The dollar has been going up as traders wish to avois risk. This means back to the basics and that means the dollar. Global markets are still looking to China for direction and seem to be still walking around in circles. No one's pointing out the way.
This makes the dollar very attractive. Look for continued upward movement in the weeks to come.
I've had this notion for some time. Oil rallied yesterday (August 19) after oil inventory reports showed lower oil on hand. This news at first hit the dollar then helped oil prices it seems. Buying in equity markets was also triggered as traders are willing to take on more risk. Watch action today and tomorrow on the dollar, as this will show if the dollar will continue the down trend or start going back up.
The U.S. stock market still appears bearish.
Traders are avoiding risk and the place to that is in the dollar. Stock futures were sharply lower adding to the risk aversion notion. Equity markets have been hit with much bearish news which has made the dollar a safe haven for investors again. Consumer spending remains sluggish allowing many to question if U.S. economic recovery is still around the corner.
The dollar rose to a monthly high versus the sterling.
The dollar gained on Friday the 14th with help from the triple digit drop in the DJIA. Also helping a bit was news that the eurozone is still in recession. Traders consensus is for more gains in the dollar, but they should be modest. Recovery is still the keyword. U.S. consumers still aren't spending.
The Bank of England decided to expand the amount of pounds to pump into the economy to the tune of 50 billion. With the news the gbp/usd fell 150 pips. The exit plan from British monetary leaders will be interesting to say the least.
Australia showed job growth and that was good for their currency.
On Tuesday, the 5th, the dollar was still scratching against the other major currencies. Risk appetite seems to be diminishing, but traders pulled away from going to the dollar. The dollar hit a ow against the pound it had not seen since last fall.
Oil invetories are higher, however crude is testing $72. U.S. commercial crude inventories went up by 1.7 million barrels in the previous week.
Stronger unemployment numbers over the past several months will create U.S. government deficits that could be more than originally projected. Long-tern interest rates could rise as a result of the burdens of financing the deficits, even when the economy improves. Higher deficits also may make it a tough case to sell the healthcare reform and cap and trade issues.
That brings us to the next item: the dollar. what's hurting the dollar is both fundamentals and technical. With the help of the usual numbers coming in negatively and take a look at the usd index, it is no wonder why the dollar decline continues. Also knocking on the door is eroding purchasing power, inflation and stagnation well into the future. Usually a lower dollar means higher commodities and precious metals.
The dollar got hit yesterday (the 3rd of August) as investor confidence goes to the equities markets. The dollar bearishness seems to be overdone. Strength in the euro remains. The European Central Bank will most likely have interest remain unchanged.
The dollar was weaker against a spectrum of currencies as traders speculate that global economic recovery is on target. The demand for safe-haven assets is waning. European equities found support which helped the pound.
Crude had a third straight daily gain to end the week. The U.S. Department of Energy reduced oil inventories by 2.8 million barrels from the previous week. Gasoline inventories were up by 1.5 million barrels. For the week August crude closed up $3.70, the first weekly gain in five.
The U.S. dollar struggled and gave back gains to the euro and sterling. Equities advanced around the world. Economic news from th U.S. was a mixed bag.
The yen has been gaining as traders have been losing risk appetite. This will be bearish for the dollar as it has been unable to hold onto recent gains. Troubled economic news in the U.S. has placed the dollar in a corner. Stronger commodities will continue to put pressure on the dollar.
Oil has been getting hit as of late since a double top of $73.38 has been confirmed and the "sell rallies" notion is being heard loud and clear. Total petroleum inventories rose to a level not seen since 1990.
U.S. jobless claims fell below 600,000, the first time that figure has been realized since January. This brought better demand for higher-yielding assets. The dollar and yen fell pretty much across the board as traders took on more risk.
The pound rallied due to forecast growth in the U.K. economy.
The 10-year treasury note auction went very well.
The dollar gained late last week but the gains couldn't be sustained as U.S. equities need a stronger buying volume. The yen was stronger across the board.
Watch crude fundamentals as rallies have been sold. Crude supplies are reported up.
The dollar dropped on the 1st of July as a rise in global stocks in Europe and China downsized dollar demand. U.S. manufacturing shrank in June but at a slower pace during the prior month. Traders noted that a further drop in the dollar is likely. The British pound is also under pressure.
The pace of economic contraction is slowing and this seems to be in line with household spending showing signs of stabilizing. U.S. inflation data is still smooth with recessionary pressures helping there. Economic recovery may begin later this year.
The U.S. dollar has had a good week and could see further gains on Friday the 26th. U.S. data has, for the most part, been dollar friendly and given the current trend, the dollar could keep the gains going into early next week. Just how much risk appetite is out there among traders? That remains to be seen, but gold was a bit lower and commodities in general were lackluster this week.
The dollar took a hit today (23 June, 2009) and some traders said it went a bit too far, but the usd is likely to go down tomorrow with more U.S. data on the way. The housing data may take on more importance than usually expected tomorrow especially if overnight trading is sideways.
The U.S. economy may be in better shape than expected, but still with a long way to go. Weaker equities in the middle of the day had a negative impact on the dollar. Most of the currency pair action was in the EUR/CHF today which caused the USD/CHF to drop the hardest to a low point of 1.0642.
Gloomy news spooked the markets on the 22nd and that news hit European markets to the downside. But the European Central Bank will offer unlimited credit at the ECB rate of 1% for 12 months. The demand is expected to be huge. This gave the EUR the turnaround today. Interesting to see what takes shape tomorrow, despite the U.S. news. Just maybe the U.S. news won't matter. Yeah, right!
I recently read comments that made me think of why we do what we do. Take traders for example. They are studying charts and data to get ahead. An excerpt of the book Paradigm Lost was used and I read about Being. What traders actually see in charts, etc is what lies on the surface. The power of ideas comes from being in the market. Timing is obviously essential and this article made me think of the multidimensional model, taking into account the past, present and future.
What can't be accounted for is real comprehension of the markets. Why must we always think in terms of one graph, one chart or one idea? Good traders don't. What one individual trader does goes out to the market collectively to be digested most likely the same way that individual trader digested the previous information used to make the decision to execute an order. The article asks if there is a way out. Think totality of markets.
With so much uncertainty in equity markets now can we assume that most traders will sit on the sidelines? Probably not. There happens to be too much "happenings" which gets people involved in the study of graphs, charts and data so to discern information to make an order.
And so on and so on and so on.
The U.S. dollar remained little changed, but on edge as a "mixed bag" of economic news still needs to be unwound. Jobless claims in the U.S. rose for the week. The dollar was unchanged against the sterling this afternoon and rose a bit against the euro.
The U.S. economic recovery still is a question that remains "up in the air" as the U.S. looks at healthcare reforms, the war in Iraq and turmoil in Iran. Oil prices have been below $70.00 per barrel this week, but prices were able to stay atop that level. OPEC stated earlier this week that production will remain below earlier expectations.
The EUR/USD is trading heavy this week. Inflationary numbers are still being monitored closely to see what the higher CPI will do to Fed policy in the coming weeks.
President Obama's health care reform speech on Monday may be giving some negative economic recovery signals to traders. The question is if more U.S. government spending is the answer to the economic recovery question. The Republicans in Congress say no as they were concerned about the private health insurance companies wanting to compete against a government program. Some Republicans on the Hill said that private companies may not even offer coverage aginst a most likey cheaper government plan.
This was one way for Obama to offer incentives to stablize the U.S. economy so more consumer spending can take place.
