Professional traders have long observed that when a financial story becomes fron page news, the move is over. Is the weak dollar getting to that point? This morning the WSJ published an article entitled, " The Dollar Adrift. A Global Vote of no Confidence. " They said: "The biggest story in the world economy is the continuing fall of the U.S. dollar, or at least it is everywhere outside of Washington, D.C., the place most responsible for its declining value. For good reason, the world is wondering if America has cast the dollar adrift."..........."Washington may not care to notice, but the sell-off in the dollar is a daily global vote on U.S. economic policy. It is not a vote of confidence."
The stories of the dollar demise are abundant. One story in the London Independent, even with dubious documentation, had a negative impact on the dollar's value. We are beginning to wonder if the bearish dollar story is getting so much publicity, that everyone has already placed their bets.
There have been a few reports of monthly trade balances during the past two days. The Germans, French, and Canadian all had balances worse than expected, while the US trade balance, though still negative, was smaller that forecast. US exports at 128.2B reached a high for the year. Could it be that a weak dollar is helping the US trade balance while the strong Euro and Loonie are having the opposite effect?
During the week, a group of small but wealthy Asian countries decided the dollar was cheap enough and they intervened by buying the dollar. This seemed to help the dollar versus the yen, and perhaps slowed the advance of the Euro, but the pound lacking buyers continued the slide versus the dollar.
After checking out the 1.48 level yesterday, the Euro retreated quickly.
Though we remain on the alert that the short dollar position is too popular, the Euro does not act like is wants to sell off. We remain interested in buying in the 1.4650 area is able, to hopefully return to the 1.48 level and check out the season high.