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  • Dollar bulls take a breather...

    * Dollar bulls take a breather... * Paulson is out of control... * From the mouth of babes... * Fingers crossed for Chuck... ** Dollar bulls take a breather... Good day...Just as Chuck predicted, we had a Thundering Thursday yesterday, as thunderstorms moved into the St Louis area early yesterday and are expected to stick around throughout the weekend. Yesterday was a pretty slow day in the currency markets, with the dollar trading in a fairly tight range, but overnight the dollar changed direction and we saw it lose ground across the board for the first time in weeks. This turnaround was seen in the European markets as traders finally started to realize the speed of the increase in the US$ was overdone. But before I get going this morning, I need to run a public service announcement for Chuck. Yesterday's Pfennig announced that the Reserve Bank of New Zealand cut interest rates .25%. This was in error, the bank actually cut .50% to a rate of 7.5%. Chuck realized his error just after hit the send button, and wanted to make sure I let everyone know (He received more than a few emails from readers letting him know his error). The extra quarter point cut was aimed at giving the NZD a good jump start, and Governor Alan Bollard is indicating more rate cuts will be on the way: "We've got room to move,.. We're in a loosening mode." The reaction of the currency markets was the same with a 50 bps cut as it would have been with a 25 bps cut, they sold off the kiwi as the interest rate differentials narrowed....

  • Falling In And Out Of Love...

    * Euro sinks to 1-year low... * RBNZ cuts rates 25 BPS... * Carry Trades continue to unwind... * Fannie and Freddie cause problems for banks... ** Falling In And Out Of Love... Good day... And a Thunderin' Thursday to you! Today we mark 7 years since the "monsters" attacked our great nation and thousands of lives were lost needlessly. My blood still boils at the thought of what happened on Sept 11, 2001, and the thoughts of the twin towers coming down still flashes in my mind. 7 years ago today, we witnessed the horrific scenes from terrorists in our country. I recall trying to come up with words the next day, and just couldn't, so I stuck to currencies, in attempt to keep things as normal as they could be. I hope everyone flies their flag today in remembrance of this day 7 years ago. OK... We're seeing a complete meltdown in the currencies this morning, folks.. The euro has fallen to the low 1.39 handle, and all is looking quite bleak for the single unit right now. Our metals trader, Kristin, sent me this note that she came across regarding the euro......

  • Dollar range bound...

    * Dollar range bound... * German confidence falls... * Aussie and NZD continue to slide... * US to maintain pressure on Chinese... ** Dollar range bound... Good day... Chuck had a rough night, so he decided to stay home and try to get some rest. The Pfennig will be pretty short this morning, as I want to try and get it out as close to the regular time as possible. The currency markets were fairly calm yesterday, with the dollar staying in a pretty tight range before rallying some in early trading this morning. The Euro has lost some ground in European trading as German business and consumer confidence fell more than economists forecast. The Ifo institute's business climate index dropped to a three year low in July and consumer sentiment slumped to the lowest level in five years. Some currency traders pointed to these latest reports as further proof Europe is slipping into recession and that the ECB will need to cut rates before year end. It is obvious by now that the economies of Europe are weakening, and growth will not be able to match last years numbers. But I still believe Trichet and the other voting members of the ECB will continue their hawkish bias, and I don't expect any interest rate moves until sometime next year. This should keep the Euro from falling dramatically away from these current levels....

  • US$ saved by oil...

    * US$ saved by oil... * US Recession? (not according to Paulson)... * New Zealand worst performer in July... * Big Mac Index says buy Asia... ** US$ saved by oil... Good day...And welcome to August. The markets had a little more movement yesterday as the US GDP report came in lower than expected, and had a hidden surprise for dollar bears (more on that later). In addition to the poor GDP numbers, Personal consumption dropped and the GDP Price Index also showed a decrease. The employment cost index was flat, and the weekly jobless claims were slightly higher than expected at 448k. More Americans filed initial unemployment claims last week than at any time in more than five years. The only positive piece of data released in the US yesterday was the volatile (and somewhat unreliable) Chicago Purchasing Managers number which showed an increase back above 50. With all the bad data, the dollar sold off rather sharply and the Euro jumped a full cent to trade over 1.57 for a short while. But the dollar bears didn't celebrate for long, as the dollar sharply reversed course as crude oil prices rode to its rescue. As I explained earlier in the week, the price of crude oil and the US$ have had a very tight relationship lately, with a correlation of .9. Just after the dollar fell due to the GDP releases, crude oil began a sharp $3 drop and saved the US$ from further losses. The price of oil has continued to slide, and is now down over 11% in the past month. This has helped prop the dollar up in spite of a number of poor economic reports here in the US....

  • US consumers come to the rescue of the dollar...

    * US consumers come to the rescue of the $... * European data comes in negative... * Currencies down under take a hit... * Goldman suggests investments in Norway... ** US consumers come to the rescue of the dollar... Good day... The dollar bulls took control of the currency markets yesterday after the US consumer confidence numbers looked slightly less awful than expected. The better than expected confidence number caused the dollar to jump over one and a half cents vs. the Euro and close to 1% vs. the NZD$. The gain by the US$ was the biggest one day move in almost two months. Chuck, who is enjoying a much deserved break this week, sent me his thoughts on this dramatic move by the dollar: "It sure looks like the markets once again, took the bait hook, line and sinker yesterday... I mean, Consumer Confidence rises from a deep dark abyss, and the markets were singing, ding, dong the witch is dead, ding dong the wicked witch is dead. The wicked witch here is the bear and what it's done to the markets this year. Since November, stocks have lost plenty of ground, and I for one truly suspect there will be more losses in the days ahead. But... Not yesterday, and not a losing day for the dollar either! Probably the best 1 day performance I've seen in the dollar in some time......

  • Budget gap to approach $500 billion...

    * Budget gap to approach $500 billion... * Deficits lead to record borrowing by the US... * Commodity currencies take divergent paths... * India raises rates... ** Budget gap to approach $500 billion... Good day... The currency markets were mostly flat yesterday with all of the majors stuck in fairly tight trading ranges. With no economic data released, the trading desks were mostly dead. The story which dominated the screens yesterday was the announcement of a record $490 billion US budget gap. The Bush administration said the US budget deficit will widen to a record next year, leaving a deep budget hole. The bigger shortfall reflects dwindling tax receipts because of the US economic slowdown, the cost of the $168 billion economic stimulus package and spending on the wars in Iraq and Afghanistan. The shortfall reflects a deterioration of the budget over the past seven years. Bush inherited a budget surplus of $128 billion when he took office in 2001. The budget worsened almost immediately, because of recession, the Sept 11 attacks, the beginning of the war in Afghanistan and, later, the war in Iraq....

  • RBNZ Cuts Rates...

    * The dollar swings it mighty hammer! * Weekly Jobless Claims spike! * Exposing the debt in N.Z.... * The Fed's Beige Book is grim... ** RBNZ Cuts Rates... Good day... And a Thunderin' Thursday to you! It's not so Thunderin' for me this morning, as I must have eaten something that didn't agree with me last night... Therefore I was up most the night sick... This will be ever so short-n-sweet, and then I'm going back to bed, I've got a presentation this afternoon with Addison Wiggin, I've got to be in tip-top shape for that! The dollar swung its mighty hammer again yesterday, bringing the euro to the 1.56 handle, with all the other usual suspects falling in line behind the euro. The markets are ga-ga with news that leads them to believe the "worst is over" in the credit crunch... I beg to differ on that, but then, I'm just one guy, one voice, one letter......

  • Taking On Risk Again!

    * Mexico's rate goes higher! * A 100 Billion dollar note? * Euro rates to go higher? * Oil's sell off might be short-lived... ** Taking On Risk Again! Good day... And a Marvelous Monday to you! All my bags are packed, I'm ready to go, the taxi's waiting, he's blowing his horn... Yes, I'm off to Vancouver this morning... This becomes a labor of love for me especially today, with Chris taking off the same week I'm in Vancouver, I'm writing the Pfennig on my way to the airport! Graham Nash wrote a song about that... But I won't go there after the intro! Oh, what the heck! Just a song before I go... This will be short-n-sweet this morning, as I've got to get to the airport! Friday, saw the currencies range bound once again, as the data cupboard was empty. And... We didn't have any major losses print, or we didn't have any news at all about all the rot on the U.S. economy's vine. The Biggest mover was... Drum roll please... The Mexican peso! Yes, the Mexican peso outperformed all other currencies last week, reaching a 5-year high VS the dollar after the Mexican Central Bank raised interest rates 1/4% (25 BPS) to 8%, pushing the peso to its highest level VS the dollar since 2003!...

  • "Somewhat Receded"?

    * Fed leaves rates unchanged... * A dovish tone to the Fed... * Dollar Bulls run for the hills! * Norway raises rates... ** "Somewhat Receded"? Good day... And a Tub Thumpin' Thursday to you! Well... If you are a non-dollar owner, you might want to quickly go to the currency round-up to check on your currency / currencies... The Fed left rates unchanged and were quite dovish in their statement, and the dollar has been sent to the woodshed... Welcome back! Front and Center this morning, we have a currency rally going on, with the euro leading the dogs off the porch to chase the dollar down the street. The single unit has pushed past the 1.57 handle this morning, and the high yielders of Aussie, kiwi, and Brazil are all dancing in the streets because their positive rate differentials are even more in the face of traders now....

  • I Love It When A Plan Comes Together!

    * The dollar trades weaker... * N.Z. Retail Sales collapse! * U.S. Tics recover... * A note from David Galland!...

  • FOMC Finally Comes Clean (sort of)

    * FOMC finally comes clean... * Pound Sterling to drop with falling consumer confidence... * Bank of Japan holds rates... * AUD$ and NZD$ economies prove resilient......

  • Markets May be Saving it up for Today...

    * Consumption rose...* Inflation fell... * Swedish surplus... * Euro setting the tone......

  • A Tale of Two Confidences...

    * Euro gets a boost! * High yielders are soaring again! * Existing Home Sales fall again... * Accepting euros......
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