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Federal Reserve’s Trillion Dollar Debt-Buying Plan Eases Lending and Zaps the Greenback
While the U.S. Federal Reserve’s plan to buy more than $1 trillion in debt has helped unfreeze the credit markets, it has also effectively capped U.S. Treasury yields and undermined the dollar. And that’s caused commodities to soar as currency speculators and safe-haven investors head for higher ground.
At the culmination of the policymaking Federal Open Market Committee’s (FOMC) two-day meeting Wednesday, Fed Chairman Ben S. Bernanke revealed that the central bank would purchase up to $300 billion in longer-term Treasury securities, as well as an additional $750 billion of mortgage-backed securities. The central bank also said it would buy debt issued…
20Mar2009 | Money Morning | 0 comments | ContinuedRALLY IN RISK PUTS PRESSURE ON THE DOLLAR TO THE DOWNSIDE
We are seeing a light revival in risk appetite putting downside pressure on the dollar. The EurUsd rose nearly 100pips to the mid range of 1.29, while the UsdJpy fell roughly 50pips to the bottoming out around 89. The GbpUsd gained 50pips pushing the pair back above1.43 ahead of the BoE meeting scheduled for this week. Equity markets are positive in the US and Europe with the Dow higher by 1.7% or 141pts. Bond yields followed suit as rates jumped higher across the UST curve, notably the 10 and 30yr saw the largest moves up 16 and 20bps respectively. Commodities…
3Feb2009 | Advanced Currency Markets | 0 comments | ContinuedA Radioactive US Dollar
There is a rather interesting scientific experiment going on right now in the United States. The experiment involves the effect that intensive radiation has on the brains of rats. Who is conducting this experiment? Why Wall Street, of course!
With all of the highly leveraged, stupid bets blowing up in Wall Street’s face, it has been the equivalent of a nuclear bomb going off right in the middle of Wall Street. Most people would use common sense and get as far away as possible from the nuclear blast.
However, Wall Street money managers have abandoned all caution and have run full speed…
14Jan2009 | Oxbury Research | 0 comments | ContinuedUS SESSION: DOLLAR CLOSING THE WEEK STRONGER ACROSS THE G10
The dollar gained substantially against most of the majors recovering most of this week’s losses. The EurUsd sunk over 360 pips to the high range of 1.38, while the UsdJpy was mostly flat up only 7pips to mid 89 price area. The GbpUsd dropped an additional 160 to the mid 1.48 level, due to several factors including weak economic conditions. Equity markets have traded traded closely to yesterday’s levels with the Dow and SPX virtually unchanged. Bond have given up light ground with 2yr and 10 yr yields higher by 5bps, but remain considerably lower from average levels. The commodities…
19Dec2008 | Advanced Currency Markets | 1 comment | ContinuedJim Rogers: The dollar is a flawed currency
Excerpts from The Financial Times’ View from the Markets online interview with Jim Rogers:
FT: It’s a year since we last interviewed you. You were aggressively bearish about the dollar, but you thought there would probably be a rebound and you would take that as an opportunity to further get out of the dollar. Have you made a further exit from the dollar?
JR: Not yet, no. And the reason I haven’t is because we’re in a period of forced liquidation of everything. We’ve only had eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything.…
21Nov2008 | The Gold Blog | 0 comments | ContinuedBernanke’s end game, dollar devaluation
There is another cost too. As interest rates move to zero, the Fed’s becomes less and less effective: low-yielding treasury bills are barely distinguishable from cash.
The answer to this is to expand the balance sheet: the Fed has to grow larger and larger to allow it to continue to affect rates.
This is all remarkably similar to the policy of quantitative easing adopted by the Bank of Japan in the 1990s. It’s odd really that the Fed is not giving much clarity on its actions. Odder yet that people aren’t looking to Ben Bernanke’s numerous papers on fighting deflation to…
19Nov2008 | The Real Deal | Comments Off | ContinuedUS SESSION: SELLERS CONTINUE TO DRIVE MARKETS SOUTH JPY STRENGTHENS
The dollar seems to be breaking away from the risk aversion trade which has been the persistent theme in the marketplace. The EurUsd rose nearly 130 pips to the low range of 1.26, while the UsdJpy moved 50 pips to the downside trading at the mid 96 price area. The GbpUsd rallied over 300pips to the low 1.50 level, recovering some of last week’s losses. Equity markets opened lower in the US with the Dow down 1.2% or 100pts, the European stock indexes are negative as well with the DAX off 2.1% or 100pts in intraday trading. Bond yields are…
17Nov2008 | Advanced Currency Markets | Comments Off | ContinuedUS SESSION: DOLLAR STRENGTH CONTINUES TRADE IN TANDEM WITH RISK AVERSION
The dollar rose in intraday trading based on rising risk aversion in the marketplace. The EurUsd sunk over 200 pips to the low 1.25 area, while the UsdJpy was marginally lower to the high range of 97. The GbpUsd dropped nearly 200 pips finding support near the 1.54 level. Equity markets traded substantially lower with European stock indexes like the DAX, CAC, and FTSE leading the way. Both the Dow and SPX (S&P500) are off about 2%, as GM and AMEX lead the way reflecting the severe effect of the credit crisis. Bond markets are closed in the US in…
12Nov2008 | Advanced Currency Markets | Comments Off | ContinuedUS SESSION: CURRENCY MARKET CONTINUES RISK AVERSION
The extreme move towards risk aversion fueled another rally in Usd trading. The EurUsd fell 137 pips to the high range of 1.24, while the UsdJpy took a larger dive down 174 pips to the mid 92 level. The GbpUsd dropped over 370 pips placing the pair back to levels seen in 2002. The Equity markets extended its recent decline with the Dow leading US indexes in losses falling 2.42% to 8175. European stocks closed on a weaker note with the CAC 40 down 3.96%, FTSE off 1.72%, and the SMI off 3.07% at 5500. Bond yields were mostly flat,…
28Oct2008 | Advanced Currency Markets | Comments Off | ContinuedAsian Session: Markets Confidence Grows
The Usd was slightly weaker in the Asian session, after a strong rally yesterday. EurUsd, in choppy trading, jumped between 1.3300 and 1.3360, while UsdJpy rose in early trading to 102.16, before slipping down to 101.43 (carry trades followed a similar pattern). The US equity markets continued to rally, with the S&P 500 up 4.7% and Asian regional stock indexes are following with Nikkei up 3.39%. VIX fell a whopping â€24.0% to 52.97 and gold fell to $793.82oz, as confidence continues to filter back into markets. Participants were broadly encouraged by the flood of official speak and corresponding markets reaction…
21Oct2008 | Advanced Currency Markets | 1 comment | Continued
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