This is why I have been holding off on jumping into the Swissie trade. I will only jump in heavily at the end of the year. If it were my company, I'd repatriate every penny I could declare at these rates, including 2005 profits.
FOREX-Dollar gains vs euro: repatriation flows cited
yahoo.reuters.com
Wed Dec 21, 2005 12:05 PM ET
(Updates prices, adds comment)
By John Parry
NEW YORK, Dec 21 (Reuters) - The dollar rose against the euro on Wednesday, helped by talk of repatriation of U.S. companies' foreign earnings into dollars, illiquid market conditions and meeting of technical targets, traders said,
A mixed third quarter U.S. gross domestic product report earlier didn't give the dollar much direction.
"We are starting to hear of small pieces of HIA flows that are starting to kick in, with technical and momentum accounts also selling euros," said Tim O'Sullivan, trading manager with Gain Capital in Warren, New Jersey.
U.S. companies' foreign subsidiaries can repatriate foreign earnings into dollars and get a one-time reduced tax rate during 2005 under the Homeland Investment Act (HIA), which has been a source of support to the dollar for several months.
But as year end approaches, many analysts had said during recent sessions that these inflows into dollars had dried up.
"Most of the market had thought HIA was over, and now it has reemerged and there is the thought that there may be some flows next week," O'Sullivan added.
Late morning the euro was down 0.5 percent from late on Tuesday at $1.1812 . Chart support at around $1.18 has so far saved the euro from further losses.
Against the yen, the dollar hit one-week highs at 117.49 yen , up 0.3 percent from Tuesday. The dollar fell 4 percent against the yen last week, its biggest one-week loss in six years.
Against the Swiss franc , the dollar was up 0.6 percent at 1.3158 francs.
Sterling was down 0.8 percent at $1.7393 .
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