This thread was started in response to the Article:

Dollar Slashed as Fed Goes Shopping by: Ashraf Laidi
Posted: May 20, 2009 ET
Comments: 87
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Tarek, with support at 1.3720-30, consider stops at 1.3690, assuming you can handle the margin in a loss to that point.

Look at EURGBP chart above.

Ashraf

mr ashraf

buying eur /usd above 1.4050 will be a good poinet , and what the good stop lose in your opinion
iam just a beginer forgave me for my weak comments

thanks so much

jj, spot on too.

Ashraf

high us yields are yen negative

spec, spot on. Fed increasingly behind the curve in catching up with US Treasurys relentless bond issues, 10 year yields have now retraced over 50% of their decline from their 5.32% high of June 2007 to their record low of 2.03% in December. The path is now paved towards the 4.1% market, last attained in October 2008.

Ashraf

the steepening of the longer end of the yield curve is stocks negative as the cost of capital in the us becomes more expensive for corps and mortgage borrowers. this is likely to impact corporate profitability including personal borrowing costs as worsen the real estate market and bank profits. this could cause a possible inflow in to the short end of the yield curve with very short durations. this was maybe why the dollar rose due to risk aversion.

it is clear that the government bonds are pricing higher future inflation probably due to a combination of nearer term economic recovery and increase in the us money supply but i think mainly the later.

ta

Slaiman, rising yields are only good for the dollar if they occur as a result of improved economy rather than rising borrowing needs. today's jump in yields was attributed to mortgage traders' hedging i.e. technical reasons. it's not clear whether the the rise in yield was the reason to falling stocks. But with so much doubt over the US credit outlook ahead, any deterioration in the price of US treasures (rise in borrowing costs via higher yields) then that could be dollar negative. Yes, the dollar rose today. But have you seen how fast it goes back down again?

Ashraf

Dear Ashraf,

Could you shed some light on the effects of high Treas yeilds? Won't high yields lead to more deleveraging and thus stronger dollar?

jj, because these nth korea stories usually come and go.

Ashraf

how a buy if yen negative?