USD 02 (Oct 09 - Sep 10)

[winston]

Weekly Review

The dollar tried to rally Friday and did . . . for awhile. It broke back over the 50 day EMA it gave up Thursday but by the close gave it up again along with a bit more ground (1.2548 versus 1.2522 Thursday). Thursday a short position in the euro was unwound.

What we are also hearing is that the ECB's renewal of its loan facilities to EU banks at the same interest rate (1%), because it is shorter term and is expected to be a series of loans, is deemed to be a rate hike (e.g. 4 loan periods at 1% versus 1 longer one at 1%). Thus additional pressure on the dollar and strength in the euro.

Is the dollar's run over? The reason the dollar rose was the economic problems in Europe and the ECB's turn from just an inflation fighter to a stimulus maker. With the ECB willing to print a lot of money that made it just like the US Fed. Then it was a question of stronger economies given both central banks were willing to print what it deemed necessary.

With the US economy on the upswing and the EU economies in turmoil, money flowed to the dollar. If that perception is no longer held, a very good reason for holding dollars over euro is not such a good reason anymore.

Source: MarketFN.com

[winston]

I'm A Dollar Bull, Here's Why
July 6, 2010

Ron Rowland, an active money manager, has been providing market commentary and active investment advice since 1991.

When the stock market stumbles, smart investors look for alternatives. These alternatives can be different asset classes like commodities or bonds. The idea is to select a non-correlated asset so that when stocks aren’t performing well, something else will.

Another alternative can be shorting the market. Two weeks ago, we highlighted one of those shorts with Proshares Ultrashort S&P 500 (SDS). Investors in SDS have watched their investment appreciate since that time, while other investors lost their lunch money holding stocks long.

We don’t think the market is turning around in the near term. In fact, there will probably be more volatility in the coming weeks. On Tuesday, Treasury yields fell hard amid economic concerns. The yield on the two-year note fell to an all-time low while the 10-year note yield found its way back to April 2009 levels. This is a bearish sign as investors look for safe havens. Add to that anxiety about weakened growth in China and the slump in consumer confidence, and you have a skittish market. Stocks are taking it on the chin.

However, it’s not always best to short a market in times like these. A better move is to look for a non-correlated asset to help you weather the storm. Find alternatives outside of stocks that tend to do better in periods of uncertainty.

There are two reasons we think the US Dollar is the safe-haven of choice right now. For one, the European sovereign debt crisis is far from over. Ongoing worries about European liquidity capabilities continue to plague the market. This is causing even more traders to bail on the Euro. The big winner turns out to be the Euro’s biggest competitor: the Dollar.

Secondly, the Dollar has been a traditional shelter in times of market uncertainty. As the market was reeling from the credit crisis in 2008 and 2009, the Dollar surged. Conversely, when the market rallied starting in March 2009, the Dollar began its fall. Right now, the Dollar is in a long-term and intermediate-term uptrend. This up-pattern in the Dollar, as in the past, is inversely correlated to the market.

The best way to go long the Dollar is with PowerShares DB US Dollar Index Bullish (UUP). This ETF is composed of futures contracts “designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.” You won’t get rich with UUP, but you should find some shelter from the headwinds of a down trending market.

Though longer term trends are positive for the market, the short-term isn’t inspiring. That makes this a buying opportunity for the US Dollar. To seek stability in a shifting market, buy the Dollar with UUP.

http://blogs.forbes.com/investor/2010/0 ... heres-why/

[winston]

Weekly Review

Dollar. The dollar was up on the session (1.2643 Euro versus 1.2703 Thursday). The dollar is well off its peaks near 1.21 hit a month back; it has had quite a slide. It was unable to hold a key support level, and now it is sliding back down to the next level. That level is the rising trendline off the bottom it made in late 2009.

It is not in trouble, but it has lost some of its luster. Some of the other economies showed they are improving and were raising interest rates. The fear that was driving a lot of people into the dollar is not as rampant. The dollar has lost ground but has not lost its uptrend overall.

Source: MarketFN.com

[winston]

Weekly Review

Dollar. The DXY0 managed to post an ever-so-slight gain against the Euro (1.2927 Euros versus 1.2928 Thursday). Hardly a difference. I am looking at the break of the trendline coming out of 2009.

It may come up and kiss that trendline, but I think it will have to come down and test the solid support range from the February-April consolidation. That will be the key test for the dollar. For now, with the US economy in trouble, it doesn't look like there are many foreign investors putting money into the greenback right now.

A far cry from where it was in April and May when the EU was in flames and all the money was seeking dollars. My, how quickly the tables have turned. Hopes can be dashed very quickly.


Source: MarketFN.com

[winston]

Weekly Review

Dollar. The dollar was stumbling around once more (1.2914 Euros versus 1.27887 Thursday). Of course it was lower: US earnings were not great to start with, and the EU had good news with the UK and German business confidence.

The dollar was lower, although not cataclysmically. The problem with the dollar is that it broke the 2009 trendline, kissed it, and it is falling back. It is in jeopardy of coming back down to the February and March-through-mid-April consolidation.

It very easily could drop there. I am not expecting the dollar to rise anytime soon, although I am not expecting any kind of cataclysmic decline.

Source: MarketFN.com

[winston]

Weekly Review

Dollar. The dollar is continuing lower toward its test of the March consolidation range. There was no change there. It finished slightly higher on Friday (1.3036 Euros versus 1.3074 Thursday), but it is down on the week and is definitely struggling.

The lick log is when it gets to the prior consolidation range. I expect it to try a bounce there. After that we will have to see how it performs.

Source: MarketFN.com

[kennynah]

if and when /DX reaches ~79.50 - 80.00...

i would be keen to go LONG for a swing...2 months...

i wont over commit since all futures plays are leveraged.... although i may have a target at ~$84 over a 2 months period, which appears a mere 5% increase in price... but remember, this is a futures play and so, it is leveraged... the absolute gains is a net 200% with a $4 increase in price...

be careful and best of luck !!!

[winston]

Weekly Review

Dollar. The dollar had looked ready to bounce. It was down at key support at the 200 day EMA and the trading range from February to March even into April. The weak economic data gave no one reason to buy dollars.

Indeed it gave reason to sell, and it closed lower. It broke below the 200 day EMA on the close, bounced a little off to have lows, but not enough to make a difference on the day (1.3296 Euros versus 1.3184 Thursday).

It appears there is no reason to buy dollars right now, and we will have to see it come to the bottom of this range to see where it will find its support.

Source: MarketFN.com

[winston]

Crisis Watch: Here's What You Need to Own By Jeff Clark
August 12, 2010

It's time to get liquid.

Yesterday, the Fed announced plans for "QE2" – Quantitative Easing, the sequel. It'll be using the principal payments from its mortgage-backed securities to buy Treasury Bonds.

In other words, the Fed will be both selling and buying T-Bonds.

In more words... the fed will be monetizing debt.

This is a big, BIG deal. The market seemed to ignore the potential effects on Tuesday. But it looked like investors finally got the picture yesterday, when the market spent most of the trading session down more than 2%.

It's a big deal because the Fed is basically using its Visa card to make its MasterCard payment. Yes, it's a relatively small amount. But healthy entities don't do that. And it's a slippery slope.

Think about Argentina in 2000.

Think... liquidity crisis.

Of course, it's a big leap to go from a small amount of debt monetization to a complete financial meltdown. After all, one small child throwing a pebble into the ocean isn't going to create a tidal wave. But in the current economic and psychological environment, small moves have big ramifications.

Everyone knows the U.S. will never be able to pay off its massive debt load. Yet, everyone keeps piling into Treasury bonds at record-low interest rates. We all know it's a Ponzi scheme, but we all keep playing the game.

The only way to survive a Ponzi scheme breakdown is to get out at the first sign of trouble.

Debt monetization – even just a small amount of it – is a sign of trouble.

In a liquidity crisis, everything gets sold. Stocks go down. Bonds go down. Even precious metals get hit.

Cash – in the form of U.S. dollars – is the only thing that holds up. That may seem counterintuitive. After all, if the Fed is essentially printing money to buy its own debt, the value of a dollar should fall. But in times of crisis, everyone rushes to own dollars. The demand for dollars more than makes up for the increased supply.

Look at what happened to the dollar during the financial crisis in 2009...

From mid-December 2008 to mid-March 2009, while the financial markets were on the verge of a meltdown, your dollars gained 10%.

Make sure you have plenty of them this time around.

http://www.growthstockwire.com/archive/ ... aug_12.asp

[kennynah]

As usual, the abv author is habitually slow in calling a BUY n quick too quick to suggest a SHORT