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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 2338
Posted: Feb 22, 2010 5:00
Comments: 2338
Forum Topic:
USD
Discuss USD
and with mathematical precision at some time the bet is right. This holds as long as one ( or more) currencies don't default and disappear.
From MNI FX Bullets
Nomura offers this outline of how Fed's first ever press
briefing will go: "policy statement released at about 12:30 p.m. EDT,
expect no change in the format of the statement; Statement should read
similar to that of 15 March: "maintaining existing policy of reinvesting
principle payments"; commit to complete $600b purchase program by the
end of June; retain language of continuing to "regularly review."
Press Briefing: start at 2:15 p.m. - expected to last about 45 minutes.
Who will participate: eligible members of the accredited press corps,
may include numerous representatives from regional news organizations,
one participant per media firm. A brief opening statement will likely
recap the 12:30 statement then shift to a longer summation of the new
FOMC forecast. Summary of the FOMC forecast will be released.
Questions will be invited."
Ashraf
From MNI FX Bullets
ECB: President Jean-Claude Trichet stressed in an interview with two
Finnish newspapers the statement by U.S. Treasury Secretary Timothy
Geithner and Federal Reserve Chairman Ben Bernanke that a strong dollar
is in the interests of the United States. "I entirely share this view,"
he said.
Trichet also stressed that need for advanced countries, "without
exception" to have sustainable long-term fiscal positions but said he
trusted that the United States would bring its house into order. "It is
extremely important that the authority of the signatures (on the money)
of the advanced economies is unchallengeable. I personally have full
trust in the United States for preserving its creditworthiness and the
authority of its signature."
Ashraf
China failed to deliver on a weekend revaluation rumour but three other important headlines crossed. 1) Officials said they need to guard against falling U.S. Treasury prices. 2) The PBOCs Zhou said Chinas $3 trillion in fx reserves exceeds a reasonable requirement. 3) The CEO of a state-owned investment company said reserves should be diversified and lowered to $1.3 trillion.
In short, China is threatening to cut its investments in U.S. Treasuries by $1.7 trillion. In comparison, the sum total of Q1 and Q2 is around $2.6 trillion and there is about $14 trillion in marketable debt outstanding. The consequences would be considerable. No surprise then that on Monday the Treasury Dept. announced a US-China meeting for May 9-10 in Washington. We see the Chinese comments as political maneuvering aimed at quieting U.S. calls for a yuan revaluation at those meetings but we also expect some measure of diversification in the near future. This will hurt the USD as we look for them to invest in: a) resources and resource companies b) real estate, especially arable land c) places where their money buys maximum political influence esp. distressed govts. Primary targets will be in the developing world but Australia, Canada and the European periphery will also benefit.
Ashraf
About Thursday's US Q1 GDP figure
Apr 25 / 09:02 EDT
US DATA PREVIEW: Thursday's advance Q1 GDP release is likely to show the weakest GDP in three quarters. Credit Suisse economists expect a 2.0% q-o-q headline, vs 3.1% q-o-q in Q4, with rising price pressures "likely to have taken a toll on consumer sentiment." The economists however say that the soft Q1 reading "would underestimate the economy's progress." In particular, they note steady job creation and strong Q1 ISM "was consistent with growth in excess of 4.0% q-o-q." The median estimate in a Market News International survey of economists looks for Q1 GDP of 1.8% (range 1.3% to 2.7%).
Ashraf