The continuing weakness and collapse of the U.S. dollar is driving gold prices as much as anything else, as in terms of the U.S. dollar, gold broke an all time record again, reaching $1,500 a troy ounce, as investors ignore the plunging jewelry demand from India and other nations and look toward safety and an inflation hedge.
To get a grasp of how weak the U.S dollar is, in other currencies gold is far from breaking records, as in being measured by the yen it's 15 percent below their all time record in gold, and the Australian dollar is even stronger, being 30 percent away from their all-time high for gold prices as measured by their currency. Even against sterling gold is 6 percent away from record past highs.
Again, gold is being moved by the increasing lack of faith in the U.S. dollar, along with complete uncertainty on the condition of the economy, as mixed signals and postive thinking reports from the government continue to hide the real condition of the global and U.S. economy, which is probably much worse than being reported.
The response to the U.S. dollar shows investors believe this completely.
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Wednesday, October 7, 2009
Wednesday, December 17, 2008
Is the Party Over for U.S. Dollar? Probably!
Earlier this month I asked the question of when the artificial strength of the U.S. dollar was coming to an end. We may be seeing the initial move toward that happening, as it seems deleveraging, which propped the dollar up, may be winding down.
The only question for the dollar, has been how long the deleveraging would take to unwind, as the complexity of the funds involved made it impossible to know. It seems the majority of that has happened now, and the dollar is responding in a predictable manner.
With U.S. obligations now in the trillions of dollars, the absolute necessity of a strong U.S. dollar is crucial to the successful implementation of the misguided bailouts and simulus package, but that isn't going to happen any time soon.
Some were hoping the deleveraging would last longer, giving the dollar a longer period to remain strong, but that isn't going to be the case. Most analysts believe that not only is downward pressure coming short term, but it should last for some time as well.
Today the greenback dropped to a 13-year low against the yen, and fell to its largest one-day loss against the euro, as currencies responded to the slashing of the benchmark interest rates to a range of zero to 0.25 percent, which is the lowest among major economies in the world.
While there are those looking to what Japan did as a blueprint for the U.S., that's a huge mistake for a couple of reasons.
First, the Japanese economy hasn't come near to recovering from its performance when they instituted a similar strategy as set forth by president-elect Obama. He wants to build up the infrastructure of the nation to create jobs.
Just that alone is an unfortunate idea, as it in reality crushed the Japanese economy.
But that's not the only reason it's foolish and misguided. The second reason is the difference between Japanese and American investors.
In Japan, people were willing to invest in the bonds issued by the government because of the huge savings available, as well as the willingness of local investors to fund the debt. Americans can't do that, as they basically have no savings, which makes that a mute point.
So who will fund U.S. debt with the low interest rate and the government talking pursuing quantitative easing (buying Treasuries), that will put more downward pressure on the U.S. dollar.
In the end, the government should have listened to the many voices saying they should let the market sort out the mess, as it's the best mechanism available to do that.
Now that they've decided to enter fully into the fray, they've done far more harm to the U.S. dollar, the economy, as well as the American people.
Essentially everything they've done has backfired and been impotent. It will continue to remain that way no matter how much money they throw at the problem. We're all going to suffer because of their inability to leave things alone and resist intervening.
We're going to be in for a significant bear market concerning the dollar for some time to come. It's only just beginning.
The only question for the dollar, has been how long the deleveraging would take to unwind, as the complexity of the funds involved made it impossible to know. It seems the majority of that has happened now, and the dollar is responding in a predictable manner.
With U.S. obligations now in the trillions of dollars, the absolute necessity of a strong U.S. dollar is crucial to the successful implementation of the misguided bailouts and simulus package, but that isn't going to happen any time soon.
Some were hoping the deleveraging would last longer, giving the dollar a longer period to remain strong, but that isn't going to be the case. Most analysts believe that not only is downward pressure coming short term, but it should last for some time as well.
Today the greenback dropped to a 13-year low against the yen, and fell to its largest one-day loss against the euro, as currencies responded to the slashing of the benchmark interest rates to a range of zero to 0.25 percent, which is the lowest among major economies in the world.
While there are those looking to what Japan did as a blueprint for the U.S., that's a huge mistake for a couple of reasons.
First, the Japanese economy hasn't come near to recovering from its performance when they instituted a similar strategy as set forth by president-elect Obama. He wants to build up the infrastructure of the nation to create jobs.
Just that alone is an unfortunate idea, as it in reality crushed the Japanese economy.
But that's not the only reason it's foolish and misguided. The second reason is the difference between Japanese and American investors.
In Japan, people were willing to invest in the bonds issued by the government because of the huge savings available, as well as the willingness of local investors to fund the debt. Americans can't do that, as they basically have no savings, which makes that a mute point.
So who will fund U.S. debt with the low interest rate and the government talking pursuing quantitative easing (buying Treasuries), that will put more downward pressure on the U.S. dollar.
In the end, the government should have listened to the many voices saying they should let the market sort out the mess, as it's the best mechanism available to do that.
Now that they've decided to enter fully into the fray, they've done far more harm to the U.S. dollar, the economy, as well as the American people.
Essentially everything they've done has backfired and been impotent. It will continue to remain that way no matter how much money they throw at the problem. We're all going to suffer because of their inability to leave things alone and resist intervening.
We're going to be in for a significant bear market concerning the dollar for some time to come. It's only just beginning.
Friday, December 5, 2008
Is Artificial Strength of U.S. Dollar Coming to an End?
The unusual circumstances surrounding the underpinning of the U.S. dollar has many analysts unsure of how long that shifting foundation can last.
Forced liquidation or deleveraging has been the key reason the dollar has performed so well lately, and it's now questionable how much longer that process will remain a factor.
Once that slows down, the dollar will have tremendous downward pressure on it. Think of how that will sit with American businesses already facing major challenges from China and its currency.
Bob Sinche, head of global FX and rate strategy at The Bank of America in New York said, "Foundations for the dollar's recent rally have not been solid. The result of repatriation, deleveraging, quantitative easing and a major scarcity of dollars. But now we are bound for a correction."
It's not a matter of if, it's only a matter of when. And that seems to be coming on us pretty fast.
Another factor recently introduced is the steep and fast cuts coming from across the ocean in interest rates. That should also have some impact on weakening the dollar.
Most arguments aren't for some type of long-term wait for the downturn in the dollar. It could start any time, and could be at most, several months out. I haven't heard much about anything longer than that.
Some do think if it takes several months to happen, investors will be willing to take on more risk as economic conditions settle down - assuming they do - and other currencies may not be as attractive at that time.
One thing is for sure, the forced liquidation can't go on forever, and that will definitely undercut the strength of the dollar and put downward pressure on it.
Forced liquidation or deleveraging has been the key reason the dollar has performed so well lately, and it's now questionable how much longer that process will remain a factor.
Once that slows down, the dollar will have tremendous downward pressure on it. Think of how that will sit with American businesses already facing major challenges from China and its currency.
Bob Sinche, head of global FX and rate strategy at The Bank of America in New York said, "Foundations for the dollar's recent rally have not been solid. The result of repatriation, deleveraging, quantitative easing and a major scarcity of dollars. But now we are bound for a correction."
It's not a matter of if, it's only a matter of when. And that seems to be coming on us pretty fast.
Another factor recently introduced is the steep and fast cuts coming from across the ocean in interest rates. That should also have some impact on weakening the dollar.
Most arguments aren't for some type of long-term wait for the downturn in the dollar. It could start any time, and could be at most, several months out. I haven't heard much about anything longer than that.
Some do think if it takes several months to happen, investors will be willing to take on more risk as economic conditions settle down - assuming they do - and other currencies may not be as attractive at that time.
One thing is for sure, the forced liquidation can't go on forever, and that will definitely undercut the strength of the dollar and put downward pressure on it.
Wednesday, November 26, 2008
German Chancellor Angela Merkel Blasts Use of "Cheap Money" for Economic Management
Although German chancellor Angela Merkel and the German government has implemented a fiscal stimulus plan, it was an extremely modest €12bn over the next two years. While that was probably a mistake, at least Merkel understands that creating money from thin air won't do a thing to take care of the problem they're in.
Merkel and the German government have been coming under increased pressure to contribute to a huge stimulus in relationship to the European Union; now standing at €200 billion. That would be about 1.2 percent of GDP of the 27 member states.
Talking about the contribution of the drop in value of the U.S. dollar to the current global economic crisis, Merkel stated to the German parliament:
“Excessively cheap money in the US was a driver of today’s crisis. I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.”
Some analysts assert the action wouldn't do much to change the economic crisis anytime soon. They're of course right, as is Merkel.
History has proven that the utter stupidity of the New Deal did more to create the Great Depression in the U.S. than anything else. Printing money, devaluing currency, and generating inflation is never an answer to an economic crisis.
The best thing to do is let it play out and allow the market correct itself. That cleans out the bad businesses and leadership, and makes the free market much stronger.
Throwing money at poorly run companies does nothing but reinforce poor management and keeps the real problems from being solved. Government interference in what would have been a short period of economic struggle created the infamous Great Depression in the U.S. We don't need to do the same and create a worldwide one.
Merkel and the German government have been coming under increased pressure to contribute to a huge stimulus in relationship to the European Union; now standing at €200 billion. That would be about 1.2 percent of GDP of the 27 member states.
Talking about the contribution of the drop in value of the U.S. dollar to the current global economic crisis, Merkel stated to the German parliament:
“Excessively cheap money in the US was a driver of today’s crisis. I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.”
Some analysts assert the action wouldn't do much to change the economic crisis anytime soon. They're of course right, as is Merkel.
History has proven that the utter stupidity of the New Deal did more to create the Great Depression in the U.S. than anything else. Printing money, devaluing currency, and generating inflation is never an answer to an economic crisis.
The best thing to do is let it play out and allow the market correct itself. That cleans out the bad businesses and leadership, and makes the free market much stronger.
Throwing money at poorly run companies does nothing but reinforce poor management and keeps the real problems from being solved. Government interference in what would have been a short period of economic struggle created the infamous Great Depression in the U.S. We don't need to do the same and create a worldwide one.
Tuesday, October 21, 2008
U.S. Dollar in Strongest Showing Against Euro in 20 Months
The U.S. dollar continues to strengthen, as it had its best showing against the euro in 20 months. Much of this is generated from the possibility of a second financial rescue package by the U.S. government, along with talk of a second stimulus package as well.
Commodity prices of responded by continuing to plunge in the short term as the dollar-denominated raw materials continue to struggle, even though underlying fundamentals haven't changed.
Fear will keep this trend going for a time, but as Jim Rogers says, we're now in a "forced liquidation" stage for commodities, but once liquidity comes back to the market, we'll see commodity prices go up again, as demand has only slowed down, but the commodity bull market will now be longer than originally expected because of the financial crisis.
In the short run we'll see the commodity market slow in growth as countries cut back on or put off projects. In the long term we'll see things return to where they've been concerning commodities. We will also see the dollar weaken significantly again in response to the ill-advised bailout that will eventually pummel the dollar and increase inflation from pouring more greenbacks into the economy.
Commodity prices of responded by continuing to plunge in the short term as the dollar-denominated raw materials continue to struggle, even though underlying fundamentals haven't changed.
Fear will keep this trend going for a time, but as Jim Rogers says, we're now in a "forced liquidation" stage for commodities, but once liquidity comes back to the market, we'll see commodity prices go up again, as demand has only slowed down, but the commodity bull market will now be longer than originally expected because of the financial crisis.
In the short run we'll see the commodity market slow in growth as countries cut back on or put off projects. In the long term we'll see things return to where they've been concerning commodities. We will also see the dollar weaken significantly again in response to the ill-advised bailout that will eventually pummel the dollar and increase inflation from pouring more greenbacks into the economy.
Friday, October 17, 2008
U.S. Dollar Continues as Safe-Haven Choice
With many gold funds needing cash, along with ongoing deleveraging, the U.S. dollar continues to be the refuge of choice for many jittery investors.
With the dollar and the yen basically mirroring the movement of the equities market, they have been the cheif beneficiaries of current market conditions.
The yen is still playing its customary role of measuring risk, and the dollar is moving pretty closely in step, playing a similar role as well.
For the yen, when stocks strengthen - investors sell, when stocks plummet, they're quickly buying the Japanese currency.
The yen continues to be pressured because risk-adverse investors are abandoning carry trades at this time; that has helped the U.S. dollar hold its strength. It'll continue to be difficult to guage risk while the market seesaws back and forth.
Those currencies which will be most negatively impacted by the continuing strength of the dollar will be the British pound and euro.
With the dollar and the yen basically mirroring the movement of the equities market, they have been the cheif beneficiaries of current market conditions.
The yen is still playing its customary role of measuring risk, and the dollar is moving pretty closely in step, playing a similar role as well.
For the yen, when stocks strengthen - investors sell, when stocks plummet, they're quickly buying the Japanese currency.
The yen continues to be pressured because risk-adverse investors are abandoning carry trades at this time; that has helped the U.S. dollar hold its strength. It'll continue to be difficult to guage risk while the market seesaws back and forth.
Those currencies which will be most negatively impacted by the continuing strength of the dollar will be the British pound and euro.
Wednesday, October 8, 2008
U.S. Federal Reserve Cuts Prime Rate by Half a Point
The U.S. Federal Reserve cut its lending rates by half a point today, joining other central banks around the world in an effort to boost failing markets.
Lending rates now stand at 1.5 percent from the Fed, with the discount rate also being trimmed by half a point to 1.75 percent.
Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.
This is more symbolic and psychological than really doing anything that will make a practical difference at this time.
Lending rates now stand at 1.5 percent from the Fed, with the discount rate also being trimmed by half a point to 1.75 percent.
Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.
This is more symbolic and psychological than really doing anything that will make a practical difference at this time.
U.S. Federal Reserve Cuts Prime Rate by Half a Point
The U.S. Federal Reserve cut its lending rates by half a point today, joining other central banks around the world in an effort to boost failing markets.
Lending rates now stand at 1.5 percent from the Fed, with the discount rate also being trimmed by half a point to 1.75 percent.
Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.
This is more symbolic and psychological than really doing anything that will make a practical difference at this time.
Lending rates now stand at 1.5 percent from the Fed, with the discount rate also being trimmed by half a point to 1.75 percent.
Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.
This is more symbolic and psychological than really doing anything that will make a practical difference at this time.
Monday, October 6, 2008
Dollar Strengthens Against Euro as European Economic Fears Mount
Mounting fear that the European market is about to partake in similar results as the U.S. market, has the euro continuing to fall against the U.S. dollar. Today it dropped to a 13-month low of $1.35 against the greenback.
The problems in the European market have been slower to emerge than in the U.S., and now it seems it's about to participate in the same problems.
This has continued to pummel commodities as investors are now eyeing dollar-denominated short-term paper like U.S. Treasury bills.
With the dollar continuing to strengthen, it has left gold in a much less important position than it would usually hold when people are looking for a safe haven for their capital.
Until the U.S. dollar drops again, this will continue to be the way the market moves overall.
While it's difficult to ascertain, it looks like a significant number of overseas U.S. dollars are being brought back into the U.S. at this time.
The problems in the European market have been slower to emerge than in the U.S., and now it seems it's about to participate in the same problems.
This has continued to pummel commodities as investors are now eyeing dollar-denominated short-term paper like U.S. Treasury bills.
With the dollar continuing to strengthen, it has left gold in a much less important position than it would usually hold when people are looking for a safe haven for their capital.
Until the U.S. dollar drops again, this will continue to be the way the market moves overall.
While it's difficult to ascertain, it looks like a significant number of overseas U.S. dollars are being brought back into the U.S. at this time.
Friday, September 26, 2008
Commodities will Remain U.S. Dollar Denominated - for now!
The fall of the U.S. dollar has generated the question of whether or not it will remain the currency used to price commodities. While that may happen someday, it's probably not going to be something that happens in the near future.
Assuming there'll be a huge $700 billion bailout package passed in the U.S., that could put huge pressure on the U.S. dollar, and who knows if it will hasten the process.
"At some point in history, all empires decline and at some point in history, the U.S. empire will decline," said Ian Morley, director at British-based fund manager Quantum.
"Until that happens, the world reserve currency, the world trading currency and the currency that all commodities are ultimately denominated in, is dollars."
The other obvious problem is what currency would replace it at this time and history, and there's no obvious answer.
Currencies like the yuan, British sterling or the rupee, aren't going to replace the dollar to price commodities, and neither will the euro, which is far too rigid to work.
One possibility would be the yen, which is already being used by some. Iran is using the yen as well as the euro for its oil trading. Some oil companies have been calling to do business with the euro also. But again, its rigidity leaves a lot to be desired and I don't see that being an overall answer.
The other problem for the euro is China would have to completely revamp its export policy toward Europe, something that won't be desirable for them at all.
So while there is definitely the beginning of rumblings to change from dollar-denominated commodities, until a viable alternative is offered we'll see business as usual in that regard.
Again, the process may be speeded up if the bailout package is passed and the dollar continues to take a beating from more fiat money being pumped into the economy.
This will pressure revenue and profit margins for commodity companies and countries, and could bring about the inevitable change quicker.
Assuming there'll be a huge $700 billion bailout package passed in the U.S., that could put huge pressure on the U.S. dollar, and who knows if it will hasten the process.
"At some point in history, all empires decline and at some point in history, the U.S. empire will decline," said Ian Morley, director at British-based fund manager Quantum.
"Until that happens, the world reserve currency, the world trading currency and the currency that all commodities are ultimately denominated in, is dollars."
The other obvious problem is what currency would replace it at this time and history, and there's no obvious answer.
Currencies like the yuan, British sterling or the rupee, aren't going to replace the dollar to price commodities, and neither will the euro, which is far too rigid to work.
One possibility would be the yen, which is already being used by some. Iran is using the yen as well as the euro for its oil trading. Some oil companies have been calling to do business with the euro also. But again, its rigidity leaves a lot to be desired and I don't see that being an overall answer.
The other problem for the euro is China would have to completely revamp its export policy toward Europe, something that won't be desirable for them at all.
So while there is definitely the beginning of rumblings to change from dollar-denominated commodities, until a viable alternative is offered we'll see business as usual in that regard.
Again, the process may be speeded up if the bailout package is passed and the dollar continues to take a beating from more fiat money being pumped into the economy.
This will pressure revenue and profit margins for commodity companies and countries, and could bring about the inevitable change quicker.
Monday, April 28, 2008
US dollar Drops Again, Federal Reserve Decision Looming
The US dollar declined again against several major currencies, as most markets look toward the decision of the Federal Reserve later in the week, which most expect will cut the rate by a quarter point. Even so, the unsurety of what the Fed will do has investors holding back on the greenback until the decision is revealed.
Performing strongly against the dollar was the euro again, which climbed to $1.5645, an increase over the $1.5593 in New York on Friday. The British pound also did well, rising to $1.9900, up from $1.9818.
Also gaining was the Swiss franc, with the dollar buying 1.0353. That was down from what the dollar bought on Friday: 1.0367. The Candian looney also strengthened, ending at 1.0119, in contrast to 1.0164 the U.S. dollar bought on Friday as well.
Another factor in the ongoing weakening of the dollar is the high inflation in Europe, which pretty much guarantees rates won't be cut over there.
Most think there will be a cut on Wednesday by the Fed, and that they'll probably hold cuts for some time.
Performing strongly against the dollar was the euro again, which climbed to $1.5645, an increase over the $1.5593 in New York on Friday. The British pound also did well, rising to $1.9900, up from $1.9818.
Also gaining was the Swiss franc, with the dollar buying 1.0353. That was down from what the dollar bought on Friday: 1.0367. The Candian looney also strengthened, ending at 1.0119, in contrast to 1.0164 the U.S. dollar bought on Friday as well.
Another factor in the ongoing weakening of the dollar is the high inflation in Europe, which pretty much guarantees rates won't be cut over there.
Most think there will be a cut on Wednesday by the Fed, and that they'll probably hold cuts for some time.
Thursday, April 24, 2008
US dollar Strengthens Against Most Major Currencies
With the exception of the Canadian dollar, the U.S. dollar gained against the major currencies today, including its best performance against the euro since December 2007. The euro finished down 0.0209 to end at 1.5679 against the U.S. dollar.
The U.S. Dollar Index ended up by 0.757 points to finish at 72.575. The Index measures the US dollar against the Canadian dollar, pound sterling, Swedish krona, Japanese yen, and euro.
"Now that we tried and failed to stay above $1.60 in euro/dollar, it looks like we're coming back to the bottom," said Brian Dolan, head of research at consultancy Forex.com, in Bedminster, New Jersey. "The U.S. data today is pretty clearly dollar positive and we're coming off some weaker European data."
The Zurich-based UBS AG looks at the euro's performance against the dollar to fall in the range of $1.47 in three months, while within a month it projects it to be at about $1.55.
Better-than-expected employment news and strengthening of the dollar has investors and analysts wondering which way the Fed will go at their meeting next week as far as rate cuts go. It looks like it could be a toss up whether the expected quarter-percentage-point cut will come.
The U.S. Dollar Index ended up by 0.757 points to finish at 72.575. The Index measures the US dollar against the Canadian dollar, pound sterling, Swedish krona, Japanese yen, and euro.
"Now that we tried and failed to stay above $1.60 in euro/dollar, it looks like we're coming back to the bottom," said Brian Dolan, head of research at consultancy Forex.com, in Bedminster, New Jersey. "The U.S. data today is pretty clearly dollar positive and we're coming off some weaker European data."
The Zurich-based UBS AG looks at the euro's performance against the dollar to fall in the range of $1.47 in three months, while within a month it projects it to be at about $1.55.
Better-than-expected employment news and strengthening of the dollar has investors and analysts wondering which way the Fed will go at their meeting next week as far as rate cuts go. It looks like it could be a toss up whether the expected quarter-percentage-point cut will come.
Saturday, April 19, 2008
U.S. Dollar Mixed Against Latin American Currencies
The U.S. dollar was mixed against its Latin American counterparts, as it fell to a multi-year low against the Mexican peso, while also falling against the Colombian and Chilean pesos on Friday.
Against the Brazilian real the U.S. dollar increased from multi-year lows, while it also gained against the Peruvian Sol.
Citing inflation concerns over food and commodity prices, the Mexican central bank held interest rates where they were, as inflation was higher than expected in the early months of 2008. The dollar ended the session at 10.4706, after falling to a low of 10.4348.
After falling to muli-year lows earlier in the session, the dollar gained some back against the Brazilian real, reaching a high of 1.6730.
At about mid day, the dollar fell to a low of 454.75 against the Chilean peso, in contrast to the high of 459.65 it reached on Thursday.
Against the Peruvian Sol the dollar went as high as 2.7235, after reaching 2.7175 the day before.
The Columbian peso gained against the U.S. dollar, as it went to 1786.00 on Friday, after weakening at 1794.50 earlier in the day.
Monday, April 14, 2008
Investors Ignore G-7 Currency Shift
Seeming to think the the warning by the G-7 about steep fluctuations in the exchange rates could cause harm to the global economy, French Finance Minister Christine Lagarde talked down to investors saying they don't understand the significance of the G-7's shift in its outlook on exchange rates.
That was in response to the ongoing decline of the dollar which is starting to impact exports from the strengthening currencies of other countries.
Legard said in an interview: "It's a strong statement which I am not sure the markets have yet fully understood and appreciated."
My thought is: Who cares? That's why it's called a market, and market forces are impacting the currency rates; that's how it should be. To attempt to strenghthen the U.S. dollar so European companies can benefit doesn't do anything for Americans.
Until there are real actions taken, rather than just talking the talk, most investors aren't going to sell their euros or other strong currencies in order to listen to some bureaucrats who want their interests to be put ahead of others.
Friday, April 11, 2008
U.S. Dollar Weekly News Roundup
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US dollar rises against Chilean peso on news of Central Bank intervention
The U.S. dollar closed 2.85 percent higher against the Chilean peso Friday after the Central Bank announced it will buy up to US$8 billion (euro5 billion) of the currency this year, a move expected to halt the dollar's recent slide here.
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Yuan up 4.3% against US dollar in 2008; 18.3% since Jul 05
The Chinese currency broke this week the psychological benchmark of seven Yuan to the US dollar which could signal a change of policy in Beijing since a stronger currency should help fight inflation and makes food and energy prices cheaper.
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Canadian dollar closed 0.44 of a cent lower to 97.71 cents US
The Canadian dollar closed at 97.71 US, losing 0.44 of a cent on Friday. The U.S. dollar stood at 102.34 cents Cdn, up 0.46 of a cent.
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The Gulf Common Currency: Implications for the U.S. Dollar
Amidst the US Dollar’s recent depreciation in the global marketplace the looming adoption of a common currency by the Gulf Cooperation Council has weighed down on the minds of many economists and market participants alike. With the adoption of the common currency tentatively scheduled for 2010 it is worth examining both the motivations for a common currency, and its implications in the global marketplace.
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Falling US Dollar and Trouble with the Trade Deficit
Ever since the falling dollar really hit the radar screen of the mainstream media, one predictable, knee-jerk response was that this would be a miracle elixir for our ailing export economy. Further, they asserted, the weak dollar would cure the trade deficit.
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Early U.S. copper futures fluctuate with dollar
U.S. copper futures at the New York Mercantile Exchange's COMEX division fluctuated in early business on Friday, with the market taking its short-term cue from the volatile swings in the U.S dollar, traders said.
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US dollar rises against Chilean peso on news of Central Bank intervention
The U.S. dollar closed 2.85 percent higher against the Chilean peso Friday after the Central Bank announced it will buy up to US$8 billion (euro5 billion) of the currency this year, a move expected to halt the dollar's recent slide here.
=====
Yuan up 4.3% against US dollar in 2008; 18.3% since Jul 05
The Chinese currency broke this week the psychological benchmark of seven Yuan to the US dollar which could signal a change of policy in Beijing since a stronger currency should help fight inflation and makes food and energy prices cheaper.
=====
Canadian dollar closed 0.44 of a cent lower to 97.71 cents US
The Canadian dollar closed at 97.71 US, losing 0.44 of a cent on Friday. The U.S. dollar stood at 102.34 cents Cdn, up 0.46 of a cent.
=====
The Gulf Common Currency: Implications for the U.S. Dollar
Amidst the US Dollar’s recent depreciation in the global marketplace the looming adoption of a common currency by the Gulf Cooperation Council has weighed down on the minds of many economists and market participants alike. With the adoption of the common currency tentatively scheduled for 2010 it is worth examining both the motivations for a common currency, and its implications in the global marketplace.
=====
Falling US Dollar and Trouble with the Trade Deficit
Ever since the falling dollar really hit the radar screen of the mainstream media, one predictable, knee-jerk response was that this would be a miracle elixir for our ailing export economy. Further, they asserted, the weak dollar would cure the trade deficit.
=====
Early U.S. copper futures fluctuate with dollar
U.S. copper futures at the New York Mercantile Exchange's COMEX division fluctuated in early business on Friday, with the market taking its short-term cue from the volatile swings in the U.S dollar, traders said.
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Tuesday, April 8, 2008
Dollar in Small Dip after Fed Minutes Released
The dollar pretty much shrugged off the news from the Federal Reserve minutes released today, which had an outlook of contraction in the short term for the U.S. economy.
"There was little dollar reaction to the [Fed] minutes, where the key takeaway was the Fed's concern over the potential for a severe downturn," analysts at Action Economic said in a note.
Even the continual poor U.S. housing market didn't rattle the greenback today, as it only declined slightly on the dollar index, dropping 0.3 percent to 72.20. Before the Fed minutes were released, the index stood at 72.23.
The housing report showed pending home sales had declined by over 21 percent from the February 2007.
Against the euro, the dollar fell to $1.5731 before the data was released, where it stood at $1.5717 before. For the yen, the dollar rose by 0.03 percent to 102.36, in contrast to 103.41 before the reports were released.
"There was little dollar reaction to the [Fed] minutes, where the key takeaway was the Fed's concern over the potential for a severe downturn," analysts at Action Economic said in a note.
Even the continual poor U.S. housing market didn't rattle the greenback today, as it only declined slightly on the dollar index, dropping 0.3 percent to 72.20. Before the Fed minutes were released, the index stood at 72.23.
The housing report showed pending home sales had declined by over 21 percent from the February 2007.
Against the euro, the dollar fell to $1.5731 before the data was released, where it stood at $1.5717 before. For the yen, the dollar rose by 0.03 percent to 102.36, in contrast to 103.41 before the reports were released.
Friday, April 4, 2008
Weekend Eye on the U.S. Dollar
Dollar News around the Web
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Dollar Falls Versus Euro as Job Losses Raise Recession Concern
The dollar fell against the euro and dropped the most versus the yen in a week as a government report showed the U.S. lost jobs for a third straight month in March, increasing concern the economy is falling into a recession.
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U.S. payrolls data push down dollar
The U.S. dollar fell to session lows Friday after the economy lost more jobs than economists had forecast, putting a renewed spotlight on worries about the depth of the U.S. economic downturn.
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50 million Zimbabwean dollar is one US dollar
The Reserve Bank of Zimbabwe (RBZ) has introduced a new note worth 50 million Zimbabwean dollar to deal with rampant shortages of cash in an economy that is also grappling with the world's highest inflation rate of over 100,000 percent.
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Canadian dollar ends winning week on a lower note
The Canadian dollar closed lower versus the U.S. dollar on Friday as data showed job growth moderated in Canada in March after two solid months, but the currency still ended the week with a 1.2 percent gain.
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US dollar futures offer on Indian stock exchange
The US Futures Exchange will start offering today (April 4) the first US-dollar denominated futures contract linked to India’s SENSEX stock index. The USFE has exclusively licensed the Bombay Stock Exchange’s benchmark SENSEX Index for US dollar-denominated futures trading.
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The falling dollar and remittances
The impact of the dollar depreciation on remittance flows to developing countries has emerged as a serious subject of study amongst economists and policy analysts. In particular, the impact of remittance flows for the Philippines, Mexico and India, the three countries among the largest remittance-recipients, is of immediate concern for economists and policy planners.
=====
=====
Dollar Falls Versus Euro as Job Losses Raise Recession Concern
The dollar fell against the euro and dropped the most versus the yen in a week as a government report showed the U.S. lost jobs for a third straight month in March, increasing concern the economy is falling into a recession.
=====
U.S. payrolls data push down dollar
The U.S. dollar fell to session lows Friday after the economy lost more jobs than economists had forecast, putting a renewed spotlight on worries about the depth of the U.S. economic downturn.
=====
50 million Zimbabwean dollar is one US dollar
The Reserve Bank of Zimbabwe (RBZ) has introduced a new note worth 50 million Zimbabwean dollar to deal with rampant shortages of cash in an economy that is also grappling with the world's highest inflation rate of over 100,000 percent.
=====
Canadian dollar ends winning week on a lower note
The Canadian dollar closed lower versus the U.S. dollar on Friday as data showed job growth moderated in Canada in March after two solid months, but the currency still ended the week with a 1.2 percent gain.
=====
US dollar futures offer on Indian stock exchange
The US Futures Exchange will start offering today (April 4) the first US-dollar denominated futures contract linked to India’s SENSEX stock index. The USFE has exclusively licensed the Bombay Stock Exchange’s benchmark SENSEX Index for US dollar-denominated futures trading.
=====
The falling dollar and remittances
The impact of the dollar depreciation on remittance flows to developing countries has emerged as a serious subject of study amongst economists and policy analysts. In particular, the impact of remittance flows for the Philippines, Mexico and India, the three countries among the largest remittance-recipients, is of immediate concern for economists and policy planners.
=====
Thursday, April 3, 2008
Volatility Should Continue for U.S. Dollar
The U.S. dollar was mixed today, as it fell strongly against the Canadian and Australian dollar, and the British pound.
It did manage to gain against the euro based on Eurozone Retail Sales, which fell by 0.5 percent. It also gained strongly against the New Zealand dollar, as the ANZ Commodity Price index reached a record high.
We'll get a better picture of the effects on the U.S. dollar with the various reports set to be released on Friday, as Non Farm Payrolls figures will come out, followed by Non Manufacturing Payroll and the Unemployment rate.
A report on the Average Hourly Earnings will also be released, giving a snapshot of the overall, general economic picture.
Tuesday, April 1, 2008
U.S. Dollar Gains Triggering Commodity Selling and Losses
The U.S. dollar gained some strength today, as manufacturing data from the United States, as well as retail sales in the U.S. increasing last week helped prop it up.
News of the Swiss Bank UBS and Deutsche Bank of Germany that they will be writing down $23 billion also helped the dollar out for now.
"We look for the U.S. dollar to generally guide pricing today now that military activity in southern Iraq has subsided and most financial markets are showing some stability," said Jim Ritterbusch, president of Ritterbusch & Associates.
Commodities were widely down, as oil, gold, copper and wheat all fell on the dollar's rise. It was the third straight day that oil fell.
Thursday, March 27, 2008
Dollar Returns to its Downward Trend
I don't think anybody really thought there was going to be a sustained rally with the U.S. dollar, as after a brief rally last week had some people almost euphoric and starting to talk as if something big was happening there. Most knew better.
Today the reality of the weakness of the dollar reasserted itself, as it continues its downward spiral.
Yen
For the third day in a row the yen increased against the dollar, as Japanese investors brought their money back home as concerns credit problems will spread across the world.
"Repatriation flows are likely to pick up and this will boost the yen," said Takuma Kurosawa, global markets treasurer in Tokyo at HSBC Bank, a unit of Europe's biggest lender. "Financial market turmoil increases Japanese investors' home bias. People are genuinely worried about the U.S. economy."
The yen rose to 98.72 a dollar, up from the 99.20 it was at late Tuesday in New York. Kurosawa added that the yen could trade as high as 95 a dollar next week.
Euro
Against the euru, the U.S. dollar fell to near a record low again, as more governments and investors believe the U.S. will have difficulty avoiding a recession. It traded at $1.5806, after the more significant 1.3 percent drop it experienced yesterday.
Yuan
The Chinese yuan rose to its highest level against the U.S. dollar since it dropped the peg in 2005, reaching 7.01 yuan to one dollar. That's up from the 7.0252 of Wednesday.
With the Chinese seeking to strengthen their currency, it's believe by analysts it'll drop below 7 yuan a dollar in a very short time.
Today the reality of the weakness of the dollar reasserted itself, as it continues its downward spiral.
Yen
For the third day in a row the yen increased against the dollar, as Japanese investors brought their money back home as concerns credit problems will spread across the world.
"Repatriation flows are likely to pick up and this will boost the yen," said Takuma Kurosawa, global markets treasurer in Tokyo at HSBC Bank, a unit of Europe's biggest lender. "Financial market turmoil increases Japanese investors' home bias. People are genuinely worried about the U.S. economy."
The yen rose to 98.72 a dollar, up from the 99.20 it was at late Tuesday in New York. Kurosawa added that the yen could trade as high as 95 a dollar next week.
Euro
Against the euru, the U.S. dollar fell to near a record low again, as more governments and investors believe the U.S. will have difficulty avoiding a recession. It traded at $1.5806, after the more significant 1.3 percent drop it experienced yesterday.
Yuan
The Chinese yuan rose to its highest level against the U.S. dollar since it dropped the peg in 2005, reaching 7.01 yuan to one dollar. That's up from the 7.0252 of Wednesday.
With the Chinese seeking to strengthen their currency, it's believe by analysts it'll drop below 7 yuan a dollar in a very short time.
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