Tuesday, April 12, 2011
Broader view of the US Dollar
Following is a much broader view of the Dollar on the world markets than the USDX. The Broad Dollar index is just as ugly as the USDX.
Goldman Sachs provides opportunity
News this morning that GS recommended clients book profits on long commodity positions in anticipation of a short term correction should be taken for what it is - their clients may be long but GS is short.
The US Dollar has breached a technically significant level of chart support near the 75 level basis the USDX. There now remains only one subsequent level of support just above 74 before the greenback has nothing but air between it and its all time low. If it fails to recover 75 before the end of the day, it is on track to test 74.
Bonds have taken off to the upside again as traders are running away from risk trades as news filters out about the nuclear disaster in Japan becoming further aggravated. Talk of a global slowdown is the order of the day.
I bring this up because even though risk trades are being lifted and there is some Yen carry trade unwinding this morning, the US Dollar is abysmally sick on the price chart. It is not getting any safe haven bid. Makes me want to rush out and sell gold and load up on more US Dollar denominated paper!
The widespread selling in commodities is indiscriminate today - it is related to money flows once again as even the grains are being sold in spite of the strongly bullish set of fundamentals in that complex.
Have you ever noticed how insane all this must look to unbiased spectators? Goldman says: "SELL" and the world stops eating!
The US Dollar has breached a technically significant level of chart support near the 75 level basis the USDX. There now remains only one subsequent level of support just above 74 before the greenback has nothing but air between it and its all time low. If it fails to recover 75 before the end of the day, it is on track to test 74.
Bonds have taken off to the upside again as traders are running away from risk trades as news filters out about the nuclear disaster in Japan becoming further aggravated. Talk of a global slowdown is the order of the day.
I bring this up because even though risk trades are being lifted and there is some Yen carry trade unwinding this morning, the US Dollar is abysmally sick on the price chart. It is not getting any safe haven bid. Makes me want to rush out and sell gold and load up on more US Dollar denominated paper!
The widespread selling in commodities is indiscriminate today - it is related to money flows once again as even the grains are being sold in spite of the strongly bullish set of fundamentals in that complex.
Have you ever noticed how insane all this must look to unbiased spectators? Goldman says: "SELL" and the world stops eating!
Monday, April 11, 2011
Saturday, April 9, 2011
Trader Dan on King World News Weekly Metals Wrap
Click here to listen to my regular weekly radio interview with Eric King of King World News on the Weekly Metals Wrap
Friday, April 8, 2011
Federal Reserve adds $22 billion in Treasuries to its Balance Sheet this week
Since the beginning of December 2010, the Fed has purchased an average of $24 billion of Treasuries each and every week. They are now holding an astonishing $1.345 TRILLION in US Treasury obligations making them the largest holder of Treasuries on the planet, larger than even China with its reported $1.116 Trillion in Treasury holdings.
Fears still remain that Japan will become a net seller of US Treasuries to fund the rebuilding of their shattered nation. Current holdings for Japan are $882.3 Billion.
The question remains unanswered - who is supposedly going to step up to purchase any Treasuries that the Fed might wish to sell in order to reduce their balance sheet given the fact that their yields remain abysmally low compared to other nations around the world?
When you see crude oil over $112 and Brent knocking on the door of $130, with corn at record highs and the CCI (Continuous Commodity Index) attempting to retest its all time high, it is a given that food and energy costs are soaring and that severe inflationary pressures are building in the US economy. Anyone who buys Treasury debt at current yields, especially in the face of a falling Dollar, is practically guaranteeing themselves tremendous losses.
So to whom will the Fed sell this stuff to? Those that answer the primary dealers will buy it back are seemingly ignoring the fact that were this the case, the stock market would drop like a lead balloon as noted by the direct link between the size of the Fed's balance sheet and the level of the S&P 500.
The answer is that there is no solution to QE. It cannot be undone without creating havoc somewhere.
Fears still remain that Japan will become a net seller of US Treasuries to fund the rebuilding of their shattered nation. Current holdings for Japan are $882.3 Billion.
The question remains unanswered - who is supposedly going to step up to purchase any Treasuries that the Fed might wish to sell in order to reduce their balance sheet given the fact that their yields remain abysmally low compared to other nations around the world?
When you see crude oil over $112 and Brent knocking on the door of $130, with corn at record highs and the CCI (Continuous Commodity Index) attempting to retest its all time high, it is a given that food and energy costs are soaring and that severe inflationary pressures are building in the US economy. Anyone who buys Treasury debt at current yields, especially in the face of a falling Dollar, is practically guaranteeing themselves tremendous losses.
So to whom will the Fed sell this stuff to? Those that answer the primary dealers will buy it back are seemingly ignoring the fact that were this the case, the stock market would drop like a lead balloon as noted by the direct link between the size of the Fed's balance sheet and the level of the S&P 500.
The answer is that there is no solution to QE. It cannot be undone without creating havoc somewhere.
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