Dollar Drops Against Euro, 11 Other Currencies on Rate Outlook

[papau]

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a0KjDTcesUv4&refer=home

Dollar Drops Against Euro, 11 Other Currencies on Rate Outlook
Feb. 17 (Bloomberg) --<snip>

"The dollar is in trouble," said Mark Austin, head of currency strategy at HSBC Holdings Plc in London."I don't think it will be too long before we see new highs in the euro and the risk is that a move higher could attract new buyers."

Against the euro, the dollar fell to $1.2853 at 12:01 p.m. in New York from $1.2771 late yesterday. The dollar fell to $1.90 versus the British pound for the first time since September 1992 and dropped to a seven-year low versus the Australian dollar. <snip>

"It's very difficult for investors to hold on to dollars right now, just because they can get higher yields elsewhere," Brian Taylor, chief currency trader in Buffalo, New York, at Manufacturers & Traders Trust, with $50 billion in assets said in a radio interview with Bloomberg News. Taylor also said the euro may rise to $1.35 if the European Central Bank doesn't express concern when the currency reaches $1.30.<snip>

The pound was last at $1.90 in September 1992, the month the U.K. quit the European Exchange Rate Mechanism, in which countries agreed to curb fluctuations in their currencies in preparation for the introduction of the euro. <snip>

The pound may reach $2 as a near-record deficit in the U.S. current account weighs on the dollar, said Kenneth Clarke, another former exchequer chancellor under Major.

"I don't see an end to the present process until the current account deficit of the U.S. begins to close," said Clarke, who served from 1993 to 1997.

[stopbush]

1. Holy effing shit!

Why doesn't anyone talk about this in the media? Tie this in with the loss of our manufacturing base and you have the largest debtor nation in the world.

Thanks, shrub!

[54anickel]

5. Just try searching the web for a link to this info for today. This is

buried, at least it was 15 minutes ago when I tried. Google came up with nothing. Yahoo, same thing until I used the advanced search.

What's up with that? :shrug: :tinfoilhat:

[54anickel]

7. I question this quote as well,

The dollar trimmed some of its losses against the euro and rose against the yen after the Treasury Department said foreigners poured a net $75.7 billion into U.S. financial assets in December. For 2003, net foreign purchases of U.S. securities rose 23 percent from a year earlier, the Treasury said.

They only mention Japan's inflows and they were a far cry from 75.7 billion:

Asian central banks have been among the biggest buyers of U.S. government securities as they take dollar assets in exchange for selling their own currencies. Japan increased its holdings of Treasuries by $19.7 billion in December to $545.2 billion, and China increased holdings by $5.1 billion to $149.2 billion. Japan is the largest holder of Treasuries.


From THIS article, it looks like we had to have at least 60 billion of inflows or the crap would hit the fan.

http://www.forbes.com/home_europe/newswire/2004/02/13/rtr1260812.html

If foreigners' net purchases of U.S. assets are larger than $60 billion, that should give the dollar a breather, but should net inflows be less than $40 billion, that would keep downward pressure up. The dollar has already lost 13 percent against a broad basket of currencies from early 2002.

Net purchases of U.S. assets by foreigners reached $87.6 billion in November.

Within those net purchases, the proportion of private sector buying -- as opposed to central bank purchases -- of U.S. assets will garner close attention, analysts said.

"I think the (net monthly purchases) will be pretty robust," said Joseph Quinlan, managing director and chief market strategist at Banc of America Capital Management in New York, who expects net purchases of between $65 billion and $70 billion.

But he said that figure would largely comprise central bank buying, principally from Japan. "I wouldn't be fooled by a big (overall) number," Quinlan added.

Is this another Snow job?
:wtf: :shrug: :tinfoilhat: :tinfoilhat: :scared:

[Petrodollar Warfare]

16. Question: WHO bought that mysterious $50 billion in US financials?

Japan's $19.7 + China's $5.1 = $24.8 billion. (this is normal)

The total was supposedly $75.7 billion. (this is not normal)

Something is very very wrong with December's $75.7 billion number.

My question: What nations forked up that mysterious $50 billion?

...IMO, something is not right with these figures. Any thoughts?

[aneerkoinos]

18. My guess

Many other East Asian central banks, that must follow the lead of China and Japan.

Some other central banks joining the inflate your own game (e.g. Turkey just did)

Suckers who believe US economy is doing great and dollar assets gonna go up. Never underestimate suckers.

[54anickel]

19. Had the same question. Is that 75.7 real or some smoke & mirror

Snow job to have it come in above 60?

From the article:
If foreigners' net purchases of U.S. assets are larger than $60 billion, that should give the dollar a breather, but should net inflows be less than $40 billion, that would keep downward pressure up.

[ixion]

2. hey, not to worry... according to the Bush cabal

weak dollar is good.

overseas outsourcing is good.

deficits don't matter.

:eyes:

[StClone]

3. When the war went on without world support

My wife and me discussed a real threat that the WORLD would find a way to respond in a non-military way that would reign in U.S. might. We saw it as an economic in nature and using the predisposition of U.S. tendencies against us. I see now that this may be occurring.

[salinen]

4. In the end everything will be okeedokee

because when push comes to shove, we have our real investment in military might. And that might will be used to gain economic strength. The spoils go to the fiercest, all in the name of national security.

[cosmicaug]

6. Maybe junker will get his mid-February dollar drop after all.

Maybe junker will get his mid-February dollar drop because of the whole blind squirrel getting a nut thing (as KoKo01 put it). But there's nothing to look at yet as we still need a whole bunch more data points.

[RainDog]

8. Are any people making guesses at how low the dollar

will fall?

of course, anyone can make guesses, but are people who regularly talk about these things making educated guesses on how low Snow will let the dollar go?

(and if the Bush junta lets the dollar fall, will they be able to catch it? and is this phase two of Amereeka the banana republica?

[54anickel]

9. I remember articles when Snow and Greenspin were first talking

about the overvalued dollar that stated they thought it should be between 80 and 85. That was back during the holidays. I'll dig around and see if I can find that one again.

Trying to catch it will be the difficult part.

[RainDog]

10. wasn't that what the dollar was against the euro before

I don't know when...maybe back in Reagan's weak dollar time?

[RainDog]

11. oops. my bad. euro was intro'd at 85?

When Reagan was in office, various currencies were still around for diff. countries...but I was in Europe then, and it was no fun when your dollar kept paying for less and less.

[54anickel]

12. The Plaza Accord in 85. I don't know what the ultimate value of the

dollar ended up being back then, it was a 30% decrease. But they did have to stem the downward trend with the Louvre Agreement of 87. Here's a couple of items I had bookmarked. Haven't looked at either one very closely lately, but I think they are still relevant.


http://www.chamber.org.hk/info/the_bulletin/sept2003/orear.asp

http://www.iwep.org.cn/wec/2004_1-2/heitiandongyan.pdf

[54anickel]

13. One more article I came across. Seems my attention has been

distracted, so I must stop looking at this 'stuff' now.

http://www.capitallinkrussia.com/interviews/Walter/walter0104.htm

14. 100b Japan "hot potato" -- I now believe a big doll drop is possible

The juggling act with the 100billion in US bonds in Japan is telling, to say the least.

Let's say they had to issue Japanese bonds in that amount to pay for the lent US bonds...that would trash a lot of things! Or maybe they would sell the dollar to buy the bonds back? That would trash a lot of things.

Or they could juggle a few hundred more billion in US debt--then WHAT?

Trash or trash, or delay trash. Take your pick.

Right now you have got 100b in US debt hanging in limbo, and the worlds largest two economies juggling, and running a combined defict of 1.5 trillion, with interest rates at near zero.

And all this being spent but no workers in the US is generating incomes to pay for it all.

It can't last long.

[TrogL]

15. Canadian Economists are all over the place

Just saw an article discussing this (but lost the link) and Canadian economists are talking about a loonie anywhere between 80 cents and 65 cents.

I disagree, I could see anything up to a dollar loonie (I suppose talking about Canadian economics and fiscal policy could drive anybody crazy :ducks:) in an economic "perfect storm". That would be:

• Japan stops propping up the greenback
  
• Paul Martin cheerleads the Canadian economy
  
• Gold goes up dragging gold mining stocks with it
  
• Diamonds go up (eg. conflict diamond controversy) dragging diamond mining stocks up with it
  
• US credit rating goes in the toilet because of deficit and debt load
  
• Oil switches to Euro
  
• OPEC cuts oil supply
  

17. "Double-bubble" debt In order for Japan to keep propping

Based on the hard numbers.

Japan would have to issue debt.

But to issue the debt would interact with US debt issuance.

Between the US and Japan, they would have to issue 1.5 trillion in debt, just to keep the current thing going as-is until November.

Who would buy this "double bubble" debt?

[aneerkoinos]

20. India goes euro?

"USDCHF

The dollar gained ground during the US session as both European and Japanese officials expressed their desire to curb currency movements. However, as we mentioned earlier, the effects of verbal intervention from Europe and suspected overt intervention by the Bank of Japan should be relatively short-term. More interestingly, an announcement by the Reserve Bank of India (RBI) went unnoticed by the market. The RBI is exploring the option of shifting a part of the central bank's reserves from US dollar based short-term securities to European gilts. India currently has the world's sixth largest store of reserves at slightly under $107 billion. This compares to Japan's reserves of approximately $673 billion and China's reserves of approximately $403 billion. We have been warning about the possibility of a capitulation of US treasuries by Asian central banks for months. Although the RBI is only considering it at this point, it indicates that second tier central banks are looking at moving reserve positions out of the dollar. If they outline plans to do so, the effects on the dollar would be dire."

more:
http://www.dailyfx.com/article_daily_fundamentals_021804.html