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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (7176)	6/13/2006 8:18:41 AM
From: elmatador	Respond to of 217737

FED tactic is: Raise until the the first domino tumbles. First domino tumbling the others will follow. No need to increase further than the necessary to the first domino to tumble. Case in point: July 1997 was a point which the Baht first domino tumbled... Case in point: 1982 Mexico first domino tumbled the others followed. Please, remember that those things were used to be negotiated in a back-room deal by the cartel of currencies a.k.a as G7. Plaza Accord, Louvre Accord... Those mechanisms are no longer feasible. First domino candidate? Turkey? South Africa? Brazil?

To: TobagoJack who wrote (7176)	6/13/2006 8:37:25 AM
From: elmatador	Read Replies (1) \| Respond to of 217737

If it passes 7 percent, "then things get very tricky," Zandi said. "Many homeowners will have trouble making payments." By the end of 2004, 35 percent of buyers had adjustable-rate loans, up from 18 percent the previous year, according to the Federal Housing Finance Board's interest rate survey. It will be bad for the US if the first domino is not an outsider!

To: TobagoJack who wrote (7176)	6/15/2006 6:33:33 PM
From: elmatador	Respond to of 217737

It didn;t work: rising interest rate expectations appeared to lose their ability to support the greenback. Where you get money to support the USD? Take it from Gold, oil, commodities and emerging markets to cushion it. only WEAPON? The interest rates. Message 22537417 Dollar loses ground for a second day By Steve Johnson Published: June 15 2006 12:10 \| Last updated: June 15 2006 17:43 The US dollar lost ground for a second session as portfolio inflows into the US disappointed and rising interest rate expectations appeared to lose their ability to support the greenback. The US Treasury reported that net inflows into US assets of more than one-year duration totalled just $46.7bn in April, the lowest figure for a year. This was not only below March inflows of $70.4bn and consensus forecasts for a reading of $60bn plus, it was also insufficient to cover April’s trade deficit of $63.4bn. “At a time when global imbalances have taken on greater importance in the market psyche the decline in inflows will come as a blow to the dollar,” said Mitul Kotecha, head of global FX research at Calyon. Hans Redeker, head of currency strategy at BNP Paribas, was among those to play the data down, arguing that inflows probably rebounded in May, given the recovery in the US Treasury market and a pick-up in corporate bond issuance. However Mr Redeker did speculate that a $12.4bn decline in the Treasury holdings of UK-based investors could indicate declining interest from Middle Eastern oil exporters, many of whom route capital flows through London. “There could have been some liquidation from the Middle East, it is more than likely,” said Mr Redeker. If so, he believed the money had been switched to shorter term US debt instruments not covered by the data, hinting at possible future dollar weakness if this money is actually shifted out of the US. The data, combined with a strong Empire manufacturing survey but weak industrial production numbers, saw the dollar dip 0.2 per cent to $1.2615 to the euro and 0.3 per cent to $1.8481 against sterling, although it was little changed at Y115.06 against the yen and actually firmed 0.4 per cent to C$1.1175 against its Canadian counterpart. The dollar’s softness came despite the futures market moving to price in a 54 per cent chance of an August rate hike, on top of a 100 per cent probability of a rise later this month. This discrepancy led David Gilmore, economist at Foreign Exchange Analytics, to argue that it was the sell-off in higher risk markets, rather than changing rate expectations, that had fuelled the recent dollar rally. “The dollar bounce was wrongly attributed to inflation rhetoric when in fact it was really all about position unwind by leveraged funds and bank prop traders hugely exposed to emerging markets, commodities and global equities,” he said. Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi UFJ, agreed, saying: “The stabilisation in equity markets resulted in the dollar weakening given the recent link between equity market turmoil and dollar strength.” Most emerging markets were calm for a second day. However the Hungarian forint fell 1.2 per cent to an all-time low of Ft273.79 to the euro as Standard & Poor’s cut Hungary’s credit rating, forecasting that the budget deficit would still be 6.8 per cent of GDP by 2009 despite an austerity package unveiled this week, well above the 3 per cent needed for entry to the euro. “This should not come as a surprise, although Hungary is still investment grade,” said Tania Kotsos, senior emerging market strategist at RBC Capital Markets, who added that if the forint fell to Ft275 this could be a buying opportunity, as long as Hungary is not downgraded by any other ratings agencies. The Polish zloty fell 0.7 per cent to a ten-month low of 4.067 zlotys to the euro and the Czech koruna 0.3 per cent to Kc28.393 to the euro amid a degree of contagion. Elsewhere the Swiss franc fell 0.2 per cent to SFr1.5541 to the euro as the Swiss National Bank raised rates by a quarter of a point to 1.5 per cent, scotching minority expectations for a half-point rise.