Posted on October 08, 2010
Wall Street Cheat Sheet submits:
By Jordan Roy-Byrne, CMT
If you’ve followed our work you know how useful intermarket analysis can be when deciphering future movements and trends in the precious metals complex. Years ago when I would analyze gold I would only follow gold. Now I am aware of a wealth of markets that can be analyzed, which can help provide an outlook for precious metals.
Posted on October 08, 2010
Dr. Duru submits:
Talk of currency wars have heated up as several events have converged to make the public increasingly aware of the on-going competitive devaluations around the globe. The increasing clamor came ahead of an IMF meeting Thursday and a G7 meeting this weekend where the topic of global trade and currency rates are hot topics. It is probably no coincidence that gold and silver started to go parabolic ahead of these meetings. The euro’s test of the 1.40 level against the U.S. dollar seemed to be a sufficient catalyst to cool off the rocket fuel quickly and abruptly. Even oil reversed sharply on Thursday. These moves have created “bearish engulfing” patterns which typically signal the end of a rally.
Gold stopped short of going parabolic
Posted on October 08, 2010
Marc Chandler submits:
Recent weeks have seen much talk about "currency wars". This talk suggests that many countries are seeking the devaluation of their currencies in order to promote their exports, which in turn forces other countries to respond with similar efforts. It harkens back to the disastrous beggar-thy-neighbor policy that was seen between the two world wars. While the foreign exchange market is one of many arenas in which nation states compete for advantage, calling what is happening now a currency war is not only wrong, it is dangerous.
No Devaluations
Posted on October 08, 2010
Edward Harrison submits:
As a result of the Federal Reserve’s next round of quantitative easing, Goldman Sachs is predicting a sharp slump in the US dollar’s value against other major currencies. In particular, the dollar is expected to weaken to $1.79 against the British pound over the next six months, $1.85 over the next year. The dollar will also weaken against the euro to as low as $1.55, according to Goldman. This is far cry from Dollar-euro parity. If the dollar does weaken to these levels, it will likely fan trade friction.
Notable in this discussion is that the all of the adjustment for US dollar currency debasement falls on the floating rate currencies like the euro, the pound, the Swiss franc and the yen. China’s currency, because of its fixed peg to the US dollar, will depreciate as well, setting up tensions with Japan and Europe.
Posted on October 08, 2010
Kurt Brouwer submits:
I have made it clear that I believe the U.S. Treasury wants a weaker dollar. For more on that, see U.S. Treasury seeks weaker dollar. In addition to the post itself, the comment thread is very interesting and worth reading.
For different reasons, the Federal Reserve and the Bank of Japan are trying to weaken their respective currencies. China is allowing its currency, the yuan, to strengthen, but not quickly enough for the U.S.
Posted on October 08, 2010
Jeb Handwerger submits:
In a recent article I wrote about how the Federal Reserve and Washington D.C. will do anything possible to save the markets from a bear market before the November election. Unemployment is high, defaults on homes and credit cards are rising and record amounts of taxpayer’s money have gone to bail out failed banks. The last thing Washington wanted was another bear market before a November election. An emergency job bill was passed and the Fed started pumping money into the system. Now we are beginning to see the outcome of the Fed’s actions as the world looks at a deteriorating dollar and the tension that surfaces with volatile exchange rates. Recent job bills and quantitative easing may help tomorrow’s job report which could put some hawkish pressure on The Fed to change their stance.
I believe over the next few weeks volatility could increase as a major shift in Washington may occur. Although the equity markets are up, the dollar and the economy have not shown improvement. The “Tea Party” movement and politicians who push tax cuts and less government spending are gaining recognition. I would not be surprised if there is a shift in power which may be bullish for the dollar or another intervention from overseas to continue purchasing the dollar. Tomorrow’s job report could provide relief to the oversold dollar as additional government jobs were created through recent legislation and massive cash infusion from The Fed. The dollar could have a dead cat bounce.
Posted on October 08, 2010
Greg Feirman submits:
It is an extraordinary measure for a central bank, particularly the purchase of financial assets to encourage the decline in risk premiums. To be explicit on that point and to extensively influence market interest rates and risk premiums, the Bank judges it necessary to establish a program on its balance sheet through which the bank will purchase various financial assets.
- The Bank Of Japan, “Comprehensive Monetary Easing”, October 5
Posted on October 07, 2010
Tom Lydon submits:
The U.S. dollar has been on a downtrend for most of the year, but the news is not all doom and gloom for this currency or its related exchange traded funds.
Although the dollar is at multi-year and even record lows against some currencies, it’s getting stronger ahead of tomorrow’s unemployment figures. Unfortunately, the dollar could be weak for some time, especially if the Fed steps in with more stimulus.
Posted on October 07, 2010
Matthew Bradbard submits:
Today could mark a key reversal for several markets, including but not limited to the US dollar, metals and energies. Oil reversed from these same levels in August… will history repeat itself? In recent blogs we hinted at this, and on confirmation tomorrow Crude will likely move back to the 50 day MA; in November at $77.70. If that is the case, we’ve seen an interim top in the distillates as well; that would drag heating oil and RBOB 12-15 cents lower. A bearish AGA report prompted natural gas to lose 4.4-6.25% depending on the month. Some clients have thrown in the towel; others will likely be out in the coming sessions if we do not move north from here. I feel we’re close to a bottom, being the sentiment is so bearish, but as the saying goes, markets can be irrational more than most investors can remain solvent. What really irks me is that Goldman is forecasting a 20-25% advance in natural gas in the coming months and clients will likely get out at the bottom. Unfortunately sometimes that is the way the cookie crumbles. We will advise clients to re-establish positions once an interim bottom is established.
The next leg in indices will be determined by the NFP tomorrow. We’ve positioned several clients short the S&P via November put spreads.
Posted on October 07, 2010
Benzinga submits:
By Ronald Weisenstein
The U.S. dollar hit 15-year lows against the Japanese Yen Thursday, after data on U.S. unemployment benefits did little to reduce expectations that the Federal Reserve will resort to more quantitative easing.
