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by Ashraf Laidi
Posted: May 20, 2009 20:02
Comments: 87
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This thread was started in response to the Article:

Dollar Slashed as Fed Goes Shopping

Fed's latest bond buybacks triggers fresh dollar damage, while VIX downside does not spell out the end of equity selling.
 
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B
Florida, United States
Posts: 9
15 years ago
May 26, 2009 15:32
U.S. housing prices hit a record low. But we send the DOW up 150 points off of a consumer survey and a manufacturing survey. Is it too hard to go by real, actual numbers? Looks to me like the new consumer is the banks.

North Korea test nucs and we buy, buy, buy. Please tell me why this is ok?
Carlco
bristol, UK
Posts: 151
15 years ago
May 26, 2009 9:01
thanks ashraf, i can just about keep up with you on gbpusd, everything else is a blur, this week i think is going to blow my mind, especially if countries step in to support $, i think its posturing, but i remember BoJ on the yen in the 90's at about this time actually , everyone winding down for summer and bam! the bank crisis hit and traders being burnt on BoJ imf interventions, so im staying alert for support after failed auctions. i love the way we have end of contracts , auctions and MA's converging this week.
Ashraf Laidi
London, UK
Posts: 0
15 years ago
May 26, 2009 2:55
carlco, Aussie fundamentals are better than those of NZD in terms of gains from metals and agri (gold, copper, wheat) as well as higher yields and better structural balances. I still stick by my strategy of LONG AUDUSD and SHORT AUDNZD. short AUDNZD is occurring on falling equities (currently in the money from the 1.2740s) and failure of triple top.

Ashraf
Carlco
bristol, UK
Posts: 151
15 years ago
May 25, 2009 20:58
refresh my memory on why nzdusd is a preferred trade to audusd
speculator
Posted Anonymously
15 years ago
May 25, 2009 10:56
ashraf. It is clear that other fundamentals are driving fx states and correlations between dollar and extities reducing. But we need to see a sustained decline in equities for traders to buy back the dollar.
Ashraf Laidi
London, UK
Posts: 0
15 years ago
May 25, 2009 10:42
fx618, yields are now rising due to overborrowing and worries that there may not be enough interest in US treasuries i.e. low demand, low bond price, high yield. the positive correlation between dollar and yields has NOT always been intact, and it's breaking down again now. This week will borrow a fresh $100 bln in treasuries, further lifting yields and hurting bond prices as well as the dollar. markets are now talking about 4%yields.

slaiman, the complete breakdown would happen if NEITHER the dollar NOR the yen STOP appreciating during falling equities. so far we're seeing ONLY the dollar no longer rising on falling equities. But perhaps we have to await deeper selloff in order to test whether USD remains under pressure. This week will be key as indices test key support levels. 880 and 8200 in S&P and DOW.

Ashraf
slaiman7
Lebanon
Posts: 31
15 years ago
May 25, 2009 6:26
I appologize if am asking a redundant question. You said about the USD weakening " im closely assessing the relationship between world equities and the yen before i can say whether a breakdown has fully occurred ". Do you mean that in case we witness equities fall, YEN strengthen, and USD weaken, then we can be sure that a breakdown in the risk aversion=strong dollar equation?
fx618
Massachusetts, United States
Posts: 5
15 years ago
May 25, 2009 4:51
Hi Ashraf,

As US is to finance several Trillions of dollars of debt, who is going to lend them with such a low yield? If no one lends them then the bond market & dollar suffers as long as yield/interest rate is lower than other currencies. But when the yield/interest rate rises greater than other currencies, the bond market still suffers but the dollar strengthens b/c of higher rates. Am I correct here? Isn't this what happened in the early 80's? Thanks!
Ashraf Laidi
London, UK
Posts: 0
15 years ago
May 24, 2009 2:40
bubbles, the falling dollar will NOT be a strong enough reason for the Fed to raise rates during the worst recession in 70 years. Perhaps the US treasury may have to as major economies to support the dollar if the decline is too excessive, if the dollar index drops below 76 or 75 in say 2 weeks or if we get to 72 by end of quarter than we got a problem.

hedge, im closely assessing the relationship between world equities and the yen before i can say whether a breakdown has fully occurred. All insights will be added to my Workbook.

taha, we may still see 1.65 but i remain negative sterling against EUR, AUD and CAD. And watch for any news about UK fundamentals and banking situation


Ashraf
SPECULATOR
LONDON, UK
Posts: 17
15 years ago
May 23, 2009 17:26
the dollar will greatly appreciate against the pound this summer
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