Mark -- as usual, I have been giving a lot of thought to your views on the market. I am posting a dollar related article to you as I mull things over. A small comment -- the dollar hinges in part on where the fed is on the curve -- is it ahead or behind? What I have been waiting for is a sign that it is behind. But is it? I am not sure. PPI could be the last piece we need to answer this question for now. A strong ppi is very possible -- which would shift us to the downside in stocks -- and a low ppi would clear the air and allow for a little dollar rally which is all we need for US stocks to stage a rally. Good luck:
Thursday August 12, 2:15 pm Eastern Time
(Note: this article is ''in progress''; there will likely be an update soon.)
FX IN EUROPE -Dollar firm as assets keep nerve
LONDON, Aug 12 (Reuters) - The dollar hit two-week highs against the yen, euro and
Swiss franc in Europe on Thursday as investors in U.S. assets absorbed the idea of a
near-term tightening by the U.S. Federal Reserve, analysts said.
The greenback has reversed a weakening trend which had been fuelled by expectations
of a U.S. rate rise this month, a move which markets feared would prompt foreign
investors to divest U.S. stocks and bonds.
But a rate increase was no longer seen as necessarily negative for the dollar, analysts said.
''The message is the economy is slowing down, it might need some help from the Fed to push it further,'' said Alfonso
Prat-Gay, global head of foreign exchange strategy at JP Morgan in London.
Despite a 0.7 percent month-on-month rise in the headline figure in U.S. July retail sales released on Thursday, the
statistics were consistent with a view the U.S. economy was slowing down but might need a rate tightening to engineer a
soft landing.
''As long as the Fed is not seen as being behind the curve, that is not necessarily bad news for the dollar,'' Prat-Gay said.
''Because everything is under control, the Fed is the next one to move and short-run rates going up should support the
dollar.''
(Note: this article is ''in progress''; there will likely be an update soon.) |
