Mr. G

Tuesday FX View: Sour Tone Leaves Both Dollar and Yen Bid

You seem to enjoy analogizing currency and people to food. I hope your not overweight. GI

Euro Breaks to the Upside

My understanding is printing money is not just a US phenomenon, but many countries are printing more money. It appears the globe is awash in currency.

I have to say the currency charts present unusual opportunity with long trends up and down.GI

Why U.S. GDP Will Decline in Q4

Thanks for taking the time to respond. The rise in corporate earnings is based in part in our participation in the global recovery. I do not expect this reporting data to decrease and this has been a primary factor in our GDP rise.

The credit issue has been a primary problem as banks have decreased lending and increased interest rates even on creditworthy borrowers. I see this as a primary damper on increased demand. The consumers who are employed have recovered some since our country did not collapse into another great depression, and this sentiment factor may lead to increased holiday spending over the same period in 2008.

I am hesitant to express too much gloom as the housing market is in transition to stabilisation, thats why I say, lets talk in January. GI

Why U.S. GDP Will Decline in Q4

The rise in corporate earnings does not support your conclusion. If your thesis is correct, the stimulus programs are not working. The GDP in part rests on consumption, at least in some sectors. I think it is to early to make a blanket conclusion. Lets talk again in January. GI

Is the Dollar Toast?

To the OLD Trader: NO , I am not kidding. Read the rest of my post. Dont jump conclusions. The evidence of what the FED is trying to accomplish takes time. Raising the lending rate just to correct the dollar would be detrimental to our economic expansion.

One of the primary reasons for dollar depreciation is the world holds about 7 trillion or more in reserves,and as they sell dollars to diverify their reserve base, it puts downwrd pressure on dollar value. This is causing large moves in the euro(150 pips per day average.) The cause and affect of dollar movement is not solely related to the FED rate. GI

Is the Dollar Toast?

Maintaining a 0.25% FED rate supports the economic policy of a strong dollar because it encourages bank lending to assist and foster economic growth.

Another benefit is US exports. It makes our products competitive on the global markets. The pegged yuan makes Chinas products equally competitive.

On a final note, currency traders set the prices of currency value, not the US govt. If the current pattern of FED policy works, the dollar will appreciate as our economy grows, but the hurdles of employment rate and credit markets have to resolve first. GI

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

Thursday FX View: Trichet Offers the U.S. His Sledgehammer

3% GDP increase and 10.2% unemployment. A question arises. What is holding up the US economy? I believe its the global economy and for US stock investors, those companies participating in the world wide economy will do the best. Locally, demand has waned. September inventories were down and this doesnt bode well for the holiday season and one might speculate the consumer has been severally damaged, not only from unemployment but in overall sentiment.

In the longer term, this does not support the dollar. I would speculate the dollar will remain in the downtrend longer term till US consumption picks up. GI

Tuesday FX View: Currency Traders Take a Beating as Dollar Rally Gives Way

The question concerning the Yuan is interesting. The most important point is that the value of any currency is how the universe of traders see it on the spot market, not any true value. For example, for the US to have a strong dollar policy is a worthless statement if the universe of traders do not perceive the dollars fair market value as strong.
A better question is what causes a currency to be perceived as strong? In my opinion, the value of any currency is determined by the set of economic indicators affecting the countries GDP. It is the constant ebb and flow of these indicators that traders perceive at any one time that ultimatley measures a currency value. Said another way, look at currencies as being a stock in a country.

At present China may be artifically depressing its currency to make its exports more competitive on the global export market. Considering Chinas economic growth rate, I believe the universe of traders would see its value higher than its current pegged rate. How much higher is a guess at best, but I would like to watch it trade once unpegged and my position would be long. GI

Tuesday FX View: Currency Traders Take a Beating as Dollar Rally Gives Way

The dollar index recently made a major breakout from its downtrend. Was this a headfake or a signal for future upside movement? The ADP and ISM nonmfg reports do not support the upside, but an unexpected move in the unemployment rate on friday may have a more pronounced affect.
The dollar breakout may have been short covering as the demand for the dollar increases. It seems the US is just bumping along the bottom and if the unemployment rate is flat, I do not expect more upside to the dollar.GI

Monday FX View: A Smoother Start to a Week Has Dealers Mark Down Dollar

Just a technical note. The dollar has broken out of its downtrend since June. It could retrace back to 80 on the index. I think the unemployment indicator this friday could forecast future movement. I would still be on the sidelines in gold and oil. GI

How Bad Is the Dollar's Fall?

I think the most recent rise in the dollar (five cents against the euro) was FED action. This is the first time they lowered the rate with out increasing the money supply. Typically,lowering the rate makes the dollar weaker against the euro based on interest rate preference,but the move was counterintuitive. I can see nothing in the near future that supports the dollar and I expect it to retrace lower considering the fundamentals coming down the pike.

Time To Go Long The Dollar?

As the knives keep dropping and the FED tries to prevent freefall, the dollar will correct in response, but the visibility of risk and failure of similiar institutions like BEAR STEARNS is not clear, and this places a jaundiced light on futher dollar strength. Buyer beware. Why did Bear Stearns and J. p. Morgan rise after buying a bundle of worthless debt? Is there more bad debt to surface. I dont hear any fat ladies singing yet and the markets are fickle depending in their focus.