7 replies to this topic

[arbman]

I don't know how many times I expected an USD bottom since Nov... It is almost amusing that the Fed is still complaining about the inflation, btw... - kisa

[Mr Dev]

I don't know how many times I expected an USD bottom since Nov...
It is almost amusing that the Fed is still complaining about the inflation, btw...
- kisa

My charts went on alert 2 days ago and since its climbed a wee bit... looking for a position soon.

Also watching charts showing Japan uptrend is ending,...with charts rolling over maybe real fireworks there,..

much weaker than Europe.

Edited by Mr Dev, 23 April 2007 - 09:04 PM.

[Cirrus]

We may get a ST bottom but I would be surprised if we didn't see a high 70s daily and probably weekly close this year.

[VolPivots]

time to swap 'em. Sell equities for USD$.

[Mr Dev]

time to swap 'em. Sell equities for USD$.

I agree and that may well have an affect foreign investors as we move down the road.

I mean we all know ... it's like foreigners shopping in NYC with Euros & Pounds they've been able

to swap currency and buy while getting a big discount on the US stock markets plain and simple.

That's one good reason why it's been allowed to tumble. Very well orchestrated.

[arbman]

The pattern is quite similar to the last year's; the dollar drops right ahead of the earnings, the multinationals just converted their foreign earnings into the USD and the earnings are all of a sudden beating the estimates, the market goes hurray!!!

[Rogerdodger]

Interesting piece in John Mauldin's Outside the Box:

In his article "The Missing Link to Global Rebalancing," Roach contradicts the widespread notion that the US Dollar is the primary driver for rebalancing and explains why personal consumption is the issue to keep an eye on:

"Conventional wisdom has it that the currency mechanism lies at the heart of the coming rebalancing of the world economy.

I still don't buy that line of reasoning. The broad trade-weighted dollar index is now off 16% in real terms from its early 2002 highs - slightly more than half the 30% decline that the models deem necessary for rebalancing. Yet, the US current account deficit has barely budged - holding steady at around 6.5% of GDP over the 2005-06 period...

America's trade imbalance remains very much an outgrowth of a serious excess consumption problem. With personal consumption currently at a record 71% of GDP, high and rising import propensities underscore the structural aspects of the US trade problem. Consequently, I continue to think it will take a lot more than another 15 percentage point decline in the dollar to reduce the US trade gap to manageable proportions. Yet, the global powers that be have little appetite for such a "mega dollar correction" scenario, in my view. In short, don't count on the dollar to be the principal instrument of global rebalancing.

... My guess is that US consumers won't wake up to the urgency to rebuild income-based saving until they face some sort of a shock that raises questions about job and income security. As long as the unemployment rate hovers near its cycle low - precisely the message from a 4.4% reading for the jobless rate in March - that won't happen. But if and when the unemployment rate starts to rise - as I fully expect will be the case in the second half of 2007 when long-deferred construction sector layoffs finally kick in - then consumers will need to come to grips with the excesses of asset-based spending. If that prompts an increase in income-based saving, as I suspect, then America's overall domestic saving position will also improve - thereby limiting US demand for foreign saving. A US current account adjustment would then be a perfectly normal outgrowth of such a development - a major breakthrough on the road to global rebalancing.

... So it all boils down to the macro question of the hour - the consumption response to the bursting of the US housing bubble. Not only does this hold the key to the US current account adjustment but it is also the linchpin of the US growth prognosis, as well as the global decoupling debate (see my 9 April dispatch, "Spillovers versus Linkages"). Global rebalancing can't occur without a US current account adjustment. As I see it, it will take the negative wealth effects of a post-housing bubble shakeout to trigger the sustainable saving and current account responses that global rebalancing requires. Contrary to widespread perception, the dollar is a bit player in all this."

In the meantime, this headline:
VEGAS BOOM INTENSIFIES!

Edited by Rogerdodger, 24 April 2007 - 12:17 AM.

[flyers&divers]

Trying to bottom? Depends on which currency. A very well formed H&S top is developing on the USD/JPY pair on the daily charts suggesting that the USD would lose vis a vie the JPY. The futures are quoted inversely to the cash, meaning the futures are bottoming. I have been scale trading the Yen futures from a bit higher for the past six weeks. As a result my average price is way under the current price. At first I was buying it every 20 pip down and selling it every 20 pip up. This resulted in so many trades that I forgot even to count. Realizing that the bottoming process may take longer (and we could trade closer to the old lows) I widened my scale to 25 pips. Once in a while there is a burst upward hitting my resting orders but I sleep through the alarm and when the market falls back through my buy zone (before I re enter my order ) giving me a nice bonus of getting that layer back cheaper. At the moment this is a perfect two sided market. The carry trade people jumpy about the eventual rally and the long keep being stopped out. I am there on both sides with an upward bias. Totally uncorrelated to the US situation the Japanese commercial RE market is soaring after having been down 85% (yes 85%) in the last 15 yrs. This alone will attract foreign currency including dollars but it also have positive effect on the economy. Regards, F&D .