Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Gold and Silver The Die Is Cast - 27th Feb 20
US Economy Permanently Addicted to Zero Interest Rates - 27th Feb 20
Has the Stock Market Waterfall Event Started Or A Buying Opportunity? - 27th Feb 20
Advantages of Enrolling in a Retirement Plan - 27th Feb 20 - LS
South Korea Coronavirus Outbreak Data Analysis Warning Rate of Infection is Exponential! - 26th Feb 20
Gold Price Long-term Trend Analysis Forecast 2020 - 26th Feb 20
Fake Markets Are on Collision Course with Reality - 26th Feb 20
Microsoft is Crushing the S&P 500, Secret Trait Of Stocks That Soar 1,000%+ - 26th Feb 20
Europe's Best Ski Resorts For The Ultimate Adventure - 26th Feb 20
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

US Dollar in the Doldrums

Currencies / US Dollar Nov 05, 2007 - 08:08 AM GMT

By: Regent_Markets

Currencies The Dollar again grabbed the headlines last week as it hit all time lows against the Euro and levels not seen in generations against the Pound & Canadian Dollar.

The reason for this drop in the medium term has been the gradual weakening of the US economy as it tries to fight the effects of the credit crunch and a housing slump. Recent Case-Schiller data showed that US house prices fell for the eighth consecutive month with most of the country's regions posting declines. On Thursday, banking stocks suffering their worse fall for years as US giant Citigroup was battered by analysts down grades. This comes on top of a recent 57% drop in third quarter profits compared to last year. Citigroup are now in danger of dropping out of the top 10 US companies by market capitalisation. Top of the list Exxon Mobil also disappointed with below estimate earnings despite record oil prices. To cap all this negative data, former Fed chairman Alan Greenspan went on record as saying that the US trade gap implied dollar erosion and with an accelerating decline.

Of course the short term reason for the drop in the dollar last week was the widely expected quarter point cut in interest rates by the FOMC. Notable however, was the unusually hawkish language that accompanied the statement. One economist called the wording as “subtle as a sledge hammer” because of the bold way it indicated that this was the last cut for a while. Hawkish comments from the MPC combined to send the USD/ GBP exchange rate within touching distance of $2.09 to the pound.

Equity markets initially greeted the FOMC decision positively, pushing the S&P 500 past last week's high and the Nasdaq to fresh new highs for 2007. On Thursday, however all the good work was undone as earnings fears and the reduced probability of further cuts brought out the sellers in force. The fall was of the same magnitude as the mauling on the 19th of October which brought out lots of shock headlines in the mainstream press. This time it was hardly reported. When the press gets hold of something, it may pay to go the other way. When the same thing is met with silence it could be time to get genuinely worried.

Notable announcements next week are UK industrial production figures on Monday, US Non-farm productivity figures on Wednesday, trade balance numbers and consumer sentiment data on Friday. In all it looks a data heavy week and we haven't even mentioned the MPC and ECB interest rate decisions on Thursday. The consensus estimate is that both central banks will announce no change statements, but as ever it is the reading between the lines on the next decision that will cause the excitement. ECB president Trichet is speaking after the statement.

Last week's German PMI figures were well below estimates, which might call into question the widely held view that the next ECB move will be up. Friday's payroll numbers indicated that there may be life in the US economy yet. The dollar may have further to fall, but perhaps Greenspan's accelerated decline may not come to fruition, particularly against the Euro. If the ECB keep rates on hold over the coming months, or even cuts them, as some now think they might, then the dollar's decline could become more measured.

Therefore, a long term trade that picks up on the possibility of a slower Dollar decline might be attractive. Traders ar predicts that a no touch trade on the EUR/ USD with the trigger set to 1.50 over 180 days pays a 78% return. If the dollar falls only a little bit more, stays still or strengthens against the Euro then the trade wins. The trade is not without its risks, but that is reflected in the price.

By Karen
Tel: +44 1624 678 883 /

Address: Regent Markets (IOM) Limited
3rd Floor, 1-5 Church Street
Douglas, Isle of Man IM1 2AG

About Regent Markets Group:   Regent Markets is the world's leading fixed odds financial trading group. Through its main multi-awarding winning websites, and, it has established itself as the leading global provider of a unique, powerful way to trade the world's major financial markets. The number, length and variety of trades available to our clients exists nowhere else in the world. Tel  (+44) 08000 326 279

Regent Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules