Joined: Oct 05, 2004 Posts: 216 Location: Back France from Japan
Posted: Fri Nov 26, 2004 12:17 am Post subject: THE US Dollar Thread (merged)
US$ is desintegrating : 1euro = 1.332$, 1$=102yens
This is going really fast now. No doubt there is lot's of speculation behind it but I guess this movement really follows the fundamentals. A guess for an upper bound for the euro? 1.4$? more?
ASPO suggested few months ago that crude oil is implicitely priced in euros and not in $ anymore. So do you expect that a big fall of the $ automatically puches up crude oil prices? Can anyone explain me the market mecanisms which would be behind this causality : low $ implies high crude?
Thank you _________________ Not mother tongue. Sorry for the mistakes.
Joined: May 17, 2004 Posts: 293 Location: San Jose, CA
Posted: Fri Nov 26, 2004 12:28 am Post subject:
I think low $ does = high price for crude. The lower the dollar falls, the more it will cost.
Just came across this article - looks like the Chinese have just cut a large portion of their U.S. Treasuries: Link
That could be significant for the U.S. dollar.
Just came across this article - looks like the Chinese have just cut a large portion of their U.S. Treasuries
.
Russia is doing so as well: Article
The gold market shows that the Arabs and Indians are buying gold for their dollars.
I don't think that the central banks will intervene anymore. Otherwise they would have done it yesterday. Thanksgiving day is the ideal day for an intervention because the US market is closed. Trading volumes are thin which means that you need relatively little leverage to alter an index.
There is still one big hurdle ahead, which is the 80 level for the dollar index (right now it is a t 82.3). Perhaps we'll see some intervention there, or a pullback. But if it breaks through that it will basically be a run for the exit. I don't even dare to speculate on how low the dollar can go then.
$1=102 yen is hardly a disintegration. The yen marked its all time high of $1=79.75yen in 1995. Even that level didn't cause the end of the world or a meltdown of the global financial system. People got up and went to work, just like they always do. And a few years later, the yen was back down around 120. Rates move up and down. Yawn...
$1=102 yen is hardly a disintegration. The yen marked its all time high of $1=79.75yen in 1995. Even that level didn't cause the end of the world or a meltdown of the global financial system. People got up and went to work, just like they always do. And a few years later, the yen was back down around 120. Rates move up and down. Yawn...
How many days did it took for the yen to go from 100 to 80? Imagine that happening for a basket of currencies.
Joined: Aug 17, 2004 Posts: 3541 Location: 39° 39' N 77° 77' W or thereabouts
Posted: Fri Nov 26, 2004 6:23 am Post subject:
Quote:
Dollar reels on fears China selling US assets
11-26-2004, 11h33
LONDON (AFP) - The enfeebled dollar tumbled to record depths against the euro for the fourth day in a row, and hit multi-year lows against the yen and Swiss franc on reports China is selling US government bonds.
However, analysts noted that movements were being exacerbated by thin trading volumes, with many US participants taking an extended weekend after Thursday's Thanksgiving holiday.
The euro shot to a new all-time peak of 1.3329 dollars in early European trading Friday, hurdling the 1.33 threshold for the first time since its launch in January 1999.
The US currency has slid to a series of record lows against the euro this week and to multi-year troughs against a range of other currencies, buckling under the strain of the swelling US current account and budget deficits.
The dollar fell to a near five-year nadir against the yen, which rose to 102.15 to the dollar, the highest level since January 2000.
"The dollar took another hit against most major currencies in the wake of a report citing a PBOC (People's Bank of China, the central bank) member who said that China has reduced the size of its US Treasury holdings in its reserves to around 180 billion dollars," said Calyon currency analyst Mitul Kotecha.
"This has now been denied, but the implications are worth considering. At a time when concerns about the willingness of foreign investors -- especially increasingly important official investors (mainly Asian central banks) -- to fund the current account deficit are growing, the story will fuel fears of a dollar collapse."
The US currency also tumbled to the lowest level for nine years against the Swiss franc, for 12 years against the Canadian dollar, for five years against the South African rand and for seven years against the South Korean won.
The dollar's decline lifted gold prices above 455 dollars an ounce for the first time in 16 years.
The US currency's decline gathered pace after the Shanghai-based China Business News reported that China had cut the size of its US Treasury bond holdings in its foreign exchange reserves.
The newspaper cited Yu Yongding, a member of the monetary policy committee under the central bank, who was speaking at a seminar given at Shanghai University of Finance and Economics.
Yu later issued a statement clarifying his comments, saying China had reduced the proportion of its holdings in US Treasury securities but had not cut its portfolio in absolute terms.
The dollar has been under renewed pressure all week after US Federal Reserve chairman Alan Greenspan suggested further depreciation in the greenback might be necessary to reduce the current account deficit.
News that the Russian authorities are considering switching more of their foreign currency reserves from dollars into euros, a move thought likely to be mirrored by other central banks, has further soured dollar sentiment.
Analysts said that although there appeared to be no appetite in Washington for intervention to stem the dollar's decline, the European Central Bank might soon make a foray into foreign exchange markets to curb the euro's rise.
"If the movement of the past three or four days continues I think it will soon be regarded by the ECB as a disruptive move," said Bank of America economist Lorenzo Codegno.
"Should we have another big round of (euro) appreciation, clearly at some point the ECB will intervene, trying to at least moderate the pace of appreciation," he predicted.
The euro was changing hands at 1.3223 dollars against 1.3240 late on Thursday in New York, 136.01 yen (135.83), 0.6991 pounds (0.7016) and 1.5159 Swiss francs (1.5111).
The dollar stood at 102.91 yen (102.60) and 1.1470 Swiss francs (1.1414).
The pound was at 1.8908 dollars (1.8869), 194.58 yen (193.59) and 2.1693 Swiss francs (2.1537).
On the London Bullion Market, the price of an ounce of gold stood at 451.70 dollars against 451.15 late on Thursday.
Dollar Gains; China's Yu Denies Knowledge of Action on Reserves
Nov. 26 (Bloomberg) -- The dollar gained against the yen after Yu Yongding, a Chinese central bank official, denied saying his country had trimmed its holdings of U.S. Treasury securities.
The U.S. currency earlier today fell to the lowest since 2000 after China Business News reported Yu said China had cut its holdings of U.S. debt. Yu, a monetary policy committee member, said the report was ``distorted,'' in a statement on the Web site of the Institute of World Economics and Policies of the Chinese Academy of Social Sciences, where he is a director.
``The denial from the China story was the initial trigger for this move'' higher in the dollar, said Mitul Kotecha, global head of currency research in London at Calyon, the investment banking unit of Credit Agricole SA. ``There was a feeling that we've moved a bit too far'' on the dollar.
Against the euro, the dollar traded at $1.3262 at 11:25 a.m. in London, from $1.3269 late yesterday, according to electronic currency-dealing system EBS. It earlier reached a record-low $1.3330. The U.S. currency was also at 102.78 yen, from 102.46, after dropping as low as 102.01, the weakest since January 2000.
The U.S. currency was poised to gain, based on a technical indicator some traders use to gauge likely trends. The dollar's 14-day relative strength index against the euro closed at 80.2 yesterday. Against the yen, it closed at 24.3. Levels above 70 and below 30 suggest a currency may change direction. The index shows how rapidly prices have risen or fallen in a given period.
Currency Reserves
``When I woke up this morning and saw on my pager $1.3315 I was thinking to myself maybe people could be looking to lock up some profits today'' on the euro, said Naeem Wahid, a currency strategist at HBOS Plc in London. Wahid's team manages a $60 million currency fund and predicts the euro at $1.33 at year-end.
The dollar is still set for a weekly drop against the euro amid concern the U.S. current account deficit will undermine demand for the currency and policy makers will refrain from stemming its slide. Speculation central banks will reduce their dollar holdings contributed to the currency's drop, said Adrian Hughes, a currency strategist at HSBC Holdings Plc. in London.
Russian central bank official Alexei Ulyukayev told reporters in Moscow three days ago it may reduce the share of dollars held in its currency reserves. Indonesia may reduce holdings of dollars should the currency continue to slide, said Aslim Tadjuddin, deputy governor for monetary policy at the central bank, in an interview in Jakarta today.
Lowest Since 1995
China is the second-largest foreign holder of U.S. notes. The country's central bank declined to comment on the report that it had reduced its holdings. China's international reserve assets climbed to a record $514.5 billion in September, accounting for about 15 percent of the world's total, excluding holdings of gold, according to data compiled by Bloomberg.
China reduced its U.S. Treasury note holdings to $180 billion, China Business News said. Yu said in his statement that he knew ``nothing about the actions that (the State Administration of Foreign Exchange) has taken and will take.''
The dollar has dropped to a record against the euro eight times since this month. The Dollar Index, which measures the dollar against a basket of six currencies, fell to 81.53 today, the lowest since 1995, according to data compiled by Bloomberg.
The New York Board of Trade's index averages exchange rates between the dollar and six other currencies, with the euro accounting for 58 percent.
`Weren't Prepared'
DaimlerChrysler AG, the world's fifth-largest carmaker, said the dollar's decline against the euro will reduce the earnings of the Mercedes-Benz luxury car division.
``We weren't prepared for the dollar to be at this level,'' Thomas Weber, the management board member responsible for research, told journalists at a dinner in Frankfurt yesterday. ``It will influence the results at Mercedes and 2005 won't be an easy year.''
Japanese Finance Minister Sadakazu Tanigaki told reporters in Tokyo today the currency market needs careful watching. Japan must act on any unusual moves, Tanigaki said.
``The market has gone a little bit carried away'' with the dollar's slide, said Tania Kotsos, a currency strategist at RBC Capital Markets in London.
``It looks like our first-quarter forecasts are going to materialize quicker than we'd expected'' for the dollar, Kotsos said. The bank predicts the dollar to drop to $1.35 per euro and to 100 yen by the end of March.
`Real Risk'
Britain's currency climbed as high as $1.9037 today, within 1.5 cents of its strongest in 12 years, after Bank of England Chief Economist Charles Bean said international investors are unlikely to keep buying U.S. assets indefinitely, resulting in a ``possibly substantial'' drop in the dollar.
Bean's comments echoed those of Federal Reserve Chairman Alan Greenspan, who said in Frankfurt on Nov. 19 that overseas investors may tire of financing the U.S. current-account gap. ``A diminished appetite for adding to dollar balances must occur at some point,'' he said.
The deficit in the U.S. current account, the broadest measure of trade, was a record $166.2 billion in the second quarter. A wider deficit means more dollars need to be converted into other currencies to pay for imports.
``The real risk is that the sharper and the quicker the dollar falls that these investors pull out pretty quickly from U.S. markets,'' said Kotecha at Calyon. ``There hasn't really been signs of that recently but the risk must rise as the dollar falls and as the pace of this fall intensifies.''
Joined: May 15, 2005 Posts: 4144 Location: THE MATRIX
Posted: Mon Oct 23, 2006 9:40 pm Post subject: Re: the death and resurrection of the us dollar
see! now I am going to have nightmares.
Thanks Kristen!!! _________________ It is easier to enslave a people that wish to remain free then it is to free a people who wish to remain enslaved.
Joined: Dec 07, 2005 Posts: 1741 Location: Australia
Posted: Tue Oct 24, 2006 12:12 am Post subject: Re: the death and resurrection of the us dollar
Old news for anyone following safehaven.com or other "contrarian" sites. Still a nice summary.
Think we need to see some hyper inflation first before the dollar goes done.
Perhaps first some withdrawal of foreign investments, which then leads to hyper inflation (money printing) which escalates the foreign withdrawal and then the dollar goes down the hole.
Though it was interesting that Aus. treasurer Costello would make statements like this at a time when US$ is showing a bit of strength;
Quote:
TREASURER Peter Costello has called on East Asia's central bankers to "telegraph" their intentions to diversify out of American investments and ensure an orderly adjustment............Mr Costello said "the strategy had changed" and Chinese central bankers were now looking for alternative investments.
Anyone not yet convinced gold and silver is the way to invest? _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Joined: Dec 06, 2005 Posts: 833 Location: Stopped at the border.
Posted: Wed Oct 25, 2006 1:46 am Post subject: Re: the death and resurrection of the us dollar
The best reason for not ever intervening directly to change regimes in other countries is that it is possible to lose. Such a loss can also happen when a superpower uses a proxy, like a hand picked opposition party, but the downside is limited. Bush and co made the supreme mistake of not using a proxy in Iraq. The reason is easy to divine, they thought that any proxy would have to be Shiite. They don't want the Shiites to be in charge at the end. They need to hand control over the Iraqi fields to the Western friendly Saudis. Now, the US military must be involved in any attempt to right the ship. So much is on the line, cheap oil, Western elitism, etc that the US can't afford to fail. A Shiite proxy could have failed and those things would not be riding in the balance.
We could be looking at a potential US military loss in Iraq. It could come as a Viet Nam style prolonged insurgent loss or it could be worse. If the US withdraws from Iraq and the country explodes into a civil war that war might become regional. The same things that hinder democracy in Iraq also enshrine dictators in most of the surrounding countries. A street level civil war could set the surrounding countries off as well. That sounds good for the US on the surface, let our enemies take care of themselves, but it is just as likely that when the US military has to re-enter Iraq they will face the whirlwind. Their presence could serve as a catalyst to unite the forces unleashed everywhere across the ME. Imagine what a US military loss in the ME would mean. The world would be changed overnight. Gold would climb over $2,000.00 an ounce. Oil would climb over $200.00 a barrel. The dollar would instantly have to deal with the size of the US Gov debt. Worse that loss would signal the beginning of a new era of wars as Russia first and Europe and China second swept in to fill the power vacuum.
There is a way to win in Iraq. It involves giving the Iraqis the right to use their own oil to industrialize and compete internationally in energy intensive indistries. Leaving the country will only set off a firestorm.
Joined: Dec 07, 2005 Posts: 1741 Location: Australia
Posted: Wed Oct 25, 2006 7:00 pm Post subject: Re: the death and resurrection of the us dollar
Quote:
a new dollar backed by gold could help the u.s out though. It seems like their only option to remain the biggest currency in the world
First they need to have the gold. Not sure if you can back up a currency with a reserve full of paper IOU's instead of physical gold.
Secondly, I don't think that is a scenario that the powers that be would like. Their money making scheme is based on inflation and a gold standard is used to keep inflation down. _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Joined: Oct 06, 2006 Posts: 1011 Location: was rwwff
Posted: Wed Oct 25, 2006 7:04 pm Post subject: Re: the death and resurrection of the us dollar
Just keep an eyeball on the Yuan/US$ rate; as long as the descent is smooth and orderly, its all good; if it lurches out of control and acquires my ole friend Mr. Jitter, then hold on to your hats, cause it might be all your left with! _________________ Yes, we are. As we are.
And so shall we remain; Until the end.
Joined: Dec 07, 2005 Posts: 1741 Location: Australia
Posted: Wed Oct 25, 2006 7:16 pm Post subject: Re: the death and resurrection of the us dollar
Quote:
Just keep an eyeball on the Yuan/US$ rate; as long as the descent is smooth and orderly, its all good; if it lurches out of control and acquires my ole friend Mr. Jitter, then hold on to your hats, cause it might be all your left with!
Not sure if I believe orderly exit is possible.
It assumes that although the dollar is trending down, US$ holders will be happy get out in small steps and either minimise profits or even take sure losses.
Australian treasurer Peter Costello went out and suggested that CB's signal their intentions in advance, so that other CB's can hold off their selling until later stage. Are this guys really so nice so they will take a queue ticket?
What about hedgefunds etc. if they see trend pointing down or a signal from a CB that selling is going to take place, won't they capitalize on this by selling/short selling?
I think it is more a case of a lot of runners ready at the blocks but they are currently not sure when the starter pistol will go off. Once some runners take off the other will realise the gun went off and follow.
The only way US can hold off those first runners is by keeping up the perception that the race hasn't started.
i.e. keep up the appearance that foreigners are still investing in bonds (not just caribbian US proxies recycling printed money), hint that there will be rate rises, fudge inflation data, keep gold down. _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
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No doubt there is lot's of speculation behind it but I guess this movement really follows the fundamentals. A guess for an upper bound for the euro? 1.4$? more?
