Us$ Nearly At 35

[Jingthing]

The key to the future of the dollar and much more is whether CHINA remains willing to buy US debt. So far, so good, but what a vulnerable position to be in.

[Naam]

Maybe, but the rest of the world is in worst shape - so long term $ is King.

forgot to take your pills?

[britmaveric]

Perhaps, but pretty bullish on $ - made a nice bit of change lately.

[VegasVic]

The key to the future of the dollar and much more is whether CHINA remains willing to buy US debt. So far, so good, but what a vulnerable position to be in.

Thats quite an overstatement Jing The U.S.- China relationship is a two way street! China needs a market for their goods and the U.S. is by far Chinas biggest trading partner, and because China has such a trade surplus with the U.S. it needs a safe and liquid place to park those massive dollar reserves, hence they buy U.S. treasury notes. Its very much a symbiotic relationship, but it is not THE absolute key to the future of the Dollar. There are many factors that will guide the Dollars value near term and longer term. Near term there is still considerable deleveraging yet to come and this will strengthen the dollar further, and oil will continue to fall near term (perhaps to the $35-$40 range) which will also put upward pressure on the Dollar, the BOE and the EU central banks both have multiple rate cuts ahead of them, and as deflation and deep recession continue around the globe there will continue to be a "flight to safty" feature of the Dollar. Longer term the key factors to look for will be the health of the U.S. economy, the budget deficit and trade deficits, and the key factor as always is the price of oil since oil is priced in U.S. dollars (perhaps going forward there will be a basket of major currencies instead of just the dollar?) Also something else to remember, if the Dollar does start to fall at some point, what will it fall against? The Pound, the Euro, the swiss franc and the Aussie dollar are all having problems all on their own and the Yens incredible rise as of late has more to do with the unwinding of the Yen carry trade than anything fundemntal going on in Japan. Just a few other issues to consider other than the Chinese buying U.S. debt, that will have an effect on the Dollar

[MeetJohnDoe]

Australian equity markets have been discounted as heavily as the US despite better fundamentals

There is no doubt that Australian policymakers (and those of many other countries) have done a better job of managing their economies than those in the US. Therefore, it's understandable why many cannot understand why its stock market is down 50% and its currency is down 40% against the USD. The answer is pretty simple...those Aussies are very nice people but their economy is not of much import in a 50 trillion USD world economy.

The Australian economy is a resource/commodity based one (with some tourism thrown in) and therefore is very dependant of economic cycles and growth in other developing and industrialized economies. When those economies are in economic slowdowns, the Australian economy goes in the tank.

Edited December 1, 2008 by MeetJohnDoe

[mgjackson69]

My pension is all in USD, and I would settle for a nice, flat, constant 40.

Yes...for those of us dealing in THB <->USD, 40/1 sure makes the math easy.

[mgjackson69]

Unfortunately - Oz/China and most of the world is involved with subprime mortgage mess - hate to tell you this, but yes they are in the shi*e too.

Correct...the base issue is that the subprime mortgages have been used in so many "follow on" transactions, as securities or as "cash", it has really spread throughout the worldwide financial system. The contraction that we are seeing now is the flushing of that "funny money" from the system.

[Jingthing]

Thats quite an overstatement Jing biggrin.gif The U.S.- China relationship is a two way street!

I don't think you understand the change that has happened.

It is a two way street but only ONE side (CHINA) has the OPTION of shutting down that street. They could if they decided it was in their better self interest decide to pull the plug and focus on their INTERNAL MARKET. The relationship has been described as a present day MUTUALLY ASSURED DESTRUCTION. but given the choice China now has, most of the destruction would be on the USA side.

[fanselah]

"They could if they decided it was in their better self interest decide to pull the plug and focus on their INTERNAL MARKET."

Of course they could do that, and it would destroy their economy. There are an insufficient number of consumers in their middle class to support the development of either their economy or infrastructure. I'm sure that you're basing much of your persepctive on the fact that China holds almost $600 billion in US debt. That's a big number, but it is dwarfed by the size of the US economy.

[Jingthing]

Of course they could do that, and it would destroy their economy.

Yes, that is the conventional wisdom. Of course, they won't do this unless they think this is better for their country. If the US shows signs of moving towards recovery they most likely would never do it. However, if the US totally melts down, they might have no choice but to pull out. It is no coincidence that the new US treasury secretary, educated in Thailand and Asia, speaks Chinese. Yes, now both sides need each other, but the balance has shifted to the US needing China more than China needs the US. The US, stronger dollar or not for the moment, is now dealing with a weak deck of cards.

Edited December 1, 2008 by Jingthing

[lannarebirth]

The key to the future of the dollar and much more is whether CHINA remains willing to buy US debt. So far, so good, but what a vulnerable position to be in.

That's not true JT. The key to the future of the $USD (for the next few years anyway) is whether or not its 80 week cycle is right translated or not. So far that appears to be the case.

Edited December 1, 2008 by lannarebirth

[lannarebirth]

$USD Index has just completed week 36 of it's 40 week Hurst Cycle. It could be expected it will break sharply into that time frame. It is showing some negative divergances (bearish) in it's daily chart, but it also has printed some patterns that come with higher targets. If the correction into it's 40 week cycle lows hold 83 (50/50 IMO), it will likely melt up. If it doesn't, will need to see the action of the ensuing cycle for guidance.

Laymen's terms please, lanna?

So you're saying a weakening of the dollar, but against the THB or no? Because the BOT seems determined to keep this managed pseudo peg... or am I wrong?

I don't really look at the Baht much jcon, except when I wire funds.The USD:THB has broken some resistance recently and I expect that to act as support on any general pullback of the $USD in the next couple of weeks. I should have mentioned in the prior post that the last 20 week cycle was only 18 weeks long.If that repeats , this consolidation we're seeing could be its correction. Still, I don't lke negative divergances (internals telling a different tale than price) and I would expect some kind of pullback here. If it doesn't come, Uncle Buck is going to launch.

Don't know about the BOT. I take the view that news is meaningless. Time and Price are what matter most to me. The price will tell you what next weeks news will be.

So anyway, looks like the 40 week has bottomed. This should be the turn. Could be wrong, but I expect to see some "shock and awe" action.

[britmaveric]

Chinese don't like suicide - pulling plug on yanks means pulling the plug on themselves.

[Jingthing]

Chinese don't like suicide - pulling plug on yanks means pulling the plug on themselves.

Again, that is the conventional wisdom. But they could choose to focus instead on their internal economy and give the world a pass and probably survive better than the USA without their money/heroin fix. I am not saying they will, but they could. This gives them a huge negotiating advantage in all kinds of things. For example, Taiwan.

Edited December 1, 2008 by Jingthing

[britmaveric]

US could stop paying the chinese, seize their assets - yanks have pretty much all they need resource wise.

[Jingthing]

This is what I am talking about. It isn't my original thinking but maybe some people are not aware of the current situation:

"People often say that China and America are equally dependent on each other," says Joseph Stiglitz, winner of the 2001 Nobel Prize in Economics. "But that's no longer true. China has two ways to keep its economy growing. One way is to finance the American consumer. But another way is to finance its own citizens, who are increasingly able to consume in large enough quantities to stimulate economic growth in China. They have options, we don't. There isn't really any other country that could finance the American deficit."

http://fareedzakaria.com/articles/articles.html

Edited December 1, 2008 by Jingthing

[Spaniel]

You could have been looking at pre 1997 25 baht to the greenback. Now that would have been depressing and chronic for business !

When I first came here it was B 20 to $1

[Hairy]

So anyway, looks like the 40 week has bottomed. This should be the turn. Could be wrong, but I expect to see some "shock and awe" action.

Meaning the dollar dropping sharply, or ??

Interest rates here are ridiculously low, considering the massive devaluation the government is engaging in.

[FarangFatal]

Good Ole Green Back has hit 35.9 and WILL reach 38 or higher for the New Year! Is 40 in sight, no problem! I remember when the dollar cornered more baht than the Euro, expect that to happen in 2009! I also remember some German gents who wished they'd gotton dollars at home to exchange in Patong Beach... BTW, the cambios there are at 36.3 already! You know they want dollars to buy on the black market! US Hundeds ( aka C notes) are the prefered note of the underworld!

I used to buy ALOT of high quality knock off purses and my regular lady always wanted to do bix in "C Notes" Same Same for the guys at King Fashion in Patong!

Edited December 1, 2008 by FarangFatal

[mgjackson69]

US could stop paying the chinese, seize their assets - yanks have pretty much all they need resource wise.

Exactly so...China really supplies nothing that USA cannot source somewhere else, either externally or internally. Granted, there would certainly be some lag time as USA brought manufacturing capacity back online...but we could live without cheap plastic toys and shitty hand tools for a while.

[Ricardo]

My pension is all in USD, and I would settle for a nice, flat, constant 40.

Yes...for those of us dealing in THB <->USD, 40/1 sure makes the math easy.

Personally I think 50/1 would make the maths even easier !

[lannarebirth]

So anyway, looks like the 40 week has bottomed. This should be the turn. Could be wrong, but I expect to see some "shock and awe" action.

Meaning the dollar dropping sharply, or ??

Interest rates here are ridiculously low, considering the massive devaluation the government is engaging in.

No, the opposite.

[VegasVic]

Thats quite an overstatement Jing biggrin.gif The U.S.- China relationship is a two way street!

I don't think you understand the change that has happened.

It is a two way street but only ONE side (CHINA) has the OPTION of shutting down that street. They could if they decided it was in their better self interest decide to pull the plug and focus on their INTERNAL MARKET. The relationship has been described as a present day MUTUALLY ASSURED DESTRUCTION. but given the choice China now has, most of the destruction would be on the USA side.

I'm certian that we could post back and forth on this subject for months and you still wouldn't "get it" Jing China could very well be on the verge of an implosion (by now I am certain that you have sen the numbers releasd on the Chinese economy this AM) over the next 12-18 months should this recession linger, their saving grace currently is that they have a large position in Dollar denominated assets! China has no such option as you envision, as a matter of fact the entirity of the Chinese U.S. debt holdings is approximately 2 1/2 days trading volume on the Wall street government debt markets! If you ever had a business yourself you would know how this dynamic works. When you have a business and you allow one customer to have such an impact on your bottom line as the U.S. has on China then you are tied at the hip to that customer, hence the symbiotic relationship that I alluded to in my previous post! I could go in depth on the other various reasons why China is more dependant on the U.S. than the other way around, but I have a hunch that it would fall on deaf ears. In any event I hope for your sake that you are not too heavily invested in the Chinese markets

[mgjackson69]

My pension is all in USD, and I would settle for a nice, flat, constant 40.

Yes...for those of us dealing in THB <->USD, 40/1 sure makes the math easy.

Personally I think 50/1 would make the maths even easier !

Being a computer/IT guy, I prefer powers of 2...but I suppose 80/1 (factor of 8 for quick calculations) is a bit optimistic

I could live with 50/1

[New2Chalong]

I am curious to ask the smart financial/money folks if the slight retreat of the US Dollar strength against the Baht is just temporary. Previously, someone posted a neat graph which showed the trends predicting the exchange rate going as high as 38 THB to 1 USD by the first quarter of next year.

Any thoughts/comments are greatly appreciated.

New2Chalong

[Wrong Turn]

I am curious to ask the smart financial/money folks if the slight retreat of the US Dollar strength against the Baht is just temporary. Previously, someone posted a neat graph which showed the trends predicting the exchange rate going as high as 38 THB to 1 USD by the first quarter of next year.

Any thoughts/comments are greatly appreciated.

New2Chalong

Many posting here are looking short to medium term, understandably.

Where the dollar will with the word currencies, and the Thai Baht is being debated.

I am not bullish on the US Dollar, for many of the reasons we've discussed in this section of the forum on other threads.