Dollar Bulls and Bears Struggle for Dominance 10 comments
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The US dollar has not given up the fight in the forex markets following its sharp decline on Monday.
Many analysts are saying the dollar is in peril, and that it is going to reverse its recent uptrend because of the government’s intention to print more money, thus diluting the pool of money available.
On the other hand, there are many analysts saying that dollar weakness is only temporary, since US dollars will be used to purchase Treasury bonds auctioned by the government to finance their latest mega ultra cool plan, and that the USD still has what it takes to push higher once the bailout plan has been debated.
As of now, Paulson and Bernanke are still trying hard to convince the Congress, instilling fear in policymakers that if the rescue plan doesn’t go through, there will be “grave threats” to US financial stability, and Congress should avert “serious consequences”.
I can’t help but feel that Bernanke is acting under pressure from Paulson, the chief decision-maker, and is compelled to give his strong support to the $700 billion bailout plan in front of the politicians, some of whom are skeptical about the plan, especially since it is put together by "I’m-becoming-so-powerful that-I-can’t-even-believe-it' Paulson. Congressional Joint Economic Committee Chairman Schumer showed his dislike of the plan at today’s hearing, saying that taxpayer protection must come ahead of share holders and bond holders in rescued firms.
In forex trading, EUR/USD stayed above Tuesday’s low of 1.4622 and was capped by 1.4750. The Eurozone is not doing so well itself, despite all the negativity surrounding the US economy and financial system, so there is still a chance for USD to limit its losses. USD/CHF is slightly up today, although it is still under 1.0900.
Meanwhile, the US stock market is quite undecided about where to head. The cloud of uncertainty is weighing heavily on investors; so what if Warren Buffet had bought $5 billion worth of perpetual preferred shares in Goldman Sachs (GS) (129.23 +4.18 +3.34%), the market is taking a cautious stance, but only for now.
Think the ongoings in the markets are too confusing? Don’t be. Take your cues from the charts, and take things one day at a time. Don’t lose sleep over conflicting information and the higher volatility in the markets. If you can, make only quick trades.
Economic Calendar For Thursday:
German GfK consumer confidence 0610 GMT
US durable goods, initial jobless claims 1230 GMT
US new home sales 1400 GMT
Paulson and Bernanke to testify on Fannie takeover 1600 GMT
New Zealand GDP 2245 GMT
Japan National CPI 2330 GMT
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This article has 10 comments:
Copper/gold daily news, followup and the miner TSX-v stories - all in layman's terms
mining101.blogspot.com
Some fundamentals are:
US financial sector debt rose another 1.5 trillion in the last year, we had the latest FED Z1 release out last week. And the last thing money traders do is going through all those difficult statistical nonsense!
But it clearly says:
Total US fin sector debt:
2007 Q2: 14998.1
2008 Q2: 16507.5 billions of US$
Just 1500+ billion standing on the debt side of the US bank books.
The 700 billion bail out plan only affects the 'asset side' of the bank books but the dollar bulls can't care less...
BTW, the 700 billion toxic debt is old debt from a few years ago, the new 1500 billion debt is toxic within a few years.
Are there still weird bulls out there? (As a matter of fact there are, beside debt also stupidity can grow exponentially!)
Sorry, I can be exponentially stupid too, but here is the link:
www.federalreserve.gov...
Go to the one before last column and scroll down to you see the latest fun like 16.5 trillion US$ size.
Don't forget: There are still plenty millions of US citizens that think they have a constitutional right to refi and that there is no problem in letting total debt levels grow faster than the GDP for decades...
But when your debt level is 3 times the GDP what will happen???
And 4 times? And 5 times?
Do you now mean what 'credit crisis' actually means?
This has nothing to do with sub prime, this is the big hammer...
there now and you need 25% of the world GDP to save your banks...
我相信一些你可以給我一個貸款在一個合理的回落...
Well, as for "instilling fear in policymakers" -- we've come a long way in leadership that told us "the only thing we have to fear is fear itself." No there is a terrorist under every bed and a broker jumping out of every window if Congress doesn't pass Paulson's plan.
Our fearless leader, Bush, is supposed to speak tonight, I'm sure the speech will go something like... "My fellow Americans, I'm here to inform you that, based on 'reliable' intelligence sources, Al Qaeda is behind the recent short selling on Wall Street. I have, therefore, signed an executive order, granting Treasury Secretary Paulson, absolute control of all current and future financial resources. Thank you and God bless the United States."
Of course, the screen behind him will say: The Economy has not Contracted The Economy has not Contracted The Economy has not Contracted The Economy has not Contracted The Economy has not Contracted The Economy has not Contracted The Economy has...