Dollar getting clipped today
- Thread starter myminitrading
- Start date
The strength and sheer momentum of the USD move is impressive, but I would much prefer if it were backed by fundamentals. FX moves are still highly correlated with interest rates and differentials, and the FED is not about to cut anytime soon, and the US still has higher rates than EZ, JY, CH. Yes inflation coming off - but still above their target. Yes Housing continues to shock and awe - but consumers still spending, and the negative wealth effect from housing being offset by lower gas prices and higher income. I'm not fading the move - but I'm not jumping on the bandwagon unless we approach some pretty decent support (in EUR).
This should get the US federal reserves attention, I look for some fed officials to be out next week talking tough about inflation and putting on their hawk uniforms. Even though the wont raise rates the will talk tough. This might not fool the market though look at the the 10 year.
I dont see how the fed can cut rates with the equity markets hitting all time highs, and corporate profits swelling. Confusing times we are in for sure. Thanks Greenspan!
I dont see how the fed can cut rates with the equity markets hitting all time highs, and corporate profits swelling. Confusing times we are in for sure. Thanks Greenspan!
i hate to dwell on this - but i always think of friends i have in europe when i see the usd move like this.... they export and mbe enjoy a net profit margin of 5%. on a day like today - their net margin goes down another 1% to 4%. multiplied to all the businesses dealing with the us in all the exporter countries - its a very scary thought... which also mbe partly explains the rally in the markets.... on a day like this you could buy a quality company like msft on sale 1% cheaper than it was fri...just a thought...
will be interesting to see if 1.3 holds on the euro. gotta figure a lot of this move was just stops blowing off
will be interesting to see if 1.3 holds on the euro. gotta figure a lot of this move was just stops blowing off
Yes, much talk but no real action. Bond market knows better, except in maybe the 30 year.
Rate cuts are a foregone conclusion once the equity market stops rising or sells off. Housing market collapse violates one of the important needs of our american economy - mobility of workers to minimize the negative effects of failed business in a particular sector. Inability to sell=no mobility = stagnation. Banks will hurt and there will need to be credit expansion to re-prime the pumps and move these assets at reduced levels (maybe - the exact level of the reduction can occur at many levels, but uniformly will equal a decrease in intrinsic value, if not nominal) and there you get your lousy long term yields.
If they short term hike to "defend the dollar", all it means is that we will see a deeper trough later.
