The Buck is getting badly beaten!
Posted on Tuesday, July 15th, 2008 | In Current Market NewsThe Buck is getting badly beaten!
Is it a new dollar low? Close, but no cigar yet!
The dollar has been hammered lower this morning. But its bouncing higher the Big Boys, Bernanke, Bush and Paulson add to the public commentary this morning. But…
If you notice in the chart below, we have marked the day the dollar bottomed i.e. an all-time low in the US dollar index, in red. It coincided with the day the Fed (and Treasury) stepped in to save investment bank Bear Stearns. The next line on the chart shows the day, yesterday, the Treasury back-stopped Fannie and Freddie (and stepped in to take control of IndyMac). However, there was no bounce in the dollar yesterday.
Multiple Choices:
A) Lack of credibility now missing in the market when it comes to future Federal bailouts (Bailout Fatigue); it’s lights out for the buck and a spike down to much lower levels is inevitable?
B) Momentum is down and a test of new lows is in the cards?
C) Realization the Fed can’t hike rates in this environment and inflation IS accelerating?
D) An out-of-the box view that Europe will soon be heading down this path (UK already is)—credit markets will soon seize-up as the troubles in the US flow-through and the market realizes the European Central Bank does not have cross-border mechanisms to deal with the problems in any efficient way, as the Fed is doing despite the pain; thus the dollar is near a low and due for a major bounce against the European currencies?
E) None of the above.
As we complete this piece, the dollar has staged a decent bounce. In fact, the euro even dipped back into negative territory during this bounce. Of course it is still early. And obviously the path of least resistance for the buck is down. But, maybe it is too soon to discount choice D above even though it was a major run-on sentence.
Regards
Jack & JR
Last 5 posts by Jack Crooks
- Only Gold Is Winning the Ugly Contest - February 26th, 2009
- Stocks AND Dollar to Rally in the First Half? Keep Hope Alive - January 6th, 2009
- We’re Bullish on the US Dollar Today ... and Tomorrow! - January 5th, 2009
- Can we rest? Gold may lead the way. - December 22nd, 2008
- A super deal on the U.S. dollar - December 20th, 2008
 About Jack Crooks (http://blogs.moneyandmarkets.com/blog/currency-corner)
John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research’s latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007. Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis. Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron’s, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC. Mr. Crooks holds a bachelor’s degree in finance from Florida State University and a master’s in business administration from the University of North Texas. |
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