Mr. G

The Dollar as a Funding Currency

THE US dollar will only appreciate when the universe of currency traders see value from better economic numbers, rise in employment, increased GDP, equivalent rise in personal consumption, rise in inventory numbers, decrease in current account deficit, better numbers in the real estate industry etc. Obviously, this is not going to happen overnight . GI

The World Financial Markets in Eight Charts

The surprising metric is the continued market for tipps and treasuries notwithstanding the dollar decline. I suspect a depreciating dollar helps us out of a crisis as the US pays back a depreciated currency at time of redemption. No wonder everone is screaming about the dollar as a reserve currency, yet they keep on buying. Truly one of the great mysteries of the present stance of the global markets.

A Dilemma for the Dollar

I believe the experienced forex trader will tell you currency markets trade on sentiment and of course the direction of trade is determined by the majority of traders betting in one direction. The euro has lost 5 cents against the dollar recently. From the indicators recently emanating from the US, I have not seen an indicator that supports such a move other than the FED and treasury have taken some innovative tactics other than printing money to slow down the dollar retreat. The market has perceived this shift in policy and given the dollar a reprieve. The major question is whether the dollar will continue to rise against its paired sisters on the forex.
I think the answer is not visible until the mortgage market unwinds and traders can determine the depth of decline in the GDP of the US. Prediction at this point is a guess, but the data dependancy of forex will tell as time unravels the details. As far as the U.S., I havent heard any fat ladies singing yet.