Reinko

Forex: Why the Dollar Is Staying Strong

We have to take into account that dollar moves these years are often not good to explain, for example lately European inflation was reported at 1.6% instead of 1.8% (while core inflation still above 2%).

That gave an intraday swing of 2% on the €/$ pair.

Later Obama stated that trillion deficits will be there for a couple of years and almost nothing happens...

There simply is no economical theory that explains such weird behavior; one thing is clear:

Those who have the deep pockets to steer the value of the dollar neglect large parts of what the real value should be.
Don't forget: In the 600 trillion nominal value in the OTC derivative markets a tremendous amount is bounded to currencies; if we would have more insights who has what kind of derivatives you might better understand the weird weird behavior of the US dollar.

It might very well be that if the dollar gets too weak, a few trillions must be paid in the derivative markets...

That is not unreasonable.

While Iran Threat Keeps Oil Elevated, U.S. Stocks and Dollar Slip

Upon Iran:

Finally OPEC is talking some sense and we must not forget that the latest time the Iranians went on an agressive war was somewhere in the 19th century...

Until now there is no quantum of proof that the Iranians are indeed building nuclear weapons, I follow this for years and there is not one quantum of proof.

There is only stupid talk by stupid generals.

Beside this many years ago I explained to the Iranians how to build bunkers that could withstand the US bunker busters.
Lately the USA had a brand new model of far bigger bunker busters but in case the Iranians have followed my bunker building advices the new bunker busters are not a real threat.
The trick is very simple: Since bunker busters are very 'needle like' shaped all you have to do is destabilize the tip of the weapon at impact.

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On the paragraph 'US Manufacturing Improves':

In the first place the reported 50.2 in some vague statistic falls inside the white noise range, that means it is not statistical significant.
In the second place, it is related to exports so it has nothing to do with local USA demand.
When the US$ declines it is rather logical exports climb...

Another Record Oil Surge Leans on Stocks and Dollar

The Bear rescue by the US FED the author mentions is very interesting:

Many months before the sudden collapse of Bear Stearn Cos I already expected a tidal wave of bankruptcies in the US financial sector.

So I was a bit disappointed when Bear got rescued but I knew I only had to wait some time longer...

And guess what? I have it from a commisioner from Fortis Bank, he stated they needed to raise another 8 billion Euro (that's above 12 billion US$) in order to prepare for 'that what is coming' from the USA.

When asked by the journalist what exactly was coming, the Fortis guy said: "Right now 6000 regional US banks go busted".

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So far the Fortis guy, I knew already of a lot of problems in the regional banks. For example they cannot merge because in that case the banking books needed mark to market value...

Let the good times roll & what happens to the petro dollar?????

Intense Inflation Pressure: Fed, Bank of England Have Their Hands Tied

Hello Grace, again one of your beautiful articles.

You mention that producer prices grew 1.4%, the highest in six months. Well, this is very nice but are these month on month figures or year on year stuff?

Let me quote from your source (gracecheng dot com):

The report showed that the producer price index rose 1.4 percent in May following an unrevised 0.2 percent increase in April. The increase came in well above economists’ expectations of an increase of about 1.0 percent.

Comment: This means that it is a mom figure... (Because April was not revised...)

So yoy fun is 1.014^12 = 1.18 hence 18% year on year producer fun.

Of course core inflation without that stupid food and energy is only 0.2% so the populace will be protected against that nasty inflation. Really true...

Top 10 Currency Trading Tips From Deutsche Bank

A very good strategy is to trade against the big boyz, when they unwind their positions because they are sh*tting their pants it is time to hit the 'execute' button.

I have a golden, a silver and a bronze tip on this.

I only expose bronze:

Look for Central Bank policy setting meetings, when there is no financial news of any significance you often observe (just an example from lately) a sharp rise in the US$/Euro in the hours before the rate decisions are made public.

Hence: Big players like that Chicago sh*t are unwinding.

Of course you must use your brain: What kind of crap will this particular Central Bank come up with?

But if that Central Bank comes up with what most was expected the big players will take their old positions in again and you have a good profit when you have leverage of one thousand...

Remark: The big players can also unwind on the back of the economical news of that day (that is early unwinding in the run up to the Central Bank rate decision).

Again: Always use your brain and if you do not understand the situation; DO NOT TRADE!

Good luck trading the bronze tip...;)

Week in Review: Dollar's Biggest Advance Vs. Euro in 3 Years

Correction: It must be 'everybody' instead of 'everybode'.

Week in Review: Dollar's Biggest Advance Vs. Euro in 3 Years

Oh Grace your articles are always a feast for the eye:

Bernanke suddenly sees no economical downturn any longer and points to the inflationary dangers of a low US$.
In fact when we are supposed to believe the inflation reports, in Europe and the USA they are about the same size of about 4% yoy right now.

And we have a rather strong currency...

But when you, just like me, digg a bit deeper in the wonderful world of US financial stuff you can calculate that from the top of 2006 US family home equity will get a ram of over 10 trillion.

Since Bernanke, just like me, is an academic; he too is capable of making such easy to understand macro calculations. That leaves you wonder why Bernanke tells crap like this?

Very simple: Because everbode wants to hear that kind of crap.

Yet rather likely the law of gravity will also apply to US housing value (let alone commercial real estate) so a few more trillion of home equity will fade away and it is hard to see economical recovery under such conditions...

Strategies for Currency Investors

Indeed a nice article, I have tried some demo programs myself and that was big fun.

But the reason I give a reaction is the next:

When you start a demo program they always contact you by phone, to my surprise one of those 'advertising people' told me it was an advantage that they had leverages of up to one thousand times...

This is of course a stupid selling proposition because when you trade leveraged one thousand, you need a big big margin in order to pay that call when it comes.

All leverages above 10 are fake because you can make only smaller trades if you use a higher leverage (when you are a bank it is different, why pay the margin call when you can also classify it as a Level 3 asset?).

But it is great fun and you better use one of those demo's first because I can remember I wanted to buy Canadian dollars, but the pair was noted in reverse so I actually sold them.
So do your thinking because selling Euro/US$ is the same a buying US$/Euro.
And I was looking at my losses and I did not grasp it...

Compared with Canada, U.S. Economy Looks OK

Canada having a problem because there was a small contraction?

After all these years I still do not understand why the Americans think that (small) contractions equal to death.

Contractions are just as natural as your sleep.

And don't forget: If you adjust the US GDP growth for all that extra debt, the USA is contracting for a lot of years already. Right now the US economy has over 50 trillion of debt standing over herself and it routinely grows about 8% a year (that's about 2 to 3 times the long term GDP YoY growth by the way).

No no Grace: Your looks are charming but your brains are not...