A bit of volatile movement in the dollar with reports that Gulf states planned to move away from dollar pricing of oil, but now Kuwaiti Oil Minister Sheikh Ahmed Al-Abdullah Al-Sabah said that they have no plans to move away from dollar pricing. Dollar was down on the initial report and gained on the Minister’s report. Saudi Central Bank Governor Muhammad al-Jasser also denied the report providing additional confirmation and confidence.
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Eur/usd
- Thread starter Nancy Cheah
- Start date
New York Fed’s President, William Dudley, said on Monday that US interest rates will remain low for a long time. When you combine this with the Australian interest rate increase, investors can see that the US is still weak, meaning it will take a long time to raise interest rates, there will be higher yielding currencies that can be invested in making the dollar a less attractive investment at this time. The dollar fell about 0.5% against the euro and I would expect future weakness in the dollar.
Nancy Cheah
Sergeant
- Messages
- 157
From what I see here, it touched 1.4815 before settling down slightly below 1.48 nett.
The gold price shot up to breach the USD 1, 050 barrier and if and when further rise in the gold price, we might also possibly witness the EUR/USD pair touching 1.5 nett somewhere towards the end of next calendar week.
I may be wrong but hey, let's just see how it ends this calendar week before I further comment.
Regards.
The gold price shot up to breach the USD 1, 050 barrier and if and when further rise in the gold price, we might also possibly witness the EUR/USD pair touching 1.5 nett somewhere towards the end of next calendar week.
I may be wrong but hey, let's just see how it ends this calendar week before I further comment.
Regards.
Last edited:
Nancy Cheah
Sergeant
- Messages
- 157
A weekend close of 1.473 nett was seen and with both the oil priced at around USD 72 nett and the gold priced at around USD 1,050 nett.
I don't see the pair going anywhere bottoming out at 1.465 nett but I do see it going to 1.487 nett.
A breach of 1.5 nett seems unrealistic as of now but speculative activities may actually make it happen.
Regards.
I don't see the pair going anywhere bottoming out at 1.465 nett but I do see it going to 1.487 nett.
A breach of 1.5 nett seems unrealistic as of now but speculative activities may actually make it happen.
Regards.
Last edited:
Additional pressure on the dollar as central banks are shunning the dollar in favor of the euro and the yen as a store of reserves. Foreign currency holdings increased $413 billion last quarter to $7.3 trillion and the nations that report foreign currency holdings put 63% into euro and yen. This shows that global central banks are becoming more serious about diversifying foreign reserve currency holdings. The dollar now is 62.8% of central bank holdings that report – the lowest on record.
Fed Bank of St Louis President James Bullard said yesterday that falling unemployment is a precondition for an increase in the interest rate. Given that the average work week is down to historic lows and that the number of open jobs is also at historic lows does not bode well for unemployment. I’m continuing to expect a weak dollar.
Federal Reserve Vice Chairman Donald Kohn said, “I don’t think a V-shaped recovery is the most likely outcome this time around. All told, I expect that the recovery in US economic activity will proceed at a moderate pace in the second half of the year before strengthening some in 2010…. I expect the persistence of economic slack, accompanied by stable longer-term inflation expectations, will keep inflation subdued for some time. The substantial rise in the unemployment rate and the plunge in capacity utilization suggest that the margin of slack in labor and product markets is considerable.” Further evidence that the Fed isn’t concerned about inflation and there isn’t any need to increase interest rates in the near future. The dollar will continue to be the funding currency for those seeking risky assets and higher yielding currencies.
Interesting article from the FT:
A strong US needs a weakened dollar
Published: October 9 2009 22:23 | Last updated: October 9 2009 22:23
Lawrence Summers, the director of President Barack Obama’s National Economic Council, has voiced his support this week for “a strong dollar based on strong fundamentals”. He was responding to the greenback’s recent feebleness: the US currency has depreciated by 13.3 per cent on a trade-weighted basis since its peak in March of this year. But this fall in value, while large, should neither be feared nor obstructed.
The immediate cause of this slide is not growing fear of inflation: market expectations for future inflation rates have been stable and low. Rather the decline in the dollar has been caused by the recent recovery in world economic confidence.
The weakening is part of the unwinding of the stampede to safety that, between August 2007 and the spring of this year, drove the value of the dollar up by 12.6 per cent as investors rushed to hold safe assets. The US currency is now roughly where it was as the crisis was emerging.
It would actually be rather helpful if the dollar were to weaken further. Politicians everywhere see strong currencies as national virility symbols, but the effect of a cheaper dollar would be to help American exporters while making imports to the US dearer.
This is what America – and the world – needs. In the medium term, as Mr Summers put it earlier this year, “the rebuilt American economy must be more export-oriented and less consumption-oriented”. In short, the US must start living within its means, and the rest of the world must stop relying on its profligacy.
This is the prospect that has worried monetary authorities in Asia. The central banks of South Korea, Taiwan, the Philippines and Thailand have intervened in markets in the past week to bolster the dollar’s strength against their currencies. They are trying to slow the pace of any such rebalancing.
That is understandable: this type of reordering of the world economy would be enormously disruptive for these export-led countries, since their economic strategy is to sate the appetites of the consumption-led countries.
But this is a losing game. Devaluing their own currencies to maintain weakness against a sinking dollar is dangerous. It risks domestic inflation and stakes public money on currency speculation in a race to benefit from the largesse of already over-indebted consumers. Mr Summers may be inclined to repeat his empty mantra in favour of a strong dollar. We can only hope he does not mean it.
A strong US needs a weakened dollar
Published: October 9 2009 22:23 | Last updated: October 9 2009 22:23
Lawrence Summers, the director of President Barack Obama’s National Economic Council, has voiced his support this week for “a strong dollar based on strong fundamentals”. He was responding to the greenback’s recent feebleness: the US currency has depreciated by 13.3 per cent on a trade-weighted basis since its peak in March of this year. But this fall in value, while large, should neither be feared nor obstructed.
The immediate cause of this slide is not growing fear of inflation: market expectations for future inflation rates have been stable and low. Rather the decline in the dollar has been caused by the recent recovery in world economic confidence.
The weakening is part of the unwinding of the stampede to safety that, between August 2007 and the spring of this year, drove the value of the dollar up by 12.6 per cent as investors rushed to hold safe assets. The US currency is now roughly where it was as the crisis was emerging.
It would actually be rather helpful if the dollar were to weaken further. Politicians everywhere see strong currencies as national virility symbols, but the effect of a cheaper dollar would be to help American exporters while making imports to the US dearer.
This is what America – and the world – needs. In the medium term, as Mr Summers put it earlier this year, “the rebuilt American economy must be more export-oriented and less consumption-oriented”. In short, the US must start living within its means, and the rest of the world must stop relying on its profligacy.
This is the prospect that has worried monetary authorities in Asia. The central banks of South Korea, Taiwan, the Philippines and Thailand have intervened in markets in the past week to bolster the dollar’s strength against their currencies. They are trying to slow the pace of any such rebalancing.
That is understandable: this type of reordering of the world economy would be enormously disruptive for these export-led countries, since their economic strategy is to sate the appetites of the consumption-led countries.
But this is a losing game. Devaluing their own currencies to maintain weakness against a sinking dollar is dangerous. It risks domestic inflation and stakes public money on currency speculation in a race to benefit from the largesse of already over-indebted consumers. Mr Summers may be inclined to repeat his empty mantra in favour of a strong dollar. We can only hope he does not mean it.
Alex-the-Gr8
Private
- Messages
- 9
EUR/USD chat
The FOMC minutes were a disappointment for the USD yesterday - and Obama's stimulus package is unraveling as the US goverment may continue buying MBS securities in an effort to stave off the crumbling of an empire. But hey, at least he's $1M dollars richer after winning the Nobel. Maybe Obama will make an anonymous donation to Fox news.
The Euro rally toward 1.50 versus the Dollar continued as Industrial Production gained for the 4th consecutive month. Industrial Production came out at 0.9% as expected. EUR/USD traded with a low of 1.4838 and with a high of 1.4946. Today, ECB Monthly Bulletin will be released and will provide detailed analysis of current and future economic conditions. European Core CPI is expected slightly weaker with 1.2% versus 1.3% prior.
Resistance
1.499
1.501
Support
1.486
1.48
1.476
The FOMC minutes were a disappointment for the USD yesterday - and Obama's stimulus package is unraveling as the US goverment may continue buying MBS securities in an effort to stave off the crumbling of an empire. But hey, at least he's $1M dollars richer after winning the Nobel. Maybe Obama will make an anonymous donation to Fox news.
The Euro rally toward 1.50 versus the Dollar continued as Industrial Production gained for the 4th consecutive month. Industrial Production came out at 0.9% as expected. EUR/USD traded with a low of 1.4838 and with a high of 1.4946. Today, ECB Monthly Bulletin will be released and will provide detailed analysis of current and future economic conditions. European Core CPI is expected slightly weaker with 1.2% versus 1.3% prior.
Resistance
1.499
1.501
Support
1.486
1.48
1.476
Nancy Cheah
Sergeant
- Messages
- 157
As long as the oil maintains above USD 75 nett and the gold maintains above USD 1, 060 nett, the EUR/USD shall definitely breach 1.5 nett as well as reach a high of 1.505 nett.
Regards.
Regards.
Last edited:
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