As I turn on the currency screens this morning, I see that the euro (EUR) is higher than it was yesterday morning, but lower than it was mid-day yesterday, as the single unit rallied to 1.2850 yesterday, only to see that figure slip slidin' away, and then watch it rise again…
[Read more...]Japanese Yen Hits a 15-Year High Versus the US Dollar
August 12, 2010 By Leave a Comment
I told you yesterday that the FOMC had set off some fireworks with their statements the other day, and those fireworks turned into a major sell-off in the risk assets yesterday… Stocks, currencies and commodities, all sold in a major way!
Stocks were down 2.5%, the euro (EUR) was down three whole cents, and gold lost ground… I would think that the 3-cent sell-off was a bit overdone… We'll have to wait-n-see… But there was good news for Japanese yen (JPY) holders… The yen hit a 15-year high yesterday, when it traded, albeit briefly, below 85… I was a foreign bond and currency trader at the old Mark Twain Bank in 1995, and I truly recall when yen was 85 in 1995… I have to say that, in some ways, those days are very reminiscent of today… Like investors flocking to yen when yields are non-existent and the country is wallowing in deflation and a rising national debt…
[Read more...]The Markets React to the Fed’s Tired Response
August 11, 2010 By Leave a Comment
“DJIA Plunges 225 Points in Global Sell-Off…â€?
“VIX Surges…â€?
“US Trade Deficit Unexpectedly Widens, Exports Decline…â€?
The news is neither good nor bad this morning. It just is. Fellow Reckoners are advised to interpret it accordingly.
To the cheers of some and the tears of others, stocks appear to be gripped in a downward spiral today. The Fed's medicine went down like a bucket of KFC at a Miss Universe pageant, yesterday – which is to say temporarily, at best…and with immediate, violent regret.
[Read more...]Gold: The Great Uncertainty Hedge
May 13, 2010 By Leave a Comment
Front and center this morning… The 2-day tight trading range for the euro (EUR) was thrown to the roadside last night, and the single unit has fallen through the 1.26 handle. This is all due to the thought that, while the aid package is in place, it will take too long for the cost cutting to begin. OK… I agree that it could take a while, but… Why would traders beat on a currency that is at least attempting to cut their deficit spending, and at the same time buy a currency (the dollar) where there is NOTHING – nada, none, zero, zilch, a big goose egg – when it comes to cutting deficit spending… In fact, the dollar is getting bought while the US continues to spend money it doesn’t have, will ever have, or even dream about paying back!
[Read more...]Gold Price Hits a New Record High
May 12, 2010 By Leave a Comment
Yesterday was a change in the weather for the currencies, as we saw a very tight trading range with no wild swings up or down, which has been the routine for a month now. The euro traded in a range of 1.2675 to 1.2740, going back and forth all day… This morning, as I turn on the screens, the euro (EUR) is at the bottom of that range.
[Read more...]France Against US Dollar Dominance
January 12, 2010 By Leave a Comment
Well, the euphoria around the risk assets of currencies and commodities got watered down as the day went on yesterday, and that continued throughout the overnight and morning sessions in Asia and Europe. The currencies and commodities haven’t turned on a dime; they just stopped moving higher versus the dollar… Although, now that I’ve said that, the euro (EUR) has dipped below 1.45…
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Bernanke’s Choice
For twelve years the US trade deficit financed the US budget deficit and held down US interest rates. From 1996 to 2008, the US trade deficit exceeded the government’s budget deficit every year. The dollars sent abroad to pay for the trade deficit were accumulated by the central banks of the trade surplus countries, who then reinvested them in US government bonds. As discussed in earlier posts, those central banks bought up the dollars entering their economies in order to hold down the value of their currencies and so perpetuate their countries’ low-wage trade advantage and their export-led economic growth.
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