The US dollar is rallying today. Maybe it’s not going to tumble. Maybe it’s going to surge higher from here. Then again, with estimates for the US deficit raised to $9 billion over 10 years, I think the greenback’s long-term problems are going to overwhelm short-term bullishness.
More likely, too many people lined up on the short-side of the dollar trade. The big trading houses (Goldman Sachs, etc), saw this, and saw an opportunity to reap some quick gains by shaking out the weak hands among the shorts.
You don’t think that can happen? You don’t think the market is being manipulated short-term? Then I have a bridge to sell you.
The long-term trends remain intact. We’ll play those trends.
Here are some charts …
In other news, I’ve been on Fox Business News more than a few times, and it’s an excellent group staffed with some of the smartest people in the business. Neil Cavuto is top-notch, as is the rest of the on-air talent. But they aren’t getting ratings – only 21,000 people are watching, apparently. That just goes to show there is no justice in this world. If there was, Fox Business would have twice the ratings that CNBC does.
Some Other News I’m Reading …
As Budget Deficit Grows, So Do Doubts on Dollar
While many analysts expect the dollar to strengthen in coming months as the crisis fades and the U.S. economy turns toward growth, a growing chorus of investors is expressing concern about the longer-term outlook for the greenback.
On Tuesday, the Obama administration added fuel to concerns about the dollar, saying the U.S. will run a cumulative budget deficit of $9 trillion over the next 10 years, $2 trillion more than it had previously projected.
Dollar’s dominant role coming under threat, S&P says
“We do expect a bit of dollar weakness and expect the dollar won’t be as dominant in world reserves as it has been in the recent past,” David Wyss, chief economist at S&P, said at a conference in Sydney, according to Bloomberg.
“It will still be the biggest reserve currency but we will go back to a more normal distribution, back to more like what we had 10 or 15 years ago when the dollar was 70pc of reserves instead of 90pc of reserves.”
Durable Goods Orders blow out to the upside
Manufacturers’ new orders for durable goods were reported up +4.9% by the Census Bureau, significantly higher than expectations. Last month’s initially reported decline of -2.5% was halved to -1.3%. Beyond simply being one month of particularly good data, manufacturers’ new orders are a component of the Leading Economic Indicators, and are now decisively higher than at any point since the end of last year. This also completes the third part of an important trifecta of LEI indicators — more on that tomorrow.
For those asking, “What will the economic recovery build upon?” we have at least part of our answer. It will be done the old-fashioned way, via manufacturing.
New-Home Sales in U.S. Jump 9.6% in Sign Economy Recovering From Recession Purchases of new homes in the U.S. jumped more than forecast in July, adding to signs that the economy is rebounding from the worst recession since the 1930s.
Related Posts
- Watch the US Dollar Rally (08/10/09)
- Is the Dollar Rally Done? (10/29/09)
- Dollar Chart — It’s Rally Time! (09/24/09)
- Setting Targets for a Potential Dollar Rally (10/26/09)
- The Real Scandal of AIG and More (03/16/09)
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keep going i find you extremely interesting. i want to get into gold on the next drop. which i think may be in one day and then also close high on that same day. i am thinking down to 920.00 and close higher. i want to get into futures. i am waiting for the right dip in gold. thank you, thank you for your insight,you are quit interesting and right on the mark.