USD 02 (Oct 09 - Sep 10)

[kennynah]

yet another GS setup that fooled me...these guys are way too good for me, i must admit...NNKC !!!

[millionairemind]

Keep printing money and one day your whole economy will collapse cos' no one will believe in your fiat money.

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Nov 26, 2009
US$ tumbles to 14-year low

TOKYO - THE dollar has tumbled to 14-year low against the Japanese yen after the US Federal Reserve indicated it wasn't overly concerned about the dollar's recent decline versus major currencies.

The dollar sank as low as 86.51 yen (S$1.378) in Tokyo trading on Thursday, the lowest since July 1995.

Finance Minister Hirohisa Fujii said Japan will take appropriate steps if exchange rates move abnormally, according to Kyodo News agency.

A strong yen is generally seen as bad for Japan's economy because it erodes overseas income for the country's big auto and electronics exporters. -- AP

[kennynah]

i was just wondering ... how come no one posted abt this dollar...

indeed, yesterday, DX (dollar index) made new lows.. it crashed below 75, losing some 1% of its value. consequently, eur/usd also gained and made a new high 1.51 for 2009...

although, all these should have spelt disaster for Shortists, market did not explode...it did rally higher but did so in a slow fashion... the main reason has to be the thin trading activities on Thanksgiving eve..

market is closed on thurs (today) and Fri is a 1/2 day session....again thin trading is expected...

next Monday, i expect a major price adjustment to account for all that happened during this few days...

[LenaHuat]

Hi K
My avatar speaks volumes abt what I think abt the US$ The US$ will slide further cuz the US is trying to export its problem. It's got no alternative right now. She's run out of ammunition - printed $, bought pte equity, prime-pumped the domestic economy. It's not really a bad thing for a controlled phase.

[winston]

Do you all remember the story some time back, of a Supermodel and a Rap Star who wanted to be paid in Euro rather than USD ? And subsequently, the USD rebounded strongly against the Euro

I'm waiting to see who wants to be paid in non USD again .

Or maybe they would like to be paid in Gold this time

[millionairemind]

If this DUBAI WORLD thing is as big as it appears to be, we might see the USD strengthening VERY VERY QUICKLY amid a flight to quality.

Treasuries Gain Most This Month on Dubai’s Debt Payment Delay
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By Theresa Barraclough

Nov. 27 (Bloomberg) -- Treasuries advanced the most this month after a proposal from Dubai to delay debt payments set off a slide in stocks and higher-yielding assets worldwide.

Ten-year Treasury yields fell to the lowest level in seven weeks as the yen strengthened to a 14-year high versus the dollar, boosting speculation the Bank of Japan will intervene in the currency markets. Treasuries headed for a third weekly gain as economists forecast the Federal Reserve will keep interest rates near zero until the third quarter of next year. U.S. markets were shut yesterday for the Thanksgiving holiday.

“The Dubai issue has caused a flight-to-quality move, which is positive for Treasuries,” said Hiromasa Nakamura, a senior investor in Tokyo at Mizuho Asset Management Co., which oversees the equivalent of $21 billion and is part of Japan’s second-largest bank. “The Fed will keep low interest rates for a long time due to low inflation and the continuing credit crunch. That’s supportive for shorter-zone Treasury notes.”
http://www.bloomberg.com/apps/news?pid= ... pu2I&pos=5

[winston]

The US government can increase interest rates. They can increase VAT. They are already giving out green cards to immigrants who invest large in the US. Dont let these guys frighten you too much ..

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A Run on the Dollar Starts Soon By Porter Stansberry

It's one of those numbers that's so unbelievable you have to actually think about it for a while...

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?

How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss."

What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt... at ever shorter durations... at ever lower interest rates.

Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.

When governments go bankrupt, it's called a "default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.

The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money-management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."

The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default.

The U.S. holds gold, oil, and foreign currency in reserve. It has 8,133.5 metric tonnes of gold (it is the world's largest holder). At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally.

But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.

Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.

So... where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP.

Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or Russian central banks, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.

So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.

One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None owns even 1% of its total reserves in gold.

All of this is going to lead to a severe devaluation of the U.S. dollar... Which I expect to happen within 18 months. I examined these issues in much greater detail in the most recent issue of my newsletter, Porter Stansberry's Investment Advisory, which was published last week. Coincidentally, America's paper of record – the New York Times – repeated our warnings (nearly word for word) last weekend. Word is getting out.

If you haven't taken steps to protect yourself from the coming devaluation – like owning gold and silver bullion, foreign real estate, and farmland – make sure you do it soon. The dollar rout is coming.

Source: Daily Wealth

[kennynah]

it's really very simple...all that they have to do is for their dept of statistics to declare improving trade balance qtr after qtr from now on....and in a matter of 1 year, they will magically shore up enough foreign capital to convince the creditors that US is able to meet its debt obligations without any real GDP growth...

do recall, they can print money without having to tell anyone about it...

[winston]

Dollar to Rally in 2010 as Fed Cuts Liquidity, BNP Paribas Says By Justin Carrigan

Dec. 4 (Bloomberg) -- The dollar’s decline is in its final stages, heralding a rally in the next two years, as the Federal Reserve scales back stimulus measures, BNP Paribas SA said.

“The Fed has sent signals that it will stop expanding its balance sheet from March onwards,” a team led by Hans-Guenter Redeker, London-based global head of currency strategy, wrote in a report dated today. “Hence, dollar liquidity growth will start to shrink starting in March.”

“Markets tend to be forward looking and extreme dollar short positioning indicates to us that the dollar turnaround could come earlier,” they wrote.

http://www.bloomberg.com/apps/news?pid= ... SFTbgacE8U

[winston]

Is this a strong enough catalyst to force the shorts to cover ?

Dollar gets strong lift from surprise jobs data

NEW YORK - The dollar gained momentum Friday after a report showing a dramatic improvement in the US labor market prompted traders to rethink their outlook for growth and interest rates in the United States.

The euro fell to 1.4852 dollars at 2200 GMT from 1.5045 late Thursday in New York.

The dollar meanwhile rose to 90.47 yen, from 88.30.

The jobs data cheered investors who saw it as possibly heralding an employment-expanding US recovery.

The dollar has lately tended to weaken on positive US economic news, which can encourage investors to seek out currencies -- such as the euro -- seen as riskier than the greenback.

But Friday's data appeared to change the outlook of traders, serving to boost the greenback.

The report "suggests that the US economy is not doing nearly as bad as everyone had feared," said Kathy Lien at Global Forex Trading.

Lien said the report raised the possibility that the Federal Reserve would push up interest rates from the near-zero level, since the central bank normally avoids rate hikes until unemployment peaks.

"Up until this point, no respectable economist would consider that rates would move anywhere until the second quarter at the earliest," she said.

"However, if a continued easing in unemployment indicates that we have indeed passed the peak, history has shown that the Fed is inclined to start raising rates."

Analysts were busy revising their outlook for when the Fed might hike rates and how quickly.

"The dollar posted its sharpest advance since June," said Scott Marcouiller of Wells Fargo Advisors.

"The gain in the greenback came as an improving jobs picture suggested the Federal Reserve might lift interest rates sooner rather than later."

Michael Malpede at Easy Forex noted that "a more rapid improvement in the US labor market outlook could make it harder for the Fed to justify maintaining low yields for an 'extended period.'"

The US Labor Department reported that the number of lost jobs fell to 11,000 in November from 111,000 in October, with the unemployment rate dipping from 10.2 percent to 10.0 percent of the work force.

The report showed the labor market moving close to positive territory, suggesting the economy is nearing job growth needed to sustain a fragile recovery.

At City Index, analyst Joshua Raymond said the "nonfarm payrolls number is quite incredible and it's a massive shock to the markets, but a fantastic one nonetheless."

"The market had been expecting a decline of 130,000 but the fact that the decline was just 11,000 also suggests that maybe investors have been too conservative with their recovery aspirations and perhaps the economic picture is much better than we are currently anticipating," he added.

In late New York trade, the dollar stood at 1.0160 Swiss francs from 1.0013 Thursday.

The pound was at 1.6456 dollars after 1.6532.

Source: AFP /ls

http://www.channelnewsasia.com/stories/ ... 93/1/.html