Archived IMT (2009.03.25)

SOUNDBITE GALORE in todays FX market activity as remarks from Geithner voicing support for reweighting SDRs were misinterpreted for his support of moving away from USD as a reserve currency, which dragged USD across the board, until his clarifications that strong USD was in US interest briefly boosted USD, which was later reversed after stocks recovery. At end of day, NOK was worst performing currency (after Norges Bank rate downgrades), followed by USD (stocks declines) and GBP (dismal CBI figures & first failed guilt auction in 7 yrs). If this week was confusing then lets wait until next week when G20, ECB and NonFarm Payrolls are all due out. Stepping back and getting longer perspective, USD risks still downgraded by the fact that despite the Feds announcement of purchasing $300 billion in LT Treasuries, a third of that was SOLD this week alone. Thus, downward impact on yield may not be prolonged, and combining that with shaky USD is a double whammy for +$700 billion of Chinas US Treasuries. Gold has first up day in 4 and stay tuned for any gold-capping efforts from a few cenbanks.