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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (852)9/4/2007 12:42:48 PM
From: stan_hughes  Read Replies (1) of 71426
 
I guess part of the analysis has to be based upon whether you think the USD is big enough to control technically (i.e. such as the stock market can be 'steered' using futures).

I personally don't believe that the USD forex rate can be controlled -- IMO it's too big a beast -- that opinion stated, I operate on the premise that the USD rate genuinely reflects capital flows. So if the clownbuck is rising even mildly, that's a simple case of 'more in than out' rather than manipulation, although that statement doesn't speak very well to what form the net inflows are taking.

I have read the recent work by Russ Winter about foreign sales of treasuries, but I also just finished reading some other stats reflecting record purchases of US stocks recently -- has there been a foreign shift out of US debt into US equities, with a slight tipping of the scales net to the buy side and pushing up the dollar?

Meanwhile back at the ranch, there's also the trade balance to consider -- if I'm correct about the US consumer going AWOL here, since they've been buying mostly foreign-made goods all these years, maybe we're having an ironic temporary rally in the USD for lack of outflows thanks to JSP and his defaulted ARM calling it a day and skipping those trips to the mall in August -- import/export data isn't current enough to test that theory yet.

Last but not least there is the interest rate differential conundrum to ponder -- if the USD is acting stronger here, then perhaps investment money is starting to exit the hot currencies in anticipation of a global recession where foreign interest rates will get chopped faster than US rates because of the huge pre-existing US foreign debt.

Lots of moving parts here -- pick a scenario and bet on it I guess, if it's currency betting you need to be doing
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