Posted on 05/16/2005 1:12:17 AM PDT by RWR8189
TOKYO (Reuters) - The dollar rallied to a seven-month high against the euro on Monday after a run of surprisingly upbeat data eased worries that the United States may not attract enough capital to fund its huge external deficit.
An above-consensus rise in new jobs and retail sales in April and a narrower-than-expected trade deficit in March have fueled buying in the dollar, pushing the single European currency below its major support level this year.
"Investors had preferred the euro. But now they are shifting some of their funds back to the dollar," said Takehiko Jimbo, a forex sales manager at Mitsubishi Trust and Banking.
The euro fell as far as $1.2582 -- its lowest level since Oct. 21. Last week the U.S. currency pushed through long-held resistance levels around $1.27-$1.28.
The dollar has gained around 8.4 percent against the euro since it hit a record low at the end of December.
The U.S. currency also struck a one-month high of 107.52 yen, up 5.7 percent from a five-year low hit on Jan. 17.
Dollar bulls see the overall rally continuing, as an upbeat performance of the U.S. economy compared with other economies boosts expectations for the Federal Reserve to keep raising interest rates, helping to lure more funds to dollars.
The dollar also gained against other currencies.
The British pound dropped to a six-month low of $1.8465. The Australian dollar marked a four-month low of 75.82 U.S. cents.
The U.S. currency hit a seven-month high around 1.2285 Swiss francs.
Still, traders said that offers from Japanese exporters have curbed the dollar's advance versus the yen.
Exporters that have assumed a dollar exchange rate of 105 yen for the current business year ending in March 2006 often sell the U.S. currency in forward trade to hedge against a future fall in the dollar.
The yen was unfazed by a smaller-than-expected Japanese current account surplus, which rose 0.5 percent in March from a year earlier to 1.8511 trillion yen ($17.23 billion).
FEWER RISKS
Some analysts said the dollar's rise was also driven by repatriation by U.S. investors trying to reduce their risk exposure due to rumors of big losses at a hedge fund.
A rise in U.S. Treasury prices on Friday reflected such sentiment, traders said.
"Commodity prices are falling. It seems speculative money that flew out of dollars is now returning," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.
"Given uncertainty about financial markets, investors are reducing risk."
Rising U.S. interest rates are also encouraging investors to put their money into U.S. deposits, rather than buying commodities and other products.
The Fed has raised rates eight times since last June, pushing its fund rate to three percent from one percent, and the market expects the central bank to raise rates again in June.
The next point of focus is U.S. capital flows data for March, due at 1300 GMT, to see how well the United States is funding its huge current account deficit. Japan's capital flows data on Monday showed Japanese investors had a strong appetite for foreign bonds in April, buying a net 4.00 trillion yen ($37.25 billion) worth.
($1=107.43 yen)
Willie Green and the doom&gloomers will be so sad. :-)
Go dollar!
I'm living in Germany and would be very happy to see the dollar continur this trend.
Generally it's a bad move to bet against the ability of the Bush team to manage the US economy. Some of these lefty hedge fund managers who overpaid for oil contracts and bet against the dollar are just beginning to reach this same conclusion (much to their chagrin and dismay.)
If so, that's great. I think that money will boost our economy, just as the tax break was designed to do.
Maybe the powers-that-be will see the light and do this again another year.
And then there are FR's doom&gloomers, who haven't called a single market move correctly, since FR's inception. LOL
Just wondering, why do you think the SEC is "after Buffet in a big way."
Soros and Buffet have been trying to bring down the president, since early last year, BTW and have lost many millions in the process. They were both shorting the dollar and went long in oil. The dollar never went where they wanted it to and they went long in oil when it it all of a sudden went DOWN, around the time of the GOP Convention last summer. :-)
Oh, is this rich:
1) The data is not "surprising," least of all to the purveyors of agitprop in the MSM that have been trying to sabotage a booming economy through their doom and gloom" reportage. If there is a "surprise" here it is a "surprise" in the sense that they have been caught in the act of attempting to talk down the economy for purely partisan political reasons. I would suggest that rather than "surprised", they are shocked: Shocked to find that they do not have the clout that they imagine that they should have. Investors, of course, will in the end react rationally to markets and wealth creation. Investors, on the other hand, should be "shocked" to find that they ever listened to these miscreants in the firsts place, and quite sheepishly so too, but should be pleasantly "surprised" to find that their own good sense prevailed in the end.
With oil prices being what they have been, coupled with the blows struck at the economy by 911 and everything that followed, the robustness of the recovery has proven itself yet again.
2) A recovering dollar has little to do with any of this; it has to do with the Fed raising rates to a rational level. Currency rates in todays markets reflect little more than the rates of central banks (and, of course, manipulations of currency markets and policies by the Asian governments so inclined.) If it were otherwise there would be no rational reason at all to be in Euros. Smart money "parked" money there pending a) Rate run ups by the Fed, and b) Movements to unpeg the Yuan.
So on the surface these "experts" would appear to know absolutely nothing about what is going on in there own so called "field of expertise." Well, of course, they do know better, they just think hat the rest of us do not know any better than to listen to their deeply dishonest attempt to manipulate opinion for partisan political purposes.
You know, that bill was passed to appease the Euros and the WTO, they thought that this would hurt us, but they did not see that they playing directly into the administraion's hands. Bet they regret ever taking this up with the WTO now. Too funny.
Someone call the "Genius of Berkshire" and tell him his bet on the dollar is about to lose another 300 million. Oh and his Re-insurance company is about to be held criminally liable for fake transactions. This all from the moral center of the Democratic Center of finance...sarcasm off /facts still right.
probably because his insurance company(S) have manipulated financial information to improve earnings or revenues
spritzer may have opened a can of worms that buffet was in
Though I'm no highly educated economists, unpegging the Yuan to the dollar makes perfect sense for the US and China. I believe China, because of their extremely low wages vs high volumes of cheap exports, inflation will, to some degree, hit the Chinese economy. Because of their own sharply increasingly higher demands on scrap metal and raw materials, they have themselves driven up their own costs with higher oil prices too. China has to compete with Taiwan, Korea, Malaysia, and Japan for the same goods they import, and those competing countries are highly competitive in their finished goods exports too.
The domestic Chinese inflation has been lagging, but will (has) start (started) to show up. This will after some time, drive up their wages and in turn, drive up their manufacturing costs as to be more more competitive with fellow Asian countries.
I could never completely understand why the Feds dropped our interest rates so low, unless to decrease US costs of finished good exports.
We're going to be spending as much as 3 weeks in Russia in the next couple of months, and last trip our best rate was Rb27.35. Now it's up to 28. here's hoping it hits 30, that'll cut our hotel bill from $93 to $83 per night.
Had the democrats been in charge they would have jacked up taxes, interest rates and enlarged handouts. They could well have caused a depression.
The Administration's handling of all of this was nothing less than masterful. They also should be lauded for not being stampeded by the MSM - they knew it would take time, that patience was required and that partisanship should be avoided.
Perhaps someday when a meaningful history of the crisis is written they will get the credit they deserve (that one would require us taking back the academy.
The world needs to understand that the WOT is a global economic strain and cooperate to the fullest to stamp out the radical murders.
$10.00 a night will buy a lot of vodka...
Thanks to the friendly Russians we met in the Moscow airport, I've developed more expensive tastes in Vodka - Altai & Flagman - but 280 rubles would still be enough to get thoroughly hammered even with premium brands.
china will re-adjust its currency peg by the end of June.
china will not float, they will adjust the peg. let's see by how much, I am betting it will be a token 5% move. if it floated, I think we would see a 40% move.
They will repeg in a series of repeggings. I imagine 40% from today in about 7 to 10 years. It may be too late for them as the rest of the world has just about had it. The EU will start putting up a wall soon; the USA may feel that pressure sooon to. If the Dems get back in power, it surely will happen here. That leaves the Japanese. There recovery is based on a China expansion primarily, but their high end markets are here and in the EU. so they are between a rock and a hard place.
There will be some real economic issues imerging soon as regard China: IP rip offs, huge banking corruption and the failure of many multinational to get a real profit from all of the investment that they have put in. There will be some severe political probelms too, both internally and externally.
I think that the gravy train in china is just about over - I give it another 2 or three years tops. It was all artificial anyway. China is overrated as a economic threat. We should be more worried about India. We also need to go after the EU in terms of trade barriers and subsidies.
My bet is that a decade from now we will wonder what all the fuss was about China.
Yes, I think that the calculators have been working overtime at the Bank of Japan and the Japanese Ministry of Finance to try work out the scenarios.
BRAVO.........great post. You explained it accurately and simply. :-)
Thanks
You're most welcome. :-)
Buffett deepens dollar worries
Warren Buffett sees no way but down for US dollar
Soros sounds dollar warning (Soros tries to kill America, again)
Greenback account is not worth the weight in dollars (Soros at it again)
The Fed has gone along with the Rats almost every time. THe Fed is full of liberals.
Warren Buffett sees no way but down for US dollar
3
posted on 01/19/2005 8:54:56 PM EST by Always Right : I believe Warren is dead wrong here. The US still has the strongest economy by far in the entire world and the best currency. What is gonna beat it out, the Euro? I think not. The US economy will grow its way out of debt like it did after Reagan. We have always had trade deficits and the dollar always remained strong.4 posted on 01/19/2005 9:00:09 PM EST by spetznaz I wouldn't discount Warren so quickly. No one is infallible, but Mr. Buffet comes quite close.
5
posted on 01/19/2005 9:01:00 PM EST by GSlob: Well, not many people made money by betting against Warren Buffett. Because of the scale he operates on, he has to be concerned with macro-trends.?? - One day does not make a trend, nor would a week or a month make it.
WTF? This has been a five month trend. Buffet has lost rough $500 Million for his company betting against dollars. Buffet was dead wrong.
We can all thank Soros for cutting us some slack.
500 mil is the pocket change for the guy. And given the size of his positions (like it was in silver years ago) both accumulating and unloading them takes time - thus he has to operate on a long time scale.
Warren and Soros are NOT as smart/clever as they and a few blind followers imagine them to be. :-)
Both of them haves lost many fortunes, over the past year, in their attempt to manipulate the markets and politics. Oh yes, and then there is the wee problem Warren is neck deep in, with the SEC and Spitzer's investigation of AIG. ;^)
FYI...unloading vast holdings, quickly, can be done easily and swiftly; especially is a quickly moving market.
It was the Hunt brothers, who tried to corner the silver market and neither Buffet nor Soros was involved with that mess.
I remember reading about it (in WSJ, I believe) a few years ago (WAY after Hunt brothers' affair) that Warren Buffett was heavily involved in the silver market at one time. There were enough signs of unusual activity there, IIRC, so they started looking at it - and found Buffett, and backed off. They were reporting that he allegedly held about 4000 metric tons, either physical or as future contracts.
And if they had really done the research, they would have know immediately, whether it was futures or options or whatever, that he was immersed in. IT'S PUBLIC RECORD.
And since you GOOGLED and didn't find anything from the WSJ, my statement stands.
Since your only experience with how markets work, is owning a few common shares of Berkshire,it would behoove you to abstain from attempting to post as though you knew about this topic; you don't and are biased.
Oh and BTW, owning 37% of the world's supply of silver,IN A HEDGE FUND, isn't cornering the market at all. :-)
I just picked and copied the first blasted link on search for "buffett, silver". There were a lot more of them. I remember reading about the story in WSJ, but Time reference came first on the search - they were writing it up as a bigger scandal than it was.
And I still stand by my post ....Buffet is quite often right, and while he is not infallible nor omniscient he is an extremely adept investor and just as honed a speculator. And while he has made investment decisions that have not panned out, and speculative movements that have squeezed him, his record is quite stellar. Actually all of the major investors/speculators past and present have had runs of bad luck/flawed logic, but overall they have made more profitable market movements than not. I could include the 'mistakes' of people ranging from such luminaries as Cohen and Li Ka-Shing in the investment fields, to even speculators like Mobius and Soros. I could show how they have made imprudent decisions. However at the end of the day all are either billionaires or high centillionaires, and all have done so by placing bets that have high reward potentials (which also makes them hit the news because they also ahve a high risk potential that the media likes to report on).
And let me also add that there are many times I have said that betting against the US economy is a fool's gambit. Many times. Hence if you are trying to use that one statement I made concerning Buffet (which I still stand by) as a shell to lump me with anti-US economy/'the sky is falling kooks' then you are quite mistaken. Iam as far from a 'sky is falling' kook as you can probably get (without ending up at the other spectrum where people thrive in self-perpetuated myopia). I'll call a spade a spade, but I will not run about like a headless hen, neither will i close my eyes and repeat an 'everything is peaches' mantra when things are actually day old strawberry cream. With that said I have always maintained that the US economy is the most robust system on this planet, and betting against it is a fool's errand. Moreover I even listed once folk who thought they could bet against our economy and ended up with burnt pocket linings and the baying calls of creditor's hounds streaming after them.
However you can decide to pick my comments on Buffett and weave whatever conclusions from them. In fact let me make it easy for you ....I support my comments 100% and would post them the same exact way today as I did then. Actually let me even take a bigger step and bring up Soros. I think he has made many good investments over the years (yep, that should give you a lot of weaving material). And I'd say he has made far more prudent financial decisions than injudicious ones. Make of that what you will. And you can decide to ignore the remainder of what I have to say. That Soros is one of the vilest individuals I know, that Soros gains pleasure from using his resources to play with people and countries, and that Soros is absolutely anti-American and would stoop so low as to try and buy an election! All around bad guy. But hey ....I said he has made prudent financial decisions, so you can go ahead and say Spetz 'supports' Soros in some future thread and ignore everything else i said.
As an aside: This is why many people are afraid of giving the media statements. One snip can be taken, and it can present the exact opposite of someone's beliefs. I'm sure that there are soundbytes out there that if snipped in the right manner can make Mother Teresa seem like Pol Pot.
And you know what's funny? I am certain I can go and pull your name up and dredge for past statements ....probably on that same thread, and come up with some 'I told you so' spiel. Fortunately I have better things to do, and I have already wasted enough time retorting to some ego-goaded 'guess what i dredged from the past' post.
"Scandal" ? Unless Warren did something other than just buying a whole lot of futures or option, there's no "scandal" at all.
Well, they tried to blow it into a scandal, suspecting Hunts' sequel, found Warren Buffett, chewed around - and backed off. Scandal is, after all, a media phenomenon. No legal actions were undertaken, IIRC. Just what I referred to earlier.
And you know what's funny? I am certain I can go and pull your name up and dredge for past statements ....probably on that same thread, and come up with some 'I told you so' spiel.
You can search, but my record is fairly solid. My worst prediction was I thought there was no way the Supremes would allow McCain's Finance Reform Law to stand. I still don't believe a former ACLUer like Ginsburg would not stand up for the First Amendment. But economically I have been blowing the doom and gloomers out of the water on a regular basis. Some owe me money but have never paid up.
1. The repatriation is a one time thing, so this boost would just be temporary. 2. A lot of the money offshore was already denominated in dollars, but held in offshore banks.
As for the doom and gloomers. I'm not one of them (unless we are talking about GM, an aspect whereby I will rant against Detroit's lunacy for days straight. LOL). On economical matters one would have to be a fool, a pessimist, a speculator (with significant weight), or delusional to place bets against the US economy. I'm not a fool, I abhor pessimists (unless they are ranting about GM), while I am not per se 'risk averse' I am a tad bit too future minded to be a speculator (and anyways i do not have resources to the level of a Soros or Li Ka shin, not yet), and while I have the occasional flight of fancy I am definitely not delusional. Thus rustling the reeds my way will not bring any game.
Now, start a thread on GM (especially if you have a picture of the Aztek) and it is GUARANTEED MONEY I will be there ranting and raving. However if you are on the warpath for doom and gloomers check elsewhere.
Oh, as for Ginsburg and the ACLU I discovered something interesting (obvious to most but quite interesting to me). The ACLU claim to be pro-free speech and all that stuff, but if you scrutinize them for the last decade or so it becomes evident that their actions run contrary to their precepts. At the very least they are HIGHLY selective as to what they will protect as free speech, and what they will trample on the 1st amendment in their strive to stiffle.
Another word for the above starts with a 'H' and ends with 'ypocritical.'
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