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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....
  • Rescue plan not an instant fix...

    * Rescue plan to take time... * Pound sterling rallies (for now)... * Brazil supports the real... * Iceland cuts rates... ** Rescue plan not an instant fix... Good day...Another roller coaster of a day, as the dollar continued to slide through lunch but then rallied back up in the afternoon. As I walked out the door last night, most of the major currencies were trading right about where they were when I turned the screens on. The dollar has started to fall again in overnight trading, so the up and down of the past few weeks looks to continue. The news stories coming across the wires this morning seem to be as volatile as the currencies. I have now counted three different stories which state the markets are moving back into higher yielding currencies and riskier investments after the coordinated bank bailout plan which was announced yesterday. But several other stories are talking about how investors are moving out of the higher yielding assets because of concern that the bank rescue will take too much time to unfreeze global credit markets. I tend to agree with the latter of these....
  • Fed floods the markets with US$...

    * Bernanke gets help opening the spigot... * Euro and Pound rally... * Yen to continue to benefit from carry reversals...* Aussie $ rallies... ** Fed floods the markets with US$... Good day...and happy Columbus day! This is an official bank holiday here in the states, so all of the banks are closed, but the stock markets are open. We will have a half day here on the desk to try and catch up with all of the work which has been piling up the past few weeks. The phones are turned off, since it is an official bank holiday, but we will be checking messages and try to get back to everyone as quickly as possible. It is a very unusual holiday, as the banks are all closed with no funds transfers possible, but the stock markets are open. Currency desks are lightly staffed, so we will have to really work to get the trades done this morning. These strange holidays usually can lead to some real market volatility, and with today will probably be another rollercoaster. In an all out effort to ease the credit freeze, the Federal Reserve recruited help from the ECB, Bank of England, and the Swiss central bank to flood the market with US$. These central banks will auction unlimited dollar funds with maturities of seven days, 28 days, and 84 days at a fixed interest rate. This move is unprecedented, as all previous dollar swaps were capped at a maximum amount while these auctions will be for unlimited funds....
  • A week of interest rate decisions...

    * A week of interest rate decisions... * Pound Sterling drops again... * Brazil and Mexico continue to dominate... * Gold and Silver fall... ** A week of interest rate decisions... Good day...The dollar stayed in the pretty tight range it has established over the weekend, gaining some strength over the weekend after losing some ground on Friday. Should be an exciting week as it is 'Interest Rate Decision' week as a number of central banks will be announcing their new rates. I think the rate announcements will reinforce my feelings that the world's economies are heading down divergent paths, with some economies heading down a recessionary path while others maintaining good growth rates. As expected, the US unemployment rose to the highest level in more than four years as employers cut jobs again in July. But the decrease in payrolls was slightly less than forecast, so some were saying 'it isn't as bad as we thought'....
  • Big Al Is Upset!

    * Currencies rally a bit overnight... * U.K. data sends sterling lower... * Pooled precious metals... * Oil hits $109!...