Could The Dollar Be In A New Bull Market?

[ray23]

http://news.bbc.co.uk/hi/english/static/in...o_cash/history/

1979 when the specuators were working it as the did the Thai baht a few years ago.

I don't pretend to know what you know nor to be as capable as you. So if I'm wrong I would appreciate an explanation. I'm here to learn

[Naam]

The Chinese look as if they may be preparing to loosen their peg to the $ allowing it to strengthen - This presumably will also mean that Asia currencies , inc the Baht , will strengthen against the $- But will it effect other US$ exchange rates ? EUR/$ and GB/$ -?

Asian currency pressure grows on US, China

http://www.google.com/hostednews/afp/artic...eLblYWOea1wsURg

my [not so] humble view is that the Chinese have presently no intention to let RMB appreciate vs. USD.

[churchill]

World Governments Stage Dramatic Dollar Rescue Attempt

"Leaders the world over may talk about wanting to dump the dollar, but as we've seen, as long as it remains the currency, they don't want it to weak.

If Bernanke is going to print, they're going to print to keep up, keep their currencies weak, and keep their exporters competitive

Thailand, South Korea, Russia and the Philippines have been snapping up dollars this week in order to hold down the value of their currencies, traders said Wednesday, as the U.S. currency wallowed near 15-month lows.

In Latin America, Brazil's finance minister said the country's currency remained too strong, sparking speculation that the government would intensify recent efforts to curb the real's ascent. On Tuesday, Taiwan banned foreign investors from parking time deposits in the country in an effort to ease upward pressure on the local currency.

China, as we noted yesterday, is under pressure too, as the speed of its rebound may destroy the famous Yuan peg.

In the long term, they won't be too successful. The old regime by which "The world makes, and the US takes" is clearly coming to an end, and all these government need to be ready for a changed equation in the future.

Of course, in the shrot therm, they totally could move the markets, which should freak the hel_l out of carry-traders and all the other dollar bears."

http://www.businessinsider.com/world-gover...attempt-2009-11

[khunjake]

Intervention can only slow down the ascent of appreciation.. but doesn't stop it indefinitely..

The evidence is quite clear to me, the US needs a substantially lower dollar if they ever want to pull themselves out of the gutter. They will need high productivity rates which include high quality exports that can compete in the global market. Without that, they will slip into depression with double-digit unemployment for years to come.

[ray23]

Defintley an interesting world we have found oursleves in isn't it?

Fed Treasurer is still saying he wants a higher dollar I stopped believing that years ago.

[ray23]

I'm sorry this is a lot to look at, but if you want ro see the real picture you can not just look at the entire picture. Dollar is in big trouble, it obvious that Thailand is supporting it right now. If you have studied the 97 crash this was part of the problem. Thailand chased the dollar to keep it's imports up. How far will it chase it this times I don't know. They have huge dollar cash reserves. The other side of the coin is dollar drops commodities go up I.E. inflation. The Us is talking the talk but they are not walking the walk.

People are upset and in fear today at 33.27. They are not remebering where we came from:

28-Feb-08 29.5300

Keep this in mind if you survived 29 once you can do it again. Every baht that you have brought here is now now worth more then when it was taken into country. Where is what really need to be feared. inflation and another asset bubble. I feel that infaltion every time I fill me bike or go shopping. That is not a future event that is now.

Now that was the botom we saw it took a long time to get there. It is a time to be cautious but not a time to panic yet. We may infact be headed there if the US doesn't stop talking the problem and begins truly acting.

If You really look at this you will see a very slow gradual fall with its ups and downs in the process. There wa a time I thouhgt it was the Baht I can;t say that today

3-Jan-00 36.9700

4-Jan-00 37.1300

7-Mar-00 38.0600

8-Mar-00 37.9400

25-Apr-00 38.0400

12-May-00 38.9000

15-May-00 39.3500

10-Jul-00 39.9200

11-Jul-00 40.0100

1-Sep-00 40.9000

4-Sep-00 ND

5-Sep-00 41.2500

15-Sep-00 41.9900

6-Oct-00 42.5600

9-Oct-00 ND

10-Oct-00 42.8600

11-Oct-00 43.1400

29-Mar-01 44.7800

30-Mar-01 45.0400

13-Aug-01 45.1700

14-Aug-01 44.8800

29-Nov-01 44.1000

30-Nov-01 43.9300

20-Dec-01 43.9000

21-Dec-01 44.0200

17-Jan-02 43.9000

18-Jan-02 44.0000

3-May-02 43.1000

6-May-02 42.9900

21-Jun-02 42.0600

24-Jun-02 41.8400

13-Sep-02 42.8100

16-Sep-02 43.3500

3-Jan-03 43.0000

6-Jan-03 42.8000

20-May-03 42.0200

21-May-03 41.9800

1-Sep-03 ND

2-Sep-03 41.0100

3-Sep-03 40.8500

30-Sep-03 40.0500

1-Oct-03 39.7400

9-Jan-04 39.0000

12-Jan-04 38.8910

13-Feb-04 38.9700

16-Feb-04 ND

6-May-04 39.9300

7-May-04 40.1900

3-Nov-04 41.1300

4-Nov-04 40.9400

18-Nov-04 40.1600

19-Nov-04 39.9200

11-Jan-05 39.0000

12-Jan-05 38.8500

25-Mar-05 38.9700

28-Mar-05 39.1700

19-May-05 39.9000

16-Jun-05 40.9400

17-Jun-05 41.0800

2-Sep-05 41.0900

5-Sep-05 ND

6-Sep-05 41.1200

7-Sep-05 41.0200

15-Sep-05 40.9600

16-Sep-05 41.0400

5-Oct-05 41.0300

6-Oct-05 40.9800

7-Nov-05 40.9700

8-Nov-05 41.1300

13-Dec-05 41.1300

14-Dec-05 40.9900

5-Jan-06 40.2600

6-Jan-06 39.8300

28-Feb-06 39.0900

1-Mar-06 38.8500

6-Jul-06 38.1500

7-Jul-06 37.8100

25-Oct-06 37.0700

26-Oct-06 36.9800

28-Nov-06 36.2500

29-Nov-06 35.9900

24-Jan-07 35.1900

29-Jan-07 34.0000

8-Feb-07 34.2200

9-Feb-07 33.6000

5-Mar-07 33.1300

6-Mar-07 32.6500

10-Jul-07 31.2600

19-Jul-07 30.0600

20-Jul-07 29.7000

3-Aug-07 29.9300

6-Aug-07 30.0300

14-Sep-07 31.9000

27-Nov-07 31.1000

28-Nov-07 30.8000

26-Dec-07 30.0500

27-Dec-07 29.8000

18-Jan-08 30.8000

21-Jan-08 ND

25-Feb-08 31.1800

26-Feb-08 30.1000

27-Feb-08 29.9000

28-Feb-08 29.5300

29-Feb-08 30.8800

22-May-08 31.8700

23-May-08 32.0300

5-Jun-08 32.8900

6-Jun-08 33.1500

22-Aug-08 33.9200

25-Aug-08 34.1000

1-Oct-08 33.9800

18-Nov-08 35.0000

19-Nov-08 34.9500

11-Dec-08 35.1000

10-Feb-09 34.9700

25-Feb-09 35.7500

26-Feb-09 35.9200

27-Feb-09 36.1100

2 7-May-09 34.8400

17-Jul-09 34.0400

20-Jul-09 33.9900

10-Aug-09 34.0100

9-Sep-09 34.0000

10-Sep-09 33.9900

6-Nov-09 33.3500

[flying]

Dollar decline too powerful for Brazil, Korea as reserves mount

[ray23]

In my mind the real questions is was 29 the bottom?

[Naam]

In my mind the real questions is was 29 the bottom?

Ray,

your list shows offshore rates which were used only by brain-amputed chaps. the onshore rate on august 3, 2007 was

33.77

http://www.scb.co.th/html/exchange/03082007_174500.htm

[sokal]

Intervention can only slow down the ascent of appreciation.. but doesn't stop it indefinitely..

The evidence is quite clear to me, the US needs a substantially lower dollar if they ever want to pull themselves out of the gutter. They will need high productivity rates which include high quality exports that can compete in the global market. Without that, they will slip into depression with double-digit unemployment for years to come.

Thats right yet the trade deficit is going back up and US savings rates are going back down.

[Orion76]

Intervention can only slow down the ascent of appreciation.. but doesn't stop it indefinitely..

Earlier than expected intervention, or an unexpected economic disaster could cause quite a dramatic spike.

A flight to safety and a short squeeze at the same time could be quite spectacular, and quite painful to people who are long commodities and equities and short the dollar with loose or no stops.

Long term I believe the dollar will continue to weaken but a near term spike is very probable and if you are a trader you would be well served to be mindful of this.

[churchill]

China’s Liu Says U.S. Rates Cause Dollar Speculation

The decline of the dollar and decisions in the U.S. not to raise interest rates have caused “huge” speculation in foreign exchange trading and seriously affected global asset prices, said Liu Mingkang, chairman of the China Banking Regulatory Commission.

“The continuous depreciation in the dollar, and the U.S. government’s indication, that in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” he told reporters in Beijing today at the International Finance Forum.

Liu said this has “seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies.”

His view echoes that of Donald Tsang, the chief executive of Hong Kong, who said the Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis.

“I’m scared and leaders should look out,” Tsang said in Singapore Nov. 13. “America is doing exactly what Japan did last time,” he said, adding that Japan’s zero interest rate policy contributed to the 1997 Asian financial crisis and U.S. mortgage meltdown.

Carry Trades

Zhao Qingming, a Beijing-based analyst at China Construction Bank Corp., said today that low interest rates in the U.S. have spurred a carry trade with some currencies, notably the Australian dollar after recent interest rate increases by that nation’s central bank.

“The carry trades will further drive down the dollar’s value and fuel commodity prices,” Zhao said. “The dollar’s depreciation has also caused excessive liquidity in the global market.”

continued

http://www.bloomberg.com/apps/news?pid=206...Ui.30&pos=3

[ray23]

Thanks Naam off shore rates mean little to me since I live here.

28-Feb-08 29.5300

Was this the bottom?

Will it be lower then that?

I see nothng indicating any change in direction in America. maybe they just can't do it, I have no idea. The effects of this have to spread, is this what they are counting on?

[churchill]

Could China be considering changing its peg to the US$ to a peg against a basket of currencies ?

"China's central bank said last week it would consider major currencies in guiding the yuan, suggesting a departure from an unofficial peg."

http://softwaredev.itbusinessnet.com/artic...e.jsp?id=905510

[Naam]

China's central bank said last week it would consider major currencies in guiding the yuan, suggesting a departure from an unofficial peg.

But Chinese Vice Commerce Minister Chen Jian on Sunday played down talk of a shift in policy as well as mounting expectations of a rise in the yuan's exchange rate.

question: since when can a central bank speak?

Edited November 15, 2009 by Naam

[sokal]

China’s Liu Says U.S. Rates Cause Dollar Speculation

The decline of the dollar and decisions in the U.S. not to raise interest rates have caused “huge” speculation in foreign exchange trading and seriously affected global asset prices, said Liu Mingkang, chairman of the China Banking Regulatory Commission.

“The continuous depreciation in the dollar, and the U.S. government’s indication, that in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” he told reporters in Beijing today at the International Finance Forum.

Liu said this has “seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies.”

His view echoes that of Donald Tsang, the chief executive of Hong Kong, who said the Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis.

“I’m scared and leaders should look out,” Tsang said in Singapore Nov. 13. “America is doing exactly what Japan did last time,” he said, adding that Japan’s zero interest rate policy contributed to the 1997 Asian financial crisis and U.S. mortgage meltdown.

Carry Trades

Zhao Qingming, a Beijing-based analyst at China Construction Bank Corp., said today that low interest rates in the U.S. have spurred a carry trade with some currencies, notably the Australian dollar after recent interest rate increases by that nation’s central bank.

“The carry trades will further drive down the dollar’s value and fuel commodity prices,” Zhao said. “The dollar’s depreciation has also caused excessive liquidity in the global market.”

continued

http://www.bloomberg.com/apps/news?pid=206...Ui.30&pos=3

It took one year(2008) to unwind the 20 year long Japan carry trade yet people think that a 10 month carry trade in the USD is going to cause the same thing in the near term ?

[Lost in LOS]

unfortunately i have my money in dollars and I am worried about it. the US has maxed out its credit card and I don't see any reason for it to get better, especially with the "shoot from the hip" & "spending money can cure anything" administration.

Luckily I have some gold as a hedge

[wester]

Look at the US fundamentals. Is there any reason whatsoever that the dollar should be considered undervalued? Look at the US balance of payments, the US debt, US manufacturing, the US business model based on invading and ripping-off instead of producing real capital. Being contrary just to be contrary can only get you so far. Sometimes trends appear for very good reasons. If you are a short term player and feel like betting on the dollar in the short run then have at it. Prices go up and down, but ...you had better look at the 10 year chart on the dollar. If a building is on fire, sometimes it just makes good sense to get out of that building. Take a look around and make your own decision.

[Naam]

unfortunately i have my money in dollars and I am worried about it.

what did i tell you nearly two years ago over a bottle of Sherry?

[Naam]

Dollar doomed? i don't think so. a dozen or more central banks are buying dollars like mad to prevent their currencies rising too fast. how long will that last? i have no bloody idea

[JimsKnight]

Naam just loves to get the last little word in

And this time the final word from Naam is...

[Lost in LOS]

unfortunately i have my money in dollars and I am worried about it.

what did i tell you nearly two years ago over a bottle of Sherry?

yeah but we split the bottle 50/50. If I would have drank the whole bottle I would have understood better must have been those great sandwiches that got me thinking wrong

[Naam]

unfortunately i have my money in dollars and I am worried about it.

what did i tell you nearly two years ago over a bottle of Sherry?

yeah but we split the bottle 50/50. If I would have drank the whole bottle I would have understood better must have been those great sandwiches that got me thinking wrong

somehow i don't believe what most @n@ls and a multitude of "learned" chaps predict (the Dollar is doomed). my best guess is that we have reached USD/JP¥ and USD/€UR lows. NZD and AUD might still have a bit to go.

on the other hand i also don't believe in a big USD recovery as carry trades are too tempting and there is neither a sign nor a valid reason for the FED to raise interest rates.

all aforesaid of course -as always- in my [not so] humble opinion!

[ray23]

Thanks Naam that was the answer I was looking for.

[Orion76]

on the other hand i also don't believe in a big USD recovery as carry trades are too tempting and there is neither a sign nor a valid reason for the FED to raise interest rates.

The carry trade is what makes an unexpected huge spike in the USD very probable.

If some catalyst, like an unexpected geopolitical event, causes the USD to suddenly add a few % then all carry traders will bail out of their positions. This "bailing out" will be in the form of speculators selling oil, metals, equities, commodities, other currencies etc., basically buying the dollar and selling everything else. It's called a short squeeze.

When these securities start selling off their prices will plummet and other investors/speculators will start selling these securities too and move their money into fixed income funds, aka a flight to safety, further driving up the dollar.

A dollar short squeeze + a flight to safety = spectacular peak in dollar value and spectacular decline in prices of everything else.

It's not a guaranteed thing but very probable, and the more money goes into the carry trade the harder the recoil will be when it ends.

Long term I believe the USD will go the way of the ZWD, but short term a spike is a high probability event.

If you're just concerned about if you will be getting 29 or 36 baht for your dollars a few years from now then this is not all that relevant, but if you have a lot of money invested in equities and future contracts then you'd be well advised to monitor the situation closely and trade with very tight stops. For nimble traders the shorting opportunity of a lifetime might be on the horizon

[lannarebirth]

The $USD can't move up throught its 50 sma because it' has got too much downslope on it. Starting today and for the next few days hereafter the severest drop in the $USD from 45-50 days ago will come off the ma and it will begin to flatten. That is a precondition of it moving up. Needless to say the buck has to generally stay in this area while this takes place. All FWIW and OCICBW blah blah.

Edited November 17, 2009 by lannarebirth

[ray23]

Being in the 29 to 36 type folk complicated stuff but interesting to learn.

[jesimps]

Naam just loves to get the last little word in

And this time the final word from Naam is...

"Aaaaaarrrrrrggggghhhhhh"........hopefully.

[ray23]

Interesting interview on the 15 min. buisness segiment on the BBC this morning. I can't recall the guys name but an American and involved in Forex trading. I think he summed up Bernenke pretty good. No one is listening anymore to we want a strong dollar. Neither am I, his point was a simple .25% increase would turn the direction of the dollar. His position was that would not really effect the recession. At the same time give people something they could believe instead of just idle talk.

Think about it this started a long time ago, been the ongoing presentation through two Presidents terms. Was Bush trying to teach the the Chinese a lesson to let the value of thier curency to increase. If so that was a huge mistake.

So in the end today as dollar earners we see less purchasing power and that will only increase with inflation.

Sadly he believed it would be as much as two years before we actually see some measure of assistance. Recent history and the current position of the FED I see no reason to doubt him.

[lannarebirth]

The $USD can't move up throught its 50 sma because it' has got too much downslope on it. Starting today and for the next few days hereafter the severest drop in the $USD from 45-50 days ago will come off the ma and it will begin to flatten. That is a precondition of it moving up. Needless to say the buck has to generally stay in this area while this takes place. All FWIW and OCICBW blah blah.

The $USD Index closed above its 50day ma yesterday for the first time since April. The ma has been desloping which is normally a precondition to an advance. If the buck doesn't fall precipitously in the next 8 trading days the 50ma will have gone flat and no longer be resistance. Just an observation and not a prediction of anything. Nothing overtly bullish here save for some positive divergances.