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Dollar Support Breach Alert
The rampaging deflation in Europe and Japan has to be giddy about this development. Bernanke is sitting in a windowless, telephoneless office, and is not answering any press queries about his repeated statements to keep the dollar strong.
And this from a Goldman research piece released to "clients" this morning:
Trade Update: Top Trade #11: Go Long $/JPY With a Target above 105. July 31, 2009
With structural considerations still pointing clearly to a weaker JPY, we think the opportunity for notable JPY weakness is the best it has been all year.
We recommend clients consider being long USD/JPY with a target above 105.
Our basic view has been that the JPY belongs at weaker levels and the main structural reasons on that front are if anything even clearer now than earlier in the year. JPY remains two standard deviations expensive on GSDEER (currently around 115), financial conditions in Japan are too tight (and have continued to tighten) and the Broad Balance of Payments (BBOP) is in large deficit - to the tune of 6.7% of GDP on a 12-mth ma - on the combination of a weaker trade balance and significant portfolio outflows.
We think there are two sets of reasons why the JPY has not so far responded to these dynamics. The first reason is rate (and growth) differentials. With US and Japanese policy rates both firmly anchored around zero, rate differentials have been extraordinarily narrow. And even as the US and global economy has stabilized, the notion that tightening is not imminent in either country has left short-dated rate differentials at historically low levels. Not only has this left the US as an alternative funding currency within FX, but it has made it less costly (in a carry sense) than it has been in a very long time for Japanese exporters and life insurers to hedge against a stronger JPY. The second reason is that speculative positioning has generally been substantially short JPY since March, as our Sentiment Index has clearly shown.
There is some risk that with a US tightening cycle a long way off, this is (still) too early for USD/JPY to move back to where we think it belongs. But with the downside in our view relatively limited, lighter positioning and some identifiable cyclical catalysts, we think the risk-reward is more attractive than it has been for some time.
Goldman clients everywhere rejoice.
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Look at gold
and oil, and silver..
And Canadian stocks... Beware, that'll blow soon at some point.
Can you please elaborate on this point?
I don't know about that... people should realize by now that gold mining stocks and gold bullion are worlds apart.
The former is a type of derivative, the latter a hard currency.
This just in:
LOOKOUT BELOW!
"A transfer to the U.S. Treasury of the Federal Reserve’s so-called Maiden Lane companies, the three entities it set up in 2008 to hold investments acquired in the rescues of Bear Stearns Cos. and American International Group Inc., “would reduce its exposure to credit risk,” the IMF said."
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVY5gFyU_mSk
the article doesn't make sense. however, that's what they always wanted to do, dump this sh.t on the treasury.
the imf should be dissolved.
Message<
The stuff you guaranteed and told everyone that you're going to hold to maturity and the taxpayer may even make money and even took a haircut to limit the downside, is worth ZERO. They can't pay and will default, if you don't convince the American taxpayer to take an IOU (bonds), and dress up the title with stimulus or healthcare or whatever crazy story you can insert.
GET RID OF IT!
End Message<
BLUE DOGS RULE!
Note the article also points to a 2.6% decline in GDP. We've had just over half of this, so expect a worse Q3/Q4 than Q2 (10%+ bump in govvie spending can not be sustained).
DXY down, Vix down, mkt failing to rally this time around
Methinks the market is waiting for currency to break one way or another...Looks like it could be consolidating for an Argintine-like spike on sharply weaker dollar (v the Euro and Yen)
This is the market rewarding central planning. ;)
Surprisingly, the 10yr is happy with the situation !?!
no it's not....the fed bought a bunch
of debt so the ten year price goes up....but
the currency guys know what's going on which
is why the dollar plunged today in a most
dramatic fashion and why gold spiked up.....
next week the 10 year will drift back down...there
has been a lot of volatility in the bond market
since march and it will get worse....
it's the old fingers in the dike game with
the us govt.
There are some serious macro moves going on today - and yet equities are just kind of sitting here - very very weird.
Any thoughts on who or what is driving this change today?
us government attempting maintain the value
of chinese securities after a huge lecture / threat
from the chinese this week or last....
Look out below!
http://www.goldseek.com/quotes/charts/usdollar/usdollarindex5day.php
What can they do to suppor it? deflation is very real now and if no suppor then OIL goes above $70 in light of the consumer being cooked
you gotta love this, also,... just before the move...
Goldman Sachs Says Buy Dollar Against Yen, Target Above 105
Share | Email | Print | A A ABy Daniel Tilles
July 31 (Bloomberg) -- Investors should buy the dollar against the yen, with a target above 105, according to Goldman Sachs Group Inc.
“With structural considerations still pointing clearly to a weaker yen, we think the opportunity for notable yen weakness is the best it has been all year,” Goldman Sachs analysts wrote today in an e-mailed report.
The dollar was little changed at 95.63 yen as of 10:46 a.m. in London.
To contact the reporter on this story: Daniel Tilles in London at dtilles@bloomberg.net
Last Updated: July 31, 2009 05:48 EDT
oh i just realized this was in the original post. headlines reader , sorry lol
maybe now more people will see it though
Busted. New yearly low.
Gold fails at 958 resistance, and is not ramping up with the new low in DXY.
We'll see.
It doesn't matter. As long as the equities (golden calf) is propped up - Rome can burn away unnoticed.
the low has been breached
just a bunch of stops being blow out by vampire squids and the like. Need to squeeze every bit out of those "clients" by month end.
It appears that the Fed is simply plugging holes (trying to support the dollar, treasuries, equities, keeping gold suppressed) in the massive dam with its fingers. It will eventually run out of fingers. I'm guessing they would let the dollar or equities go first. Easier to screw the people that way.
The Fed/Treasury is incapable of saying anything about our collapsing currency-even in the depths of the crisis all they could ever muster was "we believe a strong dollar is in the best interest of the economy" Mere words with absolutely nothing behind them. support the dolla?, nah. Threaten to tap SPR if crude prices climb more? , nah.
I'm on Mish's side with this one. Expect a bounce in the dollar.
I'm no trader, but I can feel something. There's a 'teetering' feel to this market. This baby could blow any second
Silver pushing +4%
Nickel up another +5%
et al
anyone with a UUP target? sept strike? dec strike?
The new US economic strategy... Creating "prosperity" by diluting the currency quickly.
Rrrrrring...
TD: Mr. Bernanke please
Admin: I am sorry, Mr. Bernanke is busy and not available at this time
http://www.youtube.com/watch?v=YWyCCJ6B2WE
if that's the 5th wave then DXY goes right to 75 levels
the stock market is already played out that scenario and will not rally any higher from here. short the stock market.
I thought they were inverse...
Check out Venezuela and Russia's currency collapses. Currency collapsed then market crashed more. It is more of a confidence game than just an inverse relationship. Who would want to buy shares knowing that they might not even go up and meanwhile the currency you have to exit to is crashing?
Is CNBC showing the DXY volatility index on the screen yet?
I stopped watching CNBC looooooooooooooong back....bunch of jokers....
Now what...Inflation...or Deflation?
Cheeky Bastard's Fuckflation (tm).
Won't the stock market continue upward with a weak dollar?
Since GOLDMAN says it......it must be true. JPY to 105.
Are you a joker is it just the picture :)?
CNBC would tend to show clevage at a time like this...
mmmmmmm.....
Keeps the little liberal sheeple placated and green.
Ben's To Do List:
1) Don't be the one presiding over the Fed when Great Depression II comes, i.e., save my ego for posterity so that some schmuck grad student won't earn his doctorate off my ass when I'm pushing daisies
2) Slip Lloyd another $100x10^9
3) Donate to the GS/JPM bonus pool (use Maiden Lane III)
4) Put the rest of my IRA in DDRX common
5) Triple down on RMBS and CMBS
5) Remember to take the Prozac
6) Pick up another ULCC of ink for the printer
~~~~~~~~~~~~~~~~~~~~~~~~
1,674,941) Maintain strong dollar, LOL
The market has set itself up perfectly. Long dollar, short equities. Such an opportunity has not been around for a while. BOOYOOOO
Beetlejuice, Beetlejuice, Beetlejuice....
Ur killing me dude.
How about DXY is a buy, right here. Selling EU at 142.47 and BP at 166.96. NST
stock market keeps on going up. shows everybody does not know what they are talking about.
The night they drove old DXY down.
Well except that three comments here agree with GS, have to say that bonds and dollar up with commodities, gold, oil, platinum, silver and stocks sure has a ring of contrarian truth...
that would be commodities, gold, oil, platinum, silver and stocks down...
Went home short EU after giving back my whole week today. If the dollar breaks lower from here, yikes!
What a goat fk currencies have been. I wish I had GS client signals, I would fade them.
I think now the dollar rally Tues/Weds was more to do with G2 Geithner meeting with the Chinese and convincing them they would support the dollar. Meeting over, support for the USD is pulled.
Goldman are bastards, USDJPY in August is a seasonal trade. On average, since 1999, UJ has declined 325 pips.
USD 75.89 on 7/31/8 not been breached.
In fact, dollar rallied before stock downturns...