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  • Confidence sends the dollar lower...

    In This Issue..

    * Confidence sends the dollar lower...
    * Good data for the US boosts Mexico and Canada...
    * The Fed exits stage left...
    * Pound rallies, but don't be fooled...

    Good day, only two more days left in March, and April brings Chuck back to the desk. The dollar bears returned to the markets yesterday as most every currency moved higher versus the dollar.

    Confident investors kept the dollar on the run yesterday as they went shopping for yield. The commodity currencies ruled the day again, with Australia, Norway, and Brazil's currencies all posting gains nearing 1.5% vs. the US$. Greece successfully sold 5 billion euros worth of bonds in the first sale since the EU reached agreement on a stability plan. The sale emboldened investors who moved funds out of their 'safe haven' parking spots in the Japanese yen and US dollar. It seems we are back to the risk on / risk off trading pattern which dominated the currency markets over the past year. Good news for the US or global economy means bad news for the safe havens of the US$ and yen, while the opposite occurs whenever the global recovery is called into question....
  • A New Trading Theme...

    * Coordinated rate cuts...* Did the Fed reignite soaring inflation?* More pain in Iceland...* Revisiting the 90's in Japan... ** A New Trading Theme... Good day... And a Tub Thumpin' Thursday to you! Well... How about those wily veteran Central Bankers? They all got together and decided to cut rates... The Reserve Bank of Australia (RBA) went first with their 100 BPS cut, and opened the rate cut sea for the rest of the Central Banks around the world. The European Central Bank, The Riksbank (Sweden), Swiss National Bank, Bank of Canada, Bank of England, and the Bank of China all lined up at the rate cut table... The Bank of Japan, The Norges Bank (Norway), and Reserve Bank of New Zealand did not participate. The Bank of Japan doesn't have any rate to cut, The Norges Bank will wait until their regularly scheduled meeting on 10/15, and the RBNZ believes that they have taken their toxic waste bond flu shot......
  • Don't be fooled by the US GDP...

    * Don't be fooled by the US GDP... * Canada, Mexico, and Brazil rally... * Aussie dollar falls... * Japanese to keep rates unchanged... ** Don't be fooled by the US GDP... Good day...And welcome to the last day of July. The dollar held its ground through most of the trading day but started to sell off as the day wound down. The currency markets seem to be stuck in a summer doldrums, with few dramatic moves. With many of the head traders enjoying a summer break (ours included), currency desks are reluctant to take on large positions. And who can blame them as the recent global economic data has left investors wondering where to turn. As I have explained to several recent callers, the global economy is experiencing a slowdown as the high commodity prices and a slumping US economy has hurt growth. The economic releases have shown an overall slowdown in growth, and rising global inflation. But the overall slowdown will have differing effects on the currencies. Asia is slowing, but a slowdown from double digit growth in China and India is much different than a slowdown in the US where growth is around 2%. Also, the Asian countries have kept interest rates low to try and keep their currencies from appreciating too quickly. These countries are therefore in a much better position to combat inflation, and can allow currency appreciation to help combat rising prices....