Dollar decline, round II, starts here

[Ivanovich]

Interesting report from IFR:

"The twin deficits drumbeat has subsided a bit in recent weeks as the US continues to suck in unprecedented amounts of foreign capital, far in excess of its monthly needs. But listening to the strategists and media, one would assume that the US is by far the biggest debtor in the world. In absolute terms it is, owing to the colossal size of its economy, but on a deficit to GDP basis, it comes off quite favorably compared with its European rivals. From this morning"s GDP report, our economists calculate the US deficit/GDP ratio at 2.9%. A year ago, the ratio was 3.8%. Compare that the France, Germany and Italy which have chronically missed the 3.0% cap for the last 3-4 years and will likely do so again next year. Just today, Italy announced a "goal" of 3.8%. All things considered, not too bad for the greenback."

And which "Long Term Trend" would you say is "sharply down"?

Lastly, can you please verify what source you use to determine that dollar shorts have all been cleared out?

 

[killATwill]

long term trend is looking at a decade's worth of data.

source is sentimentrader.com, which uses COT data from the CFTC on commodity/currency calls www.cftc.gov/cftc/cftccotreports.htm

 

[killATwill]

ivan, every G7 country that ever had a trade deficit as a large as ours, as percentage of GDP, encountered a reversion of that deficit to zero. either domestic prices are going to drop relative to other countries, or the US currency is going to drop...or maybe (probably) both. the second scenario is much prettier, so it looks like we might get a plaza accord II sometime in the future.

 

[keafan]

something that doesn't seem to get much press is the 1 year law from our smart congress giving US corporations an opportunity to "repatriate" offshore earnings and pay a nominal 5% tax on it. many many large corporations are doing it 5, 10 and 20 billion dollars at a whack. look at your USD charts and abrupt change in direction which occurred at the first of the year. this is running out in 2 months. long gold and short USD against anything u want is the easiest trade in several years on the USD IMO.

 

[DeepFried]

Quote from Ivanovich:

Interesting report from IFR:

Very interesting. What is IFR?

 

[killATwill]

keafan, i agree. can we both be right?

too many spec longs commercial shorts right now in the gold pit. maybe we cleared them out today with the sharp drop.

 

[LionTrader]

Dollar has turned, and that's it. You won't see 1.35EUR/USD for a long time, if ever.

 

[SethArb]

IFR ...

www.ifrmarkets.com

 

[Pabst]

Quote from killATwill:

if the global economy faced deflation, i wouldn't put my money in usd. i would put my money in gold. yes, gold as a deflation hedge. the reason is that the main price driver in gold is E/P (the reciprocal of P/E ratio). In times of bad deflation, risk premia increase and P/E ratios get smaller. When that happens, gold rises.

I must say I find your posts on this thread very provacative.

 

[Ivanovich]

Quote from Pabst:

I must say I find your posts on this thread very provacative.

LOL...not sure that's meant as a compliment, is it?

Feel free to take dollar shorts, Killa, and make sure to post them here.

If you believe that strongly in the round 2 of the dollar decline, step up to the plate.

I'm not saying you're wrong. I believe you are, but knowing and believing are two distinct things.