EURO vs USD

[J. Abizeid]

Originally Posted by dodzi

It wasn't minor. It decreased from 1.58 to 1.50 in less than 2 days...

In any case, what I got angry at is that my mother is visiting the states in less than 2 weeks from now... I told her to change her money a month ago coz it was so high but she didn't do it. The fluctuation is actually great, so there will be a great difference in what she might change!

The dollar was being heavily bought by the Chinese government, early in the week. This happened, most likely, after the green light was given to them by the American administration, which had always objected to such manipulation, in the past. The operation is being done under cover of "controlling currency flows to stop inflation."

The truth is that the Chinese are buying dollars with the blessing of the U.S. government. It doesn't take much encouragement to cause such habitual currency debasers to start debasing again. It is what they do best. So they were buying, more and more heavily as the week progressed.

By Wednesday and Thursday, some big banks started covering short positions. By Friday, a large number of western institutional currency market players panicked, and started covering all their dollar short positions. Most currency dealers were heavily short on the dollar. This created the biggest dollar short squeeze in the history of the world.

The Federal Reserve clearly had foreknowledge of this, because behavior that would indicate such knowledge was evident at the repo and discount windows, yesterday morning.

In short, the current dollar strength is nothing but a ploy, although a desperate one, to reduce the price of oil. Reduction in the price of oil is necessary to pump up the fake rally that Fed/PPT has been trying to catalyze for several weeks, now, and has failed repeatedly at doing.

The primary dealers of the Federal Reserve, along with many of the smaller banks that they service, desperately need capital. Bank stock prices are far lower than the executives would like. They own lots of their own stock, and don't want to dilute their positions by issuing new shares at reasonable prices. So, they want to inflate share prices before selling shares. They need a rally to do that. They are desperate to raise capital, but they have not been able, even with a lot of Fed help, to stimulate the rally that will help them sell overpriced shares to the public.

The current dollar surge is not a sign of a strengthening hand for the United States, or renewed faith in the dollar's value. It is a combination of the problems that are arising in the euro, which has also been heavily printed, along with manipulation by the Fed/PPT, which is now desperate enough to be working with anyone, even the Chinese.

Here is the reality. Fannie and Freddie both gave dismal earnings reports. Productivity and employment reports were also dismal. There is every reason to believe that bailouts of F and F is going to require printing another $500 billion dollars, because the $5 trillion mortgage portfolio is likely to lose at least 10% in value, over the next year or two. Bailing out the FDIC has every likelihood of costing the taxpayers another $500 billion, with hundreds of banks, large and small expected to fail. Yes, I know, they claim that the number will be far lower than back in 1989. Baloney! No less a personage than Alan Greenspan, the architect of our current problems, has admitted, in an editorial for the Financial Times, that many more big banks (not just small ones) will need to be bailed out by the government.

Here is a link for live currency exchange rates,(lower right page)
http://www.avafx.com/

[Zouxi]

today the rate is 1.49...the euro is dropping dramatically, hope it will become 1 to 1 situation very soon :)

[Chief]

1.48 now

[dodzi]

Originally Posted by Chief

1.48 now

3a mahlak! 1.492

[J. Abizeid]

Is it just a coincidence that the dollar went up by 5% to bring up the Chinese Yuan by 5% just when the Chinese Olympics started? That translates into 5% more spending by the foreign tourists during the Olympic Games in China. The question is, for how long China wants its exported products to cost 5% more than usual? Is such a surge in its best interest?

[Chief]

dodz check this



its playing around the 1.49

[Chief]

US Dollar Breaks Records/Resistance, Will The Rally Continue?

Monday, 11 August 2008 15:24:54 GMT



Written by John Kicklighter, Currency Strategist

Records were broken and important technical levels fell with the dollar’s incredible rally last week. However, there was no specific top-tier indicator to trigger such a monumental move. So, is this just a remarkable false breakout or the inevitable fundamental shift behind a long-term trend change?



US Dollar Breaks Records/Resistance, Will The Rally Continue?

Fundamental Outlook for US Dollar: Bullish

- A Shift In Growth And Interest Rate Expectations Finally Lead The Dollar To A Major Technical Breakout
- FOMC Rate Decision Passes Without Incidence, Yet Speculators Are Still Hawkish On Rate Outlook
- Dollar Breakout Presents Significant Trading Opportunities In GBPUSD And Other All Majors

Records were broken and important technical levels fell with the dollar’s incredible rally last week. However, there was no specific top-tier indicator to trigger such a monumental move. So, is this just a remarkable false breakout or the inevitable fundamental shift behind a long-term trend change? To answer that question, we need to consider the fundamental buildup to the biggest one-day greenback advance in over five years and the longest overall sustained rally since the 2005 bearish reversal. On the outlook for growth, the second quarter GDP reading from the previous week seems to have placated the market; but that shouldn’t blind us to the first drop in growth since 2001 reported in the revision to the 4Q 2007 figure. Nor should it overshadow the significant burden on the outlook for expansion over the second half.

The Federal Reserve continues to warn the market about the downside risks to growth – and for good reason. The housing recession is still deepening, financial conditions have deteriorated to levels not seen since the peak of the credit meltdown and most importantly consumer spending (which makes up 70 percent of the economy) is in jeopardy. Americans are suffering rising unemployment (already at 4-year highs) and cooling wage growth (at more than two-year lows) which have contributed to sentiment near three-decade lows. If spending turns out as bad as this data suggests, a recession (two consecutive quarters of negative growth) could still be in store for the world’s largest economy. Next week’s docket will give a timely reading on that front with the July retail sales report – expected to repeat June’s modest improvement.

Perhaps the dominate force behind the dollar’s ultimate long-term direction though is interest rate expectations. Despite economic data that has been less than impressive, the outlook for interest rate hikes has gone relatively unchanged. Overnight interest rate swaps show suggest the FOMC will deliver 75bps of tightening through the coming 12 months. However, to sustain such a strong rally (even with the Fed’s major counterparts looking at considerably reduced forecasts), Bernanke and fellow Board Members will need to confirm they are genuinely hawkish – and relatively soon. The longer the central bank holds its hand, the more intense doubts will grow – and looking at Fed Funds futures, it might not be soon enough. Rate expectations from the derivatives show the probabilities for even a 25bp hike has dropped from 78 percent from a month ago to 38 percent last Friday. Certainly, Thursday’s CPI reading should help clarify the outlook. - JK


Source

[dodzi]

Originally Posted by J. Abizeid

Is it just a coincidence that the dollar went up by 5% to bring up the Chinese Yuan by 5% just when the Chinese Olympics started? That translates into 5% more spending by the foreign tourists during the Olympic Games in China. The question is, for how long China wants its exported products to cost 5% more than usual? Is such a surge in its best interest?

I agreed with your previous post, but this one I don't understand: if the Chinese government is buying up dollars massively, then wouldn't that result in the fall of the Yuan?

On the other hand, this reminds me on something we have seen in an economics course about the currency games the US played in the 1980, with many Latin American countries, but also and more specifically with Japan: Japan exported massively to the US, and loaned the money it got to the US, 1- to help it pay what it is importing, 2- to stabilize the $. The $ was stable in an artificial way, because there was a massive trade balance deficit. The $ was overvalued! At a certain point, the US finally decided to de-value the $, which brought great misery to Japan, 1- because the money it lent to the US was overvalued, and it would get much less in return, 2- it is now one of the most indebted countries in the world!

I have a feeling the US is doing the same thing now with China! It is not astonishing since the Bush and Republican administration have followed the line of Reagan...

[Xena]

Originally Posted by dodzi

3a mahlak! 1.492

1.489 now :(

[J. Abizeid]

Originally Posted by dodzi

I agreed with your previous post, but this one I don't understand: if the Chinese government is buying up dollars massively, then wouldn't that result in the fall of the Yuan?

On the other hand, this reminds me on something we have seen in an economics course about the currency games the US played in the 1980, with many Latin American countries, but also and more specifically with Japan: Japan exported massively to the US, and loaned the money it got to the US, 1- to help it pay what it is importing, 2- to stabilize the $. The $ was stable in an artificial way, because there was a massive trade balance deficit. The $ was overvalued! At a certain point, the US finally decided to de-value the $, which brought great misery to Japan, 1- because the money it lent to the US was overvalued, and it would get much less in return, 2- it is now one of the most indebted countries in the world!

I have a feeling the US is doing the same thing now with China! It is not astonishing since the Bush and Republican administration have followed the line of Reagan...

Check out the almost identical two pictures, Yuan and dollar vs. euro.
http://finance.yahoo.com/currency/convert?from=CNY&to=EUR&amt=1&t=3m
http://finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=3m

The Yuan is pegged to the dollar by the Chinese government. They let it slide up on demand based on the affordability of their products in the States. It’s been going up by about 5% yearly.
Make no mistake, the country with the money rules and that is China not the US.
Unlike the Arabs, China cannot be bullied around.
Last week the dollar was about to collapse because of the non ending bad economic situation in the US. The Chinese bail out had many advantages for China.
1- They want to control the dollar meltdown at around 5% a year but they don’t want it to collapse too quickly so the Americans can still afford to buy their products.
2- The Olympics are not just games for China, they are big politics and a rare opportunity to display its might in the world by having the largest number of world leaders present there, and on top of them the President of the US. Bush could not be in Chine mourning the dollar. They had to make him smile for the cameras. You can take a photo op by Bush walking by you for $25.0000. Imagine how much the Chinese had to pay so he can go all the way there…

The outcome made Bush look good. The Chinese dollar buyout brought its value up and allowed the petrodollar to take a long waited brake. Oil went down for the time being.
What goes up so quickly will eventually come down. Soon the Chinese will go out with their trillions of dollars and use them to buy the oil of the world. They will bring the oil prices up the way they just did to the dollar. The next phase of oil going up will automatically translate into dollar going down.
So don’t be fooled, the euro will beat its own record of $1.60 by December.
Mark my words.