Nice point vak. I meant to explain that the Yen can rise with low rates because the back end of the curve has priced out a bit of the depression gloom in the Japanese economy. Japan is a perfect example of a scenario where equities can rise, counter intuitively, because of currency strength. Although Yen strength makes Japanese exports less price competitive, the rise in JGB yields pacify's investors that Japan is at least turning the corner.
Agreed. My point being though that IMO the Euro is equally a POS. Even if the $ stabalizes, I still see continued strength in gold.
"the rise in JGB yields pacify's investors that Japan is at least turning the corner." yes clearly japanese money is fleeing back to japan, and the ensuing bearish figures for september's foreigne-private US treasury buying is underlining the trend......sort of US's mid 90's virtuose circle, albeit the other way arround..... again in the long run forex market do behave as beauty contest cheering currencies of attractive economies the way equity markets are cheering shares of beautifull companies : by bidding them'up.....
Doug, Here's my opinion about USD. USD is a dominant currency within the global market. Most transactions (both between countries and global corporations) in the global market are conducted in terms of USD. Most, if not all, countries have most of their reserves allocated in USD, because exports and imports between countries usually take form in USD. So, with such significant role in the global market, USD surely effects the market. I am involved in FX market, so I explain it from FX market perspective. Major currency pairs traded are of USD-related. Example: USD/CHF, USD/JPY, EUR/USD, GBP/USD, AUD/USD. If USD strengthens, USD/CHF and USD/JPY move up, and EUR/USD, GBP/USD, and AUD/USD fall. Thus, traders may position themselves in long positions in USD/CHF and USD/JPY while position themselves in short positions in EUR/USD, GBP/USD, and AUD/USD. I don't understand what you mean with "when the markets go up does the dollar go down?" Which market did you refer to? Stocks? FX? Treasuries? or commodities? As for why some companies prefer weak dollar, well, this usually applies to US exporters. Weaker USD means cheaper price of exported US goods. If US goods priced too high, there could be limited market due to limited purchasing power of the world. On the other hand, if the USD is weak, US can import less amount of goods from abroad given the same amount of money compared with the times when USD is stronger. US Treasury has stated its 'strong dollar' mantra repeatedly. This, however, I don't really certain about. Suppose they DO want a strong dollar, why would Bush's Administration lobbied China and Japan to ease their stances regarding their FX policy? If China let loose their FX pegging of CNY, and Bank of Japan stop intervening, surely the USD will fall afterwards. It appears to me, US Treasury still holds its strong dollar policy-in GENERAL, but not against CNY and JPY. Right after some futile efforts to persuade the Chinese government to let loose of CNY peg, the US proposed quotas on Chinese textiles (clothings) and TV sets. Perhaps, I think (just my opinion), as an effort to 'punish' China. Add the EU-US row over steel, all in all, these have created more woes to the USD, since these rows could ignite a global trade war, which in turn, will disrupt the balance of global economy. Hope this helps, Doug. Cheers!
eternalfuture, your post is nice so i thought i may add a grain of salt or 2..... "Major currency pairs traded are of USD-related. Example: USD/CHF, USD/JPY, EUR/USD, GBP/USD, AUD/USD. if USD strengthens, USD/CHF and USD/JPY move up, and EUR/USD, GBP/USD, and AUD/USD fall." this isn't right, it equates with saying something like when cisco's share goes down then jnpr should go up, all other currency (even of develloped countries) aren't equal and can cetainly not be see as simple dollar substitute....even in times of broadbased dollar falls there's usually one pair that takes all the steam while the other remain in there ranges...not to mention market manipulatoin by CBs "US Treasury has stated its 'strong dollar' mantra repeatedly. This, however, I don't really certain about." actually there's a consensus among observers that the strong dollar policy went bust together with paul o'neill "It appears to me, US Treasury still holds its strong dollar policy-in GENERAL, but not against CNY and JPY." since the rate cut campaign started the greenaback only lost like 15% vs the jpy and nothing vs the CNY while losing in the 30% vs the EU, cable and aussi just to mention a few "Right after some futile efforts to persuade the Chinese government to let loose of CNY peg, the US proposed quotas on Chinese textiles (clothings) and TV sets. Perhaps, I think (just my opinion), as an effort to 'punish' China." punish china for what ? buying 100yrd of US bonds a year to keep the people's republic currency pegged to the dollar ? =>maybe it's time to realise us trade deficit (even when accounted for us compagnies exporting to the states from oversees) really is worrying
Hello, here´s a visual overview of markets. Look how dollar correlates very strongly with other markets individual days, but the relationship is unstable for any longer period of time. Best Joe
Greetings Pabst, My post was not intended to refute yours. I was merely pointing out the opposite side of the same coin. And it's a good place for our young information seeker to begin his studies on this topic. In fact, I can hardly find much to disagree with in your responses in this thread. It's always good to hear from the "Old Salts" on this board. There are a few us here, with all the battle scars to prove it I'm sure. Best Regards, Dr. Zhivodka
Thanks! You're definitely one of the guy's on this board whose knowledge and intellect both impresses and intimidates me.