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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (1189)	9/28/2007 2:40:14 PM
From: kaydee	Read Replies (1) \| Respond to of 71455

Thanks for the informative post. <<By looking at the size of Euro currency and dollar currency derivative markets, my guess would be that that second major source of Euro appreciation has been pretty much exhausted.>> I want that to be true. But a lot depends on what ECB head says on 10/04, the next ECB meeting date. IMO, ECB will keep the rate at 4% only. But Trichet would love to talk hawkish and make sure Euro rises again, imo. Also, with non farm payroll the next day on 10/05, anything can happen in these Fed sponsored speculative markets. Euro rate of 4% may be near term top, but I am more often wrong than right... <<Once the Yen carry trade blows up, we'll have a real dollar crisis: long term rates will move sharply up and the Yen will skyrocket>> To be honest, I thought this would happen a while back. But one day it should, all imo. kd

To: Real Man who wrote (1189)	9/28/2007 3:03:45 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 71455

There s one correction necessary: Well, as Fed lowered rates, carry traders actually made a profit, cause... US bonds went up. They are long those. And no, when the Fed lowered rates, the curve steepened massively and 10/30 year yields actually rose. The bond prices went down! Carry traders do not buy bonds, they do money market deals, or to more concise, FX Swaps pocketing the yield differential. Carry traders dont do much USD/JPY. The lions share is JPY sold against EUR, GBP, and the minors.