Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

U.S. Dollar Bears: Be Very Careful

Currencies / US Dollar Feb 28, 2009 - 05:08 PM GMT

By: Money_and_Markets

Currencies Best Financial Markets Analysis ArticleJack Crooks writes: The rest of the world cannot yet decouple from the United States' economy. Excessive deleveraging of U.S. dollar-based credit is the sure sign that investors have come to understand this fact. They've pulled in extreme amounts of capital in search of a safe place to stash their cash.

In past Money and Markets columns, I've tried to make it clear that the U.S. dollar has been the huge beneficiary of these unwinding investments. I expect this trend to continue.

I wrote in my Money and Markets column last week about how the dollar should continue to rally and the European Monetary System is in jeopardy. But now, it's not just me saying this …

I'm not the only one saying that the European Monetary System is in jeopardy.
I'm not the only one saying that the European Monetary System is in jeopardy.

Here are excerpts from two different stories appearing on Bloomberg News yesterday morning [my emphasis]:

Feb. 27 (Bloomberg) — The dollar is approaching a three-year high against the currencies of major U.S. trading partners as the plunge in the yen and Swiss franc leaves the world's reserve currency the only refuge from economic turmoil.

Japan's crumbling economy, combined with an end to the unwinding of the carry trade weakened the yen, last year's best performing currency, by 7.2 percent this year, even after a 0.9 percent gain today. The franc suffered from a deteriorating Swiss financial system and threats of intervention by the central bank to push the currency lower against the euro.

There are no alternatives to the dollar right now ,” said Geoffrey Yu, London-based strategist at UBS AG, the world's second-biggest currency trader. “Investors see the rest of the world collapsing, and the yen is no longer a safe haven.”

Feb. 27 (Bloomberg) — Hayman Advisors LP, the firm that earned $500 million betting on the U.S. subprime mortgage-market collapse, says Europe's monetary union is about to fall apart .

Richard Howard, a managing director for global markets at Dallas-based Hayman, said Germany may opt to shore up its own economy, Europe's biggest, rather than bail out fellow euro nations such as Austria, Italy and Spain as their banks sag under the weight of bad debts. That might lead to defaults and compel Germany to renounce the euro, he said.

“People said subprime could never blow up but it did and now they're saying the exact same thing about the eurozone,” said Howard. “There's no stopping what is now a downward spiral.” He declined to discuss his investments.

Hayman joins a growing number of investors seeing the possibility of a breakup of the $12 trillion euro bloc, conceived more than 10 years ago to cut unemployment, tame inflation and create a rival to the dollar. Societe Generale SA said this week Germany may refuse a bailout in an election year. ABN Amro Holding NV said Feb. 17 the crisis is “Europe's subprime.”

But even as much as investors may now understand why the environment is changing, they have trouble accepting it . And they have bigger trouble accepting the fact that the dollar has rallied in such a lousy environment!

US$ Index Weekly

For example, they might look at numbers like the just released U.S. Federal Budget Deficit estimates for 2009 — $1.75 trillion — and think ‘run', even though the better part of them says ‘Stay put; you have nowhere else to go.'

I've got to admit … it makes my blood boil when I see the spending these clowns in Washington have gotten away with and will continue to try to slip past the public.

But I've said this before, and I'll say it again:

With big trouble brewing in the European Monetary System, it would be no surprise to see the dollar surge in the weeks or months ahead.
With big trouble brewing in the European Monetary System, it would be no surprise to see the dollar surge in the weeks or months ahead.

Currency prices are not driven by headline news; they are driven by global money flow.

And if money is flowing to the world's reserve currency in greater proportion than it is to competing major currencies, the dollar rises.

What's more … if you factor in growing expectations of big trouble brewing in the European Monetary System, a system that was supposed to displace the U.S. dollar's world reserve currency status, it would be no surprise to see the dollar surge in a huge flight to quality in the weeks or months ahead.

So, to any dollar bears out there: You have been warned by me — yet again!

Best wishes,


P.S. Are you hungry for the latest on what's going on in the currency markets? Then be sure to check out my blog .

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and 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