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Ophir Chador

 
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  • Risk Aversion Returns: Equities Face Bearish Week Alongside Surging Dollar [View article]
    Not today, it wasn't ...

    The currencies, however, are reflecting the volatility I was expecting and performing well so far. Perhaps the Athens postponement was a good thing for the markets.
    Apr 19 04:35 PM | Likes Like |Link to Comment
  • Where Greek Debt Ends and the Eurozone Crisis Begins [View article]
    In this particular case, the long-term cost to Germany will far outweigh any short-term gains for its export industry. As noted above, servicing debt is becoming ever more costly for Germany as a direct result of weaker EU member states. The domino effect of aid requests across the region, which a Greek bailout would put into motion, will only further reduce demand for German/EU debt.

    A strong -- and, more importantly, stable -- currency is essential for eurozone growth in the long-term, without which direct investment in the region will evaporate. As EU member states face increasing difficulty to raise financing through the open market (bonds), the export industry may be the only one left standing -- and they might demand payment in dollars!
    Apr 19 12:08 PM | Likes Like |Link to Comment
  • Where Greek Debt Ends and the Eurozone Crisis Begins [View article]
    You're absolutely right.... Germany is already paying a hefty toll, as the bund trades ever lower amid intensifying Greek debt concerns. Germany must recognize that a bailout will prove far more disastrous for the eurozone than a Greek default/withdrawal from the trading bloc. Until then, their debt will continue to get pummeled alongside a degenerating eurozone.

    But then, Germany may surprise us with a preemptive withdrawal of their own ...
    Apr 19 11:59 AM | Likes Like |Link to Comment
  • EU Will Take Center Stage in Coming Week of (Forex) Trading [View article]
    Thanks for the links ...

    At this point, it appears that the EUR/USD is caught between a double-bottom (bullish) and ongoing concerns over Greece (bearish):

    forexplaybook.com/1547.../
    Apr 12 07:07 PM | Likes Like |Link to Comment
  • U.S. Dollar Strength May Bode Poorly for Equities [View article]
    FOMC meeting minutes sound a bearish tone; US dollar down following release.

    Noteworthy points out of FOMC minutes:

    * Unemployement, housing remain obstacles to growth
    * Deflationary concerns remain -- though the term "deflation" will never be used by Fed
    * "Extended period" of low rates language will not preclude rate hikes in near term should such a move be warranted

    Overall, not a very optimistic view out of the Fed. The light USD decline following the release is unlikely to stick, as the minutes support the risk aversion play.

    *USD/JPY breaking lower, as expected -- this move is in line with risk aversion: forexplaybook.com/1318.../

    *EUR/USD higher following minutes, flirting with the 1.34 handle again. I cannot fathom an argument for buying the euro right now, so I expect this one to flip in short order

    *USD/CAD breaks below parity once again, last trading at 0.9996; EUR/CAD remains low, though bounced slightly to 1.3390

    *GBP/USD, AUD/USD head higher following the release, both at highs for the session
    Apr 6 02:42 PM | 1 Like Like |Link to Comment
  • U.S. Dollar Strength May Bode Poorly for Equities [View article]
    damienhaas - sorry for the delayed response ... I didn't initially see your question about the carry trade. Though a longer term concern, I'll try to address your question.

    US dollar strength is not good for the carry trade for the simple fact that the carry trade thrives in economic environments that encourage risk taking behavior. USD strength is typically seen when risk aversion is at the fore.

    However, it's worth noting that the USD has become a far less popular currency for the carry trade. The primary reason is that the market sees central rates in the U.S. going up in the near future. There are a number of reasons to expect rate hike(s) in the U.S., not the least of which is inflation fears.

    The more popular currency for financing the carry trade is the yen (JPY). Interest rates in Japan are presently at 0.10% and a rate hike does not appear to be imminent in Japan as it would seem to be in the U.S.

    The best counter currency for the carry trade remains the Australian dollar (seekingalpha.com/symbo...), where interest rates are the highest among the majors.

    To sum up -- USD strength is not good for the carry trade, but again the carry trade is a long-term concern.
    Apr 6 12:01 PM | 1 Like Like |Link to Comment
  • U.S. Dollar Strength May Bode Poorly for Equities [View article]
    Quick Update ...

    * RBA raised cash rate 0.25%, in line with analyst expectations
    * USD/CAD hits parity and remains at that level
    * Euro way down, Greek debt yields way up -- pretty easy to see that one coming: seekingalpha.com/artic...
    * US dollar strength (risk aversion) looking to become the week's theme

    As far as the USD/CAD Parity Parade, there seems to be lack of support for price to remain at parity, currently. While the level was going to be reached no matter what, the expected USD rebound is more supported by present market conditions -- risk aversion, oil relatively flat, etc.

    While down slightly on the USD/CAD position,the second leg of the trade -- short EUR/CAD -- is performing very well.

    * Long USD/CAD at 1.0020 (last price 0.9995)
    * Short EUR/CAD at 1.3523 (last price 1.3370)

    Next big news for the market -- FOMC meeting minutes. Should be enough for the action to heat up ...
    Apr 6 11:47 AM | 1 Like Like |Link to Comment
  • U.S. Dollar Strength May Bode Poorly for Equities [View article]
    Actually, the original, original title is "Forex Playbook: April 04-10", after which ForexPlaybook.com was named. However, SA changed that title last week, so I thought a more specific, "Market Outlook" title would work.
    I'll contact SA for titular advice to avoid confusion on future content.
    Apr 4 05:59 PM | 4 Likes Like |Link to Comment
  • U.S. Dollar Strength May Bode Poorly for Equities [View article]
    H.T. Love - I'll bet a $ to a donut that SA changed the title on it. No?

    You are correct. The original title: "Forex Market Outlook: April 04-10"

    The chosen title definitely missed the article's intent, which is simply to offer a forecast for the coming week of Forex trading.
    Apr 4 05:51 PM | 2 Likes Like |Link to Comment
  • U.S. Dollar Strength May Bode Poorly for Equities [View article]
    I appreciate the comments.

    LilBob, a stronger US dollar, while bringing down oil prices, also indicates a prevalence of risk aversion in the marketplace. The US economy will not benefit from risk aversion in the near- or long-term.

    ReppinFreedom, I'm not sure which US dollar downtrend you are referring to. The dollar index has steadily strengthened for some four months now; it remains near recent highs, despite the last four days of price action. Meanwhile, the dollar downtrend that followed the March 2009 highs -- when the dollar index traded near 90 -- has visibly reversed based on any trend line imaginable.
    Apr 4 04:38 PM | 1 Like Like |Link to Comment
  • Another Suspected Swiss Intervention [View article]
    Looks like the semiannual report on exchange rate policies has been delayed due to previous engagements for the Treasury Secretary. One would think that Mr. Geithner would have learned by now not to schedule overlapping meetings.

    I guess neither the Chinese nor the Swiss will be labeled as "manipulators" in the month of April.

    Smells an awful lot like a stall tactic ...

    www.bloomberg.com/apps...
    Apr 3 01:49 PM | 2 Likes Like |Link to Comment
  • Greek Tragedy Intensifies as Bond Market Loses Confidence [View article]
    I wouldn't touch Greek paper. The Irish, Spanish and Portuguese brand have been doing far better ... of course, that might change.
    Mar 31 09:29 PM | 1 Like Like |Link to Comment
  • Greek Tragedy Intensifies as Bond Market Loses Confidence [View article]
    A similarly themed article out of Bloomberg a couple hours ago: "Greece May Be Heading Back to ‘Square One’ on Aid as Bonds Fall"

    I was half expecting to see my name in the byline by the time I finished reading this one...

    www.businessweek.com/n...
    Mar 31 03:04 PM | 1 Like Like |Link to Comment
  • The Dollar Prophecy: What the Surging U.S. Dollar Signals for Global Equities [View article]
    I appreciate all the comments ...

    Bob, as far as the positive retail sales numbers coming out of the UK, it's unlikely to reverse the overall trend for the GBP, which is decidedly negative. It is, however, enough to give any currency a temporary boost, as you point out.

    As far as the "bailout" news out of the eurozone, it appears to me to be nothing more than lip service aimed at calming the bond market; in other words, it's designed to reduce the cost for Greece to issue new debt in the open market. (The best coverage of the EU's proposal that I've come across was in a Wall Street Journal article entitled, "Europeans Agree on Bailout for Greece.")

    In my opinion, the bond market will reject this proposal, as it provides no real assurance that the EU will actually step in to help Greece -- and, by extension, the debt holders -- should the need arise. In fact, the conditions that are in place for Greece to receive any EU assistance will be exceedingly difficult to satisfy. To date, Greece has yet to receive any tangible assistance from either the EU or the IMF; instead, the EU appears intent to simply talk the problem away.
    Mar 26 02:59 PM | Likes Like |Link to Comment
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