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Dollar breaking down
- Thread starter scriabinop23
- Start date
I find it absolutely hysterical that in august everyone was demanding lower oil prices. Be careful what you wish for
I find it absolutely hysterical that in august everyone was demanding lower oil prices. We got them and now everyone is scared to death
Yeah, be careful what you wish for. I'm sure people would rather get back half their portfolio and pay $4/gallon right about now.
Quote from scriabinop23:
Something is happening. The superificial flight to 'quality' may be ending.
Why would you want to own a currency where people have so little trust in its banking system you will only deposit your money with the government?
Look at gold, euro, aussie, everything. Forget carry trades... This looks like a dumping, a breakout and maybe the start of a very real trend.
I donât even understand why that little US upward can be called âflight to qualityâ since the beginning the crisis started in US
Why just for a moment did US dollars go up and then as you say âthe superficial flight to 'quality' may be endingâ?
Fundamental analysis here is essential
FED has increased the money flow to the banks. The banks are not lending it to the private sector for obvious reasons. Instead, the banks park in treasuries. And, more importantly, the FED is buying treasuries, which effectively means of course printing money and supplying it to treasure at 0%Quote from tradersboredom:
money is temporarily parked at treasuries by short funds, traders profits etc.
Eh ? The FED currently doesn't issue any debt at all, it prints money and lends it (eg buys treasury bonds). However, they've just recently said they're considering issueing debt themselves ( http://www.elitetrader.com/vb/showthread.php?s=&threadid=147567 )FED and US gov't has high debt
Anyway, IMHO the USD is going to collapse since:
1) reason it got stronger was that people fled into treasury bonds. Now those pay 0, nobody wants those anymore, hence, they don't need USD's anymore
2) Unwinding of the carry trade
3) The U.S. has taken the attitude that other countries must support the dollar because it is in their interest. But there's a limit to what other countries can do; there's also a limit when it seizes to be in their interest
4) Printed money by the FED just caused higher reserves at banks. When those start lending again to private sector -> inflation -> lower USD.
Quote from luckybastard:
FED has increased the money flow to the banks. The banks are not lending it to the private sector for obvious reasons. Instead, the banks park in treasuries. And, more importantly, the FED is buying treasuries, which effectively means of course printing money and supplying it to treasure at 0%
Eh ? The FED currently doesn't issue any debt at all, it prints money and lends it (eg buys treasury bonds). However, they've just recently said they're considering issueing debt themselves ( http://www.elitetrader.com/vb/showthread.php?s=&threadid=147567 )
Anyway, IMHO the USD is going to collapse since:
1) reason it got stronger was that people fled into treasury bonds. Now those pay 0, nobody wants those anymore, hence, they don't need USD's anymore
2) Unwinding of the carry trade
3) The U.S. has taken the attitude that other countries must support the dollar because it is in their interest. But there's a limit to what other countries can do; there's also a limit when it seizes to be in their interest
4) Printed money by the FED just caused higher reserves at banks. When those start lending again to private sector -> inflation -> lower USD.
The USD will collapse because of the unwinding of the carry trade? Huh? The USD is used to fund the carry trade!
Quote from short&naked:
The USD will collapse because of the unwinding of the carry trade? Huh? The USD is used to fund the carry trade!
Unwinding of the YEN/USD carry trade. People borrowed the YEN (which had low interest) and sold it to buy USD (higher yields, back then). Now, unwinding that, they need to sell those USD's and buy YEN's back.
Furthermore, the USD is now increasingly becoming popular as the basis for a new carry trade: borrow the USD and sell it to buy some other currency with higher yield.
So unwinding the *huge* YEN/USD carry trade and setting up new carry trades with the USD as basis, both devaluate the USD.