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  • Details of Greek aid package boosts the euro...

    In This Issue..

    * Details of Greek aid package boosts the euro...
    * Officially the US recession is still not over...
    * Commodity currencies take a breather...
    * Polish zloty holds steady after tragedy...

    Good day, and welcome to another week. It is a holiday here in St. Louis, as it is the home opener for Cardinal nation. Looks like the fans will have an absolutely perfect day for the celebration, with sunny skies and temps in the upper 70's. Opening day truly is a local holiday, and a big number of workers will be calling in sick in order to go downtown to enjoy the festivities. Let's hope the Cardinals can bring the home crowd a winner!

    The EU gave the euro a big boost over the weekend as they announced the details of a $61 billion aid package for Greece. The announcement of the details calmed the markets and sent the euro shooting up close to $1.37 for the first time since mid March. The plan was hammered out back on March 25th, but details of how the aid package would be structured were not revealed, causing many to question it. Now that the details have been revealed, traders reversed some of their short positions and the euro has recovered....
  • Home sales improve...

    In This Issue..

    * Home sales improve...
    * Are we there yet...
    * Intervention talks...
    * Buying on dips...

    Good day...and a Fabulous Friday to you. As I was sitting here this morning collecting my thoughts, it just hit me like a ton of bricks that we're already towards the end of July and next weekend brings us into August...where's the pause button when you need it. Anyway, yesterday started out like any other quiet morning so far this week but we did see a nice little run in the currencies only to see profit taking as we moved into the late afternoon. As I turned the computer screens on this morning, I see where the overnight markets brought us right back up to the levels we began with this time yesterday. The big story that moved the markets was the better than expected housing numbers that, again, gave investors that warm and fuzzy feeling that I touched on yesterday. Since I already let the cat out of the bag, I'll jump right in...

    ...
  • A Dollar Roadblock!

    In This Issue..

    * Euro goes back and forth over 1.42...
    * Geithner make another promise to China...
    * RBA leaves rates unchanged...
    * The Mogambo on a Tuesday!

    Good day... And a Terrific Tuesday to you! Well... The currencies, led by the euro, ran into a dollar road block yesterday, not once, not twice, but three times... The first two times the euro traded over the 1.42 figure, it fell back, but recovered to again try to remain over 1.42... It was a classic case of profit taking at a line of resistance... But the third time, was no charm for the euro, and thus it ended the day and night sessions below 1.42... But hey! Has this run from 1.2578 on March 1st, been something or what?

    I see where UBS believes this is it for the euro... Sort of like the thought that a star burns the brightest right before it burns out... Hmmm... I guess they believe that the U.S. deficit problems are going to go away... Apparently, they drank the kool-aid from U.S. Treasury Sec. Geithner, who told the Chinese that the U.S. was going to shrink the deficit... He also told them that their assets were 'safe'... Ty sent me something on this that he found yesterday......
  • A shrinking US economy puts pressure on the US$...

    In This Issue..

    * US GDP falls more than expected...
    * FOMC holds course...
    * Canadian dollar has a great week...
    * Oil helps commodity currencies...

    Good day... Yesterday was a big day in St. Louis as President Obama came to visit on his 100th day in office. I can't believe it has been 100 days since the inauguration. Time sure does fly! I'm sure Obama and the rest of his administration would like the calendar to move even faster as this recession will likely last through the end of 2009. While the government has thrown trillions of dollars at the markets in an attempt to turn them around, the key ingredient for recessionary cycles to reverse is time. There is now 'quick fix' for the problems we are in, and the policies the administration has begun will take time to have an impact on our shrinking economy. Obama said as much in his nationally televised press conference last night....
  • Deleveraging pushes the US$ up...

    * Deleveraging continues to push $ higher... * Pound Sterling tumbles... * Canada cuts rates... * Argentina spoils appetite for emerging markets... ** Deleveraging pushes the US$ up... Good day... Wow, another unbelievable day/night in the currency markets. The dollar continued to run up vs. most of the currencies yesterday and last night as investors brought money back into the US. We continue to get calls from WorldMarket investors asking us what was pushing this dollar up, as all of the data seems to be negative for the US$. The only explanation which seems to make sense is the global deleveraging of investors. Here is as good an explanation as I can give. Over the past several years money was extremely cheap and investors took advantage of these cheap loans. Hedge funds, corporate investors, and even some individuals borrowed funds and placed them into higher yielding investments to earn the 'carry'. This occurred not only in the currency markets, but across the entire spectrum of asset classes. These investors were rewarded with incremental yields over 'cash' investors, and banks were more than willing to lend, so the amount of leverage continued to increase to absolutely absurd levels. Everything was fine until the housing market here in the US turned and losses started to show up on the books of some investors....