Nbadan
11-08-2004, 02:00 AM
Sellers trading out the dollar can't be good especially with W rolling out another projected year of record debt, and a war in Iraq that see's no end to the cost to the American taxpayers....
Nov. 8 (Bloomberg) -- The dollar may fall to its lowest ever against the euro for a second consecutive week after President George W. Bush signaled he will expand policies that produced record deficits and a 21 percent decline in the currency since he took office in 2001, according to a Bloomberg News survey.
Sixty percent of the traders, strategists and investors questioned on Nov. 5 from Tokyo to New York advised selling the dollar against the euro. Participants also said the U.S. currency will likely drop versus the yen, British pound, Swiss franc and Australian dollar.
``A second-term for Bush doesn't bode well for the dollar,'' said Samarjit Shankar, director of global foreign-exchange strategy at Mellon Financial Corp. in Boston, which manages $625 billion. ``There's no way of convincing the market additional spending on the war can be paid for if you have a lower tax base. It's a fundamental mismatch between spending and revenue.''
Bush, who won a second term on Nov. 2, presided over a record fiscal and current-account deficit at a time when appetite for U.S. securities among foreign investors is diminished. The president, who campaigned on making permanent his $1.85 trillion in tax cuts and prosecuting the war in Iraq, said he will spend political capital ``earned'' during the campaign.
``So many people just want to hammer the dollar,'' said Ashley Davies, a currency strategist in Singapore at UBS AG, the largest trader in the foreign-exchange market. ``An endorsement of the last four years means more of the same. The underlying trend for the dollar is down.''
...more...
Bloomberg (http://quote.bloomberg.com/apps/news?pid=10000006&sid=a6qeFkuWGzl0&refer=home)
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Fewer buyers of dollars mean higher interest rates...
Speculative traders in Chicago last week racked up the highest number of long-euro, short-dollar contracts on record. Options traders have reported brisk business in euro calls - contracts to buy the euro at a pre-determined rate.
However, the market has been rife with rumours that the latest wave of selling has been led by foreign governments seeking to cut their exposure to US assets.
India and Russia have reportedly been selling US assets, as well as petrodollar-rich Middle Eastern investors.
China, which has $515bn of reserves, was also said to be selling dollars and buying Asian currencies in readiness to switch the renminbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at. Any re-allocation could push the dollar sharply lower and Treasury yields markedly higher.
...more at link...
The dollar's value falls, but a falling dollar means our exports are more competitive in the global market.
But wait! We've outsourced so many of our manufacturing jobs, we don't make as many things that can be exported. So, we're just sitting here with a currency with less power to buy things that are imported (which is making up a larger and larger share of the products we purchase).
As long as the nations that we owe accept the dollar "notes" in payment, then commerce continues as usual - the difference is that their products go up on price and it takes more dollars to purchase new goods for importation.
Currently, China has it yuan pegged at a specific number (around 8.28) but our illustrious government is hammering on them to let the yuan "float", which will increase the price of goods imported from China.
I really think we're on our way to a big economic crash. Bush and his stooges cannot keep manipulating, juggling and spinning the economic stats for four more years. Too many people will be on to their sham by then.
Nov. 8 (Bloomberg) -- The dollar may fall to its lowest ever against the euro for a second consecutive week after President George W. Bush signaled he will expand policies that produced record deficits and a 21 percent decline in the currency since he took office in 2001, according to a Bloomberg News survey.
Sixty percent of the traders, strategists and investors questioned on Nov. 5 from Tokyo to New York advised selling the dollar against the euro. Participants also said the U.S. currency will likely drop versus the yen, British pound, Swiss franc and Australian dollar.
``A second-term for Bush doesn't bode well for the dollar,'' said Samarjit Shankar, director of global foreign-exchange strategy at Mellon Financial Corp. in Boston, which manages $625 billion. ``There's no way of convincing the market additional spending on the war can be paid for if you have a lower tax base. It's a fundamental mismatch between spending and revenue.''
Bush, who won a second term on Nov. 2, presided over a record fiscal and current-account deficit at a time when appetite for U.S. securities among foreign investors is diminished. The president, who campaigned on making permanent his $1.85 trillion in tax cuts and prosecuting the war in Iraq, said he will spend political capital ``earned'' during the campaign.
``So many people just want to hammer the dollar,'' said Ashley Davies, a currency strategist in Singapore at UBS AG, the largest trader in the foreign-exchange market. ``An endorsement of the last four years means more of the same. The underlying trend for the dollar is down.''
...more...
Bloomberg (http://quote.bloomberg.com/apps/news?pid=10000006&sid=a6qeFkuWGzl0&refer=home)
--
Fewer buyers of dollars mean higher interest rates...
Speculative traders in Chicago last week racked up the highest number of long-euro, short-dollar contracts on record. Options traders have reported brisk business in euro calls - contracts to buy the euro at a pre-determined rate.
However, the market has been rife with rumours that the latest wave of selling has been led by foreign governments seeking to cut their exposure to US assets.
India and Russia have reportedly been selling US assets, as well as petrodollar-rich Middle Eastern investors.
China, which has $515bn of reserves, was also said to be selling dollars and buying Asian currencies in readiness to switch the renminbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at. Any re-allocation could push the dollar sharply lower and Treasury yields markedly higher.
...more at link...
The dollar's value falls, but a falling dollar means our exports are more competitive in the global market.
But wait! We've outsourced so many of our manufacturing jobs, we don't make as many things that can be exported. So, we're just sitting here with a currency with less power to buy things that are imported (which is making up a larger and larger share of the products we purchase).
As long as the nations that we owe accept the dollar "notes" in payment, then commerce continues as usual - the difference is that their products go up on price and it takes more dollars to purchase new goods for importation.
Currently, China has it yuan pegged at a specific number (around 8.28) but our illustrious government is hammering on them to let the yuan "float", which will increase the price of goods imported from China.
I really think we're on our way to a big economic crash. Bush and his stooges cannot keep manipulating, juggling and spinning the economic stats for four more years. Too many people will be on to their sham by then.