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#21
10-29-2007, 06:10 PM
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Re: Predict the direction of the Dollar thread
[ QUOTE ]
[ 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. [/ QUOTE ] 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 
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#22
10-29-2007, 08:02 PM
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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
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#24
10-31-2007, 03:27 PM
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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?
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#25
10-31-2007, 03:28 PM
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Re: Predict the direction of the Dollar thread
[ QUOTE ]
Anybody else long the dollar today? [/ QUOTE ] I'd love to go long dollar short pound but i don't have that optionnnnnnnnnnnnnn
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#26
11-01-2007, 10:14 AM
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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...
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#27
11-01-2007, 12:21 PM
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Re: Predict the direction of the Dollar thread
[ QUOTE ]
[ 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. [/ QUOTE ] 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
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#28
11-01-2007, 03:40 PM
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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.
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#29
11-01-2007, 03:46 PM
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Re: Predict the direction of the Dollar thread
[ QUOTE ]
[ QUOTE ] [ 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. [/ QUOTE ] 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...
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#30
11-01-2007, 06:04 PM
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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.
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