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Posts by "speculator"
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Posts by Anonymous "speculator":
there will be a stable dollar rally this year as you say.
i do expect USDx to hit the 100 mark over the next couple for years.
whilst this may be too long of a period for traders, i can see it heading that way for the reasons mentioned.
note: us treasuries are highly supported recently pushing down yields and supporting dollar.
there has been a huge amount of wealth lost in real estate, stocks and other means and the amount lost could increase. therefore the increase in money supply at current levels would not pose an issue of hyperinflation. the banks are not all that well capitalised with all the money pumped and the circulation of cash is limited due to very weak lending.
hyperinflation is highly unlikely and governments are not printing money to erode their debts but to provide necessary liquidity which is working.
the stimulus packages are not as big as they sound.
I think historically stocks are overvalued on S&P Price to Earnings multiples. So unless earnings start to rise quite quickly which is highly unlikely, stocks will be on a long path down which will reinforce the dollar bull market.
I think one needs to analyse trade balances with the US to look at signs about the value of the dollar in the future as well as investnent flows. if the US start to consume less, their current account defiict should narrow and help the dollar in the future. the current account may reduce sharply if the US changes its spending habits. So as long as they do the dollar will go up. Also, if the US does come out of the recession first but remains to consume less than pre-recession levels, there will speculative flows into the dollar on a surpirse basis and one that wont be priced in to the dollar now.
so which ever way you look at it the dollar is bound to go up UNLESS the governments around the world start to adandon the Dollar which is all a load of rubbish for now.
Their argument is that US will be first to come out of recession and US dollar will remain as a Haven for investors. They are more likely to be stocks bearish and US Government bond bullish. Also, last weeks US auction of debt proved to be oversubsribed particularly via overseas investors. So this is more to add against the speculation of the dumping of the US dollar.
we are going through a seasonal mini bear market for the dollar where investors diversified out of the dollar not because they didnt like it but to take advantage of world stock market rallies around the world. the sustainability of this rally is highly questionable and we are likely to see a gradual appreciation of the dollar. I believe we are heading for a dollar bull market marking the end of the bear in 2008 contrary to what people think. the only competition the dollar has is china, not the euro.
I expect $1.25/ year end.
but the issues is where does all the sidelined cash go? well if US treasury yields/bonds are favourable and stocks seem on a gruadual decline this year, the dollar will certainly be the most attractive short term choice due to satefy heaven and the usual inflows into the dollar when stocks decline.
as it is likely to be gradual, the dollar may not rise as quickly as it did in its last uptrend that started last year.
if you look at the dollar index it has been falling for a long time now. so we are not at a point where the dollar will keep falling but may rise slightly or trend sideways.
GBPUSD correlation with equities has fallen recently and I believe you predict it to continue to weaken as more of the moves will be explained by fundamentals with the countries.
just out of interest, how did the this correlation this quarter compare with the longer term figure.
thanks