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.
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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.
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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
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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.
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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.
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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...