As I turn on the currency screens this morning, I see that the euro (EUR) â€“ which remained well bid on Friday, thus losing that trading pattern we talked about, of overnight rallies for the euro and daytime sell offs â€“ has backed off Fridayâ€™s high… The German IFO Business Confidence was responsible for the euroâ€™s strong bid on Friday… Last night, the euro backed off a bit… The single unit actually traded above 1.36 on Friday afternoon, when the volume was thinning. This morning, the single unit is below 1.36 at 1.3575, as I type…[Read more...]
Another election day has come and gone, and I for one am happy to see it over with, as I hate all of the political ads and phone calls during the heat of the election cycle. My wife and I went to the polling place together after dinner last night and the workers said the turnout was a bit better than usual for a mid-term election. The currency markets were a bit mixed yesterday, as the higher yielding currencies did well versus the US dollar ahead of todayâ€™s FOMC announcement. The euro (EUR) also moved up a bit in spite of renewed worries about sovereign debt. More on the currency markets in a bit, but I will start todayâ€™s Pfennig with the two big stories of the day.[Read more...]
Yesterday was busy here on the desk, with the normal flurry of Monday trading combined with a number of calls to the desk regarding our MarketSafe CD which will be closing out shortly. But the currency markets were fairly quiet ahead of the elections today. But as I pointed out yesterday, trading yesterday was nothing more than the quiet before the storm, as the currency markets were rocked overnight with surprise rate announcements by both Australia and India. I warned you that this week was going to get interesting.[Read more...]
Chuck is getting on a plane bound for Mexico this morning, so I will be bringing you the Pfennig this week. As usual, Chuck left me a note to share with all the readers last night, so heeerrreeeâ€™s Chuck:
On Friday, we saw more healing in the currencies and metals, from the price action earlier in the week. Gold jumped up $15, and I have to think that some of that gain came from the heightened risk from the packages from Yemen. I tell you all the time that we have a ton of nut-jobs running around the world, wanting to blow this up, or wipe this country off the map… But gold â€“ with silver tagging along â€“ will always be sought when geopolitical risks elevate.[Read more...]
The world waits…
Stocks barely budged this week. Gold bobbed around like an anchorless sailboat, adrift in a vast ocean of guesses, speculation and rumor. All eyes, meanwhile, are on US Fed Chairman Ben Bernanke, who is widely expected to announce his next round of systematic dollar debasement a few days from now â€“ a strategy otherwise known as â€œquantitative easing,â€� or â€œQEâ€� for short. Trepid investors, unsure of what the value of the worldâ€™s reserve currency will be a week from now, sit on the sidelines, awaiting their cue from the man with the magic chopper.[Read more...]
As we draw closer and closer to the FOMC meeting next week, the clearer the markets believe they are to figuring out what the FOMC might do with regards to quantitative easing (QE)… So, I found some quotes from bond king, Bill Gross, and analyst, Mark Gilbert, regarding what they see. You wonâ€™t want to miss their quotes![Read more...]
During yesterdayâ€™s trading session, the Dow Jones Industrial Average inched ahead 10 points to a new five-month high of 11,020. The financial news services attributed the advance to new disclosures from the Federal Reserve that it would continue debasing the dollar. True.
â€œTraders pushed shares higher Tuesday,â€� The Associated Press explained, â€œafter minutes from the [September 21] Federal Reserve meeting kept hope alive that the central bank would take more action to stimulate the economy. The Fed had said…it was concerned that inflation was too low, and suggested it could step up its purchases of government bonds and take other action to encourage lending.â€�[Read more...]
The Federal Open Market Committee (FOMC) is worried. Very worried. It is worried that it is not destroying the dollar fast enough.
â€œMeasures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability,â€� the FOMC declared Tuesday. â€œInflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.â€� In other words, as every Ivy-League-educated economist understands very well, the Fed must nourish inflation if it is to have any hope of reviving the economy.[Read more...]
The FOMC has opened Pandoraâ€™s Box of currency rallies and dollar sell-offs, and Iâ€™m not talking range trade rallies. Iâ€™m talking all-out, no prisoners taken, rallies versus the dollar… Letâ€™s go to the tape!
So… The FOMC is worried… But not worried enough to implement quantitative easing (QE) RIGHT NOW. But they opened Pandoraâ€™s Box for future QE, with a statement that went like this… â€œWe are willing to ease monetary policy further to spur growth and support prices while refraining today from expanding its holdings of securities. The Committee will continue to monitor the economic outlook and financial developments and is prepared to PROVIDE ADDITIONAL ACCOMMODATION IF NEEDED to support the economic recovery and to return INFLATION OVER TIME to levels consistent with its mandate.â€�[Read more...]