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Time For The Dollar To Pick Up The Leadership Baton? Brown Brothers USD Commentary

Submitted by Tyler Durden on 02/07/2011 10:11 -0400

BBH's Marc Chandler gives his latest outlook on the FX board. Not surprisingly, and as we pointed out following the CFTC COT data, following a fresh round of record bearish bets on the USD, the Brown Brother's chief FX strategist sees a short-term bottom in USD sentiment (until we get a fresh new low of course), which coupled with a dose of irrational exuberance over how fast Europe has come on the past month, on nothing real but merely more expectations of improvement, could make the EURUSD fall to a $1.3250-$1.3350 range. Of course, this is the worst outcome for the dollar debasing central banks (i.e., all of them currently, due to the implicit G-20 understanding that a temporary bounce in the US stock market in nominal terms will lift all boats). Specifically: "For three days the euro tried to rise convincingly above the $1.3840 area, a technical area we had been monitoring. Provided this is indeed a failure, the euro could fall back into the $1.3250-$1.3350 range in the near-term. Sterling neared $1.62 and appeared also to run out of gas. Yet given the rebound in UK data and the prospects of heightened tensions in the euro zone, sterling can outperform the euro. Sterling may encounter support in front of $1.60, but there appears to be potential toward $1.58." Keep in mind that Citi's Steven Englander proposed a comparable logic recently, claiming that increasingly the only way to moderate surging inflation (check out commodity futures) aside from CME, ICE and other exchange margin hiking gimmicks which work for all of 24 hours, is for a concerted push to raise the dollar. Naturally, by the time a move like that is espoused by Bernanke it will be far too late.

Full note:

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Mon, 02/07/2011 - 10:16 | 940329 bankrupt JPM bu...

Inflation soup coming (or here) hot and ready...get your spoons

www.silvergoldsilver.blogspot.com

Mon, 02/07/2011 - 10:23 | 940336 topcallingtroll

Incredible news on the jobs front! Top bankers are hiring food tasters and letter openers. Al Queda has caused employment in this area to skyrocket. No experience necessary. If you.dont know how to open letters or use a fork training is available. Apply at your local unemployment office!

Mon, 02/07/2011 - 11:02 | 940391 Snidley Whipsnae

Bankers starve if you move their plates 6 inches.

Mon, 02/07/2011 - 10:26 | 940337 SheepDog-One

Yea sure everyones got record-hi hopes and all as everyone around the world has their bull hats securely tied on. Yeay. Bull dance for worthless dollar.

Mon, 02/07/2011 - 10:26 | 940340 johny2

FX markets are 3 trillion a day pump and dump kind of thing...If you are going to trade this than its best not to read any news, except the news for your astrology sign.

Mon, 02/07/2011 - 10:27 | 940342 SheepDog-One

May as well all be betting on which turd bobs up to the surface next.

Mon, 02/07/2011 - 10:42 | 940358 johny2

It would be worth watching analysts give their forecasts on that

Mon, 02/07/2011 - 10:47 | 940362 SheepDog-One

Isnt that exactly what CNBC is?

Mon, 02/07/2011 - 10:53 | 940371 johny2

good point....it's more or less the same thing.

Mon, 02/07/2011 - 13:14 | 940777 cramers_tears

+6Million - I didn't think I was going to laugh today.

Mon, 02/07/2011 - 11:00 | 940382 Snidley Whipsnae

I would rather go to Vegas and get free drinks, comped room, maybe free tickets to a decent show, and some good looking ladies to look at.

Better than throwing fiat into a black FX hole with no entertainment.

Or, buy PMs! ...and read ZH!

Mon, 02/07/2011 - 11:04 | 940397 johny2

smart choice, specially second option.

Mon, 02/07/2011 - 10:47 | 940363 solgundy

King Dollar has no clothes

Mon, 02/07/2011 - 11:07 | 940416 TradingJoe

Yeah, but naked! What a joke!

Mon, 02/07/2011 - 11:34 | 940504 MachoMan

To keep the analogy correct, King Dollar is in fact naked, but he's also at an orgy... However, outside the mansion, there is a neighbor, concerned from all the noise and commotion, vigorously knocking and attempting entry. He is sporting a billy club, which has been dubbed a "barbarous relic" on numerous occasions. He has no intention of participating, but rather, would love nothing more than to break up the party. The door has very little resistance left.

Mon, 02/07/2011 - 11:08 | 940420 disabledvet

We had to destroy the dollar to save it. Move along.

Mon, 02/07/2011 - 11:20 | 940448 topcallingtroll

Cramer says gold to da moon! Gold 36000 Booyah!

Mon, 02/07/2011 - 11:26 | 940472 Miles Kendig

Rotate .. those legs of the fx stool

Mon, 02/07/2011 - 11:32 | 940497 scratch_and_sniff

I say buy Euro now, you wont see it cheaper for quite some time. Im prepared to eat my words here, stops below 1.3460...come and get me you winklers!!

Mon, 02/07/2011 - 11:46 | 940533 Glasgow Gary

Marc Chandler has been bullish on the USD for 10 years, and he tends to get very loud about this views whenever the USD is falling. Usually, this pressages another leg down in the USD.

Mon, 02/07/2011 - 16:32 | 941291 99er