tests" that some U.S. banks will soon undergo. The market will likely react to any unsettling verbiage from the masters who created the mess. Probability weighs in favor of further negative news on the state of the economy, which will continue to jack up the world reserve currency.
Read More...
A Strong Dollar Policy and China a Currency Manipulator?
23/01/09 20:28
Investor risk aversion and uncertainty have returned
despite the Obama administration taking shape
throughout the week. Earnings releases have remained
downbeat for the fourth quarter earnings season as a
major blue chip company missed expectations today.
Treasury Secretary nominee Geithner won approval from
the Senate Finance Committee and now faces a
confirmation vote in the Senate, even though he
dodged personal tax payments and is being called to
task on it. Most of us would reap severe penalties,
jail time and public humiliation in such a case. The
endorsement of a tax evader does not bode well for
the Obama administration. Consider that you wake up
each day and work very hard only to pay his healthy
salary. In written responses to questions from his
recent hearing, Tim Geithner confirmed the Treasury's
strong dollar policy. I'm not sure whether he was
directed to say that or if he even knows what he is
saying. "A strong dollar policy," since when has a
stated political disposition overridden the overall
market forces, proven in what we see today with QE
efforts.
Read More...
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Dollar recoups some of its recent losses
19/12/08 00:25
The dollar recouped some of its recent losses against
the major currencies as oil fell to the lowest level
since 2004 and the credit outlook of a major US
corporate was downgraded. Investors shrugged off the
recent OPEC announcement to cut 2 mm barrels per day
and less demand pushed crude prices below $40, where
they stayed throughout the session. As the year-end
approaches, there is still no solution for the
automakers. The Bush administration said it continues
to work on a solution as the automakers have shut
down plants for now in efforts to conserve cash.
The US dollar has virtually collapsed since mid November, but we don't think USD weakness will last and expect a dollar comeback in 2009. With the current global financial crisis, global rates are converging towards zero with deflation risks looming. While carry may benefit on aggressive action in the short-term, we prefer to be long currencies which do well when global central bank rates move towards zero. Current account surpluses also provide a source of steady currency inflow. We believe investors will seek safety, liquidity and a store of value in such an environment and the USD and JPY meet those criteria. But the view can change in these uncertain times. I don't like that my next trip to Europe and that of the Monaco Grand Prix will, after fee's etc, will have me paying almost 2:1 on EUR/CAD, thus coffe and a croissant for 2 persons downstairs from the apartment will cost approximately $30 CAD. Or a round of 4 beers at the local pub on Grand Prix Wednesday will cost about $200. But its worth it, i guess.
Read More...
The US dollar has virtually collapsed since mid November, but we don't think USD weakness will last and expect a dollar comeback in 2009. With the current global financial crisis, global rates are converging towards zero with deflation risks looming. While carry may benefit on aggressive action in the short-term, we prefer to be long currencies which do well when global central bank rates move towards zero. Current account surpluses also provide a source of steady currency inflow. We believe investors will seek safety, liquidity and a store of value in such an environment and the USD and JPY meet those criteria. But the view can change in these uncertain times. I don't like that my next trip to Europe and that of the Monaco Grand Prix will, after fee's etc, will have me paying almost 2:1 on EUR/CAD, thus coffe and a croissant for 2 persons downstairs from the apartment will cost approximately $30 CAD. Or a round of 4 beers at the local pub on Grand Prix Wednesday will cost about $200. But its worth it, i guess.
Read More...
USD in Corrective Mode
28/08/08 08:09
Helped by stronger oil at $119/bbl and a hurricane
threat in the Gulf of Mexico the USD is selling off
after an over-extended run. 2yr rate spreads have
continued to move in favour of EUR/USD and this can
provide more accelerant for the move higher. I
anticipate stronger EUR from current levels over the
near term. Read More...
USD fell Thursday largely rationalized by a rally in oil
21/08/08 21:13
The USD fell Thursday largely rationalized by a rally
in oil, which jumped to its highest level in 2
½-weeks to $121.94 per barrel. Read More...
Last week the dollar sold off on GSE worries
14/07/08 00:41
The larger part of the week saw USD consolidate in a
relatively quiet week until Friday when concerns
emerged over losses at mortgage lenders Fannie Mae
and Freddie Mac may deepen and may eventually have
them nationalized. Treasury Paulson effectively held
firm in his posture that the government is supporting
the Fannie and Freddie in their current state hinting
they would not bail them out. The market views this
as a moral suasion and risk the market does not want
to subject themselves to. Consequently, the USD sold
off to a 35 year low against AUD, JPY and CHF also
moved on risk aversion related to USD only.
Read
More...
USD can't find reason to rally amid the negative sentiment and data
02/07/08 23:43
Naturally, the USD can't find reason to rally amid
the negative sentiment and data. ADP employment
reported showed -79k contraction in the private job
markets, much worse than expectation of -20k.
Read
More...
Data Watch: ECB and Non-Farm Payrolls this week
29/06/08 20:24
We had a series of dollar negative events last week
on which the dollar suffered. Firstly, the highly
anticipated FOMC statement showed lack of urgency in
a rate hike from Fed, contrary to what Bernanke led
markets to believe some weeks earlier. Markets pared
bets on near term hikes with odds of an Aug, as
implied by interest rate futures, down from 40% to
25%. Read
More...
USD - No Buyers In Sight
12/09/07 20:56
With No USD buyers in sight, we may see price
stabilization or pullback ahead of Firday's data and
next weeks FOMC.
Read More...