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by Ashraf Laidi
Posted: Feb 20, 2010 5:00
Comments: 30765
Posted: Feb 20, 2010 5:00
Comments: 30765
Forum Topic:
EUR
Discuss EUR in this thread
forrest
have u seen the emtn program?
"I think rather the FED's objective is to find someone who is both lazy and stupid enoungh to pay the bill."
I could think of the Arabs - Saudis and Emirates buying billions of toys like fighter jets / missile shields while the US plays up the poor Iranians via Ahmadinijat.
The ECB under Trichet claimed to have a lot of bite - but Sarko and Merkel have shown they r toothless and that real monetary and fiscal power still lies with the Franco German governments.
To me fair value for the Euro is around 1.35 - 40. Above 1.50, the Euro is definately overpriced. However, market mechanisms alone do not determine price - Central Bank interventions are key.
The FED is creating panic since Bernake can see that the Tea party / Republicans / Raun Paul etc are all clamouring for austerity which will kill any recovery that the stimulus might have created.
So, the FED is shooting before the people speak in November
Said,
I went to an engineering univ in Pakistan and then for finance / business degree in Rutgers, US. I work out of Munich.
Paris / French universites are great - only that these french institutions were providing the main gurus for "financial engineering" and option pricing for risk that ultimately took (almost) the whole financial system.
There is no more a Keynesian solution for the US economy - Obama has lost the mandate for fiscal easing. The only window open is Friedman style monetary easing and Bernake will go for it. If he does not, rest assured that US is done for the next decade.
TD Securities predicts that the euro will trade at $1.13 by year-end, compared with $1.38 as of Oct. 1, and drop to parity against the dollar next year. The median forecast for the euro against the dollar is for $1.30 by year-end and $1.28 in 2011, according to Bloomberg data
So we should anticipate BoJ action soon providing more liquidity to begin the sequence.
so what does your gut feeling tell you and where is USD headed? specific levels would be appreciated more than just up or down... :) saying a mere up or down... anyone can guess that with 50% accuracy... :)
BoJ did its duty so far.
Look... FED governor Smith says QE is needed next day FED gobernor Jones says QE is not required ... same game at BoE. Now the trader picks what he wants to hear. Then Smith is summoned to bernanke and is ordered tomorrow you'll gonna say the opposite and also Jones is summoned and ordered the same. And so on.
Sorry I am too long in the biz to not smell the bad tricks.
did u come out of the AKU university
they r very good in paris
If your fundamentals were right and if Forex played by fundamentals alone... Euro should be trading on par with USD right now... but it isn't right catnip.... shouldn't have come this far but it did? why do you think so? i leave it up to you... :)
one could argue that the FED is trying to bring the unemployment down by decreasing borowing costs for businesses so that they could hire more and for housing to become cheaper so construction could resume.
however, the macro issue - loss of low and medium skilled jobs in manufacturing that are permanently lost to overseas cannot be fixed by the FED. Its a generation of high school dropout Amercians that were making 20 dollar per hour working in some factory in Ohio who now may find some work at Walmart at 5.75 per hour or be homeless. How do you fix a system with millions of people with not much of a skill and thousands of people coming over from Mexico and willing to do the same job with half the rate.
Opening the US economy for golbal business has been great for the US businesses. Even if jobs move out, the multinationals are happy - you invest in China or where ever the cost is low. thats what Buffet does. Unlike Europe, where there is a social model and job firings in a company take into account social conditions of its employees and the politicians are constantly in an act of saving local jobs (think Germany) - in the US the unions are weak and the business have the main influence in Washington. People are fooled to feel rich in America via the stock market and appreciating house prices and abundance of credit etc. In reality, the common working class is geting poor every year.
But this is the American model.
In my view, the only way out of this stagnation for America is to cheapen the Dollar. Consider what happened to the Dollar during the Nixon era. The sixties were roaring and then came a recession couple with Vietnam war expanses. Nixon went ahead and took out the Dollar convertibility to Gold - (was it 32 $ per ounce?) and what follwed was a weak dollar, high oil prices and high inflation for the next decade. A similar scenario is ensuing now.
A weak dollar is great for the US economy and the US worker.
The main cause for concern would be Oil prices.
The key support for the Dollar Index is around 74 and then 71 coresponding to 1.51 and 1.60 for the Euro Dollar. I think both can be breached in the next few months. For now, I think the Euro would hold 1.35 and would top 1.4 before end of this month.