Where's the flight to safety?

A

athlonmank8

I'm a little lost on what's going on in the dollar. Bullard's comments are bullish. Mideast usually a flight to quality. Now I started searching around to make sure I wasn't going crazy and of course cnbc doesn't have shit except that Cramer broke wind today and I guess that's bullish. FT helped bring my sanity back and according to the few FX guys they talked to, they're not sure either. Someone smarter than me want to fill me in? Smells like a MAJOR change in fundamentals or Fed's looking at QE3. I'm leaning heavily toward the first one (fundies). Thanks!
 
Quote from athlonmank8:

I'm a little lost on what's going on in the dollar. Bullard's comments are bullish. Mideast usually a flight to quality. Now I started searching around to make sure I wasn't going crazy and of course cnbc doesn't have shit except that Cramer broke wind today and I guess that's bullish. FT helped bring my sanity back and according to the few FX guys they talked to, they're not sure either. Someone smarter than me want to fill me in? Smells like a MAJOR change in fundamentals or Fed's looking at QE3. I'm leaning heavily toward the first one (fundies). Thanks!
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not sure what you mean when you talk about bullard's comments being bullish. what about his comments were bullish for the usd?
 
Quote from Trendytrader:

Agree. US dollar is toast.....just waiting for it to sink totally......FED and Congress moving deck chairs not much help now.
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I used to think that, but then so does the Euro and most other currencies are in the same boat.
 
Quote from Tsing Tao:

not sure what you mean when you talk about bullard's comments being bullish. what about his comments were bullish for the usd?
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he discussed pulling the plug, and/or easing back on QE2 to see if the economy can sustain itself. Basically whqt I got from it
 
Quote from Trendytrader:

Agree. US dollar is toast.....just waiting for it to sink totally......FED and Congress moving deck chairs not much help now.
More...
right. Surprisingly it seems like it's been nothing but talk until now though. The big worry is the reserve status. I don't want to see that go. :/
 
Quote from athlonmank8:

he discussed pulling the plug, and/or easing back on QE2 to see if the economy can sustain itself. Basically whqt I got from it
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these were the brilliant statements i got from him:

* Fed is not an exporter of inflation and not to blame for inflation in emerging markets
* It would be unwise for the Fed to overreact to recent commodity price pressures
* Current Fed policy is in the interest of the world's economy
* Rates likely to stay low for extended period
* Several areas of vulnerability for US economy, and sees need to be ever watchful for any price bubbles


apart from the complete removal from reality and embracing of stupid, everything there looks dollar bearish. mind you these are actual statements. you couldnt write dumber comments if you were making them up.
 
It seems to me the flight to safety is there. Safety being swiss franc and gold against all currencies (prior to today that is).

What may be confusing you is the risk trade is still on. Equities,commodities are all up and that means dollar short. As long as the S&P is up look to sell dollar.

High oil prices is the only thing that the Middle East can do to impact earning and profit. We did see this early last week. It seems that the market didn't really consider the events in Libya to be a huge impact after the Saudis said they'll pick up the slack in any loss of oil exports. (Egypt is not a big oil exporter, therefore no impact during their party.)

That's not to say that euros trouble are behind them. I thought the elections in Ireland would have dragged the euro down today. Maybe it did as the EURGBP fell. I'm also starting to hear more talk about Italy. This or something new out of Portugal could easily cause the risk trade disconnect from the dollar.

My 2c
 
http://online.wsj.com/article/BT-CO-20110228-709031.html

Fed's Bullard: Possible To End QE2 A `Little Shy' Of Planned Conclusion
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I saw other comments making it sound a little more urgent

Federal Reserve Bank of St. Louis President James Bullard Monday said the central bank is "determined" to get monetary policy back to normal, and that policymakers could end QE2 a "little shy" of its full plan.

In an interview on CNBC, Bullard said he sees the Fed as "possibly finishing the program a little bit shy of where we intended initially, and then go on pause for a while."

Asked about the impact of unrest in the Middle East and rising oil prices, Bullard suggested that the rise in oil hasn't lasted long enough to provide a shock to the economy, and should concerns about oil supplies from the region wane in the next few weeks, "this will go away."

"I think we're (Fed) determined to get policy back to normal in a way that does not disrupt the recovery."

Ending the bond purchase program, he later said, would show the market that the Fed is willing to unwind its balance sheet. Bullard said he would not be averse to such a move -- that he `likes subtle adjustments."

Asked to assess the scale of the municipal debt problem in the U.S., Bullard said it doesn't approach the problems of the European sovereign debt crisis, although some defaults are possible. He didn't elaborate. The European crisis, he said, still is a concern.

As for the economy in general, Bullard said the economy is in good shape for 2011, but that problems in the Mideast are a "wild card."

On other subjects, Bullard said changes in the regulation of the U.S. financial sector still have not ended too-big-to-fail, and that the "unpredictability" of the U.S. dollar makes it difficult to rely on for economic growth.

"We always watch the dollar, and a weaker dollar does tend to help us temporarily. But I think the dollar is so unpredictable that you can't really count on the movement."
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http://www.forexlive.com/169742/all/update-2-fed-bullard-could-end-qe2-shy-of-600bn-take-stock
 
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