Predict the direction of the Dollar thread - Page 2

Mook · #11 10-27-2007, 05:59 PM

[ 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

pig4bill · #12 10-27-2007, 06:26 PM

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

stinkypete · #13 10-27-2007, 07:18 PM

[ QUOTE ]

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.

tippy · #14 10-27-2007, 07:24 PM

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.

ItalianFX · #15 10-27-2007, 09:37 PM

[ QUOTE ]

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.

[/ QUOTE ]

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]

tippy · #16 10-28-2007, 10:02 AM

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

xxThe_Lebowskixx · #17 10-28-2007, 12:50 PM

[ QUOTE ]
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.

tippy · #18 10-29-2007, 01:24 PM

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.

DcifrThs · #19 10-29-2007, 02:38 PM

[ QUOTE ]
[ QUOTE ]
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.

[/ QUOTE ]

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

CrushinFelt · #20 10-29-2007, 04:00 PM

[ QUOTE ]
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).

[/ QUOTE ]

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.