USD 02 (Oct 09 - Sep 10)

[winston]

Again, what will be the catalyst to force the shorts to cover on their USD position ? Would the crash in Shanghai today translate into a crash throughout the Emerging Markets ?

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The U.S. dollar isn't under threat, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn told Bloomberg Television. Instead, the main challenge will be preventing asset bubbles.

"Even with the mountain of debt that we have in front of us, not only in the United States or the United Kingdom and other advanced economies, I don't believe confidence in the dollar is going to disappear soon," Strauss-Kahn said.

"We are contemplating a very big increase in capital inflows in emerging markets with the risk of asset bubbles."

Source: Money Morning

[winston]

So many "expert" traders on CNBC are expecting the USD to go up in the short term

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Forecasters See Dollar Decline Next Year By: Dan Weil

The top performing forecasters in Bloomberg’s survey of 46 firms predict the dollar will continue falling next year.

The sluggish economic recovery and exploding government debt burden will weigh on the currency, they say.

Already the dollar has hit 14-month lows this year.

Standard Chartered bank, which placed first in estimating the dollar-euro rate over the 18 months ended June 30, sees the euro rising 5.5 percent against the dollar next year, to $1.58.

“History tells us the dollar shouldn’t start rising on a sustained basis until 12 months after the Fed starts to lift rates,” Callum Henderson, the bank’s head of foreign exchange strategy told Bloomberg.

“It’ll take time to drain the oversupply of dollars from the market. The dollar will remain weak until the Fed’s rates rise above the competitors.”

All three of the top performers in Bloomberg’s survey see the dollar falling against the euro next year.

That includes Aletti Gestielle (an Italian money management firm) and HSBC in addition to Standard Chartered.

The dollar bears are contrarians, as 24 of the 37 predictions on dollar-euro have the greenback rising next year.

But some of the most renowned currency experts anticipate the dollar will depreciate further.

"I think the dollar is an over-owned currency,” Pimco managing director Bill Gross told CNBC.

“The Chinese, the Asians have basically owned too many dollars for too long."

In addition, the U.S. government favors a dollar decline to boost exports, he said.

http://moneynews.newsmax.com/streettalk ... 89897.html

[kennynah]

i would take heed...

[winston]

Dollar to regain strength as US recovers: Mundell by Alfred Liu, The Standard HK

The US dollar is expected to regain strength as the United States economy recovers in the next several months, according to Columbia University professor Robert Mundell.

Because of this, China will not face any inflationary pressure, but there would be international and political pressure for the yuan to appreciate, the 1999 Nobel economics laureate said in Hong Kong yesterday.

"What China should do is to keep the exchange rate where it is, but to take strong steps to bring about improvements in its balance of trade with the United States" such as cutting tariffs and encouraging trading, said Mundell, also known as "father of the euro."

Despite rising unemployment, he said the US economy is unlikely to fall into a double-dip recession as long as Washington maintains its loose monetary policies.

"I don't think there will be a double-dip recession," Mundell said, adding that he drew his conclusion after studying leading indicators over the past several months.

He believes there will be a double-dip recession only if Washington exits from its stimulus policy too quickly which could see US interest rates rising again.

Mundell said the Obama administration is concerned over unemployment, and the economy will depend on the dynamics of the business cycle. The US jobless rate stands at 10.2 percent and Mundell said he will be "delighted" if it falls to 7 percent at the end of 2011. He predicted that the mainland's gross domestic product will outpace Japan's in 2011 and that China will likely replace the euro zone as the world's second-largest economy.


http://www.thestandard.com.hk/news_deta ... 91125&fc=4

[greenhoney]

looks like HK is the destination number 1 for IPO success this year. do you think the US carry trade has a hand in this?

[kennynah]

somehow..many people ignore the weakened dollar when discussing USD carry trades... or am i seeing too much into this effect...

u see, investors can borrow all the USD they want at near zero rates, and invest it outside of usa... which dictates using another currency... over that a period, usd lost it face value (as is the case against eur, swf, yen, rmb and even sgd)... does this not erode the gains from those investments?

even americans who borrow to place them in FCFD must still consider fx risks...

carry trades are in reality not always a bargain deal...if it was, you and i should have our own islands and our PAs will be typing our discussions here as we dictate...

[greenhoney]

good point. never thought about it from that angle before. i guess they not only have to beat the interest rates but also ensure their profits beats the forex as well.

[kennynah]

USD is still weakening ....arrrrggghhhhhhh


eur/usd is now above 1.5...to be exact, it's now 1.5025 as of 7pm (+8 GMT)... fyi, the high this year was in Oct at 1.5062.. so we are very close to that level now...

this also means that Dollar Index is down today...at 74.78

[kennynah]

oh man.....USD is really tanking....

eur/usd made new 09 high .. at 1.5095...WTF !!!

[millionairemind]

oh man.....USD is really tanking....

eur/usd made new 09 high .. at 1.5095...WTF !!!

And all this talk about the "STRONG DOLLAR"