Kiwi Reaches A Post-Float High!
Daily Pfennig

Blog Subscription Form

  • Email Notifications


.........But First, A Word From Our Sponsor..........

New Product Alert: The MarketSafe Timeless Metals CD Now get 5 metals & forget the market risk(1)

Great news. With the all new MarketSafe® Timeless Metals CD, we've brought together 5 of the world's most valued metals-gold, silver, platinum, copper and nickel-into one CD. Now through June 9, 2011, you have the unique opportunity to seek gains from this robust and diverse collection of metals without any risk to your deposited principal.(1,2)

Returns based on the performance of these 5 equally weighted metals:

*If prices increase for these metals, earn a market upside payment plus all principal1 *If prices decrease for these metals, receive 100% of deposited principal2

Min. deposit: $1,500

Account fees: None

FDIC insured: Yes(2)

IRA eligible: Yes

Don't miss the June 9, 2011 funding deadline. Apply today at


©2011 EverBank. All rights reserved. 11AGM0013.1 EverBank is an Equal Housing Lender and Member FDIC ......................................................

In This Issue.

* Germany to push aid to Greece.

* Bank of Canada to meet today.

* Australia to print a negative growth report?

* Recession has ended?

And, Now, Today's Pfennig For Your Thoughts!

Kiwi Reaches A Post-Float High!

Good day. And a Terrific Tuesday to you! Whew! I am worn out! Sunday and Monday were finally "end of May" weather like, with family and friends dropping by, it was a grand weekend. But, now we go "back to work". Oh well, it beats the alternative, of not working! Hey! I've been there, I know all about "not working"! And the office this morning is HOT! Ice water at my side, along with a small fan, and I think I'll make it until the air conditioning turns on!

Speaking of making it. The currencies, led by the resurgent euro, are stronger across the board VS the dollar this morning. A German newspaper reported that Germany was considering dropping its push for early restructuring of Greek debt before they would facilitate aid for Greece. This news has lifted a heavy weight from the euro's shoulders, and the single unit is up to 1.4410. I would have to think that when the boys and girls return from the Hamptons, that the U.S. traders would tend to like this news too, and the euro could see a further push higher today.

I would like to think that this Greek debt thing can all be put to bed. but I'm not naïve. and I didn't just fall off the turnip truck! Their debt problems and financing the debt has become a huge albatross hanging on the neck of the euro. And some people / analysts believe this will eventually be the end of the euro. or that we end up with a "northern euro" and a "southern euro".

All I'll say about that, is in 2005, when the euro suffered " no votes" and the U.S. had an amnesty tax, these same analysts said the euro was collapse. It didn't. In 2008, when the financial meltdown brought about a huge dollar rally, these same analysts again said the euro would collapse. In fact, one analyst, that I traveled with on the FX University Tours, told the audiences that not only would the euro collapse, but that the dollar was going to go on a multi-year rally.. neither one happened. And then in January of 2010, when Greece's problems first appeared on the scene, the euro got sold, and those same analysts called for a collapse of the euro again. it didn't happen. Of course if they just keep crying wolf, eventually they might be right, but. when will that be? HA!

While I think the euro will suffer periods of deep rooted selling, it's like I've described to you before. it's ugly. but what's uglier? Greece, Ireland, and Portugal, or. California, Michigan, and Illinois? And in the end, that's what it's all about. who's uglier?

The New Zealand dollar / kiwi has really caught some strong wind in its sails for the past week. In fact, overnight, kiwi hit a post-float high of .8254 (right now at .8240). Think about that for a minute folks. this country has experienced some devastating earthquakes, and just like I said when it all happened, that the kiwi's were strong people and would rebound quickly, along with the currency. And now, here we are at the end of May, and the currency just hit an all-time high! Remember last week when I told you that kiwi hadn't traded at 81-cents since before the financial meltdown.. Well, it's stronger than that now!

The thing that really kicked kiwi higher overnight was the printing of a very strong rebound of Business Confidence in May.

New Zealand's kissin' cousin across the Tasman, Australia, is seeing some mixed trading, with the Aussie dollar (A$) stronger, but being held back by rumors that Australia will print negative growth for the 2nd QTR. After the floods, cyclone, and other things the Aussies had to deal with in the past year, one would expect that a battening down of the hatches at home would occur, and GDP would take a temporary hit, which is exactly what I see here.

And then over in Canada. Yesterday, Canada printed a very strong follow through for their economy, following up on the 4th QTR 3.1% growth, 1st QTR GDP printed at 3.9%... I would think that the Bank of Canada Gov. Carney, would back off his concern that the strength of the Canadian dollar / loonie wasn't a problem for the economy. or maybe I'm just "wishin', and hopin', and thinkin' and prayin' that he would. But for some strange reason, something keeps telling me that Carney isn't going to use the strong loonie to his advantage.. Why would he? He was educated here and at Oxford. Same old teachings to economists that become Central Bankers. let's see. there's another one, that's on the tip of my tongue. Oh yeah! Big Ben Bernanke!

So. in the end, the loonie has all the things going for it right now. a strong economy. Oil over $100 (actually at $102 this morning). and their other raw materials rising in price. Yes, all the things that scream "rate hikes" . Maybe, eventually, Carney will see the writing on the wall! Until then, the loonie should remain underpinned by the strong data.

OH! And the Bank of Canada (BOC) meets this morning to discuss rates. With Carney's current frame of mind on the strength of the loonie, I doubt that we'll see a rate hike today.

And then in Brazil. where just a couple of weeks ago, it looked like the Gov't's attempts to stem the gains in the real were beginning to work. the real goes on a 3-day rally that has the currency back below 1.60.

And as I look at the screens, Gold & Silver are posting positive numbers this morning. Silver continues to work its way back in the good graces of metals investors, and Gold just carries on despite all the calls for the opposite to happen to the shiny metal. Not from me, of course! But from people that don't "get it" about Gold.

And then here in the U.S. we just finished a week where we saw below-forecast economic growth, and a weaker than expected Consumer Spending number for the first quarter. And foreclosures that are really gearing up again. This week, we'll end the week with a Jobs Jamboree. the downside risks for jobs growth will hang over the markets this week, like the Sword of Damocles. Until we get to Friday however, we have some other data, which won't be dollar friendly.

First, today, we'll see the color of the March S&P/CaseShiller Home Price Index, which will most likely show further rot on the vine for home prices. And with each disappointing data print, the whispering campaign that began last week, but Pfennig readers knew it for months, for further stimulus, will gain in voice strength.

And a quick look to the "bond page" on my Bloomie, I see that 10-year Treasury yields continue to slip (3.10%). Well with U.S. yields grinding lower, the rate differentials, that I talked about as coming back as a fundamental for currencies, just works against the dollar.

The "other country with a huge debt burden" Japan. saw Moodys put Japan's credit rating on review for a possible downgrade. the rating agency, Fitch, had announced the same thing last Friday. I really don't think that these shots across Japan's bow by the ratings agencies have much to do with the yen's ability to remain strong or not. Basically, yen is weaker today, because of the rise in risk appetite. Which means that dollars and yen get sold.

Then there was this. from the USA Today. "Two years have passed since the Great Recession ended, but the U.S. recovery is weak. Previously, deep U.S. recessions were followed by robust rebounds, but that's not happening this time. A survey by the Pew Charitable Trusts found that 55% of Americans think the U.S. economy is poor. "We're two years into a recovery, and everybody's yelling, "Are we there yet?'" says Wells Fargo economist Mark Vitner. "You should be putting the recession behind you and talking about where growth is coming from. Instead, we're still dealing with residual problems from the recession."

Chuck again. yes. this is what I've been talking about. and I chuckle about the "official end of the recession being June 9, 2009. yeah, tell that to the over 20% of Americans still looking for jobs!

And I can't forget to explain something I talked about Friday. I was really remiss in not talking about the difference between the U.S. GDP and Sweden's. What I was thinking and then forgot to type, was that the U.S. economy had received trillions of stimulus, while Sweden had not received any. Which is why I was more impressed with Sweden's GDP than ours. Hope that helps explain my thought.

To recap. There are reports that the Germans will give Greece aid without requiring a restructuring of the debt first. This news has the euro rallying and dragging all the other currencies along for the rally VS the dollar. Kiwi hit a post-float high overnight, and A$'s remain strong in spite of the rumors of a disappointing Quarter for growth. The Bank of Canada meets today, but no rate hike is expected, as Gov. Carney is not happy with the loonie strength right now.

Currencies today 5/31/11. American Style: A$ $1.0660, kiwi .8225, euro 1.4410, sterling 1.65, Swiss $1.1715, .. European Style: rand 6.87, krone 5.3855, SEK 6.18, forint 185.55, zloty 2.7575, koruna 17.0245, RUB 28, yen 81.55, sing 1.2335, HKD 7.7777, INR 45.05, China 6.4783, pesos 11.59, BRL 1.5940, dollar index 74.57, Oil $102.02, 10-year 3.10%, Silver $38.63, and Gold. $1,537.30 That's it for today. I hope you had a great holiday weekend, and spent a moment thanking someone for our freedoms. The Cardinals won 2 and lost 2 over the weekend, with the troubling thing coming from two young pitchers who previously had been great this year, had the wheels fall off their bandwagons. UGH! I got to see B.C. (Braden Charles) this past weekend. In fact all 3 grandkids were at the house on Sunday. Little Delaney Grace is becoming a little fish in the pool. And Everett the EverBaby is just one happy guy! Chris will have the conn on the Pfennig tomorrow and Thursday. NBA Finals begin tonight, I'm rooting for the Mavericks, but to the casual fan like me, I don't see how the Heat can lose. OK. let's go have a Terrific Tuesday.

Chuck Butler


EverBank World Markets



Posted 05-31-2011 7:26 AM by Chuck Butler
Related Articles and Posts