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Risk Aversion Returns To The Market Place
The dollar rallied against most of the majors with the exception of the yen. The EurUsd dropped 108pips to the mid range of 1.33, while the UsdJpy declined 112pips to the low 89 price area. The GbpUsd dropped substantially, down roughly 350pips finding support at 1.48. Equity markets moved south on rising volatility and uncertainty regarding the financial markets. The Dow was off 1.46% or 125pts and the SPX dropped 2.26% or 20pts which was consistent with price behavior in other asset classes. Bond buyers were back in full swing, purchasing UST as all parts of the curve driving in…
13Jan2009 | Advanced Currency Markets | 0 comments | ContinuedTurbulence in the European Economy Sparks a Dollar Rally
The U.S. greenback surged Friday, capping off the biggest weekly dollar rally in three and a half years, as the euro slumped on speculation the European economy would continue to weaken.
The euro fell as low as $1.5008 Friday afternoon, dropping more than 2% from $1.5325 Thursday – the biggest one-day drop since Sept. 6, 2000. Against the yen, the European currency traded at 165.84, from 167.70. In the dollar rally, the euro has declined 3.1% against the greenback in its fourth weekly decline.
In addition to rising against the euro, the greenback climbed 0.5% to 109.97 yen after touching 110.08, the…
11Aug2008 | Money Morning | Comments Off | ContinuedHow Will We Know the Credit Crisis and Banking Fiasco Are Truly Over?
How will we know the credit crisis and banking fiasco are truly over?
We won’t.
But there’s a damn good indicator that will show us the way – the London Interbank Offer Rate, usually referred to as LIBOR.
And right now LIBOR tells us that this financial mess still has room to run.
As indicators go, recent developments have demonstrated that the LIBOR system is arguably corrupt. Until now, LIBOR always has been constructed by industry insiders – with little in the way of oversight or regulation. It drives billions of dollars of trades and transactions a day. And it’s publicly available at 11:30…
12Jun2008 | Money Morning | Comments Off | ContinuedA Currency Conundrum: Beware of the U.S. Dollar’s “Head Fake†Rally
Don’t mistake the U.S. dollar’s recent rally for strength. If anything, it’s a head fake of legendary proportions.
In fact, the dollar’s recent run-up is actually a warning that risks are escalating.
To better understand what I mean here, let’s look at the greenback’s recent performance against the euro. After bottoming at an all-time low of $1.6019 versus the euro on April 22, the dollar has soared nearly 4% and was trading at $1.5428 per euro early yesterday (Wednesday).
Now many of the Wall Street types expect that rally to continue. Just yesterday, UBS AG (UBS) predicted the greenback would rise to $1.47…
8May2008 | Money Morning | Comments Off | Continued
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