Currency Newswire » US Dollar Risk

If the Dollar Breaks under 77.43…

admin — Mon, 24 Aug 2009 04:25:05 +0000

..then an ending diagonal may be in play. Keep an eye out for this pattern if it breaks under the recent low.

Russia and India Question Reliance on Dollar Before G-8 Summit

admin — Mon, 06 Jul 2009 00:27:52 +0000

Russia and India said the world economy is too reliant on the U.S. dollar and called for changes in how $6.5 trillion in currency reserves are managed, as Group of Eight leaders prepare to meet this week.

“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency. Read more…

Dollar Drops as China Repeats Call for New Reserve Currency

admin — Fri, 26 Jun 2009 20:58:38 +0000

The dollar fell against most of its major counterparts after China repeated its call for a supranational currency “delinked” from sovereign nations.

The greenback headed for its biggest weekly loss against the euro in four weeks after the People’s Bank of China said the International Monetary Fund should manage more of members’ foreign-exchange reserves. A rally in Treasuries this week pushed the yield on the benchmark 10-year note down the most since December, lowering expected returns.

“The dollar’s status as a reserve currency is being questioned,” said Benedikt Germanier, a foreign-exchange strategist in Stamford, Connecticut, at UBS AG, the second- largest currency trader. Read more…

U.S. Beats War Drum as Iran Dumps the Dollar

admin — Thu, 18 Jun 2009 16:49:11 +0000

The seemingly ever escalating rhetoric against Iran by U.S. officials took another step forward today. A senior military official leaked to the press plans to publicly reveal the evidence of weapons caches found in Iraq which can be directly traced back to Iran.

The types of weapons found such as roadside bombs are believed to have been meant for use against the occupying American forces.

This plan to publicly present evidence of Iranian support for Shiite militias inside of Iraq comes at virtually the same time that Iranian officials have confirmed that they have completely dumped the dollar in their oil trades. Read more…

US Dollar Correlation to Gold Signals Risk to Longer-Term Trend

admin — Wed, 17 Jun 2009 17:11:33 +0000

The correlation between the US Dollar and Gold prices has picked up considerably as of late, as a fear of excessive US fiscal and monetary stimuli have increased the lure of gold as a hedge against dollar weakness. In fact, the 20-day rolling correlation between the Euro/US Dollar and COMEX Gold futures now stands near record-highs after having fallen near all-time lows earlier this year.
Read more…

Suitcase with $134 Billion Puts Dollar on Edge

admin — Wed, 17 Jun 2009 16:23:04 +0000

It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale. Read more…

The American Empire Is Bankrupt

admin — Wed, 17 Jun 2009 03:57:16 +0000

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.” Read more…

U.S. Dollar: the Good, the Bad and the Ugly

admin — Tue, 16 Jun 2009 17:44:06 +0000

Russian President Medvedev suggests the dollar is on its way out; Russian Finance minister Kudrin says there is no substitute for the dollar. The Chinese see a need to diversify out of the dollar; the Japanese say their trust in the dollar is unshakable. Let’s look at this puzzle and make some sense of it.

It’s usually more productive to look at what policy makers do rather than what they say. Having said that, this time around, the talk also speaks volumes. Notably, world leaders have expressed their concern about the U.S. dollar and a need to diversify, to reduce dependence on the U.S., to build new alliances as well as to strengthen domestic markets. This is the strategic perspective. Conversely, when a finance minister speaks, it is the realistic perspective. There is simply no substitute for the U.S. dollar today; no other market is as deep and liquid, or able to absorb the cash that needs to be deployed by central banks around the world. The eurozone is (a distant) second, with no clear third contender in line.

When China announced it sharply increased its gold holdings, their gold holdings actually decreased as a percentage of total reserves. That’s because the gold market is tiny compared to the money markets (or even compared to most other economic sectors) and China has mostly been acquiring domestic gold production, to avoid causing disruptions in the world markets.
Read more…

Dollar Poses Dilemma for Bric Countries

admin — Tue, 16 Jun 2009 17:37:35 +0000

Brazil, Russia, India and China, collectively known as the Bric countries, are holding their first formal summit in the Russian city of Yekaterinburg.

On the agenda is the role of the dollar and its status as the world’s dominant currency.

China, Russia and, to a lesser extent, Brazil have expressed a desire to see the dollar one day replaced as the world’s main trading currency.

And fears that these big holders of dollar assets may be looking to switch from the US currency have unsettled financial markets and US politicians. Read more about the Bric countries…

De-Dollarization: Dismantling America’s Financial-Military Empire

admin — Mon, 15 Jun 2009 06:36:19 +0000

The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.

Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).

The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO. Read more…

$ Index, Short but Near Term Positives Appearing…

admin — Fri, 05 Jun 2009 16:50:31 +0000

In the May 28th email on the $ index, affirmed the short position (sold on April 27th at 85.60), but warned that further new lows below 79.80 may be limited. The market did indeed weaken from there, reaching a new low at 78.35 this past Wednesday, and before quickly bouncing….

Malaysia and China Mull Ending Trade in Dollars

admin — Fri, 05 Jun 2009 05:49:18 +0000

Malaysia’s prime minister said his country and China are considering conducting their trade in Chinese yuan and Malaysian ringgit, according to a published report.

“We can consider whether we can use local currencies to facilitate trade financing between our two countries,” Malaysian Prime Minister Najib Abdul Razak told reporters at a briefing Wednesday, according to The Wall Street Journal. Najib spoke after meeting with China’s premier, Wen Jiabao. Read more…

Follow the Money… Out of the U.S. Dollar?

admin — Tue, 12 May 2009 18:41:10 +0000

Recently, stock markets appear to have experienced an almost euphoric phase, seemingly shrugging off most negative news flow day after day. Whether or not you believe in the so-called “green shoots” of economic recovery, a significant economic rebound, or a continued decline in economic activity, one thing seems abundantly clear: investors have been becoming less risk averse. The most commonly followed “fear indicator”, the VIX index, has retracted (likewise, other commonly followed indicators such as the TED spread has tightened and OIS spreads have reverted to levels not seen since the Lehman Brothers collapse), three month T-bill yields have recently risen and equity markets around the world have rebounded from March lows.

Let’s not get ahead of ourselves just yet though. We consider the impetus for the recent stock market rally has been news flow and data pointing to economic stabilization in the U.S., not an economic rebound. Negative news flow and data still seems to predominate, though it appears to be dissipating. As such, we may well be nearing an economic trough, as the rate of decline of economic growth (also referred to as the second derivative of economic growth), appears to be slowing. That said, positive news flow continues to be conspicuous in its absence. Hence, we would caution against misinterpreting current data as a precursor to a looming economic recovery. Indeed, significant economic overhang and headwinds remain, while an economic stabilization, in and of itself, does not portend an imminent economic rebound. Read more about the U.S. Dollar…

Dollar Hovering at Cliff’s Edge

admin — Wed, 06 May 2009 15:52:37 +0000

Is the dollar about to collapse? We’ll know soon enough, since the U.S. Dollar Index fell yesterday to within a hair of an important correction target that we flagged for subscribers a couple of weeks ago. The actual target was 83.45, a Hidden Pivot support that lay just 0.05 points beneath yesterday’s actual low.

We’d expected a bounce from our target, and it came in the form of a sharp rally of 0.81 points off the intraday low at 83.50. However, the surge would need to continue to at least 85.29 by Wednesday’s close to confirm a bullish reversal of the downtrend that has dominated since April 20. On that day, the corrective rally of an even larger downtrend topped at 86.82. Read more about the potential US Dollar collapse…