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Posts by "xaron"
548 Posts Total by "xaron":
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Posts by Anonymous "xaron":
You're right, we have some serious problems in the EU as well, but it's hard to fight against Heli-Ben. ;)
But it's always nice to hear different opinions. :)
I think we will reach 1.55+ levels in Q1 2010 after it's clear that the FED won't hike anytime soon. And they won't do that if they are not 100% that the recession is over. They won't risk a double dip thing.
I agree that we might see 1.38 before but I think that the current levels are already totally overstretched (technically) and a correction is in the cards.
The only things I can imagine are shocks like wars (Israel-Iran?).
The unemployment numbers are still rising and the way the US calculate them does just not show the real picture, IMHO. So the rates will stay low for some time and there even might be more stimulus stuff.
Let's make some assumptions about the money flows for 2010 regarding the Dollar.
So we have on the Dollar demand side:
USD demand (which would support the Dollar) due to:
1) technical corrections within the primary down trend for the Dollar
2) interventions from central banks (more likely if the Euro reaches 1.55+ levels)
3) unwinding of carry trades
As I don't see any systemic risks like in 2008 I think that "safe haven" argument don't count as the Dollar can't be seen as safe haven any longer.
USD supply (which would support non dollar currencies like the Euro) due to:
1) appreciation in value on toxic US portfolios at european banks because of better economic condition and stabilization of the financial system.
2) interest rate differentials (I expect the ECB to hike in march 2010 and continue up to 2.00% till end of 2010 where the FED might hike in H2 earliest if they even hike 2010 at all)
3) a growing US trade and current account deficit
4) diversification from central banks into other currencies
5) the primary USD down trend (just technical again)
That's what I see. Have I forgot something?
I still don't see that necessary demand for the Dollar next year. As far as I know the US has to refinance $2 trillion within the next 12 months. I doubt they will find enough foreign buyers for that amount. So the only option is printing more money and let the FED buy its own treasury stuff...