Predict the direction of the Dollar thread
 

Lets hear some opinions for the next week and month. Use the DXY or your favorite pair.

EUR/USD. I think the dollar bottoms out next week after the coming rate cut, especially if we get 50 rather than 25. I'd say 1.45 might be a good spot to try and catch a major reversal in the dollar.

Thoughts?

Re: Predict the direction of the Dollar thread
 

I don't really care which way it goes as long as I'm on right side following the major trend.

Re: Predict the direction of the Dollar thread
 

[ QUOTE ]
Lets hear some opinions for the next week and month. Use the DXY or your favorite pair.

EUR/USD. I think the dollar bottoms out next week after the coming rate cut, especially if we get 50 rather than 25. I'd say 1.45 might be a good spot to try and catch a major reversal in the dollar.

Thoughts?

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Why would it bottom out and why would it reverse?

I think it keeps dropping if there's a 50 bps cut. Maybe thrashes where it is on a 25 bps cut.

Re: Predict the direction of the Dollar thread
 

trends dont last forever, thats why theyre called trends and why theyre even possible. sheessh.

Re: Predict the direction of the Dollar thread
 

Dollar has another 50% to drop on the USDX.

Re: Predict the direction of the Dollar thread
 

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trends dont last forever, thats why theyre called trends and why theyre even possible. sheessh.

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Trends keep going until something stops them. That's why they're called trends. Sheesh.

Re: Predict the direction of the Dollar thread
 

you think the dollar will get stronger if the fed creates more credit (more dollars)? I don't get it.

I mean it's pretty obvious fed/gov have decided to tank the dollar to and keep rates low,

rather than have high rates and stronger dollar.

Re: Predict the direction of the Dollar thread
 

I think USD will continue to go down

Re: Predict the direction of the Dollar thread
 

[ QUOTE ]
Lets hear some opinions for the next week and month. Use the DXY or your favorite pair.

EUR/USD. I think the dollar bottoms out next week after the coming rate cut, especially if we get 50 rather than 25. I'd say 1.45 might be a good spot to try and catch a major reversal in the dollar.

Thoughts?

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i think this would be a far better bet vs. the pound. germany remains a powerhouse.

britain, on the other hand, is fairly fragile at this point and after the next rate cut (as i mentioned in the other thread), i'd look to short the GBP/USD pair.

fundamentally it is a much better bet.

Barron

Re: Predict the direction of the Dollar thread
 

This economy is in terrible shape and you can thank the government and Fed for it. It will continue to decline.

Re: Predict the direction of the Dollar thread
 

[ QUOTE ]
EUR/USD. I think the dollar bottoms out next week after the coming rate cut, especially if we get 50 rather than 25. I'd say 1.45 might be a good spot to try and catch a major reversal in the dollar.

Thoughts?

[/ QUOTE ]
I think the USD is going to cause a lot of people a lot of pain in the next couple of months.

I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound - USD/GBP is hugely oversold and I could see it bouncing back to 1.85 or less. I think 1.35 to the euro is a reasonable bounceback point.

Long term I agree that there's more room to the downside on the dollar, but not before a bunch of leveraged speculators get absolutely crushed by a 10-15% reversal. Seems to me like everyone who wants to short the dollar already has.

Mook

Re: Predict the direction of the Dollar thread
 

It's not speculators shorting the dollar. It's foreign holders of dollars selling them. Forget technicals.

Re: Predict the direction of the Dollar thread
 

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I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound

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why would a rate cut cause the dollar to surge? that's ridiculous.

Re: Predict the direction of the Dollar thread
 

I don't know guys. I fired in a single bullet on the EUR/USD at 1.4387 near the close. Just wanted to get a position started. Looking to get it to 10 contracts by the end of the week. The Dollar should have really weakened past 1.44 Friday and it didn't, espcially given that move in gold. It really seemed to be stuck around 1.4380-90.

As for why I think it is going to turn, the FED has been the largest reason for the dollar tanking. Look at the move from Aug 16, straight in the tank. We are down to a rate of 4.75, with a cut coming this week. I expect we get a cut of .25, but it could be .50 and done. The reason for these latests cuts isn't fundamentally based, they are the FEDS attempt at softening the bursting housing bubble and easing the effects of the subprime mess. Getting down to a rate of 4.25 and not having that justified by general market factors is not going to hold. You will see adverse effects of the artificially depressed rates. The first place you are going to see it is in commodities. Look what happened to gold Friday, up $17.00. Gold is a leading indicator of inflation. These cuts made by the Fed to ease housing and the credit crunch are going to produce serious inflation pressures. And we all know what happens to rates when inflation rears its ugly head. If you don't, check out the 70's and 80's, paying specific attention to oil prices during that time.

The Fed is solving one problem, but creating another. A little inflation is good, but too much is bad. If inflation gets out of hand and the Fed has to take back these cuts, the stock market will tank. I just don't think there are too many more cuts left in the FED. Their hands may simply be tied by inflation possibilities. Since the Fed has been the main cause of dollar weakness, we may be near the end of a weak dollar.

Keep an eye on the big multinational companies this week. The ones who get most of their money from export, especially tech. If the market thinks the FED may be near the end of the easing, it will show up in these stocks.

It is a tough spot though, because you can never be too sure where we are in the cycle. Timing a turn is tricky.

I'm hoping for a nice cut and statement out of the fed this week as an excuse to continue building a dollar position.

Italian FX, I agree on the pound. A long trade probably does make more sense there. I'm not as familiar with the GBP/USD pair, so I'm going to sacrifice a little to stay with familiarity.

Re: Predict the direction of the Dollar thread
 

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Italian FX, I agree on the pound. A long trade probably does make more sense there. I'm not as familiar with the GBP/USD pair, so I'm going to sacrifice a little to stay with familiarity.

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Nice Analysis. I enjoyed reading it. However, I never said anything about currencies. I didn't even post in this thread. Thank you for thinking about me though! [img]/images/graemlins/cool.gif[/img]

Re: Predict the direction of the Dollar thread
 

oops, you are correct sir. That credit on the Pound should have gone to Barron...

Re: Predict the direction of the Dollar thread
 

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trends dont last forever, thats why theyre called trends and why theyre even possible. sheessh.

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isnt it more likely that interest rates will decrease?

isnt it more likely that the gov will keep spending more than it takes in?

if this is the case, why is the dollar going to recover? you can't just say its going to go up because it is down. that doesn't make any sense.

Re: Predict the direction of the Dollar thread
 

Added a second EUR/USD bullet at 1.4420. Average position at 1.4401. This is going to be an uncomfortable ride until the end of the week.

Sure would make a sweet candlestick pattern if we stuck right here for awhile.

Re: Predict the direction of the Dollar thread
 

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trends dont last forever, thats why theyre called trends and why theyre even possible. sheessh.

[/ QUOTE ]

isnt it more likely that interest rates will decrease?

isnt it more likely that the gov will keep spending more than it takes in?

if this is the case, why is the dollar going to recover? you can't just say its going to go up because it is down. that doesn't make any sense.

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currencies aren't a 1 way trade. the dollar could TANK but if the euro tanks by more then long the dollar/euro would be a good bet.

OP is saying that after the fed cuts again, it is not likely to be much more cutting and that the ECB will be next to cut. since interest rate diffs & growth diffs make up the vast majority of currency excess returns, havnig the US stay steady after the next cut while the ECB lowers rates means the dollar will "bottom out" and then reverse since the interest rate diff will decrease.

i, however, don't think the ECB will be lowering rates anytime in the immediate future with germany powering away as it has (and its CPI still ticking up).

thats why i think this bet is far better on the pound than the euro. also, the pound has further to fall in terms of interest rates without being inflationary once the credit bubble fails to continually increase gdp at the rate of the recent past.

Barron

Re: Predict the direction of the Dollar thread
 

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i, however, don't think the ECB will be lowering rates anytime in the immediate future with germany powering away as it has (and its CPI still ticking up).

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Can u expand on teh germany part? I'm not sure I follow. Most of my normal course of reading and work doesn't lead me to German info.

Re: Predict the direction of the Dollar thread
 

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i, however, don't think the ECB will be lowering rates anytime in the immediate future with germany powering away as it has (and its CPI still ticking up).

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Can u expand on teh germany part? I'm not sure I follow. Most of my normal course of reading and work doesn't lead me to German info.

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sure.

germany is the powerhouse of the EU right now (and has the main contribution to the euro area CA trade/merchandise surplus). it is the largest euro area economy and the home of the ECB (either located in or near the bundesbank).

it recently posted a 253.1billion (US$ terms) trade surplus vs. euro area's 42.1billion. germany is a massive export led economy but is typically viewed as having ancient labor market views (not liberal labor market).

the german S&P500 (the DAX) is up 18% in local currency terms and 28% in US$ terms since december 29th, matched only by greece in the euro area.

further, german inflation is on the rise while its growth has been merely OK at 1.75% in the past 2 quarters (2.5% in latest and 1.0% in the first) but it has been at the steady growth rate of between 2-3% for a few years now.

consumer prices rose 1% a year ago, forcast for 2007 is about 2% and the latest #s though (in september) were 2.5% rise in consumer prices.

the yield curve doestn' exactly reflect huge inflationary expectations though as short yields are 4.63% while long rates are 4.13% (i.e. the steepest inversion in the EU signifying that inflationary pressures are priced to be settled more in germany than in other EU countries...OR that demand for safe haven german bonds is far larger than in other euro area countries).

so while the euro area is slowly slightly (but still expanding), germany is on pace for a steady similar growth rate.

there are downside risks though in germany since the bundesbank had to bail out 2 landesbanks (state owned banks) that were in the very fun business of borrowing short (through commercial paper markets) and lending long (i.e. investing in US subprime backed AAA rated paper).

also, german unemployment is about 8.8% (in their national definiton, whatever that is) and their labor market is not very fluid...so inflation poses a big risk...this is the case since it is way easier to not hire workers in germany than it is to fire them (similar to france). so unemployment remains higher than it would be with a US style labor market regulator in charge.

overall though, germany is a big driver of euro area growth and with high inflation and a large % of the total euro area GDP coming from it (and the trade balance), lower rates to spur growth may produce too much inflationary risks to be attractive.

in the UK on the other hand, lower rates are far more likely.

these are just my thoughts and if anybody has more to add, please do.

Barron

Re: Predict the direction of the Dollar thread
 

CPI came out this morning. Any economic information you want on Germany can be found here:
http://www.destatis.de/jetspeed/port...epage__NT.psml

Re: Predict the direction of the Dollar thread
 

Interest Rates down 25 basis points

Re: Predict the direction of the Dollar thread
 

Sweet entry point today at 1.4490. Average position of 1.4467 on 10 lots. Got just what I was hoping for in a nice pop after the cut. Statement was awesome. Hopefully the Fed sees the inflation fear the same way I did. Statement moved to balanced between growth and inflation. Hopefully this puts a stop to the rate cuts and the dollar can rally from here.

Might be a little rough for the next few days, but hopefully the dollar gets in a 3-5 week trend toward strength.

As an aside, anyone thinks Paulson at the Treasury steps in and saves the dollar in order to stave off inflation. It would be a sneaky way to fight off inflation and still allow low interest rates. We will see.

Anybody else long the dollar today?

Re: Predict the direction of the Dollar thread
 

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Anybody else long the dollar today?

[/ QUOTE ] I'd love to go long dollar short pound but i don't have that optionnnnnnnnnnnnnn

Re: Predict the direction of the Dollar thread
 

Go dollar, Go dollar, Go dollar...

Pretty big move today. Probably just a big oversold bounce, but nice anyway. Hope this starts a nice trend back toward 1.40.

Fed f'd up for sure. They are just a little behind the curve...

Re: Predict the direction of the Dollar thread
 

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I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound

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why would a rate cut cause the dollar to surge? that's ridiculous.

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lol no kidding. I think people in this forum who actually know what they're talking about should start posting in neon blue or something so we can seperate it from all the crap

Re: Predict the direction of the Dollar thread
 

Wow this really sucks. Market down 335 and the dollar hasn't budged. The last 350 point move down in the Dow produced a 264 pip range dollar strength bar. Today that same size moved produced no strength at all. I'm cutting this trade at breakeven if EUR/USD gets back up to my 1.4467 entry.

Looks like my logic isn't holding here. The end of the rate cuts and the inflation talk should have helped strenghten the dollar. It didn't. Looks like the dollar is alot weaker than I thought. Also seems the market has absolutely no belief that a rate cut cycle is ending. Bonds went through the roof pushing rates right back down. UGLY.

Cutting this one and picking a better time to try this trade.

Re: Predict the direction of the Dollar thread
 

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I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound

[/ QUOTE ]

why would a rate cut cause the dollar to surge? that's ridiculous.

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lol no kidding. I think people in this forum who actually know what they're talking about should start posting in neon blue or something so we can seperate it from all the crap

[/ QUOTE ]


It isn't the actual cut that should produce the rally. Clearly everyone knows that a cut in rates weakens the dollar. What is important is that this cut may be the last cut, therefore the dollar may see this and turn higher knowing that futre cuts won't be there.

Of course, I put on a trade with this reasoning, but it doesn't look like it is going to hold. I think the currency market still believes the FED will cut more, even though the FED says it won't. The stock market may not share that belief.

Sometimes things just don't work out like you think...

Re: Predict the direction of the Dollar thread
 

tippy,

don't you think you are trading on fear if you are going to dump your position at the first chance you get?

It appears to me that the dollar is very oversold against the Euro and could possibly make a turn for a little bit. According to the chart right now, it looks like it's making a turn.

I'm thinking the reason why the EUR/USD hasn't moved yet is because everyone is waiting to see what the nonfarm payrolls are going to be tomorrow.

Re: Predict the direction of the Dollar thread
 

Anyone have a prediction on nonfarm payrolls for tomorrow?

80k is the forecast, but some predictions are saying it could be as high as 110k.

Re: Predict the direction of the Dollar thread
 

No doubt about that fear ItalianFX. I just don't think I'm right on this one. When I make a plan and things don't cooperate, it is usually a pretty sure signal that I've missed something.

I got knocked out at breakeven last night at 1.4467. Looking at the EUR/USD right now its at 1.4490. I never expected it to move that high again. Look what happened last time the market went down 300 points, the EUR/USD moved huge. It didn't budge yesterday on that same 300 point Dow move. Something is wrong.

As for the jobs report, I'm not sure it matters. The ADP report was up big, Jobless claims was a good number and Monster jobs report was good, the employment part of the ISM was good. I think the whisper number is high and even if the unemployment number is good, it will probably just meet whisper. If it is moderate then it won't meet whisper. And if it is bad, then all hell will break loose. If that report is bad, the dollar could collapse to 1.46. Just doesn't appear to be alot of upside here. I'm just not taking that risk on 10 lots.

I may have cut the trade too soon, but there isn't any sense in fighting the tape right here...

I might give the trade another try if there is a moderate report and the market gets out of hand. There are a ton of stops right over 1.45 EUR/USD. Might provide another entry point to try the trade again.

Re: Predict the direction of the Dollar thread
 

Nonfarm payrolls crushed expectations, up 166k, revised to 96k from 110k. Either way, they're both up.

Let's see where the Dollar goes now!

Re: Predict the direction of the Dollar thread
 

I just don't think it matters. 10 minutes after a monster jobs number and the EUR/USD is 1.4483, right where is was before the report came out. Dollar should have rallied hard. It should have rallied hard yesterday on the Dow move down. Dollar is much weaker than we think OR something we can't see is holding it down.

We are just missing something.

Re: Predict the direction of the Dollar thread
 

There go the stops. 1.4525...