U.S. Dollar Index Has 5th Biggest Decline Ever

As equity markets stage their second straight day of gains, the US Dollar index is having its worst day since 1985, and its 5th worst day ever (since 1970). And today's fall for the Dollar broke the uptrend the currency had been in over the last couple of months, although it is still in a longer-term uptrend off of its Spring lows.

Falls in the Dollar are coinciding with gains in equity markets and economic stability worldwide, since the US currency is now being treated as a safe haven. Go figure.

Comments

[mplaut:]

This has been going on for several months already. The dollar is up and EVERYTHING else is down. So now it is reversing.

2008 Nov 24 05:57 PM

[Robert Nabloid:]

I think Kathy Lien should read this. Everyday we get a new article about how demi-god Obama is causing an the sun to shine on Wall Street. seekingalpha.com/artic...

2008 Nov 24 06:28 PM

[don pedro:]

Some bobbing head on CNBC have no clue what they are talking about. The dollar is toast, and today was the beginning of a lot a whoopass to come...

2008 Nov 24 07:44 PM

[don pedro:]

Some bobbing head on CNBC have no clue what they are talking about. The dollar is toast, and today was the beginning of a lot a whoopass to come...

2008 Nov 24 07:45 PM

[swellman:]

I don't get the analysis here. Dollar down large means the end of it's bull run? Drawing a semi-random line connecting a few points means the U.S. dollar is going down? The dollar is in a bull run and these are the kinds of violent corrections that come with such. Usually they last a few days and then proceed to go right back up. Time will tell but just remember the big trend is your friend and it is up right now.

2008 Nov 24 10:31 PM

[Moon Kil Woong:]

There are fewer and fewer dollars and banks keep getting more and more dollars from the government. Sooo... who is the loser = you. Who is the winner? Banks will own a bigger and bigger percent of the US thanks to government money. Cha ching. In a deleveraging you only need to own capital as everyone else loses everything. Banks know it. As long as the government backstops their loss they win. You loose. And they grumble about how bad it will be if they don't get more and more of your money. Silly isn't it.

2008 Nov 25 03:07 AM

[Asbytec:]

This slump was expected earlier this week and is predicted to be short term. The economic calendar is fairly sparse and risk appetite has returned, especially with Obama's cabinet announcements and the Citibank bail out.. Swellman is right.

www.actionforex.com/te.../

"The US Dollar looks set for near-term loses as a correction in deeply oversold risky assets sees capital flow out of the safe-haven currency, bolstering the forex majors."

On the euro:

"Prices have settled in a wide range roughly defined between 1.30 and 1.25. This is the first meaningful period of pause that the pair has seen since the multi-year uptrend was snapped in mid-July, suggesting a large move may be in the works. Seeing continued divergence, we remain of the view that an upswing is in the cards before the dominant bearish bias reasserts itself."

"Next “soft target” aims for a test below 1.2160."

The pound:

"Our strategy here remains broadly unchanged as we look for a bullish correction to yield a favorable short entry into the dominant downtrend."

Remember, the dollar is already pricing in a 50bsp cut next month. The ECB and BoE will cut aggressively in the coming months. And, importantly, the EuroZone is in deep trouble, too. Not just us. We happen to be benefiting from a popular administration ready to take office, too.

2008 Nov 25 09:05 AM

[Mr. Boater:]

The dollar is toasted. Jummy Rogers is getting out of the dollar, Steven Roach left New York for Hong Kong---thats good enough for me---hard to make money betting against these guys....and with so many dollars being printed its hard to stay in a market --best to buy gold stocks and dump the rest.

2008 Nov 25 12:29 PM

[Asbytec:]

Get them while the dollar is strong...

2008 Nov 25 04:12 PM

[Asbytec:]

Look, most people in here are well aware of the evils of the fractional reserve banking system. Debt is money. A consequence of this growing debt is it can never be fully paid off. When debt plus interest becomes excessive, the banking system collapses.

This is where we stand, now, I believe. We can pump money into Citibank and others, but we are just prolonging the inevitable and making it worse. Though, I applaud the Fed's liquidity injections as a soft landing measure, as ill fated as it may be.

Of course, the end result will be inflation. Commodities will rise in price, and we'll see it at the pump and in the grocery store.

Now, how does one get out of that situation? Well, according to conventional wisdom, increased government spending, eh? Well, the government will rely on Fed printing money and on various debt instruments. But, to rely on debt instruments, the dollar best be strong (or the promise of a stronger dollar at maturity.)

That's what I am banking on (pun not intended) to pull us out of this thing: a strong, respected currency. Now, only if Obama will act in such a way remains to be seen. He must restore confidence in our banking system for those who believe in it (I am hoping for an complete overhaul) and to our currency.

"No nation has ever devalued itself to prosperity." All fiat currencies collapse, and all currencies are fiat. So, it's a race to rebuild fiat confidence. My bets are on the US wining that race.

2008 Nov 26 07:23 AM