U.S. Dollar Rallies On U.S. Corporate Earnings

Just Thursday, the US dollar was the weaker opponent, but things changed swiftly on Friday for the currency. The US dollar rose more than 200 pips against the Japanese yen, hitting an intraday high of 104.70, following the strong rally in US stocks which reacted positively to earnings results by Google. EUR/USD, which hit an all-time high of 1.5985 just yesterday, bounced more than 270 pips down from that level and is now trading in the 1.5700s. Traders closing out their Euro long positions have also pulled down EUR/GBP, and the British pound has been a strong performer on Friday.

Greenspan Says

Former Fed Chairman Greenspan told a conference in Italy that he doesn’t know how long the US recession will last as that will depend on the financial crisis.While he would like to say that the worst of the credit crisis is over, he said the credit market situation is still critical. With regards to forex interventions by central banks, he said there have been mixed results from it, noting that little happened to the Japanese yen when the Bank of Japan stopped intervening. He is of the opinion that interventions have not been successful in the past.

Comments

[stockmarket...:]

These recent positive earnings reports tell us nothing about the future. There is still a massive inventory of unsold homes...not just here, but in Europe also. This does not bode will for future earnings as the consumer gets squeezed further by falling home equity and rising gas prices. The recent breakout of the equity market looks like a giant sized sucker rally.

2008 Apr 18 11:08 PM

[Philly Jim:]

I like your website Grace, nice layout - everything right where it needs to be. Good info. Brains and beauty! ;P

I think the dollar is setting itself up for the rally of a lifetime, a lot of "trader" dollars have reached or are near their apex abroad and are slowly coming back into the country. Take a look at the reversal of FDI funds in India, just one example of how the billions are slowly flowing out of developing markets and back to America. Don't miss out of this awesome rally we are about to witness. Sell your commodities and foreign currency before it happens! You can see the urge to get back into the U.S. dollar and equities.

2008 Apr 18 11:37 PM

[silver-bullet:]

Philly,

When the US$ is in a currency crisis this summer, you won't look too smart - especially to Grace.

Let's keep our business straight here - this ain't no 1-800-BABE site.

2008 Apr 19 04:02 AM

[ajhough:]

Apparently the weak dollar has become much more important, not only to investors but also to American business. A stronger dollar would improve American lives and certainly to those of us who wish to travel.

2008 Apr 19 09:03 AM

[gerrele:]

STOP TRUSTING GREENSPAN. IMO, HE IS A FAKIR/LIAR; AND HAS ADMITTED BEING AN "OBFUSCATOR". NO DOUBT IN MY MIND THAT HE, LIKE MANY POLITICIANS, ALWAYS IS A PARASITE. HE WILL BETRAY/DESTROY EVEN HIS US BROTHERS AND SISTERS TO MAKE MONEY AND GET UNWARRANTED GLORY. IMO BERNANKE IS THE SAME.

YES, THE LONG-TERM-DOWN-TRENDIN... DOLLAR SHOULD NOW HAVE A **TECHNICAL ONLY** SHORT TERM TRADEABLE "DEAD CAT BOUNCE"; SEEKING TO SURPASS THE .33-8.2 RESISTANCE LEVEL.
IF IT WILL DEPENDS SOLELY ON HOW FAR THE BIG MONEY "PRICE MANIPULATORS" HAVE DECIDED TO "SQUEEZE"; PROFITING FIRST ON THE UP-SQUEEZE (WHILE SNEAKILY SELLING SHORT TO FURTHER PROFIT BY THEIR (ALREADY PLANNED) SUBSEQUENT LONGTERM ONGOING BLOODY MURDER OF THE DOLLAR.

2008 Apr 19 11:23 AM

[tclwrap:]

Philly, if the trader dollars come back to the US, that would imply a dollar selloff. I fail to see the argument for a strong dollar... Could you explain?

I think a strong dollar would impact OIL and commodities prices.

2008 Apr 19 11:56 AM

[gerrele:]

GRACE:

"BOUNCING 270 PIPS DOWN" IS NOT GOOD ENGLISH AND COULD CAUSE MISUNDERSTANDING OF YOUR INTENDED MEANING.

"DROPPING DOWN", WOULD HAVE BEEN CLEARER. BETTER YET, JUST SAYING "DROPPING" 270 PIPS .........................

BEST WISHES,

GERALD

2008 Apr 19 01:25 PM

[Coelacanth:]

Although I'm heartened by the better than expected earnings news last week from some top tier financials, domestic banks still have around $4 trillion dollars worth of mortgages on their balance sheets (Mostly interest only, Alt-A and Option Arm loans).

Against stagnant retail numbers the past two months, rising unemployment, rising food and energy prices and banks continued reluctance to lend.....anyone who thinks the dollar's pain is over is simply not paying attention.

2008 Apr 19 06:57 PM

[01GTvert:]

The dollar will continue to fall despite this small victory and grace is still hot. Right there wit ya Philly!

2008 Apr 20 01:24 AM

[vodka_tonic:]

dollar rally...pffft...big forehead yes...maybe with better hair stylin'
sorry to be a ha8r.

2008 Apr 20 07:02 PM

[LJ:]

The dollar rallies because of the yen weakness. The BOJ just released a report last Friday blaming the material costs that weaken the Japanese economy. The hedge funds use this news as an opportunity to short-sell yen and pump up the stock bubble.

2008 Apr 20 07:45 PM